Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer — Form SB-2 Filing Table of Contents
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SB-2/A — Pre-Effective Amendment to Registration of Securities by a Small-Business Issuer
Approximate
date of proposed sale to the public: As soon as practicable after this
Registration Statement becomes effective.
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.
o
_______________________________________
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.
o
_________________________________________________
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.
o
_________________________________________________
If
delivery of the prospectus is expected to be made pursuant to Rule 434, check
the following box.
o
___________________________________________
If
this
Form is filed to register securities for an offering to be made on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act, please check
the
following box. x
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.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed on the adequacy or
accuracy of the prospectus. Any representation to the contrary is a criminal
offense.
2
Prospectus
Royal
Equine Alliance Corporation
1,100,000
Shares of Common Stock
Royal
Equine Alliance Corporation is registering an aggregate of 1,100,000 shares
of
our common stock that are to be sold, from time-to-time, by one or more of
the
selling stockholders. The selling stockholders may only offer and sell, from
time to time, common stock using this prospectus in transactions at a fixed
offering price of $0.05 per share until a trading market develops in our common
stock, at which time the selling stockholders may sell shares at prevailing
market prices, which may vary, or at privately negotiated prices. The proceeds
from the sale of the shares will go directly to the selling stockholders and
will not be available to us.
INVESTMENT
IN THE SHARES INVOLVES A HIGH DEGREE OF RISK.
SEE
THE “RISK FACTORS” FOUND HEREIN
.
Neither
the Securities and Exchange Commission nor any state securities commission
has
approved or disapproved of these securities or passed on the adequacy or
accuracy of the prospectus. Any representation to the contrary is a criminal
offense.
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.
Royal
Equine Alliance Corporation does not plan to use this offering prospectus before
the effective date.
Royal
Equine Alliance Corporation (“REAC” or the “Company”), a Nevada corporation, is
a developmental stage company with a principal business objective of eventually
acquiring horse properties and in the short term building an income stream
from
horse racing operations including race horse boarding, training and racing
facilities, as well as revenue generation through the direct and indirect
ownership of racing horses.
We
currently have one officer and one director, who is the same individual. This
individual devotes time to us on a part-time basis.
As
of the
date of this Prospectus, REAC has 4,900,000 shares of $0.001 par value common
stock issued and outstanding held by 28 shareholders of record.
REAC’s
administrative office is located at 269 South Beverly Drive, Suite 1222, BeverlyHills, California90212. REAC’s corporate telephone number is (310)
882-6830.
REAC’s
fiscal year end is December 31.
The
Offering
The
offering consists entirely of shares offered by the selling stockholders. We
are
offering no shares. The selling stockholders are offering 1,100,000 shares,
or
22.45%, of our issued and outstanding common stock as soon as practicable after
this Registration Statement becomes effective. The selling shareholders will
sell at a price of $0.05 per share until the shares are quoted on the OTC
Bulletin Board® or in another quotation medium and, thereafter, at prevailing
market prices or privately negotiated prices.
The
offering price of $0.05 for the common stock being registered for hereby is
what
the selling shareholders had paid for their shares.
The
proceeds of the offering will go directly to the selling stockholders. None
of
the proceeds will be available to Royal Equine Alliance
Corporation.
Since
our
inception on January 10, 2006 to December 31, 2006, we did not generate any
revenues and have incurred a cumulative net loss of $96,645. We believe that
the
$55,000 in funds that was received from unregistered sales of our common equity
is sufficient to finance our efforts to become fully operational and carry
us
through the end of the current calendar year.
The
capital raised has been budgeted to establish our basic company operations
and
allow time to become a fully reporting company. Upon reaching the first two
milestones, i.e. fully reporting status and upon obtaining a trading symbol,
Michael Schlosser, the current President will begin to devote full time to
developing the company and executing the business plan. Initial priorities
will
include acquisition of the first REAC real estate property and developing
the
property consistent with the REAC business plan. Upon the acquisition of
any
property, additional management staff may be hired to provide on-site property
management with the specific objective of maintaining high occupancy rates.
We have not generated any revenues to date but intend that recurring
revenues (once commenced) from the rental of stall space to horse owners
will be
sufficient to support ongoing operations. Unfortunately, there can be no
assurance that the actual expenses incurred will not materially exceed our
estimates or that cash flows from the horse stall rental will be adequate
to
maintain our business. As a result, our independent auditors have expressed
substantial doubt about our ability to continue as a going concern in the
independent auditors’ report to the financial statements included in the
registration statement.
5
Royal
Equine Alliance Corporation’s Transfer Agent is 1 st
Global
Stock Transfer, LLC, 7341 W. Charleston Blvd., Suite 130, Las Vegas, Nevada89117, telephone number (702) 656-4919.
Royal
Equine Alliance Corporation has agreed to pay all costs and expenses relating
to
the registration of its common stock, but the selling stockholders will be
responsible for any related commissions, all taxes including but not limited
to
federal and state income taxes, attorney’s fees and related charges in
connection with the offer and sale of the shares. The selling stockholders
may
sell their common stock through one or more broker/dealers, and such
broker/dealers may receive compensation in the form of commissions.
Summary
Financial Information
The
summary financial data are derived from the historical financial statements
of
REAC. This summary financial data should be read in conjunction with
“Management’s Discussion and Plan of Operations” as well as the historical
financial statements and the related notes thereto, included elsewhere in this
prospectus.
Investment
in the securities offered hereby involves certain risks and is suitable only
for
investors of substantial financial means. Prospective investors should carefully
consider the following risk factors in addition to the other information
contained in this prospectus, before making an investment decision concerning
the common stock.
INVESTORS
MAY LOSE THEIR ENTIRE INVESTMENT IF REAC FAILS TO FULLY IMPLEMENT ITS BUSINESS
PLAN.
Royal
Equine Alliance Corporation was formed on January 10, 2006. REAC has no
significant demonstrable operations record upon which you can evaluate the
business and its prospects. To date, we have not generated any revenues and
may
incur losses in the foreseeable future. REAC’s prospects must be considered in
light of the risks, uncertainties, expenses and difficulties frequently
encountered by companies in their early stages of development. These risks
include, without limitation, competition, the absence of any revenue streams,
inexperienced management and lack of brand recognition. REAC cannot guarantee
that it will be successful in accomplishing its objectives. If we fail to
implement and establish a financial base of operations, we may be forced to
cease operations, in which case investors may lose their entire
investment.
FUTURE
ADDITIONAL ISSUANCES OF SHARES OF OUR COMMON STOCK MAY CAUSE INVESTORS TO BEAR
A
SUBSTANTIAL RISK OF LOSS DUE TO IMMEDIATE AND SUBSTANTIAL
DILUTION
We
are
authorized to issue up to 70,000,000 shares of common stock. Presently, there
are 4,900,000 shares of common stock issued and outstanding as of the date
of
this prospectus. In the event we require additional capital, we may need to
issue shares of our common stock in exchange for cash to continue as a going
concern. There are no formal or informal agreements to attain such financing.
We
can not assure you that any financing can be obtained or, if obtained, that
it
will be on reasonable terms. Any such future additional issuances of our stock
will increase outstanding shares and dilute stockholders’
interests.
7
OUR
SOLE OFFICER AND DIRECTOR HAS LIMITED BUSINESS EXPERIENCE AND NO EXPERTISE
MANAGING A PUBLIC COMPANY. AS A RESULT, WE MAY BE UNABLE TO DEVELOP OUR BUSINESS
AND MANAGE OUR PUBLIC REPORTING REQUIREMENTS.
Our
operations depend on the efforts of REAC’s sole officer and director, Michael
Schlosser. He does not have experience related to public company management
or
as a principal accounting or principal financial officer. Additionally, he
has
limited experience related to marketing. Because of these factors, REAC may
be
unable to develop and implement its business plan and manage its public
reporting requirements. REAC cannot guarantee it that will overcome any such
obstacles.
INVESTORS
HAVE LIMITED CONTROL OVER DECISION-MAKING BECAUSE MICHAEL SCHLOSSER, AN OFFICER,
SOLE DIRECTOR AND SHAREHOLDER, CONTROLS THE MAJORITY OF OUR ISSUED AND
OUTSTANDING COMMON STOCK.
Michael
Schlosser, who is our President, Secretary, Treasurer and sole director,
beneficially owns approximately 71.43% of our outstanding common stock. As
a
result, this one stockholder could exercise control over all matters requiring
stockholder approval, including the election of directors and approval of
significant corporate transactions. Such concentrated control may also make
it
difficult for our stockholders to receive a premium for their shares of our
common stock in the event we enter into transactions which require stockholder
approval. In addition, certain provisions of Nevada law could have the effect
of
making it more difficult or more expensive for a third party to acquire, or
of
discouraging a third party from attempting to acquire, control of us. For
example, Nevada law provides that not less than two-thirds vote of the
stockholders is required to remove a director, which could make it more
difficult for a third party to gain control of our Board of Directors. This
concentration of ownership further limits the power to exercise control by
the
minority shareholders.
