Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1 /A
(Amendment No. 1)
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
NUVOLA, INC.
(Exact name of registrant as specified in its charter)
Nevada
(State or other jurisdiction of incorporation or organization)
7374
(Primary Standard Industrial Classification Code Number)
90-1031365
(I.R.S. Employer Identification Number)
8800 N. Gainey Center Dr., Suite 270
Scottsdale, Arizona 85258
(480) 275-7572
(Address, including zip code, and telephone number,
including area code, of registrant’s principal executive offices)
Jeffrey I. Rassás, President
Nuvola, Inc.
8800 N. Gainey Center Dr., Suite 270
Scottsdale, Arizona 8525 8
(480) 275-7572
(Name, address, including zip code, and telephone number,
including area code, of agent for service)
Copies of Communications to:
Stoecklein Law Group, LLP
401 West A Street
Suite 1150
San Diego, CA 92101
(619) 704-1310
Fax (619) 704-1325
Approximate date of commencement of proposed sale to the public: As soon as practicable after the registration statement becomes effective.
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:
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.
Indicate by check mark whether the registrant is a large accelerated file, 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 12b-2 of the Exchange Act.
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer (Do not check if a smaller reporting company)
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Smaller reporting company x
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Calculation of Registration Fee
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Title of Each Class of Securities to be Registered
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Amount to be Registered
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Proposed Offering Price Per Share
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Proposed Maximum Aggregate Offering Price
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Amount of Registration Fee
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Common Stock, $0.001 par value
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776, 422 ( 1)
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$0.001
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$776.42(2)
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$0.09
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(1)
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The shares included herein are being distributed to the stockholders of Bollente Companies, Inc. Bollente Companies, Inc. stockholders will not be charged or assessed for Nuvola, Inc. Common Stock, and Bollente Companies, Inc. stockholders will receive no consideration for the distribution of the foregoing shares in the spin-off.
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(2)
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There currently exists no market for Nuvola, Inc.’s Common Stock. Estimated solely for the purpose of calculating the amount of the registration fee pursuant to Rule 457(a) under the Securities Act of 1933, as amended.
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A Registration Statement relating to these securities has been filed with the Securities Exchange Commission. 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 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
Prospectus (Subject to Completion)
Dated _________, 20__
PROSPECTUS
Nuvola, Inc.
Spin-Off of 776,422 Shares of Common Stock
This prospectus is being furnished in connection with the spin-off by Bollente Companies, Inc. to holders of its common stock, shares of common stock of Nuvola, Inc. (the “Distribution”). Nuvola is not selling any shares of common stock in this distribution and therefore will not receive any proceeds from this distribution. All costs associated with this registration will be borne by Nuvola.
Subject to the Notice of Effectiveness of this Registration Statement, the holders of Bollente Companies common stock will receive one (1) restricted share of Nuvola common stock for every twenty (20) shares of Bollente Companies common stock they hold on October 20, 2014. Stockholders will not receive cash in lieu of fractional shares, but fractional shares will be rounded up to the next whole share. Following the Distribution, Bollente Companies will not own any shares of Nuvola. On November 24, 2014, the Nuvola restricted common stock was distributed to the holders of Bollente Companies common stock as of October 20, 2014. Upon effectiveness of this Registration Statement the spin-off shares of Nuvola will be considered registered.
No stockholder approval of the spin-off is required or sought. Nevada law does not require Bollente Companies stockholder approval of the spin-off. There is no current trading market for our common stock. Bollente Companies stockholders will qualify for non-recognition of gain after the spin-off.
We urge you to read carefully the “Risk Factors” section beginning on page 5 where we describe specific risks associated with an investment in Nuvola, Inc. and these securities before you make your investment decision.
We are an “emerging growth company” as defined in the Jumpstart Our Business Startups Act (“JOBS Act”), and will therefore be subject to reduced public company reporting requirements. Investing in our securities involves a high degree of risk. See Risk Factors, beginning on page 5.
We are considered a “shell company” under applicable securities rules and subject to additional regulatory requirements as a result, including the inability of our shareholders to sell our shares in reliance on Rule 144 promulgated pursuant to the Securities Act of 1933, as well as additional restrictions. Accordingly, investors should consider our shares to be significantly risky and illiquid investments. See Risk Factors, beginning on page 5.
Our auditors have substantial doubt about our ability to continue as a going concern.
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.
Prospectus (Subject to Completion)
THE DATE OF THIS PROSPECTUS IS __________, 2015.
TABLE OF CONTENTS
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PAGE
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Prospectus Summary
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1
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Summary of the Offering
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3
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The Spin-Off
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Summary Financial Information
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4
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Risk Factors
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5
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Special Note Regarding Forward-Looking Statements
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14
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Description of Securities
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23
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Interests of Named Experts and Counsel
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25
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Disclosure of Commission Position on Indemnification for Securities Act Liabilities
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25
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Description of Business
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26
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Shell Company Status
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30
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Reports to Stockholders
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31
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Management’s Discussion and Analysis of Financial Condition and Results of Operations
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31
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Facilities
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35
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Certain Relationships and Related Transactions
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35
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Legal Proceedings
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36
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Directors, Executive Officers and Control Persons
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36
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Security Ownership of Certain Beneficial Owners and Management
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Market for Common Equity and Related Stockholder Matters
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38
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Dividends
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38
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Executive Compensation
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39
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Shares Eligible for Sale
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40
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Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
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41
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Index to Financial Statements
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42
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PROSPECTUS SUMMARY
This summary contains basic information about us and the registration. Except as otherwise required by the context, references in this prospectus to "we," "our," "us,” “Company,” “Nuvola,” refer to Nuvola, Inc.
You should read the following summary together with the entire prospectus, including the more detailed information in our financial statements and related notes appearing elsewhere in this prospectus. You should carefully consider the matters discussed in “Risk Factors” beginning on page 5.
Nuvola, Inc. is a development stage company incorporated in the state of Nevada on November 21, 2013. We are currently a wholly-owned subsidiary of Bollente Companies, Inc. (“Bollente”). We are attempting to build Nuvola into a premier provider of cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances. Our cloud-based platform will give service providers access to diagnostic reports, system failure alerts and warranty information on all of their smart home products, all in one place. This seamless integration of product data will enable service providers to proactively contact their customers for service calls or warranty extensions, boosting customer retention and their bottom line. Additionally, service providers can use the diagnostic reports to recommend cost- and energy-saving products to their customers. This service is currently in place with Bollente’s trutankless™ line of electric tankless water heaters.
Since our inception on November 21, 2013 through September 30, 2014, we generated $15,500 in revenues . As reported on our most recent audited period we had $3,000 in assets and a net loss of $10,500. As of our most recent unaudited financial statements for the nine month period ended September 30, 2014, we had $156 in assets and a net loss of $176,480. As of September 30, 2014 , our current cash on hand was $156 . During our initial months of formation we concentrated our energies on analyzing the viability of our business plan, and establishing our business model. We also worked with a graphic designer to design a logo. Additionally, we are in the process of developing our website, which upon completion will detail our cloud integration services and provide contact information (our preliminary webpage has been posted). Our operations have been limited to start up and developmental activities.
In June of 2014, we issued $200,000 aggregate principal amount of 8% convertible notes to accredited investors only. The convertible notes bear interest of 8% per annum with principal and interest due and payable on June 1, 2015 (“Maturity Date”). The convertible notes are convertible at the option of the holder into common stock at a conversion price of $0.50 per share at any time prior to the Maturity Date. Cash and cash equivalents currently on hand are not sufficient to continue operations for the next twelve months. Our monthly expenses range between $10,000 and $25,000. We expect that continued focus on acquiring new customers will enable us to increase profitable revenues from operating activities. Our only source of monthly revenue is pursuant to our Software and Services License Agreement with Bollente. If we do not generate sufficient cash from operations, we have the ability to reduce certain expenses depending on the level of business operation. We will need to raise $125,000 in additional funds to expand our operations for a twelve month period. We plan on raising the necessary funds in the future from family, friends, and business associates of our President, pursuant to exemptions provided by Section 4(2) and Rule 506 of the Securities Act of 1933.
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We are a development stage company with limited operations. We have operated at a loss since our inception, and we cannot assure you that we will operate at a profit in the future. Because we have operated at loss, we have relied upon a private placement of common stock to fund our operations since our inception, and must continue to rely on debt or equity investments until we operate profitably, if ever.
Our auditor's report dated April 30, 2014, on our financial statements from Inception (November 21, 2013) to December 31, 2013 included a going concern qualification which stated that there was substantial doubt as to our ability to continue as a going concern. We continue to be undercapitalized because of our continued losses from operations.
No member of our management or any of our affiliates have been previously involved in the management or ownership of a development stage company that has not implemented its business plan, engaged in a change of control or similar transaction or has generated no or minimal resources to date.
As of the date of this prospectus we have one officer and two directors. Mr. Jeffrey Rassás, our sole officer and a director of the Company, has experience serving as an officer and director of a public company. Mr. Rassás does not have experience running a company whose focus is cloud integration services. Mr. Rassás is involved with other businesses, and will only be devoting a portion of his time to Nuvola, Inc. Mr. Rassás will be devoting approximately 15 to 20 hours per month in regards to Company business. At this time, and for the next 12 months, the Company does not anticipate hiring additional employees.
Our principal executive office address and phone number is:
NUVOLA, INC.
8800 N. Gainey Center Dr., Suite 270
Scottsdale, Arizona 85258
(480) 275-7572
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Summary of the Offering
The Spin-Off
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Distributing Company
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Bollente Companies, Inc., a Nevada corporation, is engaged in the business of manufacturing and selling a high quality, whole-house, electric tankless water heater.
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Distributed Company
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Nuvola, Inc. is a development stage company. We are attempting to build Nuvola into a premier provider of cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances.
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Number of Shares Distributed
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Each holder of twenty (20) shares of Bollente Companies, Inc. will receive one (1) share of our common stock. The shares of our common stock spun-off will constitute 100% of the outstanding shares of our common stock immediately after the distribution. Immediately following the Distribution, Bollente Companies, Inc. will not own any shares of our common stock, and we will be an independent public company, under common control immediately following the distribution of shares in the spin-off transaction.
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Fractional Shares
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Fractional shares will not be distributed. Each fractional share will be rounded up to the next whole share.
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Record Date
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The record date is October 20, 2014.
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Distribution Date
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The distribution date is November 24, 2014.
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Distribution Agent, Transfer Agent and Registrar for the Shares
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Pacific Stock Transfer Company is our distribution agent, transfer agent and registrar for our shares.
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Federal Incom Tax Consequence of the Distribution
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Bollente and Nuvola intend for the distribution to be tax free to the stockholders and to Bollente and Nuvola.
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3
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There is no Public Trading Market for the Common Stock
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There is no public market for our common stock. Accordingly, after the distribution, our shares of common stock will not be publicly traded and there is no assurance a public market will develp in the future.
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Relationship Between Bollente and Us After the Distribution
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Following the distribution, we will be independent company and Bollente will have no stock ownership or interest in us.
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Post-Distribution Dividend Policy
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We do not anticipate paying any dividends on our common stock in the foreseeable future. The payment and amount of dividends by us after the distribution, however, will be subject to the discretion of our board of directors.
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Risk Factors
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Stockholders should carefully consider the matters discussed under “Risk Factors.”
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THE SPIN-OFF
General
The board of directors of Bollente Companies, Inc. approved the spin-off of shares of our common stock to the holders of Bollente common stock. In the spin-off, each holder of Bollente common stock received as a dividend twenty (20) shares of our common stock for every one (1) share of Bollente held on October 20, 2014, the record date.As a result of the spin-off distribution on November 24, 2014, each shareholder of Bollente common stock as of 5:00 p.m. Pacific Standard Time on the Record Date:
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received one share of our restricted common stock for every twenty shares of Bollente common stock owned by such shareholder; and
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retained such shareholder’s shares in Bollente.
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Upon effectiveness of this Registration Statement the spin-off shares of Nuvola will be considered registered.
Reasons for the Spin-Off
Nuvola’s Board and Management believe that our separation from Bollente will provide the following benefits:
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enhance the flexibility of the management team of each company to make business and operational decisions that are in the best interests of its business and to allocate capital and corporate resources in a manner that focuses on achieving its own strategic priorities;
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facilitate growth of Bollente’s and Nuvola’s businesses;
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improve investor understanding of the separate businesses of Bollente and Nuvola and facilitate valuation assessments for the securities of both companies, which should appeal to the different investor bases of the upstream and downstream businesses; and
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enhance the ability of each company to attract employees with appropriate skill sets, to incentivize its key employees with equity based compensation that is aligned with the performance of its own operations and to retain key employees for the long term.
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Enhancing business and operational decision making
Nuvola’s board of directors and management took into account the fact that different markets require fundamentally different business strategies and offer significant business opportunities for growth. They determined that a spin-off should allow the management team of each company to focus on its strategic priorities and make business and operational decisions that are in the best interest of its operations, taking into account the different challenges and opportunities and different financial profiles and capital needs pertinent to its business. As separate companies, each will be able independently to prioritize allocation of resources and capital in support of its business strategies. For example, the operations and business plan of Nuvola has been under-funded as a result of a focus on furthering Bollente’s operations. As separate companies, each of Bollente and Nuvola will no longer have to compete for investment capital and management’s time with the other, and each would be in a position to pursue a growth strategy to optimize its own operations. By eliminating the necessary time and resources required to resolve conflicting business priorities and strategic needs, the two businesses will be better able to compete through quicker decision making, more efficient deployment of capital and corporate resources and enhanced responsiveness to market demands.
Facilitating growth of Bollente’s and Nuvola’s businesses
The spin-off will improve Nuvola’s ability to grow its market and shareholder base, and to fund growth objectives. Nuvola will not be subject to any debt obligations or liabilities of Bollente and will have the ability to conduct both debt and equity financing on their own. The opportunity to grow Nuvola’s shareholder base and raise capital to be used in furtherance of the business plan will only benefit Nuvola’s performance.