WE
MAY
BE UNABLE TO GENERATE SALES WITHOUT SALES OR MARKETING.
We
have
not significantly commenced our planned operations and have limited sales and
marketing capabilities. We cannot guarantee that we will be able to develop
a
significant sales and marketing plan or implement our strategic business plan.
In the event we are unable to successfully execute these objectives, we may
be
unable to generate sufficient sales and operate as a going concern.
IF
WE
ARE UNABLE TO OBTAIN ADDITIONAL FUNDING, WE MAY BE FORCED TO GO OUT OF
BUSINESS.
We
have
limited capital resources. To date, we have not generated any cash flow from
our
operations. Unless we begin to generate sufficient revenues from the
implementation of our proposed business plan to finance operations as a going
concern, we may experience liquidity and solvency problems. Such liquidity
and
solvency concerns may force us to go out of business if additional financing
is
not available. We have no intention of liquidating. In the event our cash
resources are insufficient to continue operations, we intend to raise additional
capital through offerings and sales of equity or debt securities. In the event
we are unable to raise sufficient funds, we will be forced to go out of business
and will be forced to liquidate. A possibility of such outcome presents a risk
of complete loss of investment in our common stock.
IF
WE
ARE UNABLE TO CONTINUE AS A GOING CONCERN, INVESTORS MAY FACE A COMPLETE LOSS
OF
THEIR INVESTMENT.
We
have
yet to significantly commence our planned operations. As of the date of this
Prospectus, REAC has had only limited start-up operations and has generated
no
revenues to date. Taking these facts into account, our independent auditors
have
expressed substantial doubt about our ability to continue as a going concern
in
the independent auditors’ report to the financial statements included in the
registration statement, of which this prospectus is a part. If REAC’s business
fails, the investors in this offering may face a complete loss of their
investment.
8
COMPETITIVE
PRESSURES FROM COMPETITORS WITH MORE RESOURCES MAY CAUSE US TO FAIL TO IMPLEMENT
OUR BUSINESS MODEL.
Royal
Equine Alliance Corporation is entering an arena which is a highly competitive
market segment with relatively low barriers to entry. Within Canada and the
United States there are numerous existing horse race training facilities
and,
on-site, race horse boarding at the major race track locations. There are
also
numerous parcels of undeveloped real estate that contain sufficient acreage
and
soil conditions that would permit the construction of suitable horse race
training tracks and stall facilities and these facilities would provide
additional completion. Some of our expected competitors include larger and
more
established global companies. Generally, our actual and potential competitors
have longer operating histories, significantly greater financial and marketing
resources, as well as greater name recognition. Therefore, many of these
competitors may be able to devote greater resources than REAC to sales and
marketing efforts, expanding their sphere of influence and hiring and retaining
key employees. There can be no assurance that our current or potential
competitors will not develop or offer comparable or superior services to
those
expected to be offered by us. Increased competition could result in lower
than
expected operating margins or loss of market share, either of which would
materially and adversely affect our business, results of operation and financial
condition.
OUR
INTERNAL CONTROLS MAY BE INADEQUATE, WHICH COULD CAUSE OUR FINANCIAL REPORTING
TO BE UNRELIABLE AND LEAD TO MISINFORMATION BEING DISSEMINATED TO THE
PUBLIC.
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting. As defined in Exchange Act Rule 13a-15(f),
internal control over financial reporting is a process designed by, or under
the
supervision of, the principal executive and principal financial officer and
effected by the board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles and includes those policies and
procedures that: (i) pertain to the maintenance of records that in reasonable
detail accurately and fairly reflect the transactions and dispositions of the
assets of the Company; (ii) provide reasonable assurance that transactions
are
recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that receipts
and
expenditures of the Company are being made only in accordance with
authorizations of management and directors of the Company; and (iii) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company’s assets that could have a
material effect on the financial statements.
We
principally have one individual performing the functions of all officers and
directors. This individual developed our internal control procedures and is
responsible for monitoring and ensuring compliance with those procedures. As
a
result, our internal controls may be inadequate or ineffective, which could
cause our financial reporting to be unreliable and lead to misinformation being
disseminated to the public. Investors relying upon this misinformation may
make
an uninformed investment decision.
FAILURE
BY US TO RESPOND TO CHANGES IN CONSUMER PREFERENCES COULD RESULT IN LACK OF
SALES REVENUES AND MAY FORCE US OUT OF BUSINESS.
Any
change in the preferences of our potential customers that we fail to anticipate
could reduce the demand for our services. Decisions about our focus and the
specific services we plan to offer will often be made in advance of entering
the
marketplace. Failure to anticipate and respond to changes in consumer
preferences and demands could lead to, among other things, customer
dissatisfaction, failure to attract demand for our proposed services and lower
profit margins.
9
WE
MAY
LOSE OUR OFFICER AND SOLE DIRECTOR WITHOUT EMPLOYMENT
AGREEMENTS.
Our
operations depend substantially on the skills and experience of Michael
Schlosser, our sole officer and our sole director. We have no other full- or
part-time employees besides Mr. Schlosser. Furthermore, we do not maintain
“key man” life insurance on these individuals. Without an employment contract,
we may lose either or both of these individuals to other pursuits without a
sufficient warning and, consequently, go out of business.
Mr. Schlosser
is presently involved in other business activities and may, in the future,
become involved in other business opportunities. If a specific business
opportunity becomes available, he may face a conflict in selecting between
REAC
and other business interests. We believe that Mr. Schlosser will not
consider entering a similar line of business as we conduct; however, there
can
be no assurance of this. REAC has not formulated a policy for the resolution
of
such conflicts.
CERTAIN
NEVADA CORPORATION LAW PROVISIONS COULD PREVENT A POTENTIAL TAKEOVER, WHICH
COULD ADVERSELY AFFECT THE MARKET PRICE OF OUR COMMON STOCK.
We
are
incorporated in the State of Nevada. Certain provisions of Nevada corporation
law could adversely affect the market price of our common stock. Because Nevada
corporation law requires board approval of a transaction involving a change
in
our control, it would be more difficult for someone to acquire control of us.
Nevada corporate law also discourages proxy contests making it more difficult
for you and other shareholders to elect directors other than the candidate
or
candidates nominated by our board of directors.
THE
COSTS AND EXPENSES OF SEC REPORTING AND COMPLIANCE MAY INHIBIT OUR
OPERATIONS.
After
the
effectiveness of this registration statement, we will be subject to the
reporting requirements of the Securities Exchange Act of 1934, as amended.
The
costs of complying with such requirements may be substantial. In the event
we
are unable to establish a base of operations that generates sufficient cash
flows or cannot obtain additional equity or debt financing, the costs of
maintaining our status as a reporting entity may inhibit out ability to continue
our operations.
YOU
MAY NOT BE ABLE TO SELL YOUR SHARES IN OUR COMPANY BECAUSE THERE IS NO PUBLIC
MARKET FOR OUR STOCK.
To
date,
we have made no effort to obtain listing or quotation of our securities on
a
national stock exchange or association. We have not identified or approached
any
broker/dealers with regard to assisting us apply for such listing. We were
planning on initially listing on the National Quotation Bureau’s Electronic Pink
Sheets. However, DTC would not provide eligibility to the Issuer’s common stock
for electronic transfer as we did not meet new issuer DTC eligibility. In order
to meet DTC eligibility, we are, in this registration statement, registering
our
shareholders common stock for resale with the Securities and Exchange Commission
pursuant to the Securities Act of 1933, as amended. Once our shareholders common
stock is registered for resale and we are successful in obtaining fully
reporting status, we will reapply for DTC eligibility. In the absence of being
listed on a national stock exchange or association, no market may ever be
available for investors in our common stock to sell their shares. Given the
concentration of shares owned by Mr. Schlosser, we cannot guarantee that a
meaningful trading market will develop. If a market ever develops for our Common
Stock, of which we cannot guarantee success, the trading price of our common
stock could be subject to wide fluctuations in response to various events or
factors, many of which are beyond our control. In addition, the stock market
may
experience extreme price and volume fluctuations, which, without a direct
relationship to the operating performance, may affect the market price of our
stock.
10
INVESTORS
MAY HAVE DIFFICULTY LIQUIDATING THEIR INVESTMENT BECAUSE REAC STOCK IS SUBJECT
TO PENNY STOCK REGULATION.
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 system). The penny stock rules require a broker/dealer,
prior to a transaction in a penny stock not otherwise exempt from the rules,
to
deliver a standardized risk disclosure document prepared by the SEC that
provides information about penny stocks and the nature and level of risks in
the
penny stock market. The broker/dealer also must provide the customer with bid
and offer quotations for the penny stock, the compensation of the broker/dealer,
and its salesperson in the transaction, and monthly account statements showing
the market value of each penny stock held in the customer’s account. 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 a penny stock is a suitable investment for
the purchaser and receive the purchaser’s written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of
trading activity in any secondary market for a stock that becomes subject to
the
penny stock rules, and accordingly, customers in Company securities may find
it
difficult to sell their securities, if at all.
A
LARGE PERCENTAGE OF OUR ISSUED AND OUTSTANDING COMMON SHARES ARE RESTRICTED
UNDER RULE 144 OF THE SECURITIES ACT, AS AMENDED. WHEN THE RESTRICTION ON THESE
SHARES IS LIFTED, AND IF THE SHARES ARE SOLD IN THE OPEN MARKET, THE PRICE
OF
OUR COMMON STOCK COULD BE ADVERSELY AFFECTED.
A
large
number (3,800,000) of the presently outstanding shares of common stock
(4,900,000), are “restricted securities” as defined under Rule 144 promulgated
under the Securities Act and may only be sold pursuant to an effective
registration statement or an exemption from registration, if available. Rule
144, as amended, is an exemption that generally provides that a person who
has
satisfied a one year holding period for such restricted securities may sell,
within any three month period (provided we are current in our reporting
obligations under the Exchange Act) subject to certain manner of resale
provisions, an amount of restricted securities which does not exceed the greater
of 1% of a company’s outstanding common stock or the average weekly trading
volume in such securities during the four calendar weeks prior to such sale.
We
currently have one shareholder who owns 300,000 shares or 6.12% of the aggregate
shares of common stock which were acquired on or about January 24, 2006. Thus,
sales of shares by this individual, whether pursuant to Rule 144 or otherwise,
may have an immediate negative effect upon the price of our common stock in
any
market that might develop.
OUR
STOCK IS A SPECULATIVE INVESTMENT THAT MAY RESULT IN LOSSES TO
INVESTORS.
Our
securities are characterized as microcap stock. The term “microcap stock”
applies to companies with low or “micro” capitalizations, meaning the total
value of the company’s stock. Microcap companies typically have limited assets.
Microcap stocks tend to be low priced and trade in very low volumes. Therefore,
your entire investment may be lost should REAC be unable to completely implement
its business plan.
We
might
ultimately list on the OTC Bulletin Board® (the “OTCBB”). The OTCBB is an
electronic quotation system that displays real-time quotes, last-sale prices,
and volume information for many OTC securities that are not listed on the NASDAQ
Stock Market or a national securities exchange. Brokers who subscribe to the
system can use the OTCBB to look up prices or enter quotes for OTC
securities.
11
Although
the NASD oversees the OTCBB, the OTCBB is not part of the NASDAQ Stock
Market.
Companies
that trade their stocks on major exchanges and in the NASDAQ Stock Market must
meet minimum listing standards. For example, they must have minimum amounts
of
net assets and minimum numbers of shareholders. In contrast, companies on the
OTCBB or the Pink Sheets do not have to meet any minimum standards. While all
investments involve risk, microcap stocks are among the most risky. Many
microcap companies tend to be new and have no proven track record. Some of
these
companies have no assets or operations. Others have products and services that
are still in development or have yet to be tested in the market. Another risk
that pertains to microcap stocks involves the low volumes of trades. Because
microcap stocks trade in low volumes, any size of trade can have a large
percentage impact on the price of the stock.
Special
Note Regarding Forward-Looking Statements
This
prospectus contains forward-looking statements about our business, financial
condition and prospects that reflect our management’s assumptions and good faith
beliefs based on information currently available. We can give no assurance
that
the expectations indicated by such forward-looking statements will be realized.
If any of our assumptions should prove incorrect, or if any of the risks and
uncertainties underlying such expectations should materialize, our actual
results may differ materially from those indicated by the forward-looking
statements.
The
key
factors that are not within our control and that may have a direct bearing
on
operating results include, but are not limited to, acceptance of our proposed
services and the products we expect to market, our ability to establish a
customer base, managements’ ability to raise capital in the future, the
retention of key employees and changes in the regulation of our
industry.
There
may
be other risks and circumstances that management may be unable to predict.
When
used in this prospectus, words such as, “believes,”“expects,”“intends,”“plans,”“anticipates,”“estimates” and similar expressions are intended to
identify and qualify forward-looking statements, although there may be certain
forward-looking statements not accompanied by such expressions.
All
of
the shares being registered in this registration statement are issued and
outstanding and held by the selling shareholders. The selling security holders
will receive the net proceeds from the resale of their shares. We will not
receive any of the proceeds from the sale of these shares, although we have
agreed to pay the expenses related to the registration of such
shares.
As
there
is no public market in the shares, Royal Equine Alliance Corporation used the
price of $0.05 per share, which is what the selling shareholders had paid for
their shares, as the benchmark offering price. No other factors than what the
selling shareholders paid for their shares was used to determine the offering
price per share of this offering. The offering price of the common stock has
been arbitrarily determined and bears no relationship to any objective criterion
of value. The price does not bear any relationship to our assets, book value,
historical earnings or net worth. The selling shareholders will sell at a price
of $0.05 per share until the shares are quoted on the OTC Bulletin Board® or in
another quotation medium and, thereafter, at prevailing market prices or at
privately negotiated prices. To date, we have made no effort to obtain listing
or quotation of our securities on a national stock exchange or association.
We
have not identified or approached any broker/dealers with regard to assisting
us
apply for such listing.
The
following table sets forth (i) the number of outstanding shares, beneficially
owned by the selling stockholders prior to the offering; (ii) the aggregate
number of shares offered by each such stockholder pursuant to this prospectus;
and (iii) the amount and the percentage of the class to be owned by such
security holder after the offering is complete:
Name
of Owner of Common Stock
Number
of Shares Owned before the Offering
Number
of Shares Offered by Selling Shareholders
Number
of Shares Owned after the Offering
Percentage
of Shares Owned after the Offering 1
Luxe
Property Group, LLC
155,500
155,500
0
0.00
%
Trailer
Trash Films, LLC
5,000
5,000
0
0.00
%
Arabella
Films, LLC
150,000
150,000
0
0.00
%
Haughty
Fragrance, LLC
25,000
25,000
0
0.00
%
Net
Super Star, Inc.
176,000
176,000
0
0.00
%
The
Company, Inc.
140,000
140,000
0
0.00
%
Speedy
Wire, Inc.
2,000
2,000
0
0.00
%
James
Parker
7,000
7,000
0
0.00
%
Marvin
Bear
7,000
7,000
0
0.00
%
Lauren
Barber
7,000
7,000
0
0.00
%
Beverly
Hills Capital Group, LLC
100,000
100,000
0
0.00
%
Big
Apple Publishing, LLC
20,000
20,000
0
0.00
%
Blue
Bridge Investment Group, Inc.
10,000
10,000
0
0.00
%
Beau
Courtney
2,500
2,500
0
0.00
%
Emerging
Growth Stock, LLC
75,000
75,000
0
0.00
%
Marilyn
McMillan
5,000
5,000
0
0.00
%
Nick
Peronace
10,000
10,000
0
0.00
%
Placetorent.com,
Inc.
20,000
20,000
0
0.00
%
Royal
Strategic Corp.
70,000
70,000
0
0.00
%
Inzberg
Serieaux
8,000
8,000
0
0.00
%
Natalia
Shulha
10,000
10,000
0
0.00
%
Mark
Stever
10,000
10,000
0
0.00
%
310
Holdings, Inc.
55,000
55,000
0
0.00
%
Kenny
Toye
5,000
5,000
0
0.00
%
Westside
Capital Corp.
25,000
25,000
0
0.00
%
Total
(26 shareholders)
1,100,000
1,100,000
0
0.00
%
Notes:
1
Assumes
the offering of all 1,100,000 offered in this prospectus.
The
shares do not bear a restrictive legend as they were issued pursuant to a
Regulation D, Rule 504 offering that was registered in the State of Nevada
pursuant to NRS 90.490 (Registration by Qualification). This state provision
provides for public filing and delivery to investors of a substantive disclosure
document before sale as required by Regulation D, Rule 504(b)(1)(i).
Additionally at the time of the Offering, as required by regulation D, Rule
504(a), our Company was not:
(1)
subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act;
(2)
an
investment company; or
(3)
a
developmental stage company that either has no specific business
plan or
purpose or has indicated that its business plan was to engage in
a merger
or acquisition with an unidentified company or companies, or other
person.
13
None
of
the selling stockholders have been known to be affiliated with Royal Equine
Alliance Corporation in any capacity in the past three years. None of the
selling stockholders is a broker/dealer or an affiliate of a
broker/dealer.