Improving investor understanding of the separate businesses
The business plan and operations of Nuvola is significantly different from that of Bollente. Bollente provides hands-on collaborative direction and guidance to entrepreneurs to seize growth opportunities. Bollente specializes in refining strategic planning, exploring capitalization structures, pursuing accretive mergers or acquisitions, enhancing market presence and assistance in building qualified executive management teams. Bollente is currently involved in research and development of a new high quality, whole-house, electric tankless water heater that is more energy efficient than conventional products. Nuvola’s business will serve as the next-generation home automation and intelligence division of the Bollente portfolio companies to provide technical integration, innovation and ongoing revenue streams after the sale of the individual product. As a B2B technology solutions service, Nuvola will provide a cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances.
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As a result, the board of directors and management concluded that, as a part of an integrated business, Bollente’s and Nuvola’s operations have not been appropriately appreciated or understood by investors. They believe that the spin-off will improve the investment community’s visibility into and understanding each business and enables each company to provide more focused and targeted communication to the market regarding its own business strategies, assets, operational performance, financial achievements and management teams.
Enhancing ability to attract, retain and appropriately reward key employees
The management skills required to successfully run Bollente’s business are different from the management skill required to run a B2B technology solutions service company like Nuvola. The board of directors concluded that separating the two businesses should improve both businesses’ ability to attract managers with the appropriate skill sets. By separating the two companies, management of each should be in an improved position to attract employees with the correct skill set, to motivate them appropriately, and to retain them for the long-term.
Manner of Effecting the Spin-Off
The general terms and conditions relating to the spin-off are set forth in the Separation and Distribution Agreement (the “Agreement”) between Bollente and Nuvola. Under the Agreement, the spin-off will be effective on the Distribution Date. The Nuvola shares were distributed to shareholders in the same name as listed on the Bollente shareholder list on the record date,on November 24, 2014 by our transfer agent, Pacific Stock Transfer Company. Any fractional shares will bewere rounded up to prevent the issuance of fractional shares. Certificates were mailed to shareholders of record.
Market for Our Common Stock
There is no public market for our common stock. We intend to file for inclusion of our common stock on the Over-the-Counter-Quotation Board; however, there can be no assurance that FINRA will approve the inclusion of the common stock.
Inclusion on the OTC:QB permits price quotations for our shares to be published by that service. Although we intend to submit an application to a market maker for the OTC:QB, we do not anticipate our shares to immediately be traded in the public market. Also, secondary trading of our shares may be subject to certain state imposed restrictions. Except for the application we intend to submit to a market maker for the OTC:QB, there are no plans, proposals, arrangements or understandings with any person concerning the development of a trading market in any of our securities. There can be no assurance that our shares will be accepted for trading on the OTC:QB or any other recognized trading market. Also, there can be no assurance that a public trading market will develop in the future or, if such a market does develop, that it can be sustained. Without an active public trading market, a stockholder may not be able to liquidate their shares. If a market does develop, the price for our securities may be highly volatile and may bear no relationship to our actual financial condition or results of operations. Factors we discuss in this information statement, including the many risks associated with an investment in our securities, may have a significant impact on the market price of our common stock.
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The ability of individual stockholders to trade their shares in a particular state may be subject to various rules and regulations of that state. A number of states require that an issuer's securities be registered in their state or appropriately exempted from registration before the securities are permitted to trade in that state. Presently, we have no plans to register our securities in any particular state
SUMMARY FINANCIAL INFORMATION
The following table sets forth summary financial data derived from our financial statements. The data should be read in conjunction with the financial statements, related notes and other financial information included in this prospectus.
Statement of Operations Summary:
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For the three month period ended
September 30 ,
2014
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For the nine month period ended
September 30 ,
2014
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December 31,
2013
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(Unaudited)
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(Unaudited)
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(Audited)
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Revenue
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$ | 9,300 | $ | 15,500 | $ | - | ||||||
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Operating expenses:
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General and administrative
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94 | 3,154 | 500 | |||||||||
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Professional fees
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10,250 | 184,355 | 10,000 | |||||||||
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Total operating expenses
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10,344 | 187,509 | 10,500 | |||||||||
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Other expenses:
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Interest expense
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4,471 | 4,471 | - | |||||||||
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Total other expenses
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4,471 | 4,471 | - | |||||||||
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Net loss
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$ | (5,515 | ) | $ | (176,480 | ) | $ | (10,500 | ) | |||
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Net loss per common share - basic
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$ | (0.01 | ) | $ | (0.33 | ) | $ | (0.02 | ) | |||
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Balance Sheet Summary:
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September 30 ,
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December 31,
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2014
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2013
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(unaudited)
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(audited)
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ASSETS
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Cash
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$ | 156 | $ | 3,000 | ||||
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Total assets
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$ | 156 | $ | 3,000 | ||||
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LIABILITIES AND STOCKHOLDERS' DEFICIT
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Current liabilities:
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Accounts payable
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$ | 93,250 | $ | - | ||||
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Notes payable – related party
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60,695 | 13,000 | ||||||
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Accrued interest payable
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4,471 | - | ||||||
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Convertible notes payable
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225,000 | - | ||||||
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Convertible notes payable – related party
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272 | - | ||||||
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Total current liabilities
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383,688 | 13,000 | ||||||
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Total liabilities
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383,688 | 13,000 | ||||||
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Stockholders' deficit:
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Preferred stock, $0.001 par value, 10,000,000 shares authorized, no shares issued and outstanding as of September 30, 2014 and December 31, 2013
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- | - | ||||||
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Common stock, $0.001 par value, 100,000,000 shares authorized, 748,244 shares issued and outstanding as of September 30, 2014 and December 31, 2013
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748 | 500 | ||||||
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Additional paid-in capital
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- | - | ||||||
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Notes receivable – related party
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(197,300 | ) | - | |||||
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Accumulated (deficit)
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(186,980 | ) | (10,500 | ) | ||||
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Total stockholders' deficit
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(383,532 | ) | (10,000 | ) | ||||
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Total liabilities and stockholders' deficit
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$ | 156 | $ | 3,000 | ||||
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RISK FACTORS
An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below, together with all of the other information included in this report, before making an investment decision. If any of the following risks actually occurs, our business, financial condition or results of operations could suffer. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Special Note Regarding Forward Looking Statements” located on page 13, for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this report.
Risks Relating to Our Industry and Our Business
Our present limited operations have not yet proven profitable.
To date we have not shown a profit in our operations. We do not presently have any other customers other than Bollente. We cannot assure that we will achieve or attain profitability in 2014 or at any other time. If we cannot achieve operating profitability, we may not be able to meet our working capital requirements, which will have a material adverse effect on our business operating results and financial condition.
We will need additional capital to finance our operations, which we may not be able to raise or it may only be available on terms unfavorable to us and or our stockholders. This may result in our inability to fund our working capital requirements and harm our operational results.
Current cash on hand and the other sources of liquidity will not be sufficient enough to fund our operations in the ordinary course of business through fiscal 2014. Our monthly expenses range between $10,000 and $25,000. We will need to raise $125,000 in additional funds to expand our operations for a twelve month period. We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan, and our stockholders will lose part or all of their investment.
We are significantly dependent on our sole officer. The loss or unavailability to Nuvola of Mr. Rassás’ services would have an adverse effect on our business, operations and prospects in that we may not be able to obtain new management under the same financial arrangements.
Our business plan is significantly dependent upon the abilities and continued participation of Mr. Rassás, our sole officer. It would be difficult to replace Mr. Rassás at such an early stage of development. The loss by or unavailability to Nuvola of Mr. Rassás’ services would have an adverse effect on our business operations and prospects, in that our inability to replace could result in the loss of one’s investment. Mr. Rassás will generate sales through direct marketing and by creating personal contacts; some of whom we may lose as a result of losing Mr. Rassás. If this occurs it may significantly affect our revenues. Finding someone with either Mr. Rassás’ extensive knowledge will be difficult. There can be no assurance that we would be able to locate or employ personnel to replace Mr. Rassás, should his services be discontinued.
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Mr. Rassás is involved with other businesses and there can be no assurance that he will continue to provide services to us. Mr. Rassás’ limited time devotion to Nuvola could have the effect on our operations of preventing us from being a successful business operation, which ultimately could cause a loss of your investment.
As compared to many other public companies, we do not have the depth of managerial or technical personnel. Mr. Rassás is currently and may continue to be involved with other businesses.
Mr. Rassás is CEO of Airware Labs, Corp. This business is Mr. Rassás’ main source of income and therefore requires approximately 25 to 40 hours a week of his time. Mr. Rassás is planning on allocating an additional 15 to 20 hours a month to the affairs of Nuvola; however there can be no assurance that he will continue to provide services to us. Mr. Rassás will devote only a portion of his time to our activities. Mr. Rassás outside employment does not create a material risk of conflicts of interest with Nuvola.
We do not have an employment agreement with Mr. Rassás, therefore, he could terminate his employment with us at any time. The loss of Mr. Rassás could seriously harm our business.
The market in which we compete is highly competitive.
The market for our products and services are increasingly global and competitive. As a result, we encounter intense competition in our business. We expect competition to increase in the future both from existing competitors and new companies that may enter our market. In addition, we experience competition from in-house information technology departments when companies are determining whether to continue to outsource these services or perform them in-house. To remain competitive, we will need to invest continuously in product development, marketing, customer service and support and our service delivery infrastructure. However, we cannot be certain that new or established competitors or in-house information technology departments will not offer products and services that are superior to or lower in price than ours. We may not have sufficient resources to continue to invest in all areas of product development and marketing needed to maintain a competitive position.
We may need to change our pricing models to compete successfully.
The intense competition we face in the sales of our products and services and general economic and business conditions can put pressure on us to lower our prices. If our competitors offer deep discounts on certain products or services or develop products and services that the marketplace considers more valuable, we may need to lower prices further or offer other favorable terms in order to compete successfully. Furthermore, a shift by customers towards products and services that are less expensive may also adversely affect pricing for our products. Any such changes could have a material adverse effect on our business, results of operations and financial condition.
Our inability to adapt to rapid technological change could impair our ability to remain competitive.
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The industry in which we compete is characterized by rapid technological change, frequent new product and service introductions and evolving industry standards. Our future success will depend in significant part on our ability to anticipate industry standards and to continue to enhance existing products and services and introduce and acquire new products and services on a timely basis to keep pace with technological developments. We expect that we will continue to incur significant expenses in the design, development and marketing of new products and services. Our competitors may implement new technologies before we are able to implement them, allowing our competitors to provide more effective products and services at lower prices.
We cannot provide assurance that we will be successful in developing, acquiring or marketing new or enhanced products or services that respond to technological change or evolving industry standards, that we will not experience difficulties that could delay or prevent the successful development, acquisition or marketing of such products or services or that our new or enhanced products and services will adequately meet the requirements of the marketplace and achieve market acceptance. Any delay or failure in the introduction of new or enhanced products or services, or the failure of such products or services to achieve market acceptance, could have a material adverse effect on our business, results of operations and financial condition.
Risks associated with the Internet, changing standards, alternate technologies, competition, taxation, regulation and associated compliance efforts may adversely impact our business.
The use of the Internet as a vehicle for electronic data interchange, or EDI, and related services currently raises numerous issues, including reliability, data security, data integrity and rapidly evolving standards. New competitors, which may include media, software vendors and telecommunications companies, offer products and services that utilize the Internet in competition with our products and services and may be less expensive or process transactions and data faster and more efficiently. Internet-based commerce is subject to increasing regulation by federal, state and foreign governments, including in the areas of data privacy and breaches. Laws and regulations relating to the solicitation, collection, processing or use of personal or consumer information could affect our customers’ ability to use and share data, potentially reducing demand for Internet-based solutions and restricting our ability to store, process and share data through the Internet. Taxation of services provided over the Internet and governmental restrictions on Internet usage may be imposed in jurisdictions where we operate. Although we believe that the Internet will continue to provide opportunities to expand the use of our products and services, we cannot ensure that our efforts to exploit these opportunities will be successful or that increased usage of the Internet for business integration products and services or increased competition, taxation and regulation will not adversely affect our business, results of operations and financial condition.
Business disruptions could adversely affect our business, results of operations and financial condition.
Unexpected events, including natural disasters and severe weather events, could increase the cost of doing business or otherwise harm our business or our customers’ businesses. It is not possible for us to predict the occurrence or consequence of any such events. However, such events could reduce demand for our products and services or make it difficult or impossible for us to deliver our products and services to our customers.
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Our products and services may not achieve market acceptance, which could cause our revenue to decline.
Deployment of our products and services requires interoperability with a variety of software applications and systems and, in some cases, the ability to process a high number of transactions. If our products and services fail to satisfy these demanding technological objectives, our customers may be dissatisfied and we may be unable to generate future sales. Failure to establish a significant base of customer references will significantly reduce our ability to sell our products and services to customers.
We are frequently required to enhance and update our products and services as a result of changing standards and technological developments, which makes it difficult to recover the cost of development and forces us to continually qualify new products with our customers.
For our products to be competitive, we must be among the first to market with next-generation products. Over the last several years, the rate at which new technological developments have been introduced into the market has grown at a much more rapid pace than it had previously. Continually updated standards for the electronic exchange of information, such as those issued by the American National Standards Institute, have required us to produce frequent enhancements to our products and services and provide some of our value-added solutions and related software with additional functionality. The frequency with which we must enhance our products makes it more difficult for us to recover the costs associated with product development because those costs must be recovered over increasingly shorter periods of time. We expect this trend to continue, and it may even accelerate. As a result, we may not be able to recover all of our product development costs, which could affect our profitability. Any failure or delay in our product development or quality assurance process could result in our losing sales until we are able to introduce the new product.
We may experience product failures or other problems with new products, all of which could adversely impact our business.
Software products and application-based services as complex as those we offer may contain undetected errors or failures when first introduced or when new versions are released. If software errors are discovered after introduction, our software licensees may seek to assert claims of liability. We also could experience delays or lost revenues during the period required to correct the errors or loss of, or delay in, market acceptance, which could have a material adverse effect on our business, results of operations and financial condition.
The use of “open source” software in our products and services may expose us to additional risks and harm our intellectual property.
Our products and services sometimes utilize and incorporate software that is subject to open source licenses. Open source software is freely accessible, usable and modifiable. Certain open source software licenses require a user who intends to distribute the open source software as a component of the user’s software to disclose publicly part or all of the source code to the user’s software. In addition, certain open source software licenses require the user of such software to make any derivative works of the open source-code available to others on unfavorable terms or at no cost. This can effectively render what was previously proprietary software open source software.
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While we monitor the use of all open source software in our products and services and try to ensure that no open source software is used in such a way as to require us to disclose the source code to the related product or service, such use could inadvertently occur. Additionally, if a third party software provider has incorporated certain types of open source software into software we license from such third party for our products or services, we could, under certain circumstances, be required to disclose the source-code to our products or services. This could harm our intellectual property position and have a material adverse effect on our business, results of operations and financial condition.
We may experience service failures or interruptions due to defects in the hardware, software, infrastructure, third party components or processes that comprise our existing or new solutions, as well as human error, any of which could adversely affect our business.
There may be defects in the hardware, software, infrastructure, third party components or processes that are part of the services and solutions we provide. If these defects lead to service failures, we could experience delays or lost revenues during the period required to correct the cause of the defects. We cannot be certain that defects will not be found in new solutions or upgraded solutions, resulting in loss of, or delay in, market acceptance, which could have an adverse effect on our business, results of operations and financial condition.
Because customers use our services and solutions for critical business processes, any defect in our solutions, any disruption to our solutions, or any error in execution, as well as human error, could cause recurring revenue customers to cancel their contracts with us, prevent potential customers from joining our network and harm our reputation. These defects, disruptions or errors, could be subject to litigation for actual or alleged losses to our customers’ businesses, which may require us to spend significant time and money in litigation or arbitration or to pay significant settlements or damages. We do not currently maintain any warranty reserves. Defending a lawsuit, regardless of its merit, could be costly and divert management’s attention and could cause our business to suffer.
The insurers under our existing liability insurance policy could deny coverage of a future claim that results from an error or defect in our technology or a resulting disruption in our solutions, or our existing liability insurance might not be adequate to cover all of the damages and other costs of such a claim. Moreover, we cannot assure you that our current liability insurance coverage will continue to be available to us on acceptable terms or at all. The successful assertion against us of one or more large claims that exceeds our insurance coverage, or the occurrence of changes in our liability insurance policy, including an increase in premiums or imposition of large deductible or co-insurance requirements, could have an adverse effect on our business, financial condition and operating results. Even if we succeed in litigation with respect to a claim, we are likely to incur substantial costs and our management’s attention will be diverted from our operations.
We rely on third parties to provide certain services, and any failure of such third parties could adversely affect our business, results of operations and financial condition.
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Failure of our third party providers to provide adequate Internet, telecommunications and power services could result in significant loss of revenue. Our operations depend upon third parties for Internet access and telecommunications services, as well as for data center co-location services. Frequent or prolonged interruptions of these services could result in significant loss of revenues. We could experience outages, delays and other difficulties due to system failures unrelated to our internal activities in the future. These types of occurrences could also cause users to perceive our services as not functioning properly and therefore cause them to use other methods to deliver and receive information. We have limited control over these third parties and cannot provide assurance that we will be able to maintain satisfactory relationships with any of them on acceptable commercial terms or that the quality of services that they provide will remain at the levels needed to enable us to conduct our business effectively, which could have a material adverse effect on our business, results of operations and financial condition.
Security breaches could harm our business.
A significant component of electronic data interchange is the secure processing and transmission of confidential information over telecommunications networks. In facilitating data exchange between our customers and their trading partners, we rely on encryption and authentication technology licensed from third parties and intrusion detection technologies to protect the confidentiality of our customers’ information. We cannot assure you that our efforts to protect this information will be successful, due to the actions of third parties, software bugs or other technical malfunctions, employee error or malfeasance, or other factors.
Advances in computer capabilities, new discoveries in the field of cryptography or other developments may result in a compromise or breach of the technology used by us to protect customer transaction data. A party who is able to circumvent our security measures could misappropriate proprietary information or cause interruptions in our operations. Our security measures may not prevent security breaches. Our failure to prevent security breaches could harm our business, damage our reputation and expose us to a risk of loss or litigation, regulatory action and possible liability, each of which could affect our financial condition, results of operations and growth prospects. We also may need to incur significant additional costs to protect against similar information security breaches in the future. Furthermore, such security breaches could lead our existing customers and potential customers to have significant concerns about secure transmissions of confidential information which may create a significant obstacle in the general acceptance of our products and services.
Our operations are dependent on our ability to protect our data centers against damage.
Our operations are dependent upon our ability, or the ability of third party providers, to protect our computer equipment and the information stored in our or third party data centers against damage that may be caused by fire, power loss, telecommunications failures, unauthorized intrusion, computer viruses and disabling devices, natural disasters, terrorist attacks and other events. We cannot provide assurance that terrorism, fire or other natural disaster, including national, regional or local telecommunications disruptions, would not result in a prolonged disruption of our network services or permanently impair some of our operations. A prolonged service disruption or other impairment of operations could: damage our reputation with customers; expose us to liability; cause us to lose existing customers; or increase the difficulty of attracting new customers. We may also incur significant costs for using alternative off-site equipment or taking other actions in preparation for, or in reaction to, events that damage our data centers.
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We maintain business interruption insurance. However, even if we recovered under such an insurance policy, the lost revenues or increased costs that we experience during the disruption of our network services business, and longer term revenue losses due to loss of customers, may not be recoverable under the policy. If this were to occur, our business, results of operations and financial condition could be materially adversely affected.
A failure to attract or retain qualified personnel or highly skilled employees could adversely affect our business.
Given the complex nature of the technology on which our business is based and the speed with which such technology advances, our future success is dependent, in large part, upon our ability to attract and retain highly qualified managerial, technical and sales personnel. Competition for talented personnel is intense, and we cannot be certain that we can retain our managerial, technical and sales personnel, or that we can attract, assimilate or retain such personnel in the future. Our inability to attract and retain such personnel could have a material adverse effect on our business, results of operations and financial condition.
Delays and inaccuracies in our billing and information systems may have an adverse effect on our operations.
Sophisticated information and billing systems are vital to our growth and ability to monitor costs, bill customers, provide services to customers and achieve operating efficiencies. As we begin to offer new products and services, we intend to install new billing systems or upgrade existing ones. Delays or inaccuracies in billing, our inability to implement solutions in a timely manner or our failure to implement and maintain sophisticated information and billing systems may have an adverse effect on our business, results of operations and financial condition.
Risks Relating to Ownership of Our Common Stock
We are an “emerging growth company” under the JOBS Act of 2012, and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.
We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.
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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 for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We are choosing to take advantage of the extended transition period for complying with new or revised accounting standards. As a result, our financial statements may not be comparable to those of companies that comply with public company effective dates.
We will remain an “emerging growth company” for up to five years, although we will lose that status sooner if our revenues exceed $1 billion, if we issue more than $1 billion in non-convertible debt in a three year period, or if the market value of our common stock that is held by non-affiliates exceeds $700 million.”
Even if we no longer qualify as an “emerging growth company”, we may still be subject to reduced reporting requirements so long as we are considered a “Smaller Reporting Company.”
Many of the exemptions available for emerging growth companies are also available to smaller reporting companies like us that have less than $75 million of worldwide common equity held by non-affiliates. So, although we may no longer qualify as an emerging growth company, we may still be subject to reduced reporting requirements.
Shareholders who hold unregistered shares of our common stock are subject to resale restrictions pursuant to Rule 144, due to our status as a “Shell Company.”
Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets. As such, because we have nominal assets, we are considered a “shell company.” The Company’s shell company status results in the following consequences: (i) the Company is ineligible to file a registration of securities using Form S-8; and (ii) pursuant to Rule 144, sales of our securities pursuant to Rule 144 are not able to be made until we have ceased to be a “shell company” and we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for at least the previous one year period prior to any sale pursuant to Rule 144; and a period of at least twelve months has elapsed from the date “Form 10 information” (i.e., information similar to that which would be found in a Form 10 Registration Statement filing with the SEC) has been filed with the Commission reflecting the Company’s status as a non-“shell company.” Because none of our non-registered securities can be sold pursuant to Rule 144, until one year after filing Form 10 like information with the SEC, any non-registered securities we sell in the future or issue to consultants or employees, in consideration for services rendered or for any other purpose will have no liquidity until and unless such securities are registered with the Commission and/or until 12 months after we cease to be a “shell company” and have complied with the other requirements of Rule 144, as described above. As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash. Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future. Our status as a “shell company” could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless.
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There is no current public market for our common stock; therefore you may be unable to sell your securities at any time, for any reason, and at any price.
As of the date of this information statement, there is no public market for our common stock. Although we plan, in the future, to contact an authorized OTC-QB market maker for sponsorship of our securities on the Over-the-Counter-QB, there can be no assurance that our attempts to do so will be successful. Furthermore, if our securities are not quoted on the OTC-QB, or elsewhere, there can be no assurance that a market will develop for the common stock or that a market in the common stock will be maintained. As a result of the foregoing, shareholders may be unable to liquidate their shares for any reason. We have not originated contact with a market maker at this time, and do not plan on doing so until completion of this spin-off.
Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.
Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act, it will be more difficult for shareholders to liquidate their shares even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:
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Deliver to the customer, and obtain a written receipt for, a disclosure document;
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Disclose certain price information about the stock;
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Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
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Send monthly statements to customers with market and price information about the penny stock; and
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In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.
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Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under “Prospectus Summary”, “Risk Factors”, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, “Description of Business”, and elsewhere in this prospectus constitute forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “intends to”, “estimated”, “predicts”, “potential”, or “continue” or the negative of such terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our actual results, levels of activity, performance, or achievements to be materially different from any future results, levels of activity, performance, or achievements expressed or implied by such forward-looking statements. These factors include, among other things, those listed under “Risk Factors”, “Plan of Operation” and elsewhere in this prospectus. The “Risk Factor” section identifies all known material risks to the Company.
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Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance, or achievements. We undertake no obligation to update any of the forward-looking statements after the date of effectiveness to conform forward-looking statements to actual results.
DESCRIPTION OF SECURITIES
Common Stock
Our articles of incorporation authorizes the issuance of 100,000,000 shares of common stock, $0.001 par value per share, of which 776,4 22 shares are currently outstanding. Holders of common stock have no cumulative voting rights, but are entitled to one vote for each share of common stock they hold. Holders of shares of common stock are entitled to share ratably in dividends, if any, as may be declared, from time to time by the board of directors in its discretion, from funds legally available to be distributed. In the event of a liquidation, dissolution or winding up of Nuvola, the holders of shares of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. Holders of common stock have no preemptive rights to purchase our common stock. There are no conversion rights or redemption or sinking fund provisions with respect to the common stock. All of the outstanding shares of common stock are validly issued, fully paid and non-assessable.
Preferred Stock
Our articles of incorporation authorizes the issuance of 10,000,000 shares of preferred stock, $0.001 par value per share, of which no shares of Preferred stock are outstanding as of the date of this Current Report. The preferred stock may be issued from time to time by the board of directors as shares of one or more classes or series. Our board of directors, subject to the provisions of our Articles of Incorporation and limitations imposed by law, is authorized to:
· adopt resolutions;
· to issue the Shares;
· to fix the number of shares;
· to change the number of shares constituting any series; and
· to provide for or change the following:
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the voting powers;
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designations;
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preferences; and
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relative, participating, optional or other special rights, qualifications, limitations or restrictions, including the following:
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* dividend rights (including whether dividends are cumulative);
* dividend rates;
* terms of redemption (including sinking fund provisions);
* redemption prices;
* conversion rights; and
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liquidation preferences of the shares constituting any class or series of the preferred stock.
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In each of the listed cases, we will not need any further action or vote by the stockholders.
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One of the effects of undesignated preferred stock may be to enable the Board of Directors to render more difficult or to discourage an attempt to obtain control of us by means of a tender offer, proxy contest, merger or otherwise, and thereby to protect the continuity of our management. The issuance of shares of preferred stock pursuant to the Board of Director’s authority described above may adversely affect the rights of holders of common stock. For example, preferred stock issued by us may rank prior to the common stock as to dividend rights, liquidation preference or both, may have full or limited voting rights and may be convertible into shares of common stock. Accordingly, the issuance of shares of preferred stock may discourage bids for the common stock at a premium or may otherwise adversely affect the market price of the common stock.
Nevada Laws
The Nevada Business Corporation Law contains a provision governing “Acquisition of Controlling Interest.” This law provides generally that any person or entity that acquires 20% or more of the outstanding voting shares of a publicly-held Nevada corporation in the secondary public or private market may be denied voting rights with respect to the acquired shares, unless a majority of the disinterested stockholders of the corporation elects to restore such voting rights in whole or in part. The control share acquisition act provides that a person or entity acquires “control shares” whenever it acquires shares that, but for the operation of the control share acquisition act, would bring its voting power within any of the following three ranges:
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20 to 33 1/3%,
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33 1/3 to 50%, or
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more than 50%.
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A “control share acquisition” is generally defined as the direct or indirect acquisition of either ownership or voting power associated with issued and outstanding control shares. The stockholders or board of directors of a corporation may elect to exempt the stock of the corporation from the provisions of the control share acquisition act through adoption of a provision to that effect in the articles of incorporation or bylaws of the corporation. Our articles of incorporation and bylaws do not exempt our common stock from the control share acquisition act.
The control share acquisition act is applicable only to shares of “Issuing Corporations” as defined by the act. An Issuing Corporation is a Nevada corporation, which;
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has 200 or more stockholders, with at least 100 of such stockholders being both stockholders of record and residents of Nevada; and
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does business in Nevada directly or through an affiliated corporation.