Our
common stock is currently held amongst a small community of shareholders.
Therefore, the current and potential market for our common stock is limited
and
the liquidity of our shares may be severely limited. We cannot guarantee that
a
meaningful trading market will develop.
If
a
market ever develops for our Common Stock, the trading price of REAC’s common
stock could be subject to wide fluctuations in response to various events or
factors, many of which are beyond REAC’s control. As a result, investors may be
unable to sell their shares at or greater than the price they are being offered
at.
The
selling stockholders may offer their shares at various times in one or more
of
the following transactions:
1.
In
the over-the-counter market;
2.
On
any exchange, which the shares may hereafter be
listed;
3.
In
negotiated transactions other than on such
exchanges;
4.
By
pledge to secure debts and other
obligations;
5.
In
connection with the writing of non-traded and exchange-traded call
options, in hedge transactions, in covering previously established
short
positions and in settlement of other transactions in standardized
or
over-the-counter options; or
6.
In
a combination of any of the above
transactions.
The
selling stockholders may only offer and sell, from time to time, common stock
using this prospectus in transactions at a fixed offering price of $0.05 per
share until a trading market develops in our common stock, at which time the
selling stockholders may sell shares at market prices, which may vary, or at
negotiated prices. The selling stockholders may use broker/dealers to sell
their
shares. The broker/dealers will either receive discounts or commissions from
the
selling stockholders, or they will receive commissions from purchasers of
shares.
The
selling stockholders may transfer the shares by means of gifts, donations and
contributions. This prospectus may be used by the recipients of such gifts,
donations and contributions to offer and sell the shares received by them,
directly or through brokers, dealers or agents and in private or public
transactions; however, if sales pursuant to this prospectus by any such
recipient could exceed 500 shares, than a prospectus supplement would need
to be
filed pursuant to Section 424(b)(3) of the Securities Act to identify the
recipient as a Selling Stockholder and disclose any other relevant information.
We will file a prospectus supplement to name successors to any named selling
shareholders who are able to use the prospectus to resell the shares. Such
prospectus supplement would be required to be delivered, together with this
prospectus, to any purchaser of such shares.
In
order
to comply with the applicable securities laws of certain states, the securities
may not be offered or sold unless they have been registered or qualified for
sale in such states or an exemption from such registration or qualification
requirement is available and with which REAC and the selling stockholders have
complied. The purchasers in this offering and in any subsequent trading market
must be residents of such states where the shares have been registered or
qualified for sale or an exemption from such registration or qualification
requirement is available.
14
Some
of
the selling stockholders may be eligible and may elect to sell some or all
of
their shares pursuant to additional exemptions to the registration requirements
of the Securities Act, including but not limited to, Rule 144 promulgated under
the Securities Act, rather than pursuant to this Registration
Statement.
Under
certain circumstances the selling stockholders and any broker/dealers that
participate in the distribution may be deemed to be “underwriters” within the
meaning of the Securities Act. Any commissions received by such broker/dealers
and any profits realized on the resale of shares by them may be considered
underwriting discounts and commissions under the Securities Act. The selling
stockholders may agree to indemnify such broker/dealers against certain
liabilities, including liabilities under the Securities Act.
The
selling stockholders will also be subject to applicable provisions of the
Exchange Act and regulations under the Exchange Act, which may limit the timing
of purchases and sales of the shares by the selling stockholders. Furthermore,
under Regulation M under the Exchange Act, any person engaged in the
distribution or the resale of shares may not simultaneously engage in market
making activities with respect to our common stock for a period of two business
days prior to the commencement of such distribution. All of the above may affect
the marketability of the securities and the availability of any person or entity
to engage in market-making activities with respect to our common
stock.
The
selling stockholders will pay all commissions, transfer fees, and other expenses
associated with the sale of securities by them. The shares offered hereby are
being registered by us, and we have paid the expenses of the preparation of
this
prospectus. We have not made any underwriting arrangements with respect to
the
sale of shares offered hereby.
We
do not
intend to engage in any distribution efforts on behalf of any of the holders
of
our common stock other than providing for registration of the securities
registered for sale with the U.S. Securities and Exchange
Commission.
Each
of
the selling stockholders is acting independently of us in making decisions
with
respect to the timing, manner and size of each with the distribution of the
shares. The selling stockholders may only offer and sell common stock using
this
prospectus in transactions at a fixed offering price of $0.05 per share until
a
trading market develops in our common stock, at which time the selling
stockholders may sell shares at market prices, which may vary, or at negotiated
prices. There is no assurance, therefore, that the selling stockholders will
sell any or all of the shares. In connection with the offer and sale of the
shares, we have agreed to make available to the selling stockholders copies
of
this prospectus and any applicable prospectus supplement and have informed
the
selling stockholders of the need to deliver copies of this prospectus and any
applicable prospectus supplement to purchasers at or prior to the time of any
sale of the shares offered hereby. Our private investors held no influence
on
the decision to become a public reporting company.
No
director, officer, significant employee or consultant of Royal Equine Alliance
Corporation has been, to the best of our knowledge, convicted in a criminal
proceedings.
No
director, officer, significant employee or consultant of Royal Equine Alliance
Corporation has been, to the best of our knowledge, permanently or temporarily
enjoined, barred, suspended or otherwise limited from involvement in any type
of
business, securities or banking activities.
15
No
director, officer, significant employee or consultant of Royal Equine Alliance
Corporation has been, to the best of our knowledge, convicted of violating
a
federal or state securities or commodities law.
There
are
no known pending legal proceedings against Royal Equine Alliance
Corporation
No
director, officer, significant employee or consultant of Royal Equine Alliance
Corporation has, to the best of our knowledge, had any bankruptcy petition
filed
by or against any business in which such person was a general partner or
executive officer either at the time of the bankruptcy or within two years
prior
to that time.
Directors,
Executive Officers, Promoters and Control Persons
Royal
Equine Alliance Corporation’s sole director was elected by the stockholders to a
term of one (1) year and serves until a successor is elected and qualified.
The
officers were appointed by the Board of Directors to a term of one (1) year
and
serve until successor(s) are duly elected and qualified, or until removed from
office. The Board of Directors is not composed of any nominating, auditing
or
compensation committees.
The
following table sets forth certain information regarding the executive officers
and sole director of REAC as of the date of this Prospectus:
Mr. Schlosser
has held his offices/positions since Royal Equine Alliance Corporation inception
and is expected to continue to hold his offices/positions until the next annual
meeting of REAC’s stockholders. At the date of this prospectus, REAC is not
engaged in any transactions, either directly or indirectly, with any persons
or
organizations considered promoters.
Mr.
Schlosser is not an independent director and, although we intend to appoint
additional directors, including independent directors, we have not done so
as
yet.
Background
of Directors, Executive Officers, Promoters and Control
Persons
Michael
Schlosser - President, Secretary, Treasurer, and Director
-
Mr. Schlosser has over 30 years of practical and educational experience in
the Financial Services Industry. Mr. Schlosser’s initial career training
came in the insurance industry where he have held positions in underwriting,
sales, sales management and auditing. Later, Mr. Schlosser worked in the
investment securities industry where he owned and operated a Certified Financial
Planning Practice where we worked with individual clients that owned virtually
all types of businesses and had varying levels of “net-worth”.
Mr. Schlosser has participated in several start-up companies, including
being one of the original founders of Redmond National Bank in Redmond,
Washington. During his career, Mr. Schlosser has developed over 50 training
programs, written several educational text books, and personally conducted
hundreds of company training programs for major banks, insurance companies
and
stock brokerage firms. During the past 15 years, Mr. Schlosser has
conducted securities license preparation classes for individuals in the
Financial Services Industry. Mr. Schlosser has worked for Securities
Training Corporation for the past six years whereby he has prepared and trained
numerous individuals with regards to securities exams as required by the
Financial Services Industry. The license preparation classes include the Series
7 stockbroker license, the Series 4/9/10 & 24 Principal licensees, along
with several “unique” licenses such as Series 3, the Commodities license and
Series 86/87, the new license for analysts. In April, 2005, Mr. Schlosser
was elected President of Royal Pet Meals, Inc. a publicly traded
company.
16
Michael
Schlosser - Professional and Educational Qualifications
Author
of over 50 Insurance Continuing Education programs and 5
books.
•
Training
Instructor - Clients include major Banks, Brokerage and Insurance
Companies
•
Securities
Training Instructor - 18 different license
Programs
The
sole
officer and director of the Company is involved in other business activities
and
may, in the future, become involved in other business opportunities. If a
specific business opportunity becomes available, such persons may face a
conflict in selecting between the Company and their other business interests.
The Company has not formulated a policy for the resolutions of such
conflicts.