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At this time, we do not have 100 stockholders of record resident of Nevada. Therefore, the provisions of the control share acquisition act do not apply to acquisitions of our shares and will not until such time as these requirements have been met. At such time as they may apply to us, the provisions of the control share acquisition act may discourage companies or persons interested in acquiring a significant interest in or control of Nuvola, regardless of whether such acquisition may be in the interest of our stockholders.
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The Nevada “Combination with Interested Stockholders Statute” may also have an effect of delaying or making it more difficult to effect a change in control of Nuvola. This statute prevents an “interested stockholder” and a resident domestic Nevada corporation from entering into a “combination,” unless certain conditions are met. The statute defines “combination” to include any merger or consolidation with an “interested stockholder,” or any sale, lease, exchange, mortgage, pledge, transfer or other disposition, in one transaction or a series of transactions with an “interested stockholder” having;
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an aggregate market value equal to 5 percent or more of the aggregate market value of the assets of the corporation;
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an aggregate market value equal to 5 percent or more of the aggregate market value of all outstanding shares of the corporation; or
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representing 10 percent or more of the earning power or net income of the corporation.
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An “interested stockholder” means the beneficial owner of 10 percent or more of the voting shares of a resident domestic corporation, or an affiliate or associate thereof. A corporation affected by the statute may not engage in a “combination” within three years after the interested stockholder acquires its shares unless the combination or purchase is approved by the board of directors before the interested stockholder acquired such shares. If approval is not obtained, then after the expiration of the three-year period, the business combination may be consummated with the approval of the board of directors or a majority of the voting power held by disinterested stockholders, or if the consideration to be paid by the interested stockholder is at least equal to the highest of;
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the highest price per share paid by the interested stockholder within the three years immediately preceding the date of the announcement of the combination or in the transaction in which he became an interested stockholder, whichever is higher;
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the market value per common share on the date of announcement of the combination or the date the interested stockholder acquired the shares, whichever is higher; or
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if higher for the holders of preferred stock, the highest liquidation value of the preferred stock.
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INTERESTS OF NAMED EXPERTS AND COUNSEL
The financial statements of Nuvola as of December 31, 2013 are included in this prospectus and have been audited by De Joya Griffith, LLC, an independent auditor located in Henderson, Nevada, as set forth in their report appearing elsewhere in this prospectus and are included in reliance upon such reports given upon the authority of such firm as an expert in accounting and auditing.
The legality of the shares offered hereby will be passed upon for us by Stoecklein Law Group, LLP, 401 West A Street, Suite 1150, San Diego, California 92101.
Neither De Joya Griffith, LLC nor Stoecklein Law Group, LLP has been hired on a contingent basis, or has been a promoter, underwriter, voting trustee, director, officer, or employee of Nuvola.
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DISCLOSURE OF COMMISSION
POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
No director of Nuvola will have personal liability to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director involving any act or omission of any director since provisions have been made in our articles of incorporation limiting liability. The foregoing provisions shall not eliminate or limit the liability of a director for:
· any breach of the director’s duty of loyalty to us or our stockholders
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acts or omissions not in good faith or, which involve intentional misconduct or a knowing violation of law
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· for any transaction from which the director derived an improper personal benefit.
Our Bylaws provide for indemnification of our directors, officers, and employees in most cases for any liability suffered by them or arising out of their activities as directors, officers, and employees if they were not engaged in willful misfeasance or malfeasance in the performance of their duties; provided that in the event of a settlement the indemnification will apply only when the board of directors approves settlement and reimbursement as being for our best interests.
Our officers and sole director are accountable to us as fiduciaries, which means they are required to exercise good faith and fairness in all dealings affecting Nuvola. In the event that a stockholder believes the officers and/or directors have violated their fiduciary duties, the stockholder may, subject to applicable rules of civil procedure, be able to bring a class action or derivative suit to enforce the stockholder’s rights, including rights under federal and state securities laws and regulations to recover damages from and require an accounting by management. Stockholders, who have suffered losses in connection with the purchase or sale of their interest in Nuvola in connection with a sale or purchase, including the misapplication by any officer or director of the proceeds from the sale of these securities, may be able to recover losses from us.
We undertake the following:
Insofar as indemnification for liabilities arising under the Securities Act of 1933 (the “Act”) may be permitted to our directors, officers and controlling persons pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission this type of indemnification is against public policy as expressed in the Act and is unenforceable.
DESCRIPTION OF BUSINESS
Business Development Summary
Nuvola, Inc. is a development stage company incorporated in the State of Nevada on November 21, 2013. We are currently a wholly-owned subsidiary of Bollente Companies, Inc. (“Bollente”). Bollente’s product is a high quality, whole-house, electric water heater. Bollente conducts its operations through a staff of three part-time employees and has had limited operations to date. They have recently began generating revenues in the first quarter ended March 31, 2014 of $18,026. In the second quarter ended June 30, 2014, they generated $57,481 in revenue. We were formed to serve as the next-generation home automation and intelligence division of the Bollente portfolio companies to provide technical integration, innovation and ongoing revenue streams after the sale of the individual product.
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As a B2B technology solutions service, we will provide a cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances.
During our initial months of formation we concentrated our energies on analyzing the viability of our business plan, and establishing our business model. We also worked with a graphic designer to design a logo. Additionally, we are in the process of developing our website, which upon completion will detail our services and provide contact information (our preliminary webpage has been posted). Our operations have been limited to start up and developmental activities.
We are attempting to build Nuvola into the premier provider of cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances. In order to generate revenues during the next twelve months, we must:
1. Maintain our website – We believe that the internet is a great marketing tool not only for providing information on our company, but also for providing current information on our cloud integration services and solutions as well as industry related information. We have developed our preliminary website, which is not yet fully operational, and are in the process of developing a more advanced site where we can provide more detailed sections regarding our cloud integration services. We have begun designing a more advanced website, and intend to launch it during the second quarter of 2015. We estimate that the total cost required to complete the development of a more advanced website is $5,000.
2. Develop and implement a marketing plan – Our planned revenue streams will require an extensive list of contacts to allow for the marketing of our cloud integration services and solutions that will help installers and service providers of smart home products and appliances manage information flow throughout their supply chain with their customers and business partners. Awareness of the revenue potential Nuvola will be able to deliver through its website, will be delivered through the implementation of a number of marketing initiatives including search engine optimization, website completion, hosted video demonstrations, third party service contacts, tradeshow attendance, as well as blogging and other forms of social media which are driven by technology and mobile flexibility. These efforts and the resulting awareness will be key drivers behind the success of our revenue producing operations.
Business of Issuer
Nuvola, Inc., has created a business plan built upon becoming a premier provider of cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances.
We employ a subscription-based cloud services model for our services. Our cloud-based platform will give service providers access to diagnostic reports, system failure alerts and warranty information on all of their smart home products, all in one place. This seamless integration of product data will enable service providers to proactively contact their customers for service calls or warranty extensions, boosting customer retention and their bottom line. Additionally, service providers can use the diagnostic reports to recommend cost- and energy-saving products to their customers. This service is currently in place with Bollente’s trutankless™ line of electric tankless water heaters.
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The majority of our revenue will be generated through transaction processing and subscription service fees for access and use of our cloud integration platform.
Marketing plan of operation
In order to begin generating revenue, during the next 12 months, we will focus on developing and implementing a marketing plan that integrates with our website. We believe that using the internet is a great marketing tool not only for providing information on our company, but also for scheduling product demonstrations and web based product sales. We registered the domain name www.nuvolapro.com and have developed a preliminary website. We are working to expand the site to be more comprehensive and intend to have a fully developed website, capable of handling online sales and video based product demonstrations during the second quarter of 2015.
Nuvola’s revenue streams will require an improved web presence in addition to direct marketing to installers and service providers of smart home products and appliances. Below are the Marketing initiatives that we are currently working on, as well as an estimated timeline for completion and the estimated or anticipated costs associated with each.
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Search engine optimization- we are currently working on inserting keywords that describe our in business in the Meta tags of the websites. This will help put our websites at the top of the search results. We expect this to be complete by the end of the second quarter of 2015. We estimate the cost to be mainly in time.
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Including our web addresses (URL’s) in directories- we have begun to identify certain online and offline directories we would like to be included in. We expect to complete this by the end of the second quarter of 2015. While some directories are free of charge, others have a small fee. Overall this portion of our business plan may cost up to $200.
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Making contacts online and in person with installers and service providers of smart home products and appliances- we have been networking through personal networks and have been generally discussing our cloud based technology. While we have not yet made any independent sales, we have fostered interest. This will be an ongoing initiative and there is no cost associated.
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Developing website based video demonstrations- we have been developing the basic ideas for the video demonstrations, but have not yet filmed or posted anything. We expect this to be completed by the end of the second quarter of 2015. We plan on using personal equipment and post to the website using free online video services, so we estimate the cost to be about $100 to purchase small equipment we may need.
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Facilitating and participating in online discussions - online blogs and discussion boards is one method we plan to use to foster interest in our product. There are boards about business-to-business cloud integration services and all other kinds of topics that we could participate in. We have not yet begun this process, and it will be an on-going initiative. The cost will be in time.
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Trade show attendance – we are researching different trade shows locally that we could attend. This will be an on-going initiative and the cost per year may be about $500 - $1,000 depending on whether we simply attend or rent a booth.
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Traditional print marketing campaigns- we are making the decision to print traditional brochures and flyers to hand out. We expect the first set of materials to be designed and printed by the end of the third quarter of 2015. We estimate the cost to be around $500.
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Currently, our day-to-day operations include researching the best method for online advertising and finding the most applicable directories to include ourselves in. After funding our day to day operations will consist of maintaining the online presence we developed, and developing our sales processes. To date, all of operations have been limited to start up and developmental activities and we have not yet begun providing our cloud based services to any independent customers.
Competition
We face competition in the business-to-business technology solutions services industry by numerous companies whom are already established, have significantly longer operating histories and greater brand recognition as well as, greater financial, management, and other resources.
Our ability to compete successfully depends on multiple factors, both within and outside of our control. The principal factors are:
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quality of service, including the reliability and quality of the services and solutions we offer;
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technical functionality, including delivery of innovative solutions and our speed in developing and bringing to market the next generation of services and solutions;
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global capabilities, including serving customers with operations in multiple countries;
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price; and
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customer service, including our responsiveness, availability and flexibility.
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Market and Revenue Generation
In order to generate revenues during the next twelve months, we must:
1. Develop and implement a marketing plan – Nuvola’s planned revenue streams will require an improved web presence and improved visibility within the public and private sectors. A major key factor in sales generation will be direct marketing and demonstrations given by Mr. Rassás.
2. Develop and implement a comprehensive consumer information website – For the foreseeable future, the company’s website (www.nuvolapro.com) will be Nuvola’s primary asset and key source of revenue generation. Currently, management is formulating its plan on how best to employ its resources to expanding and improving the website. We are working with web developers/consultants to add to the functionality of our site including: e-commerce and state-of-the-art visitor tracking capabilities, increased content, forums, blogs, video demonstrations, optimization for search engine rank, as well as renew the look and feel of the site to coincide with our objectives for the Nuvola brand. We have developed our preliminary website, which is not yet fully operational, and are in the process of developing a more advanced site where we can provide more detailed sections regarding our cloud integration services. We have not yet recognized revenues from the website. These efforts and the resulting awareness will be key drivers behind the success of our revenue producing operations.
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Our operations, to date, have been devoted primarily to startup and development activities, which include the following:
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Formation of the company;
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Working with graphic artist on a custom logo for Nuvola;
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Development of our business plan; and
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Development and implementation of our website.
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Nuvola, is a recently established business, with offices at 8800 N. Gainey Center Dr., Suite 270, Scottsdale, AZ 85258.
Employees
We currently have 1 employee which is also an officer of the Company. We also have one independent contractor. We do not have an employment agreement with our sole employee, who we anticipate will devote 15 to 20 hours a month to the Company going forward.
Independent Contractor Agreement
On May 1, 2014, we entered into an Independent Contractor Agreement with Card a Client LLC. Pursuant to the agreement we engaged Derrick Maines as Chief Technology Officer to render services of such, including, but not limited to, business development, software strategy, project management, media relations, software development process strategy and implementation, management of offshore and domestic development and design resources, customer presentations, review and documentation of processes and procedures, and delivery of updates, presentations, written reports, oral reports; and any and all other resulting work product. The term of the agreement is for one year beginning on May 1, 2014. We agreed to compensate Mr. Maines as follows:
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Contractor in exchange for 60 hours of consulting services to the Company each calendar month will receive a monthly payment in cash of $2,500 billed at the end of each month and due to the Contractor within seven days,
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Additional performance based consideration, in cash or shares of Nuvola stock, may be awarded to Contractor at the sole discretion of the Company's Board of Directors; and,
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Any Stock-Based Compensation shall be subject to a re-sale restriction for Twelve (12) months from the date of vesting (“Lock-Up Period”). The Contractor shall be restricted from the sale or registration of any shares earned pursuant to the terms of the Agreement during the Lock-Up Period.
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SHELL COMPANY STATUS
Rule 405 of the Securities Act defines the term “shell company” as a registrant, other than an asset-backed issuer, that has:
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(1)
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No or nominal operations; and
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(2) Either:
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(i)
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No or nominal assets;
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(ii)
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Assets consisting solely of cash and cash equivalents; or
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(iii)
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Assets consisting of any amount of cash and cash equivalents and nominal other assets.
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For purposes of this definition, the determination of a registrant’s assets (including cash and cash equivalents) is based solely on the amount of assets that would be reflected on the registrant’s balance sheet prepared in accordance with generally accepted accounting principles on the date of that determination. The Company has no or nominal operations and has assets consisting solely of cash and cash equivalents and is, therefore, a shell company as defined under Rule 405.
The Company’s shell company status results in the following consequences:
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The Company is ineligible to file a registration of securities using Form S-8; and
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Rule 144 is unavailable for transfers of our securities until we have ceased to be a shell company, are subject to the reporting requirements of the Exchange Act; we have filed Exchange Reports for 12 months and a minimum of one year has elapsed since the filing of Form 10 information on Form 8-K changing our status from a shell company to a non-shell company.