The
following table sets forth certain information as of the date of this offering
with respect to the beneficial ownership of Royal Equine Alliance Corporation’s
common stock by all persons known by REAC to be beneficial owners of more than
5% of any such outstanding classes, and by each director and executive officer,
and by all officers and directors as a group. Unless otherwise specified, the
named beneficial owner has, to REAC’s knowledge, either sole or majority voting
and investment power.
Percent
of Class
Title
Of Class
Name,
Title and Address of Beneficial Owner of Shares(1)
Amount
of Beneficial Ownership(2)
Before
Offering
After
Offering(3)
Common
Michael
Schlosser, President,
Secretary,
Treasurer, Director
3,500,000
71.43
%
71.43
%
All
Directors and Officers as a group (1 person)
3,500,000
71.43
%
71.43
%
Notes:
1
The
address for Michael Schlosser is c/o REAC, 269 South Beverly Drive,
Suite
1122, Beverly Hills, California90212.
2
As
used in this table, “beneficial ownership” means the sole or shared power
to vote, or to direct the voting of, a security, or the sole or share
investment power with respect to a security (i.e., the power to dispose
of, or to direct the disposition of a security).
3
Assumes
the sale of the maximum amount of this offering (1,100,000 shares
of
common stock) by the selling
shareholders.
Royal
Equine Alliance Corporation’s authorized capital stock consists of 70,000,000
shares of a single class of common stock, having a $0.001 par value per share
and 5,000,000 shares of single class preferred stock, having a $0.001 par value
per share.
The
holders of REAC’s common and preferred stock:
1.
Have
equal ratable rights to dividends from funds legally available therefore,
when, as and if declared by REAC’s Board of
Directors;
2.
Are
entitled to share ratably in all of REAC’s assets available for
distribution to holders of common stock upon liquidation, dissolution
or
winding up of REAC’s affairs;
3.
Do
not have preemptive, subscription or conversion rights and there
are no
redemption or sinking fund provisions or rights;
and
4.
Are
entitled to one vote per share on all matters on which stockholders
may
vote.
Non-Cumulative
Voting
Holders
of shares of Royal Equine Alliance Corporation’s common and preferred stock do
not have cumulative voting rights, which means that the holders of more than
50%
of the outstanding shares, voting for the election of directors, can elect
all
of the directors to be elected, if they so choose, and, in such event, the
holders of the remaining shares will not be able to elect any of REAC’s
directors.
Cash
Dividends
As
of the
date of this Prospectus, Royal Equine Alliance Corporation has not paid any
cash
dividends to stockholders. The declaration of any future cash dividend will
be
at the discretion of REAC’s board of directors and will depend upon REAC’s
earnings, if any, capital requirements and financial position, general economic
conditions, and other pertinent conditions. It is the present intention of
REAC
not to pay any cash dividends in the foreseeable future, but rather to reinvest
earnings, if any, into REAC’s business operations.
Royal
Equine Alliance Corporation’s Articles of Incorporation, its Bylaws, and certain
statutes provide for the indemnification of a present or former director or
officer. See Page 33 for “Indemnification of Directors and
Officers.”
The
Securities and Exchange Commission’s Policy on
Indemnification
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 any provisions contained in its Certificate of Incorporation, or
Bylaws, 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
indemnification by it is against public policy as expressed in the Act and
will
be governed by the final adjudication of such issue.
Royal
Equine Alliance Corporation (“REAC” or the “Company”), a Nevada corporation, is
a developmental stage company with a principal business objective of eventually
acquiring horse properties and in the short term building an income stream
from
horse racing operations including race horse boarding, training and racing
facilities, as well as revenue generation through the direct and indirect
ownership of racing horses.
REAC
has
yet to commence planned strategic operations for significant exposure and
growth. As of the date of this Prospectus, REAC has had only limited start-up
operations and has not generated any revenues.
We
have
never been party to any bankruptcy, receivership or similar proceeding, nor
have
we undergone any material reclassification, merger, consolidation, or purchase
or sale of a significant amount of assets not in the ordinary course of
business.
REAC
has
no current intentions of engaging in a merger or acquisition with an
unidentified company.
The
Company has a principal business objective of eventually acquiring horse racing
training properties and in the short term building an income stream from horse
racing operations including race horse boarding, training and racing facilities,
as well as revenue generation through the direct and indirect ownership of
racing horses.
19
Business
Summary
Royal
Equine Alliance Corporation (“REAC” or the “Company”), a Nevada corporation, is
a developmental stage company with a principal business objective of eventually
acquiring horse properties and in the short term building an income stream
from
horse racing operations including race horse boarding, training and racing
facilities, as well as revenue generation through the direct and indirect
ownership of racing horses.
Industry
Background and Competition
Race
Horse owners face several problems once they acquire a race capable horse.
The
horse must be housed in a facility where the horse will be cared for, properly
fed, exercised on a regular basis and carefully trained, virtually year round,
on a suitable oval race track. While these duties are generally conducted under
the direction of an experienced horse trainer who has been hired by the owner,
it is incumbent that the trainer has a facility that can provide the environment
for attention to all of these horse training needs.
Real
Estate Plan
The
Company intends to create a “mini-warehouse” that will be filled with stalls for
boarding horses and each stall is intended to generate rental income. In
addition, , REAC may have the ability to generate revenues from numerous other
sources - for example, horse transportation service, providing
training/management, trailer sales, etc.
We
currently do not own
or
lease any of the
facilities that we intend to make use of for purposes of implementing the plans
disclosed in this plan. We have not, to date, made any definitive relations
with
trainers and/or race horse
owners who are interested in contracting with us for use of the
mini-warehouse facility referenced.
REAC’s
initial planned facility is projected to have between 50 and 200 total horses.
REAC intends to provides stall space for a fee. The individual horse owners
are
responsible for other animal costs and they pay for all of the costs associated
with horse ownership (food, vet, insurance, farrier, training, transportation
etc.).
Business
Model
REAC
has
been formed to eventually build real estate equity and create an income stream
from potential REAC properties, racing operations, and trainers. Furthermore,
the REAC business modal anticipates creating a network of REAC owned properties
that are designed to develop the various profit potentials offered in several
areas of the “horse racing arena”. As REAC continues to grow, the Company plans
to create a branded name of horse boarding/training/racing facilities through
the direct ownership of these facilities. To provide additional value to the
company, the REAC plans to eventually offer investment partnership interests
whereby potential future investors can take direct ownership in a portfolio
of
horses and participate directly in the purse winnings of those horses. In many
cases these same horses will be stabled at REAC properties and trained by REAC
Trainers.
20
REAC
plans primarily to be a real estate based enterprise and intends to take
advantage of the three main areas of horse ownership and thus may be divided
into three primary divisions. Since each type of horse competition requires
that
the owner utilize a specific type of training facility, REAC may obtain
properties in any or all of the following three areas of horse
racing:
a.
Standardbred
(Harness) Racing: Jockey rides in a two wheeled racing cart behind
the
horse.
REAC
management plans to aggressively implementits business plan by acquiring
suitable properties throughout North America and duplicating its operations
over
the next two fiscal years. The acquisition plan will be on a high growth
schedule dependent on the use of REAC equity to complete such transactions.
The
ideal property will be one that has an existing horse barn/stable operation
and
whose size would be about 40 to 100 acres, with a portion of the property
located on flat terrain. Also, the property must contain the proper soil
conditions for creation of an on-site race/training track. Proper soil
conditions are imperative as they lower the cost of track construction and
make
the track much easier to maintain during periods of adverse weather
conditions.
REAC
management feels that to develop the brand name, each REAC facility must be
a
premier first class property. Since many horse owners are very concerned about
the treatment of their animals, it is important to present an “arena” of total
comfort to the owner. This will be accomplished by both the physical appearance
of the facility, the skill level of the REAC trainers, on-site amenities,
frequent email reports to owners on training progress, racing results,
supplements used, etc.
Current
and all future REAC management and personnel have been entrusted with the
specific goal of operating each and every facet of the total operation in
accordance to REAC standards.
In
addition, it is anticipated that, depending upon the location, every new
facility may offer on-site amenities such as (a) tack store, (b) farrier
facilities, (c) vet office, (d) café/bar operation. Each of these operations
will be non-REAC owned business, but each area may generate additional rental
income from leasing space to the individual business operators.
Sources
and Availability of Raw Materials and the Names of Principal
Suppliers
At
this
time we will not procure any raw materials and have no need for any principal
suppliers as we do not produce a tangible product per se. Our company is a
service oriented company.
However,
REAC management intends to evaluate and where possible, offer horse owners,
on-site, access to many of the supplies, foods, vitamins, supplements, hay,
straw and other consumable products utilized in the training of a race horse
and
involved in a stable operation. This area has the potential to develop as
an
additional source of revenues for the company.