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REPORTS TO STOCKHOLDERS
Once our registration statement is effective and our securities are registered under the exchange act, we will file supplementary and periodic information, documents and reports that are required under section 13 of the Securities Act of 1933, as amended, with the Securities and Exchange Commission. Such reports, proxy statements and other information will be available through the Commission’s Electronic Data Gathering Analysis and Retrieval System which is publicly available through the Commission’s website (http://www.sec.gov).
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This Management’s Discussion and Analysis is intended to provide additional understanding about the Company and its planned operations.
Cautionary Statement Regarding Forward-Looking Statements
With the exception of historical matters, the matters discussed herein are forward-looking statements that involve risks and uncertainties. Forward-looking statements include, but are not limited to, statements concerning anticipated trends in revenues and net income, projections concerning operations and available cash flow. Our actual results could differ materially from the results discussed in such forward-looking statements. The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and the related notes thereto appearing elsewhere herein.
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Background Overview
Nuvola is a development stage company incorporated in the State of Nevada in November 21, 2013. We were formed, as a wholly-owned subsidiary to Bollente to serve as the next-generation home automation and intelligence division of the Bollente portfolio companies to provide technical integration, innovation and ongoing revenue streams after the sale of the individual product. In November of 2013 we commenced our planned principal operations, and therefore have no significant assets.
Since inception on November 21, 2013 through September 30, 2014, we have generated $ 15,500 revenues and have incurred a net loss of $ 186,980 . From November 21, 2013 through September 2014 our business activities included the formation of our corporate entity and development of our business plan. We also initiated the process of the Company audit, as well as secured our website domain and posted our initial webpage.
Results of Operations for the three and Nine Months Ended September 30, 2014
Revenues
During the three months ended September 30, 2014, we generated $9,300 in revenues pursuant to our Software and Services License Agreement with Bollente (related party), and incurred a net loss of $5,515.
During the nine months ended September 30, 2014, we generated $15,500 in revenues pursuant to our Software and Services License Agreement with Bollente (related party), and incurred a net loss of $ 176,480 .
On May 1, 2014, the Company entered into a Software and Services License Agreement with Bollente. Pursuant to the agreement, Nuvola granted to Bollente, a non-exclusive, non-transferable license to use the cloud diagnostic software, database, and source code relating to the 5 SKU’s of trutankless® model water heaters (the “Software”). Bollente may use the Software for its own use. The term of the agreement is for one year beginning on May 1, 2014 and will continue thereafter unless terminated by written agreement by both parties. Bollente will pay Nuvola a monthly fee, due on the 1st of each month as follows:
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1 to 4,999 Units $3,100 per month
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5,000 to 9,999 Units $4,500 per month
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10,000 to 24,999 Units $5,800 per month
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Expenses
Operating expenses totaled $10,344 during the three months ended September 30, 2014. The operating expenses consisted of general and administrative of $94 and professional fees of $10,250.
Operating expenses totaled $187,509 during the nine months ended September 30, 2014. The operating expenses consisted of general and administrative of $ 3,154 and professional fees of $ 184,355 .
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Results of Operations for the Year Ended December 31, 2013
Revenues
Since our inception on November 21, 2013 through December 31, 2013, we did not generate revenues, and incurred a net loss of $10,500.
Expenses
Operating expenses totaled $10,500 from the period of inception on November 21, 2013 through December 31, 2013.
Going Concern
The financial statements included in this filing have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. The Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start-up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (November 21, 2013) through the period ended September 30, 2014 of ($ 186,980 ). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
Liquidity and Capital Resources
Since inception, we have financed our cash flow requirements through capital investments from Bollente and through funds from 8% convertible notes. As of December 2013, the Company received a loan from Bollente totaling $13,000. The loan has 0% interest, is unsecured and is due upon demand. We do not have a loan document. As of June 30, 2014, the Company received another loan from Bollente totaling $73,000. The loan has 0% interest, is unsecured and is due upon demand. We do not have a loan document.
On November 21, 2013, we issued 500,000 shares of our restricted common stock to Bollente in exchange for reimbursement of incorporation costs totaling $500.
On August 15, 2014, we issued 248,224 shares of our restricted common stock to Bollente as part of conversion of debt of $248.
On October 9, 2014, we issued 28,191 shares of our restricted common stock to Bollente as part of conversion of debt of $28.
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In June of 2014, we issued $200,000 aggregate principal amount of 8% convertible notes to accredited investors only. The convertible notes bear interest of 8% per annum with principal and interest due and payable on June 1, 2015 (“Maturity Date”). The convertible notes are convertible at the option of the holder into common stock at a conversion price of $0.50 per share at any time prior to the Maturity Date.
As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of service sales. Additionally, we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. In the future we need to generate sufficient revenues from product sales in order to eliminate or reduce the need to sell additional stock or obtain additional loans. There can be no assurance we will be successful in raising the necessary funds to execute our business plan.
We anticipate that we will incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks for us include, but are not limited to, an evolving and developing business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and expand our line of services, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
Nuvola was formed to serve as the next-generation home automation and intelligence division of the Bollente portfolio companies to provide technical integration, innovation and ongoing revenue streams after the sale of the individual product. As a B2B technology solutions service, Nuvola will provide a cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances.
There is still no assurance that, we will be able to maintain operations at a level sufficient for an investor to obtain a return on their investment in our common stock. Further, we may continue to be unprofitable.
Since inception, we have financed our cash flow requirements through issuance of common stock. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of product sales. Additionally we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing to the extent necessary to augment our working capital. Our ability to obtain needed capital is uncertain. Our lack of operating history makes an investment in our company, and the availability of capital risky.
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Even though we intend to begin generating revenues, we can make no assurances and therefore we may incur operating losses in the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets. Such risks for us include, but are not limited to, an evolving business model and the management of growth. To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually research for new information, respond to competitive developments, and attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
Current and Future Sources of Liquidity
Our principal sources of liquidity are capital investments, cash flows generated from operations and our existing cash and cash equivalents. At September 30, 2014, we had cash and cash equivalents of $15 6 .
Cash and cash equivalents currently on hand are not sufficient to continue operations for the next twelve months. Our monthly expenses range between $10,000 and $25,000. We expect that continued focus on acquiring new customers will enable us to increase profitable revenues from operating activities. Our only source of monthly revenue is pursuant to our Software and Services License Agreement with Bollente. If we do not generate sufficient cash from operations, we have the ability to reduce certain expenses depending on the level of business operation. We will need to raise $125,000 in additional funds to expand our operations for a twelve month period.
We plan to raise additional funds through private placements, registered offerings, debt financing or other sources to maintain and expand our operations. Adequate funds for this purpose on terms favorable to us may not be available, and if available, on terms significantly more adverse to us than are manageable. Without new funding, we may be only partially successful or completely unsuccessful in implementing our business plan.
Off-Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Critical Accounting Policies and Estimates
The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions.
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FACILITIES
We currently maintain an office at 8800 N. Gainey Center Dr., Suite 270, Scottsdale, Arizona 85258. There are currently no proposed programs for the renovation, improvement or development of the facilities we currently use. We currently pay $0 per month in rent. We do not believe that we will need to obtain additional office space at any time in the foreseeable future, approximately 12 months, until our business plan is more fully implemented.
We and Bollente expect to enter into an agreement with respect to the sublease of office space following the spin-off. We expect that Bollente will sublease office space to us in Scottsdale, Arizona. The rental amounts under those lease and sublease arrangements will be priced at levels reflecting either market rates or a pro rata share of square footage utilized.
Our management does not currently have policies regarding the acquisition or sale of real estate assets primarily for possible capital gain or primarily for income. We do not presently hold any investments or interests in real estate, investments in real estate mortgages or securities of or interests in persons primarily engaged in real estate activities.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The Company currently utilizes Bollente’s office space provided at no cost.
On May 1, 2014, the Company entered into a Software and Services License Agreement with Bollente. Pursuant to the agreement, Nuvola granted to Bollente, a non-exclusive, non-transferable license to use the cloud diagnostic software, database, and source code relating to the 5 SKU’s of trutankless® model water heaters (the “Software”). Bollente may use the Software for its own use. The term of the agreement is for one year beginning on May 1, 2014 and will continue thereafter unless terminated by written agreement by both parties. Bollente will pay Nuvola a monthly fee, due on the 1st of each month as follows:
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1 to 4,999 Units $3,100 per month
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5,000 to 9,999 Units $4,500 per month
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10,000 to 24,999 Units $5,800 per month
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Note Payables
In December 2013, the Company received a loan from Bollente totaling $13,000. The loan has 0% interest, is unsecured and is due upon demand. We do not have a loan agreement but attached as Exhibit 99.1 is a written summary of this loan. As of September 30, 2014 and as of January 7, 2015, the principal amount owed to Bollente is $13,000.
As of June 30, 2014, the Company received another loan from Bollente totaling $73,000. The loan has 0% interest, is unsecured and is due upon demand. We do not have a loan agreement but attached as Exhibit 99.2 is a written summary of this loan. As of September 30, 2014 the principal amount owed to Bollente was $60,690 and as of January 7, 2015 the principal amount owed to Bollente is $73,000.
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Note Receivable
As of June 30, 2014, we loaned $135,000 (of the $200,000 funds received from the convertible note investors) to Bollente to assist with short term financing. As of September 30, 2014 an additional $62,300 were loaned to Bollente . The loan amount is due upon demand, has 0% interest and is unsecured. We do not have a formal promissory note from Bollente but attached as Exhibit 99.3 is a written summary of this loan. As of September 30, 2014 and as of January 7, 2015, the principal amount owed to us is $197,300.
Director Independence
We currently do not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide. Since the OTCQB does not have rules regarding director independence, the Board makes its determination as to director independence based on the definition of “independence” as defined under the rules of the New York Stock Exchange (“NYSE”) and American Stock Exchange (“Amex”).
LEGAL PROCEEDINGS
We may, from time to time, be named as defendants in various judicial, regulatory, and arbitration proceedings in the future in the ordinary course of our business. The nature of such proceedings may involve large claims subjecting us to exposure, or may be routine customer complaints regarding less significant losses. We may also become subject to investigations or proceedings by governmental agencies, which can result in fines or other disciplinary action being imposed on us. Additionally, legal proceedings may be brought from time to time in the future. At this time, there are no pending matters.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
The members of our Board of Directors serve without compensation until the next annual meeting of stockholders, or until their successors have been elected. The officers serve at the pleasure of the Board of Directors. Our executive officer is Mr. Jeffrey I. Rassás our President, Secretary, Treasurer and Director. Information as to the executive officers and director is as follows:
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Title
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Since
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Jeffrey I. Rassás
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President, Secretary, Treasurer and Director
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November 21, 2013
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Robertson J. Orr
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Director
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November 21, 2013
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Duties, Responsibilities and Experience
Jeffrey I. Rassás, has served as President, Secretary, Treasurer, and a Director of Nuvola, Inc. since inception on November 21, 2013. From December of 2011 to present, Mr. Rassás has served as CEO of Airware Labs, Corp., where he successfully developed and implemented a turnaround plan which included rebranding, launch and retail distribution of the patented Class 1 Medical Nasal Dilator Device. From 2006 to 2011, Mr. Rassás served as CEO and President of YouChange Holdings Corp., (publicly traded/YCNG) a development stage public company that Mr. Rassas merged later with his previous company, Infinity Resources Holdings Corp in 2012 changing it’s name to Quest Resources Holdings Corp (now publicly traded on NASDAQ/QRHC).
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Additionally, from 2006 to 2011, Mr. Rassás served as CEO and President of Global Alerts, holding company for Earth911.com and Pets911.com and Quest Recycling Services which was later named, Infinity Resources Holdings Corp. Mr. Rassas with other investors acquired the following three internet portals; Earth911.com, Pets911.com and Amberalert.com from a bankruptcy sale of the company who owned the three internet portals. Mr. Rassas and the other investors sold off AmberAlert and Pets911 for a return and built a team to grow Earth911.com.
Mr. Rassás acquired technology and entrepreneurial experience from the positions he’s held and the industries he’s been involved in over the years. Because of Mr. Rassás’ technology and entrepreneurial experience, he provides our board with the valuable technology and entrepreneurial expertise that we feel is necessary to grow our business.
Robertson J. Orr, has served as Director of Nuvola, Inc. since inception on November 21, 2013. Mr. Orr also serves as President, Treasurer, Secretary and Director of Bollente Companies Inc., a Nevada publicly traded company, since May 12, 2010. Mr. Orr attended Arizona State University and graduated with a BA in Business Management. In 1998, Mr. Orr assisted in the founding of bluemedia, Inc., a successful large format digital printing company based in Tempe, Arizona. Mr. Orr led bluemedia to profitability 9 years ago while overseeing the company's sales department and business development, and since then the company has continued to grow by more than 28% annually. In 2005, Mr. Orr and his Partners in bluemedia started a non-traditional ad agency called Blind Society, which is responsible for the direct to consumer marketing efforts of companies like AT&T, K-Swiss, and Activision. In addition to his entrepreneurial successes, Mr. Orr has been involved with supporting numerous local charitable causes through his work with the Boys & Girls Clubs of Phoenix, St. Joseph the Worker, the MDA and the ADA. He is also on the Board of Directors for the Tempe Chamber of Commerce and is active in the Phoenix 40.
Because of Mr. Orr’s business experience which he’s acquired through his positions with bluemedia and Bollente, we feel he provides our board with valuable experience that we feel is necessary to grow our business.
Family Relationships
There are no family relationships among any of our officers or directors.
Board of Directors
Our board of directors currently consists of two directors. Our members of our board of directors do not qualify as “independent” according to the rules and regulations of the SEC and the New York Stock Exchange.
Committees of Our Board of Directors
We currently do not have standing audit, nominating and compensation committees’ board of directors, or committees performing similar functions. Until formal committees are established, our entire board of directors performs the same functions as an audit, nominating and compensation committee.
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Involvement in Certain Legal Proceedings
During the past ten years, Mr. Rassás and Mr. Orr have not been the subject of the following events:
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A petition under the Federal bankruptcy laws or any state insolvency law was filed by or against, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which she was a general partner at or within two years before the time of such filing, or any corporation or business association of which she was an executive officer at or within two years before the time of such filing;
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Convicted in a criminal proceeding or is a named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses);
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The subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining her from, or otherwise limiting, the following activities;
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Acting as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity;
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Engaging in any type of business practice; or
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Engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws;
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The subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3.i in the preceding paragraph or to be associated with persons engaged in any such activity;
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Was found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated;
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6.
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Was found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated;
|
|
|
7.
|
Was the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of:
|
|
34
|
i)
|
Any Federal or State securities or commodities law or regulation; or
|
|
|
ii)
|
Any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or
|
|
|
iii)
|
Any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
|
|
|
8.
|
Was the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
|
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information, as of the date of this prospectus, relating to the beneficial ownership of our common stock by those persons known to us to beneficially own more than 5% of our capital stock, by our director and executive officer, and by all of our directors, proposed directors and executive officers as a group. The table reflects their ownership immediately following the spin-off. The mailing address for each of the executive officers and directors is c/o Nuvola, Inc., 8800 N. Gainey Dr., Suite 270, Scottsdale, Arizona 85258.
Security Ownership of Management
|
Name of Beneficial Owner
|
Number Of Shares
Beneficially
Owned(1)
|
Percent
|
|
Jeffrey I. Rassás(2)(3)
|
25,000
|
3.2%
|
|
Robertson J. Orr(4)
|
28,316
|
3.6%
|
|
|
||
|
All Directors and Officers as a Group
|
53,316
|
6.8%
|
|
(1)
|
In accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner, for purpose of this table, of any shares of common stock if he, she or it has voting or investment power with respect to such security. This includes shares (a) subject to options and warrants exercisable within sixty days, and (b)(1) owned by a spouse, (2) owned by other immediate family members, or (3) held in trust or held in retirement accounts or funds for the benefit of the named individuals, over which shares the person named in the table may possess voting and/or investment power.
|
|
(2)
|
Mr. Rassás serves as President, Secretary, Treasurer and Director of Nuvola.
|
|
(3)
|
Includes 25,000 shares of common stock held by Hayjour Family LP. Mr. Rassás is a general partner of Hayjour Family LP.
|
|
(4)
|
Mr. Orr serves as a Director of Nuvola.
|
35
Security Ownership of Certain Beneficial Owners
|
Name of Beneficial Owner
|
Number Of Shares(1)
|
Percent
|
|
Jim Burns & Lynn Burns JT TEN(2)
|
55,000
|
7.0%
|
|
|
||
|
All Principle Stockholders as a Group
|
55,000
|
7.0%
|
|
(1)
|
In accordance with Rule 13d-3 of the Exchange Act, a person is deemed to be the beneficial owner, for purpose of this table, of any shares of common stock if he, she or it has voting or investment power with respect to such security. This includes shares (a) subject to options and warrants exercisable within sixty days, and (b)(1) owned by a spouse, (2) owned by other immediate family members, or (3) held in trust or held in retirement accounts or funds for the benefit of the named individuals, over which shares the person named in the table may possess voting and/or investment power.
|
|
(2)
|
Jim Burns & Lynn Burns JT TEN maintain a mailing address at 146101 W. Meadow Lane, Maricopa, AZ 85139.
|
“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security). In addition, for purposes of this table, a person is deemed, as of any date, to have “beneficial ownership” of any security that such person has the right to acquire within 60 days from the date of this prospectus.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDERS MATTERS
|
|
Market Information
|
We intend to file for inclusion of our common stock on the Over-the-Counter Exchange; however, there can be no assurance that FINRA will approve the inclusion of the common stock. Prior to the effective date of this filing, our common stock was not traded.
Holders of Common Stock
As of the date of this prospectus , we have 207 shareholders of record of the 776,4 22 shares outstanding. The spin-off shares of 776,422 were distributed on November 24, 2014 .
Dividends
The payment of dividends is subject to the discretion of our Board of Directors and will depend, among other things, upon our earnings, our capital requirements, our financial condition, and other relevant factors. We have not paid or declared any dividends upon our common stock since our inception and, by reason of our present financial status and our contemplated financial requirements, do not anticipate paying any dividends upon our common stock in the foreseeable future.
36
We have never declared or paid any cash dividends. We currently do not intend to pay cash dividends in the foreseeable future on the shares of common stock. We intend to reinvest any earnings in the development and expansion of our business. Any cash dividends in the future to common stockholders will be payable when, as and if declared by our Board of Directors, based upon the Board’s assessment of:
|
·
|
our financial condition;
|
|
·
|
earnings;
|
|
·
|
need for funds;
|
|
·
|
capital requirements;
|
|
·
|
prior claims of preferred stock to the extent issued and outstanding; and
|
|
·
|
other factors, including any applicable laws.
|
Therefore, there can be no assurance that any dividends on the common stock will ever be paid.
Securities Authorized for Issuance under Equity Compensation Plans
We currently do not maintain any equity compensation plans.
EXECUTIVE COMPENSATION
Overview of Compensation Program
We currently have not appointed members to serve on the Compensation Committee of the Board of Directors. Until a formal committee is established, our entire Board of Directors has responsibility for establishing, implementing and continually monitoring adherence with the Company’s compensation philosophy. The Board of Directors ensures that the total compensation paid to the executives is fair, reasonable, and competitive.
Compensation Philosophy and Objectives
The Board of Directors believes that the most effective executive compensation program is one that is designed to reward the achievement of specific annual, long-term and strategic goals by the Company and that aligns executives’ interests with those of the stockholders by rewarding performance above established goals, with the ultimate objective of improving stockholder value. As a result of the size of the Company, the Board evaluates both performance and compensation on an informal basis. Upon hiring additional executives, the Board intends to establish a Compensation Committee to evaluate both performance and compensation to ensure that the Company maintains its ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers should include both cash and stock-based compensation that reward performance as measured against established goals.
37
Role of Executive Officers in Compensation Decisions
The Board of Directors makes all compensation decisions for, and approves recommendations regarding equity awards to, the executive officers and Directors of the Company. Decisions regarding the non-equity compensation of other employees of the Company are made by management.
Summary Compensation
Mr. Rassás has not received any compensation, including plan or non-plan compensation, nor has either executive earned any compensation as of the date of this Registration.
|
SUMMARY COMPENSATION TABLE
|
|||||||||
|
Name and Principal Position
|
Year
|
Salary ($)
|
Bonus ($)
|
Stock Awards ($)
|
Option Awards ($)
|
Non-Equity Incentive Plan Compensation ($)
|
Nonqualified Deferred Compensation Earnings ($)
|
All Other Compensation ($)
|
Total ($)
|
|
Jeffrey I. Rassás
President, Secretary, Director, & Treasurer
|
|||||||||
|
2013
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
|
Robertson J. Orr
Director
|
|||||||||
|
2013
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
$0
|
|
Future Compensation
Mr. Rassás has agreed to provide services to us without compensation until such time as there are either sufficient funds from operations, or alternatively, that funds are available through private placements or offering in the future.
Board Committees
We do not currently have any committees of the Board of Directors, as our Board consists of two members. Additionally, due to the nature of our intended business, the Board of Directors does not foresee a need for any committees in the foreseeable future.
SHARES ELIGIBLE FOR FUTURE SALE
Future sales of substantial amounts of common stock in the public market could adversely affect market prices prevailing from time to time. As of the date of this prospectus, we have outstanding an aggregate of 776,422 common shares. Upon the effectiveness of this registration, the 776,422 shares of our common stock offered, will be freely tradable without restriction or further registration under the Securities Act, unless such shares are purchased by individuals who become “affiliates” as that term is defined in Rule 144 under the Securities Act, as the result of the securities they acquire in this offering which provide them, directly or indirectly, with control or the capacity to control us. Shares of common stock not included in this registration will be considered “restricted securities” as that term is defined in Rule 144 under the Securities Act. Restricted shares may be sold in the public market only if registered or if they qualify for an exemption from registration under Rule 144.
38
As a result of the provisions of Rules 144, additional shares will be available for sale in the public market as follows:
|
|
·
|
no restricted shares will be eligible for immediate sale on the date of this prospectus; and
|
|
|
·
|
the remainder of the restricted shares will be eligible for sale from time to time thereafter upon expiration of their respective Rule 144 holding periods, subject to restrictions on such sales by affiliates.
|
Sales pursuant to Rule 144 are subject to certain requirements relating to the availability of current public information about us. A person (or persons whose shares are aggregated) who is not deemed to have been an affiliate of Nuvola at any time during the 90 days immediately preceding the sale and who has beneficially owned restricted shares for at least six months is entitled to sell such shares under Rule 144 without regard to the resale limitations.
The SEC has adopted 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 such securities 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 to the prospective purchaser a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from such rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the prospective purchaser and receive the purchaser’s written agreement to the transaction. Furthermore, subsequent to a transaction in a penny stock, the broker-dealer will be required to deliver monthly or quarterly statements containing specific information about the penny stock. It is anticipated that our common stock will be traded on an OTC market at a price of less than $5.00. In this event, broker-dealers would be required to comply with the disclosure requirements mandated by the penny stock rules.
These disclosure requirements will likely make it more difficult for investors in this offering to sell their common stock in the secondary market.
As of the date of this offering, there is no public market for our common stock. Although we plan, in the future, to contact an authorized OTC Market market maker for sponsorship of our securities on the OTCQB, there can be no assurance that our attempts to do so will be successful. Furthermore, if our securities are not quoted on the OTCQB, or elsewhere, there can be no assurance that a market will develop for the common stock or that a market in the common stock will be maintained. As a result of the foregoing, investors may be unable to liquidate their investment for any reason. We have not originated contact with a market maker at this time, and do not plan on doing so until completion of this offering. As of the date of this Prospectus, no steps have been taken to have these securities quoted on the OTCQB, and there is no guarantee that our common stock we will be quoted on the OTCQB.
39
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
In November of 2013, we engaged the services of De Joya Griffith & Company, LLC, to provide an audit of our financial statements for the period from Inception (November 21, 2013) to December 31, 2013. This was our first auditor. We have no disagreements with our auditor through the date of this prospectus.
40
INDEX TO FINANCIAL STATEMENTS
|
For the Period Ended December 31, 2013 (Audited)
|
Page
|
|
INDEPENDENT AUDITORS’ REPORT
|
F-1
|
|
BALANCE SHEET
|
F-2
|
|
STATEMENT OF OPERATIONS
|
F-3
|
|
STATEMENT OF STOCKHOLDERS’ DEFICIT
|
F-4
|
|
STATEMENT OF CASH FLOWS
|
F-5
|
|
NOTES TO FINANCIAL STATEMENTS
|
F-6-F-10
|
|
For the Nine Months Ended September 30, 2014 (Unaudited)
|
|
|
BALANCE SHEETS
|
F-11
|
|
STATEMENTS OF OPERATIONS
|
F-12
|
|
STATEMENTS OF CASH FLOWS
|
F-13
|
|
NOTES TO FINANCIAL STATEMENTS
|
F-14 – F-17
|
41
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
Nuvola, Inc.
We have audited the accompanying balance sheet of Nuvola, Inc. (A Development Stage Company) (the "Company") as of December 31, 2013 and the related statement of operations, stockholders’ (deficit), and cash flows for the period from inception (November 21, 2013) to December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over the financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Nuvola, Inc. as of December 31, 2013 and the result of its operations and its cash flows for the period from inception (November 21, 2013) to December 31, 2013, in conformity with U.S. generally accepted accounting principles.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ De Joya Griffith, LLC
Henderson, Nevada
April 30, 2014
F-1
|
NUVOLA, INC.
|
||||
|
(A DEVELOPMENT STAGE COMPANY)
|
||||
|
BALANCE SHEET
|
||||
|
(audited)
|
||||
|
December 31,
|
||||
|
2013
|
||||
|
ASSETS
|
||||
|
Current assets:
|
||||
|
Cash
|
$ | 3,000 | ||
|
Total current assets
|
3,000 | |||
|
Total assets
|
$ | 3,000 | ||
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
||||
|
Current liabilities:
|
||||
|
Notes payable - related party
|
$ | 13,000 | ||
|
Total current liabilities
|
13,000 | |||
|
Total liabilities
|
13,000 | |||
|
Stockholders' (deficit):
|
||||
|
Preferred stock, $0.001 par value, 10,000,000 shares
|
||||
|
authorized, no shares issued and outstanding
|
||||
|
as of December 31, 2013
|
- | |||
|
Common stock, $0.001 par value, 100,000,000 shares
|
||||
|
authorized, 500,000 shares issued and outstanding
|
||||
|
as of December 31, 2013
|
500 | |||
|
Additional paid-in capital
|
- | |||
|
Deficit accumulated during development stage
|
(10,500 | ) | ||
|
Total stockholders' (deficit)
|
(10,000 | ) | ||
|
Total liabilities and stockholders' (deficit)
|
$ | 3,000 | ||
See Accompanying Notes to Financial Statements.
F-2
|
NUVOLA, INC.
|
||||
|
(A DEVELOPMENT STAGE COMPANY)
|
||||
|
STATEMENT OF OPERATIONS
|
||||
|
(audited)
|
||||
|
Inception
|
||||
|
(November 21, 2013)
|
||||
|
to
|
||||
|
December 31,
|
||||
|
2013
|
||||
|
Revenue
|
$ | - | ||
|
Operating expenses:
|
||||
|
General and administrative
|
500 | |||
|
Professional fees
|
10,000 | |||
|
Total operating expenses
|
10,500 | |||
|
Net loss
|
$ | (10,500 | ) | |
|
Net loss per common share - basic
|
$ | (0.02 | ) | |
|
Weighted average number of common shares
|
||||
|
outstanding - basic and fully diluted
|
500,000 | |||
See Accompanying Notes to Financial Statements.