Need
for Government Approval
We
are
not aware of the need to obtain governmental approval for any aspect of our
operations with the possible exception of local business licenses, if
applicable.
Effect
of existing or probable government regulations
Royal
Equine Alliance Corporation is not aware of any existing or probable government
regulations that would have a material effect on our business.
Number
of total employees and number of full time employees
Royal
Equine Alliance Corporation is currently in the development stage. During the
development stage, we plan to rely exclusively on the services of our officers
and director to set up our business operations.
22
Currently,
Michael Schlosser, our President, is the only person providing a time commitment
to the company on a part-time basis and expects to devote a minimum of 15 hours
per week to our operations. Mr. Schlosser is prepared to dedicate
additional time, as needed. At this time, there are no full- or part-time
employees. We do not expect to hire any additional employees over the next
12
months, although the possibility does exist that administrative staff may be
required should sufficient business develop.
Reports
to Security Holders
1.
After
this offering, Royal Equine Alliance Corporation will furnish its
shareholders with audited annual financial reports certified by REAC’s
independent accountants.
2.
After
this offering, REAC will file periodic and current reports, which
are
required in accordance with Section 15(d) of the Securities Act of
1933,
with the Securities and Exchange Commission to maintain the fully
reporting status.
3.
The
public may read and copy any materials REAC files with the SEC at
the
SEC’s Public Reference Room at 100 F Street, N.E., Washington, D.C.20002.
The public may obtain information on the operation of the Public
Reference
Room by calling the SEC at 1-800-SEC-0330. Our SEC filings will be
available on the SEC Internet site, located at
http://www.sec.gov.
This
section must be read in conjunction with the Audited Financial Statements
included in this Prospectus.
Management’s
Discussion and Plan of Operation
Royal
Equine Alliance Corporation was incorporated in the State of Nevada on January10, 2006. REAC is a startup and has not yet realized any revenues. Our efforts,
to date, have focused primarily on the development and implementation of our
business plan. No development-related expenses have been or will be paid to
affiliates of REAC.
During
the period from inception through March 31, 2007, we generated no revenues
of and incurred a net loss of $96,798. The cumulative net loss was attributable
solely to general and administrative expenses related to the costs of start-up
operations.
Our
officer and director believes that our cash on hand as of March 31, 2007 in
the amount of $857,157 is sufficient to maintain our current minimal level
of
operations for current calendar year.
If
we do
not generate sufficient revenues to meet our expenses over the next 12 months,
or if we need additional capital to acquire real estate properties, we may
need
to raise additional capital. We intend to seek access to capital through
the
issues of debt securities or through issuing additional capital stock in
exchange for cash, in order to continue as a going concern. There are no
formal
or informal agreements to attain such financing. We can not assure you that
any
financing can be obtained or, if obtained, that it will be on reasonable
terms.
Without realization of additional capital, it would be unlikely for us to
continue as a going concern.
Since
our
incorporation, we have raised a total of $153,595 through private sales of
our
common equity. In January 2006, we issued 3,500,000 shares of our common stock
to Michael Schlosser, an officer and director, in exchange for services and
cash. Additionally, in May and June 2006, we sold an aggregate of 1,100,000
shares of our common stock to 26 unrelated third parties for cash proceeds
of
$55,000. We believe that the funds received in the private placement will be
sufficient to satisfy our start-up and operating requirements for the next
12
months. The table below sets forth the anticipated use of the private placement
funds:
23
Amount
Allocated
Amount
Expended
Estimated
Completion
General
working capital
$
8,190
None
Use
as Needed
Marketing
and advertising activities
$
20,000
None
Use
as needed
Travel
$
5,000
None
Use
as needed
Office
expenses
$
6,000
None
Use
as needed
Employees-General
administrative staff
$
7,500
None
Use
as needed
Offering
expenses
$
8,310
$
8,310
Completed
Our
management believes that establishing our brand name is imperative to our
ability to continue as a going concern. Establishing a personal local presence
is critical to reaching a broad consumer base, including web based contacts.
We
intend to develop a comprehensive website to offer information about our company
and provide contact information. We will update the website as time and
financial assets allow. The website will be primarily for contact information
and some general information about the company. It will serve as our secondary
method of generating service contracts.
We
have
allocated $8,190 of the proceeds toward a reserve of general working
capital.
We
have
allocated $20,000 of the proceeds raised in the private placement to finance
our
marketing activities. We have not sought to implement any significant marketing
scheme and consequently have no marketing or sales initiatives or arrangements
in development or effect.
We
have
allocated $5,000 towards travel in the exploration of assets to
purchase.
We
have
budgeted $6,000 towards general office expenses.
Our
management does not anticipate the need to hire additional full- or part- time
employees over the next 12 months, as the services provided by our officers
and
director appear sufficient at this time. However, the possibility does exist
that administrative staff and services may be required. Consequently $7,500.00
was allocated for such support.
Mr. Schlosser,
an officer and director, recognizes that we are required to continuously file
reports with the SEC and any exchange we may be listed on, and understands
the
resultant increased costs of being a public reporting company.
Mr. Schlosser believes that investors are more agreeable to invest in a
company that intends to become a public company rather than to remain private
with no foreseeable exit strategy for shareholders. Thus, Mr. Schlosser
raised capital in the Regulation D, Rule 504 offering which was completed in
June 2006 with the intention of Royal Equine Alliance Corporation becoming
a
public reporting company. Our private investors held no influence on the
decision to become a public company.
In
addition, Mr. Schlosser believes that one benefit of being a public company
is the access to capital markets. We believe that if additional funds are
required to finance our continuing operations, we may be able to obtain more
capital by pursuing an offering of equity or debt securities.
We
do not
expect to incur any significant research and development costs.
We
do not
have any off-balance sheet arrangements.
We
currently do not own any significant plant or equipment that we would seek
to
sell in the near future.
24
We
have
not paid for expenses on behalf of our director. Additionally, we believe that
this fact shall not materially change.
We
do not
intend to engage in a merger with, or effect an acquisition of, another company
in the foreseeable future.
REAC’s
uses the mailing address of 269 South Beverly Drive, Suite 1122, Beverly Hills,
California90212. REAC is not leasing a physical office space at this time
in
order to maintain a better control of recurring costs.
It
is
anticipated that as REAC executes the business plan, upon the acquisition of
a
horse race training facility, an on-site REAC business office will be
established.
We
believe that this arrangement is suitable and most cost-effective at this
time.
We also believe that we will not need to lease any facilities, other than
those
already discussed for the foreseeable future. There are currently no proposed
programs for the renovation, improvement or development of the facilities
we
currently use.
In
January 2006, REAC issued 3,500,000 shares of $0.001 par value common stock
to
Michael Schlosser, an officer and director, in exchange for services and
cash.
The
Issuer was planning on initially listing on the National Quotation Bureau’s
Electronic Pink Sheets. However, DTC would not provide eligibility to the
Issuer’s common stock for electronic transfer. On its website, DTC provides
information regarding new issuer DTC eligibility. Generally, the only security
issues that may be made eligible for DTC’s book-entry delivery services are
those that either: (a) have been registered with the Securities and Exchange
Commission pursuant to the Securities Act of 1933, as amended; (b) are exempt
from registration pursuant to a Securities Act exemption that does not involve
transfer or ownership restrictions; or (c) are eligible for resale pursuant
to
Rule 144A or Regulation S (and otherwise meet DTC’s eligibility criteria). While
we believe that our common stock presently falls under item (b) in that the
shares we are presently registering were issued in a manner that was exempt
from
registration pursuant to a Securities Act exemption that does not involve
transfer or ownership restrictions. However, in order to fully satisfy the
DTC
eligibility requirements, we are registering the selling shareholders’ shares of
common stock for resale pursuant to the Securities Act of 1933 and become a
permanently reporting company under the Securities Exchange Act of 1934, as
amended. Once we have accomplished these objectives, we will reapply for listing
on the OTCBB .
As
of the
date of this Prospectus,
1.
There
are no outstanding options or warrants to purchase, or other instruments
convertible into, common equity of
REAC.
2.
There
are currently 4,900,000 shares of common stock outstanding, of which
3,800,000 are currently restricted from resale pursuant to Rule 144
under
the Securities Act. Of the total outstanding 4,600,000 shares, we
are
currently registering 1,100,000 shares on behalf of the Selling
Shareholders for resale.
25
3.
In
the future, all 3,800,000 shares of common stock not registered under
this
Prospectus will be eligible for sale pursuant to Rule 144 under the
Securities Act. These shares of common stock are restricted from
resale
under Rule 144 until registered under the Securities Act, or an exemption
is applicable.
4.
Other
than the stock registered under this Prospectus, there is no stock
that
has been proposed to be publicly offered resulting in dilution to
current
shareholders.