F-3
|
NUVOLA, INC.
|
||||||||||||||||||||||||||||
|
(A DEVELOPMENT STAGE COMPANY)
|
||||||||||||||||||||||||||||
|
STATEMENT OF STOCKHOLDERS' (DEFICIT)
|
||||||||||||||||||||||||||||
|
(audited)
|
||||||||||||||||||||||||||||
|
Deficit
|
||||||||||||||||||||||||||||
|
Accumulated
|
||||||||||||||||||||||||||||
|
Additional
|
During
|
Total
|
||||||||||||||||||||||||||
|
Preferred Shares
|
Common Shares
|
Paid-In
|
Development
|
Stockholders'
|
||||||||||||||||||||||||
|
Shares
|
Amount
|
Shares
|
Amount
|
Capital
|
Stage
|
(Deficit)
|
||||||||||||||||||||||
|
November 21, 2013
|
||||||||||||||||||||||||||||
|
Issuance of common stock for incorporation costs
|
- | $ | - | 500,000 | $ | 500 | $ | - | $ | - | $ | 500 | ||||||||||||||||
|
Net loss
|
(10,500 | ) | (10,500 | ) | ||||||||||||||||||||||||
|
Balance, December 31, 2013
|
- | $ | - | 500,000 | $ | 500 | $ | - | $ | (10,500 | ) | $ | (10,000 | ) | ||||||||||||||
See Accompanying Notes to Financial Statements.
F-4
|
NUVOLA, INC.
|
||||
|
(A DEVELOPMENT STAGE COMPANY)
|
||||
|
STATEMENT OF CASH FLOWS
|
||||
|
(audited)
|
||||
|
Inception
|
||||
|
(November 21, 2013)
|
||||
|
to
|
||||
|
December 31,
|
||||
|
2013
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||
|
Net loss
|
$ | (10,500 | ) | |
|
Adjustments to reconcile net loss
|
||||
|
to net cash used in operating activities:
|
||||
|
Shares issued for reimbursement of parent paying for incorporation costs
|
500 | |||
|
Net cash used in operating activities
|
(10,000 | ) | ||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||
|
Proceeds from notes payable - related party
|
13,000 | |||
|
Net cash provided by financing activities
|
13,000 | |||
|
NET CHANGE IN CASH
|
3,000 | |||
|
CASH AT BEGINNING OF YEAR
|
- | |||
|
CASH AT END OF YEAR
|
$ | 3,000 | ||
|
SUPPLEMENTAL INFORMATION:
|
||||
|
Interest paid
|
$ | - | ||
|
Income taxes paid
|
$ | - | ||
|
Non-cash investing and financing activities:
|
||||
|
Shares issued for incorporation costs
|
$ | 500 | ||
See Accompanying Notes to Financial Statements.
F-5
NUVOLA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on November 21, 2013 (Date of Inception) under the laws of the State of Nevada, as Nuvola, Inc.
The Company has not commenced significant operations and, in accordance with ASC Topic 915, the Company is considered a development stage company.
Nature of operations
The Company is a premier provider cloud-based technology, diagnostics, lead generation and fulfillment to installers and service providers of smart home products and appliances
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.
Stock-based compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
F-6
NUVOLA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Revenue recognition
The Company's revenues are anticipated to be derived from multiple sources. Primarily revenues will be earned as services are rendered.
Advertising costs
Advertising costs are anticipated to be expensed as incurred; however there were $0 advertising costs included in general and administrative expenses for the period of inception (November 21, 2013) to December 31, 2013.
Income taxes
The Company follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.
The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than fifty percent likelihood of being sustained upon examination by the taxing authorities. As of December 31, 2013, the Company reviewed its tax positions and determined there were no outstanding, or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities, therefore this standard has not had a material affect on the Company.
The Company does not anticipate any significant changes to its total unrecognized tax benefits within the next 12 months.
The Company classifies tax-related penalties and net interest as income tax expense. As of December 31, 2013, no income tax expense has been incurred.
F-7
NUVOLA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2013. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.
Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.
Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.
Recent pronouncements
The Company has evaluated recent accounting pronouncements through the filing date and believes that none of them will have a material effect on the Company’s financial statements.
F-8
NUVOLA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. As noted above, the Company is in the development stage and, accordingly, has not yet generated revenues from operations. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses from Inception (November 21, 2013) through the period ended December 31, 2013 of ($10,500). In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3 – NOTES PAYABLE – RELATED PARTY
|
December 31,
2013
|
||||
|
Note payable to a related party which is the parent corporation, unsecured, due upon demand
|
$ | 13,000 | ||
|
Notes Payable – Current
|
$ | 13,000 | ||
NOTE 4 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue 10,000,000 shares of it $0.001 par value preferred stock and 100,000,000 shares of its $0.001 par value common stock.
Common stock
On November 21, 2013, the parent corporation paid for incorporation costs totaling $500 for the purchase of 500,000 shares of common stock.
NOTE 5 – INCOME TAXES
At December 31, 2013, the Company had a federal operating loss carryforward of $10,500 which begins to expire in 2033.
F-9
NUVOLA, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO FINANCIAL STATEMENTS
(AUDITED)
NOTE 5 – INCOME TAXES (CONTINUED)
Components of net deferred tax assets, including a valuation allowance, are as follows at December 31, 2013:
|
2013
|
||||
|
Deferred tax assets:
|
||||
|
Net operating loss carryforward
|
$ | 3,675 | ||
|
Total deferred tax assets
|
3,675 | |||
|
Less: Valuation allowance
|
(3,675 | ) | ||
|
Net deferred tax assets
|
$ | - | ||
NOTE 5 – INCOME TAXES (CONTINUED)
The valuation allowance for deferred tax assets as of December 31, 2013 was $3,675, which will begin to expire 2033. In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment. As a result, management determined it was more likely than not the deferred tax assets would not be realized as of December 31, 2013 and maintained a full valuation allowance.
Reconciliation between the statutory rate and the effective tax rate is as follows at December 31, 2013:
|
2013
|
||||
|
Federal statutory rate
|
(35.0 | )% | ||
|
State taxes, net of federal benefit
|
(0.00 | )% | ||
|
Change in valuation allowance
|
35.0 | % | ||
|
Effective tax rate
|
0.0 | % | ||
F-10
|
NUVOLA, INC.
|
||||||||
|
BALANCE SHEETS
|
||||||||
|
(unaudited)
|
||||||||
|
September 30,
|
December 31,
|
|||||||
|
2014
|
2013
|
|||||||
|
ASSETS
|
||||||||
|
Current assets:
|
||||||||
|
Cash
|
$ | 156 | $ | 3,000 | ||||
|
Total current assets
|
156 | 3,000 | ||||||
|
Total assets
|
$ | 156 | $ | 3,000 | ||||
|
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
|
||||||||
|
Current liabilities:
|
||||||||
|
Accounts payable
|
$ | 93,250 | $ | - | ||||
|
Notes payable - related party
|
60,695 | 13,000 | ||||||
|
Accrued interest payable
|
4,471 | |||||||
|
Convertible notes payable
|
225,000 | - | ||||||
|
Convertible notes payable - related party
|
272 | - | ||||||
|
Total current liabilities
|
383,688 | 13,000 | ||||||
|
Total liabilities
|
383,688 | 13,000 | ||||||
|
Stockholders' (deficit):
|
||||||||
|
Preferred stock, $0.001 par value, 10,000,000 shares
|
||||||||
|
authorized, no shares issued and outstanding
|
||||||||
|
as of September 30, 2014 and December 31, 2013
|
- | - | ||||||
|
Common stock, $0.001 par value, 100,000,000 shares
|
||||||||
|
authorized, 748,244 shares issued and outstanding
|
||||||||
|
as of September 30, 2014 and December 31, 2013
|
748 | 500 | ||||||
|
Additional paid-in capital
|
- | - | ||||||
|
Notes receivable - related party
|
(197,300 | ) | - | |||||
|
Retained (deficit)
|
(186,980 | ) | (10,500 | ) | ||||
|
Total stockholders' (deficit)
|
(383,532 | ) | (10,000 | ) | ||||
|
Total liabilities and stockholders' (deficit)
|
$ | 156 | $ | 3,000 | ||||
See accompanying notes to financial statements.
F-11
|
NUVOLA, INC.
|
||||||||
|
STATEMENTS OF OPERATIONS
|
||||||||
|
(unaudited)
|
||||||||
|
For the
|
For the
|
|||||||
|
three months
|
nine months
|
|||||||
|
ended
|
ended
|
|||||||
|
September 30,
|
September 30,
|
|||||||
|
2014
|
2014
|
|||||||
|
Revenue - related party
|
$ | 9,300 | $ | 15,500 | ||||
|
Operating expenses:
|
||||||||
|
General and administrative
|
94 | 3,154 | ||||||
|
Professional fees
|
10,250 | 184,355 | ||||||
|
Total operating expenses
|
10,344 | 187,509 | ||||||
|
Other expenses:
|
||||||||
|
Interest expense
|
4,471 | 4,471 | ||||||
|
Total other expenses
|
4,471 | 4,471 | ||||||
|
Net loss
|
$ | (5,515 | ) | $ | (176,480 | ) | ||
|
Net loss per common share - basic
|
$ | (0.01 | ) | $ | (0.33 | ) | ||
|
Weighted average number of common shares
|
||||||||
|
outstanding - basic and fully diluted
|
626,820 | 542,738 | ||||||
See accompanying notes to financial statements.
F-12
|
NUVOLA, INC.
|
||||
|
STATEMENTS OF CASH FLOWS
|
||||
|
(unaudited)
|
||||
|
For the
|
||||
|
nine months
|
||||
|
ended
|
||||
|
September 30,
|
||||
|
2014
|
||||
|
CASH FLOWS FROM OPERATING ACTIVITIES
|
||||
|
Net loss
|
$ | (176,480 | ) | |
|
Adjustments to reconcile net loss
|
||||
|
to net cash used in operating activities:
|
||||
|
Shares issued for incorporation costs
|
- | |||
|
Changes in operating assets and liabilities:
|
||||
|
Increase in accounts payable
|
93,250 | |||
|
Increase in accrued interest payable
|
4,471 | |||
|
Net cash used in operating activities
|
(78,759 | ) | ||
|
CASH FLOWS FROM INVESTING ACTIVITIES
|
||||
|
Proceeds from notes receivable - related party
|
(207,900 | ) | ||
|
Repayments for notes receivable - related party
|
10,600 | |||
|
Net cash (used by) investing activities
|
(197,300 | ) | ||
|
CASH FLOWS FROM FINANCING ACTIVITIES
|
||||
|
Proceeds from notes payable - related party
|
71,100 | |||
|
Repayments for notes payable - related party
|
(23,405 | ) | ||
|
Proceeds from convertible notes payable - related party
|
520 | |||
|
Proceeds from convertible notes payable
|
225,000 | |||
|
Net cash provided by financing activities
|
273,215 | |||
|
NET CHANGE IN CASH
|
(2,844 | ) | ||
|
CASH AT BEGINNING OF YEAR
|
3,000 | |||
|
CASH AT END OF YEAR
|
$ | 156 | ||
|
SUPPLEMENTAL INFORMATION:
|
||||
|
Interest paid
|
$ | - | ||
|
Income taxes paid
|
$ | - | ||
|
Non-cash investing and financing activities:
|
||||
|
Shares issued for incorporation costs
|
$ | - | ||
|
Shares issued for settlement of convertible debt
|
$ | 248 | ||
See accompanying notes to financial statements.
F-13
NUVOLA, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The interim financial statements included herein, presented in accordance with United States generally accepted accounting principles and stated in US dollars, have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading.
These statements reflect all adjustments, consisting of normal recurring adjustments, which in the opinion of management, are necessary for a fair presentation of the information contained therein. It is suggested that these interim financial statements be read in conjunction with the financial statements of the Company for the year ended December 31, 2013 and notes thereto included in the Company’s Form 10 registration statement. The Company follows the same accounting policies in the preparation of interim reports.
Use of estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ significantly from those estimates.
Cash and cash equivalents
For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents. The carrying value of these investments approximates fair value.
Stock-based compensation
The Company records stock based compensation in accordance with the guidance in ASC Topic 505 and 718 which requires the Company to recognize expenses related to the fair value of its employee stock option awards. This eliminates accounting for share-based compensation transactions using intrinsic value and requires instead that such transactions be accounted for using a fair-value-based method. The Company recognizes the cost of all share-based awards on a graded vesting basis over the vesting period of the award.
The Company accounts for equity instruments issued in exchange for the receipt of goods or services from other than employees in accordance with FASB ASC 718-10 and the conclusions reached by the FASB ASC 505-50. Costs are measured at the estimated fair market value of the consideration received or the estimated fair value of the equity instruments issued, whichever is more reliably measurable. The value of equity instruments issued for consideration other than employee services is determined on the earliest of a performance commitment or completion of performance by the provider of goods or services as defined by FASB ASC 505-50.
Earnings per share
The Company follows ASC Topic 260 to account for the earnings per share. Basic earning per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earning per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation.
F-14
NUVOLA, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
Fair value of financial instruments
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of June 30, 2014. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, prepaid expenses and accounts payable. Fair values were assumed to approximate carrying values for cash and payables because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.
Level 1: The preferred inputs to valuation efforts are “quoted prices in active markets for identical assets or liabilities,” with the caveat that the reporting entity must have access to that market. Information at this level is based on direct observations of transactions involving the same assets and liabilities, not assumptions, and thus offers superior reliability. However, relatively few items, especially physical assets, actually trade in active markets.
Level 2: FASB acknowledged that active markets for identical assets and liabilities are relatively uncommon and, even when they do exist, they may be too thin to provide reliable information. To deal with this shortage of direct data, the board provided a second level of inputs that can be applied in three situations.
Level 3: If inputs from levels 1 and 2 are not available, FASB acknowledges that fair value measures of many assets and liabilities are less precise. The board describes Level 3 inputs as “unobservable,” and limits their use by saying they “shall be used to measure fair value to the extent that observable inputs are not available.” This category allows “for situations in which there is little, if any, market activity for the asset or liability at the measurement date”. Earlier in the standard, FASB explains that “observable inputs” are gathered from sources other than the reporting company and that they are expected to reflect assumptions made by market participants.
Recent pronouncements
On June 10, 2014, the FASB published Accounting Standards Update No. 2014-10 “ASU No. 2014-10”, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements, Including an Amendment to Variable Interest Entities Guidance in Topic 810, Consolidation. ASU No. 2014-10 removes the definition of a development stage entity from the Master Glossary of the Accounting Standards Codification, thereby removing the financial reporting distinction between development stage entities and other reporting entities from U.S. GAAP. In addition, the amendments eliminate the requirements for development stage entities to (1) present inception-to-date information in the statements of income, cash flows, and shareholder equity, (2) label the financial statements as those of a development stage entity, (3) disclose a description of the development stage activities in which the entity is engaged, and (4) disclose in the first year in which the entity is no longer a development stage entity that in prior years it had been in the development stage. The amendments also clarify that the guidance in Topic 275, Risks and Uncertainties, is applicable to entities that have not commenced planned principal operations. ASU No. 2014-10 will be applied retrospectively and will be effective for public business entities in interim and annual periods beginning after December 15, 2014. The requirements will be effective for nonpublic business entities for annual periods beginning after December 15, 2014, and interim and annual periods thereafter. However, both public and nonpublic entities will have additional time to adopt the amendments to ASC 810. Early adoption is permitted in all cases. We have applied ASU No. 2014-10 retrospectively by eliminating the inception to date column in our statements of operations and cash flows."
F-15
NUVOLA, INC.
NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 2 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and incurring start up costs and expenses. As a result, the Company incurred accumulated net losses for the nine months ended September 30, 2014 of $186,980. In addition, the Company’s development activities since inception have been financially sustained through debt and equity financing.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
NOTE 3 – NOTES RECEIVABLE – RELATED PARTY
|
September 30, 2014
|
December 31,
2013
|
|||||||
|
Note payable to a related party which is the subsidiary of the parent corporation, unsecured, due upon demand
|
$ | 197,300 | $ | - | ||||
|
Notes receivable – Current
|
$ | 197,300 | $ | - | ||||
NOTE 4 – NOTES PAYABLE – RELATED PARTY
|
September 30, 2014
|
December 31,
2013
|
|||||||
|
Note payable to a related party which is the parent corporation, unsecured, due upon demand
|
$ | 60,695 | $ | 13,000 | ||||
|
Notes payable – Current
|
$ | 60,695 | $ | 13,000 | ||||
NOTE 5 – CONVERTIBLE NOTES PAYABLE
|
September 30, 2014
|
December 31,
2013
|
|||||||
|
Convertible note payable, secured, due June 1, 2015, 8% interest, convertible at $0.50 per share
|
$ | 100,000 | $ | - | ||||
|
Convertible note payable, secured, due June 1, 2015, 8% interest, convertible at $0.50 per share
|
$ | 50,000 | $ | - | ||||
|
Convertible note payable, secured, due June 1, 2015, 8% interest, convertible at $0.50 per share
|
$ | 25,000 | $ | - | ||||
|
Convertible note payable, secured, due June 1, 2015, 8% interest, convertible at $0.50 per share
|
$ | 25,000 | $ | - | ||||
|
Convertible note payable, secured, due June 1, 2015, 8% interest, convertible at $0.50 per share
|
$ | 25,000 | $ | - | ||||
|
Notes payable – Current
|
$ | 225,000 | $ | - | ||||
F-16
NOTE 5 – CONVERTIBLE NOTES PAYABLE (CONTINUED)
The notes are convertible at $0.50 per share of common stock. There is no beneficial conversion feature on these convertible notes payable since the conversion rate is greater than the fair market value of the common stock.
NOTE 6 – CONVERTIBLE NOTES PAYABLE – RELATED PARTY
|
September 30, 2014
|
December 31,
2013
|
|||||||
|
Convertible note payable, unsecured, due April 14, 2015, 0% interest, convertible at $0.001 per share
|
$ | 272 | $ | - | ||||
|
Notes payable – Current
|
$ | 272 | $ | - | ||||
The notes are convertible at $0.001 per share of common stock. There is no beneficial conversion feature on these convertible notes payable since the conversion rate is equal to the fair market value of the common stock.
NOTE 7 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue 10,000,000 shares of it $0.001 par value preferred stock and 100,000,000 shares of its $0.001 par value common stock.
Common stock
On November 21, 2013, the parent corporation paid for incorporation costs totaling $500 for the purchase of 500,000 shares of common stock.
On August 15, 2014, the Company issued 248,224 shares of common stock as part of conversion of debt of $248.22
NOTE 8 – RELATED PARTY TRANSACTIONS
During the nine months ended September 30, 2014, the Company generated $15,500 in revenue from a related party. The related party is the parent corporation.
During the nine months ended September 30, 2014, the Company loaned $197,300 to a subsidiary of the parent corporation to assist with short term financing.
During the nine months ended September 30, 2014, the Company received $60,695 from its parent corporation to assist with short term financing.
During the nine months ended September 30, 2014, the Company received $272 from its parent corporation to assist with short term financing.
NOTE 9 – SUBSEQUENT EVENTS
On October 9, 2014, we issued 28,191 shares of our restricted common stock to Bollente as part of conversion of debt of $28.
F-17
PART II: Information not required in Prospectus
INDEMNIFICATION OF OFFICERS AND DIRECTORS
None of our directors will have personal liability to us or any of our stockholders for monetary damages for breach of fiduciary duty as a director involving any act or omission of any such director since provisions have been made in the Articles of Incorporation limiting such liability. The foregoing provisions shall not eliminate or limit the liability of a director (i) for any breach of the director’s duty of loyalty to us or our stockholders, (ii) for acts or omissions not in good faith or, which involve intentional misconduct or a knowing violation of law, (iii) under applicable Sections of the Nevada Revised Statutes, (iv) the payment of dividends in violation of Section 78.300 of the Nevada Revised Statutes or, (v) for any transaction from which the director derived an improper personal benefit.
The Bylaws provide for indemnification of the directors, officers, and employees of NUVOLA, INC., in most cases for any liability suffered by them or arising out of their activities as directors, officers, and employees of NUVOLA, INC., if they were not engaged in willful misfeasance or malfeasance in the performance of his or his duties; provided that in the event of a settlement the indemnification will apply only when the Board of Directors approves such settlement and reimbursement as being for the best interests of the Corporation. The Bylaws, therefore, limit the liability of directors to the maximum extent permitted by Nevada law (Section 78.751).
Our bylaws provide that in actions other than by the corporation we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, has no reasonable cause to believe his conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, does not, of itself, create a presumption that the person did not act in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and that, with respect to any criminal action or proceeding, he had reasonable cause to believe that his conduct was unlawful.
Our bylaws provide that in actions by the corporation we may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys' fees, actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation. Indemnification may not be made for any claim, issue or matter as to which such a person has been adjudged by a court of competent jurisdiction, after exhaustion of all appeals therefrom, to be liable to the corporation or for amounts paid in settlement to the corporation, unless and only to the extent that the court in which the action or suit was brought or other court of competent jurisdiction determines upon application that in view of all the circumstances of the case, the person is fairly and reasonably entitled to indemnity for such expenses as the court deems proper.
Our bylaws provide that to the extent that a director, officer, employee or agent of the corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in Sections 1 and 2 of our bylaws, or in defense of any claim, issue or matter therein, he must be indemnified by the corporation against expenses, including attorneys' fees, actually and reasonably incurred by him in connection with the defense.
Our officers and directors are accountable to us as fiduciaries, which mean they are required to exercise good faith and fairness in all dealings affecting us. In the event that a stockholder believes the officers and/or directors have violated their fiduciary duties to us, the stockholder may, subject to applicable rules of civil procedure, be able to bring a class action or derivative suit to enforce the stockholder’s rights, including rights under certain federal and state securities laws and regulations to recover damages from and require an accounting by management. Stockholders, who have suffered losses in connection with the purchase or sale of their interest in NUVOLA, INC., in connection with such sale or purchase, including the misapplication by any such officer or director of the proceeds from the sale of these securities, may be able to recover such losses from us.
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the costs and expenses to be paid in connection with the sale of the shares of common stock being registered hereby. All amounts are estimates except for the Securities and Exchange Commission registration fee.
|
Amounts
|
||||
|
Securities and Exchange Commission registration fee
|
$ | 0.09 | ||
|
Legal fees and expenses
|
$ | 30,000 | ||
|
Copying
|
$ | 600 | ||
|
Accounting Fees and expenses
|
$ | 5,000 | ||
|
Transfer Agent Fees
|
$ | 1,000 | ||
|
Total
|
$ | 36,600.09 | ||
--
1
RECENT SALES OF UNREGISTERED SECURITIES
On November 21, 2013, we issued 500,000 shares of our restricted common stock to Bollente in exchange for reimbursement of incorporation costs totaling $500.
On August 15, 2014, we issued 248,224 shares of our restricted common stock to Bollente as part of conversion of debt of $248.22.
On October 9, 2014, we issued 28,191 shares of our restricted common stock to Bollente as part of conversion of debt of $28.191.
In June of 2014, we issued $200,000 aggregate principal amount of 8% convertible notes to accredited investors only. The convertible notes bear interest of 8% per annum with principal and interest due and payable on June 1, 2015 (“Maturity Date”). The convertible notes are convertible at the option of the holder into common stock at a conversion price of $0.50 per share at any time prior to the Maturity Date.
We made the above common stock issuance in reliance upon the exemption from registration under Section 4(2) of the Securities Act for private offerings not involving a public distribution. We believe that the issuance and sale of the above securities were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(2). The securities were issued directly by us and did not involve a public offering or general solicitation. The recipient of the securities were afforded an opportunity for effective access to files and records of our company that contained the relevant information needed to make their investment decision, including our financial statements and 34 Act reports. We reasonably believed that the recipient, immediately prior to issuing the securities, had such knowledge and experience in our financial and business matters that they were capable of evaluating the merits and risks of their investment. The recipient had the opportunity to speak with our management on several occasions prior to their investment decision. There were no commissions paid on the issuance and sale of the shares.
EXHIBITS
The Exhibits required by Item 601 of Regulation S-K, and an index thereto, are attached.
UNDERTAKINGS
The undersigned registrant hereby undertakes to:
|
(1)
|
|
(ii)
|
--
2
which, individually or in the aggregate, represent a fundamental change in the information set forth 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) (§230.424(b) of this chapter) 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.
|
(iii)
|
Provided, however, that:
|
(3)
|
--
3
|
(5)
|
|
(A)
|
--
4
|
(6)
|
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 by 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)
|
|
(ii)
|
|
(iii)
|
|
(iv)
|
|
(7)
|
In accordance of the Company’s request for acceleration of effective date pursuant to Rule 461 under the Securities Act:
|
|
(i)
|
Insofar as indemnification for liabilities arising under the Securities Act of 1933 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 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.
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5
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, on January 15, 2015.
Nuvola, Inc.
By: /S/ JEFFREY I. RASSAS
Jeffrey I. Rassás, President and
Principal Accounting Officer
Pursuant to the requirement of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the dates indicated.
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Signature
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Title
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Date
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| /S/ JEFFREY I. RASSAS |
President
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January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Director
|
January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Principal Executive Officer
|
January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Principal Financial Officer
|
January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Principal Accounting Officer
|
January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Treasurer
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January 15, 2015
|
|
Jeffrey I. Rassás
|
||
| /S/ JEFFREY I. RASSAS |
Secretary
|
January 15, 2015
|
|
Jeffrey I. Rassás
|
6
Financial Statements and Exhibits
(a) Documents filed as part of this Report
1. Financial Statements:
A. INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Independent Auditors’ Report F-1
Balance Sheet as of December 31, 2013 F-2
Statement of Operations for the Period from Inception (November 21, 2013)
through December 31, 2013 F-3
Statement of Stockholders’ Deficit for the Period from
Inception (November 21, 2013) through December 31, 2013. F-4
Statement of Cash Flows for the Period from Inception (November 21, 2013)
through December 31, 2013 F-5
Notes to Financial Statements F-6 - F-10
Balance Sheet as of September 30, 2014 F-11
Statement of Operations for the Three and Nine Months Ended September 30, 2014 F-12
Statement of Cash Flows for the Nine Months Ended September 30, 2014F-13
Notes to Financial Statements F-14-F-18
(b) Exhibits
EXHIBIT INDEX
|
Exhibit
|
Description
|
|
3(i)(a)*
|
Articles of Incorporation of Nuvola, Inc., dated November 21, 2013
|
|
3(ii)(a)*
|
Bylaws of the Nuvola, Inc.
|
|
2.1*
|
Separation and Distribution Agreement
|
|
2.2*
|
Addendum No. 1 to Separation and Distribution Agreement dated October 9, 2014
|
|
4*
|
Instrument defining the rights of security holders:
(a)Articles of Incorporation
(b)Bylaws
(c)Stock Certificate Specimen
|
|
5*
|
Opinion of the Stoecklein Law Group
|
|
10.1*
|
Subscription Agreement
|
|
10.2*
|
Software and Services License Agreement dated May 1, 2014
|
|
10.3*
|
Transition Services Agreement
|
|
10.4*
|
Addendum No. 1 to Transition Services Agreement dated October 9, 2014
|
|
10.5*
|
Independent Contractor Agreement dated May 1, 2014
|
|
11*
|
Statement Re: Computation of per share earnings
|
|
23.1*
|
Consent of De Joya Griffith & Company, LLC
|
|
23.2*
|
Consent of the Stoecklein Law Group
|
|
99.1*
|
Oral Agreement Summary of the $13,000 loan from Bollente to Nuvola
|
|
99.2*
|
Oral Agreement Summary of the $73,000 loan from Bollente to Nuvola
|
|
99.3*
|
Oral Agreement Summary of the $135,000 loan from Nuvola to Bollente
|
* Filed herewith
7