In
general, under Rule 144 as amended, a person who has beneficially owned and
held
“restricted” securities for at least one year, including “affiliates,” may sell
publicly without registration under the Securities Act, within any three-month
period, assuming compliance with other provisions of the Rule, a number of
shares that do not exceed the greater of (i) one percent of the common stock
then outstanding or, (ii) the average weekly trading volume in the common stock
during the four calendar weeks preceding such sale. A person who is not deemed
an “affiliate” of our Company and who has beneficially owned shares for at least
two years would be entitled to unlimited resale of such restricted securities
under Rule 144 without regard to the volume and other limitations described
above.
Holders
As
of the
date of this Prospectus, REAC has 4,900,000 shares of $0.001 par value common
stock issued and outstanding held by 28 shareholders of record. REAC’s Transfer
Agent is 1 st
Global
Stock Transfer, LLC, 7341 W. Charleston Blvd., Suite 130, Las Vegas, NV89117,
telephone number (702) 656-4919.
Dividends
REAC
has
never declared or paid any cash dividends on its common stock. For the
foreseeable future, REAC intends to retain any earnings to finance the
development and expansion of its business, and it does not anticipate paying
any
cash dividends on its common stock. Any future determination to pay dividends
will be at the discretion of the Board of Directors and will be dependent upon
then existing conditions, including REAC’s financial condition and results of
operations, capital requirements, contractual restrictions, business prospects
and other factors that the board of directors considers relevant.
*In
January 2006, we issued 3,500,000 shares of our common stock to Michael
Schlosser, our founding shareholder and the sole officer and director, in
exchange for services and cash.
There
are
no existing or planned option/SAR grants.
REAC
does
not have an employment agreement with Michael Schlosser, its sole officer and
director.
The
proceeds of this offering may not be used to make loans to officers, directors
and affiliates.
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To
the
Board of Directors
Royal
Equine Alliance Corporation
(A
Development Stage Company)
Las
Vegas, Nevada
We
have
audited the accompanying balance sheet of Royal Equine Alliance Corporation
(a
development stage company) as of December 31, 2006, and the related statements
of operations, stockholders’ equity and cash flows for the period from inception
on January 10, 2006 through December 31, 2006. These financial statements
are
the responsibility of the Company’s management. Our responsibility is to express
an opinion on these financial statements based on our audits.
We
conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that
we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our
audits provide a reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Royal Equine Alliance Corporation
(a development stage company)as
of
December 31, 2006 and the results of its operations and its cash flows for
the
period from inception on January 10, 2006 through December 31, 2006, in
conformity with accounting principles generally accepted in the United States
of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 2 to the financial
statements, the Company’s recurring losses and lack of operations raises
substantial doubt about its ability to continue as a going concern. Management’s
plans concerning 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.
Adjustments
to reconcile net loss to net cash used
by
operating activities:
-
Changes
in operating assets and liabilities:
-
Net
Cash Used by Operating Activities
(96,645
)
CASH
FLOWS FROM INVESTING ACTIVITIES
-
CASH
FLOWS FROM FINANCING ACTIVITIES
Common
stock issued for cash
153,955
Net
Cash Provided by Financing Activities
153,955
NET
CHANGE IN CASH
57,310
CASH
AT BEGINNING OF YEAR
-
CASH
AT END OF YEAR
$
57,310
SUPPLEMENTAL
DISCLOSURE OF CASH FLOW
INFORMATION:
Interest
paid
$
-
Income
taxes paid
$
-
SCHEDULE
OF NON-CASH FINANCING ACTIVITIES:
$
-
The
accompanying notes are an integral part of these financial
statements.
F-7
NOTE
1
- NATURE
OF
ORGANIZATION
a.
Organization and Business Activities
The
Company was incorporated under the laws of the State of Nevada on January10,2006 with a principal business objective of investing in and developing
all
types of businesses related to the equine industry. The Company has not
realized
any revenues to date and therefore is classified as a development stage
company.
b.
Depreciation
The
cost
of the property and equipment will be depreciated over the estimated
useful life
of 5 years. Depreciation is computed using the straight-line method when
the
assets are placed in service.
c.
Accounting Method
The
Company’s financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year-end.
d.
Cash
and Cash Equivalents
For
the
purpose of the statement of cash flows, the Company considers all highly
liquid
investments purchased with a maturity of three months or less to be cash
equivalents.
e.
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 revenues and expenses during the reporting period.
Actual results could differ from those estimates.
f.
Revenue Recognition
The
Company recognizes when products are fully delivered or services have been
provided and collection is reasonably assured.
g.
Organization Costs
The
Company has expensed the costs of its incorporation.
h.
Advertising
The
Company follows the policy of charging the costs of advertising to expense
as
incurred.
i.
Concentrations of Risk
The
Company’s bank accounts are deposited in insured institutions. The funds are
insured up to $100,000. At December 31, 2006, the Company’s bank deposits did
not exceed the insured amounts.
NOTE
1
- NATURE
OF
ORGANIZATION (Continued)
j.
Basic
Loss Per Share
F-8
The
Computation of basic loss per share of common stock is based on the weighted
average number of shares outstanding during the period.
Deferred
taxes are provided on a liability method whereby deferred tax assets are
recognized for deductible temporary differences and operating loss and tax
credit carryforwards and deferred tax liabilities are recognized for taxable
temporary differences. Temporary differences are the differences between
the
reported amounts of assets and liabilities and their tax bases. Deferred
tax
assets are reduced by a valuation allowance when, in the opinion of management,
it is more likely than not that some portion or all of the deferred tax assets
will to be realized. Deferred tax assets and liabilities are adjusted for
the
effects of changes in tax laws and rates on the date of enactment.
Net
deferred tax assets consist of the following components as of December 31,2006:
2006
Deferred
tax assets:
NOL
Carryover
$
37,692
Deferred
tax liabilities:
-
Valuation
allowance
(37,692
)
Net
deferred tax asset
$
-
The
income tax provision differs from the amount of income tax determined by
applying the U.S. federal and state income tax rates of 39% to pretax income
from continuing operations for the period ended December 31, 2006 due to the
following:
2006
Book
Income
$
(37,692
)
Valuation
allowance
37,692
$
-
F-9
NOTE
1
- NATURE
OF
ORGANIZATION (Continued)
l.
Income
Taxes (continued)
At
December 31, 2006, the Company had net operating loss carryforwards of
approximately $96,500 that may be offset against future taxable income through
2026. No tax benefit has been reported in the December 31, 2006 financial
statements since the potential tax benefit is offset by a valuation allowance
of
the same amount.
Due
to
the change in ownership provisions of the Tax Reform Act of 1986, net operating
loss carry forwards for Federal income tax reporting purposes are subject to
annual limitations. Should a change in ownership occur, net operating loss
carryforwards may be limited as to use in future years.
NOTE
2 -
GOING
CONCERN
The
Company’s financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the realization
of
assets and liquidation of liabilities in the normal course of business. The
Company has had no and has generated significant losses from
operations.
In
order
to continue as a going concern and achieve a profitable level of operations,
the
Company will need, among other things, additional capital resources and
developing a consistent source of revenues. Management’s plans include of
investing in and developing all types of businesses related to the equine
industry.
The
ability of the Company to continue as a going concern is dependent upon its
ability to successfully accomplish the plan described in the preceding paragraph
and eventually attain profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary if the Company
is unable to continue as a going concern.
F-10
MOORE
& ASSOCIATES, CHARTERED
ACCOUNTANTS
AND ADVISORS
PCAOB
REGISTERED
Report
of Independent Registered Public Accounting Firm
To
the Board of Directors
Royal
Equine Alliance Corporation
We
have
reviewed the accompanying balance sheet of Royal Equine Alliance Corporation
as
of March 31, 2007, and the related statements of operations, retained
earnings,
and cash flows for the three months then ended, in accordance with the
standards
of the Public Company Accounting Oversight Board (United States). All
information included in these financial statements is the representation
of the
management of Royal Equine Alliance Corporation
A
review
consists principally of inquiries of company personnel and analytical
procedures
applied to financial data. It is substantially less in scope than an
audit in
accordance with generally accepted auditing standards, the objective
of which is
the expression of an opinion regarding the financial statements taken
as a
whole. Accordingly, we do not express such an opinion.
Based
on
our review, we are not aware of any material modifications that should
be made
to the financial statements in order for them to be in conformity with
generally
accepted accounting principles.
The
accompanying financial statements have been prepared assuming that the
company
will continue as a going concern. The financial statements do not include
any
adjustments that might result from any uncertainty.
Net
Increase (Decrease) in Cash and Cash Equivalents
(153
)
17,551
57,157
Cash
and Cash Equivalents at Beginning of Period
57,310
-
-
Cash
and Cash Equivalents at End of Period
$
57,157
$
17,551
$
57,157
The
accompanying notes are an integral part of these financial
statements
F-15
ROYAL
EQUINE ALLIANCE CORPORATION
(A
Development Stage Company)
Notes
to
the Financial Statements
NOTE
1 -
CONDENSED FINANCIAL STATEMENTS
The
accompanying financial statements have been prepared by the Company
without
audit. In the opinion of management, all adjustments (which include
only normal
recurring adjustments) necessary to present fairly the financial
position,
results of operations and cash flows at March 31, 2007 and for all
periods
presented have been made.
Certain
information and footnote disclosures normally included in financial
statements
prepared in accordance with accounting principles generally accepted
in the
United States of America have been condensed or omitted. It is suggested
that
these condensed financial statements be read in conjunction with
the financial
statements and notes thereto included in the Company's December 31,2006 audited
financial statements. The results of operations for the period ended
March 31,2007 are not necessarily indicative of the operating results for
the full
years.
NOTE
2 -
GOING CONCERN
The
Company’s financial statements are prepared using generally accepted accounting
principles applicable to a going concern which contemplates the realization
of
assets and liquidation of liabilities in the normal course of business.
The
Company has had no revenues and has generated losses from
operations.
In
order
to continue as a going concern and achieve a profitable level of
operations, the
Company will need, among other things, additional capital resources and
to
develop a consistent source of revenues. Management’s plans include of investing
in and developing all types of businesses related to the equine
industry.
The
ability of the Company to continue as a going concern is dependent
upon its
ability to successfully accomplish the plan described in the preceding
paragraph
and eventually attain profitable operations. The accompanying financial
statements do not include any adjustments that might be necessary
if the Company
is unable to continue as a going concern.
F-16
Changes
In and Disagreements With Accountants on Accounting and Financial
Disclosure.
None.
28
Dealer
Prospectus Delivery Obligation
Prior
to
the expiration of ninety days after the effective date of this registration
statement or prior to the expiration of ninety days after the first date upon
which the security was bona fide offered to the public after such effective
date, whichever is later, all dealers that effect transactions in these
securities, whether or not participating in this offering, may be required
to
deliver a prospectus. This is in addition to the dealers’ obligation to deliver
a prospectus when acting as underwriters and with respect to their unsold
allotments or subscriptions.
REAC’s
Articles of Incorporation and its Bylaws provide for the indemnification of
a
present or former director or officer. REAC indemnifies any of its directors,
officers, employees or agents who are successful on the merits or otherwise
in
defense on any action or suit. Such indemnification shall include, expenses,
including attorney’s fees actually or reasonably incurred by him. Nevada law
also provides for discretionary indemnification for each person who serves
as or
at REAC’s request as one of its officers or directors. REAC may indemnify such
individuals against all costs, expenses and liabilities incurred in a
threatened, pending or completed action, suit or proceeding brought because
such
individual is one of REAC’s directors or officers. Such individual must have
conducted himself in good faith and reasonably believed that his conduct was
in,
or not opposed to, REAC’s best interests. In a criminal action, he must not have
had a reasonable cause to believe his conduct was unlawful.
Nevada
Law
Pursuant
to the provisions of Nevada Revised Statutes 78.751, the Corporation shall
indemnify its directors, officers and employees as follows: Every director,
officer, or employee of the Corporation shall be indemnified by the Corporation
against all expenses and liabilities, including counsel fees, reasonably
incurred by or imposed upon him/her in connection with any proceeding to which
he/she may be made a party, or in which he/she may become involved, by reason
of
being or having been 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 the Corporation, partnership, joint venture, trust or
enterprise, or any settlement thereof, whether or not he/she is a director,
officer, employee or agent at the time such expenses are incurred, except in
such cases wherein the director, officer, employee or agent is adjudged guilty
of willful misfeasance or malfeasance in the performance of his/her duties;
provided that in the event of a settlement the indemnification herein shall
apply only when the Board of Directors approves such settlement and
reimbursement as being for the best interests of the Corporation. The
Corporation shall provide to any person who 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 the corporation,
partnership, joint venture, trust or enterprise, the indemnity against expenses
of a suit, litigation or other proceedings which is specifically permissible
under applicable law.
The
following table sets forth the costs and expenses payable by the Registrant
in
connection with the sale of the common stock being registered. REAC has agreed
to pay all costs and expenses relating to the registration of its common stock.
All amounts are estimated.
In
January 2006, we issued 3,500,000 shares of our common stock to Michael
Schlosser, our founding shareholder and the sole officer and director, in
exchange for services and cash. This sale of stock did not involve any public
offering, general advertising or solicitation. At the time of the issuance,
Mr. Schlosser had fair access to and was in possession of all available
material information about our company, as he is the sole officer and director
of REAC. The shares bear a restrictive transfer legend in accordance with Rule
144 under the Securities Act. On the basis of these facts, we claim that the
issuance of stock to our founding shareholder qualifies for the exemption from
registration contained in Section 4(2) of the Securities Act of 1933.
In
January 2006, we issued 300,000 shares of our common stock to Nevada Business
Development Corporation pursuant to a services contract. This sale of stock
did
not involve any public offering, general advertising or solicitation. At the
time of the issuance, NBDC had fair access to and was in possession of all
available material information about our company, as they were a consultant
to
the Company. The shares bear a restrictive transfer legend in accordance with
Rule 144 under the Securities Act. On the basis of these facts, we claim that
the issuance of stock to our founding shareholder qualifies for the exemption
from registration contained in Section 4(2) of the Securities Act of 1933.
In
June
2006, we closed our Regulation D, Rule 504 whereby we sold 1,100,000 shares
of
our Common stock to 26 shareholders. This offering was registered in the State
of Nevada pursuant to NRS 90.490 Registration by Qualification (e.g. State
of
Nevada Permit Number R06-3). The shares were issued at a price of $0.05 per
share for total cash in the amount of $55,000. The shares do not bear a
restrictive legend as they were issued pursuant to a Regulation D, Rule 504
offering that was registered in the State of Nevada pursuant to NRS 90.490
(Registration by Qualification). This state provision provides for public filing
and delivery to investors of a substantive disclosure document before sale
as
required by Regulation D, Rule 504(b)(1)(i). Additionally at the time of the
Offering, as required by regulation D, Rule 504(a), our Company was
not:
(1)
subject
to the reporting requirements of Section 13 or 15(d) of the Exchange
Act;
(2)
an
investment company; or
(3)
a
developmental stage company that either has no specific business
plan or
purpose or has indicated that its business plan was to engage in
a merger
or acquisition with an unidentified company or companies, or other
person.
Thus,
we
believe that the offering was exempt from registration under Regulation D,
Rule
504 of the Securities Act of 1933, as amended.
In
this
Registration Statement, REAC is including undertakings required pursuant to
Rule
415 of the Securities Act.
Under
Rule 415 of the Securities Act, REAC is registering securities for an offering
to be made on a continuous or delayed basis in the future. The registration
statement pertains only to securities (a) the offering of which will be
commenced promptly, will be made on a continuous basis and may continue for
a
period in excess of 30 days from the date of initial effectiveness and (b)
are
registered in an amount which, at the time the registration statement becomes
effective, is reasonably expected to be offered and sold within two years from
the initial effective date of the registration.
Based
on
the above-referenced facts and in compliance with the above-referenced rules,
REAC includes the following undertakings in this Registration
Statement:
A.
The
undersigned Registrant hereby undertakes:
(1)
To
file, during any period, in which offers or sales are being made, a
post-effective amendment to this Registration Statement:
(i)
To
include any prospectus required by section 10(a)(3) of the Securities Act of
1933, as amended;
(ii)
To
reflect in the prospectus any facts or events arising after the effective date
of the Registration Statement (or the most recent post-effective amendment
thereof) 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 SEC
pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and
price represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of the Registration Fee” table in the
effective Registration Statement; and
(iii)
To
include any material information with respect to the plan of distribution not
previously disclosed in the Registration Statement or any material change to
such information in the Registration Statement.
(1)
That,
for the purpose of determining any liability under the Securities Act of 1933,
as amended, each such post-effective amendment shall be deemed to be a new
Registration Statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona
fide offering thereof.
(2)
To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
B.
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 provisions described in Item 14 above, 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 Securities Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment
by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question of whether
such indemnification by it is against public policy as expressed in the Act
and
will be governed by the final adjudication of such issue.
33
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of
the
requirements of filing on Form SB-2 and authorized this Registration Statement
to be signed on its behalf by the undersigned, in the City of Santa Monica,
State of California on July 11, 2007.
Royal
Equine Alliance Corporation
(Registrant)
By:
/s/
Michael Schlosser,
President & CEO, CFO
In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities
and
on the dates stated: