Item 2. Unregistered Sales of Equity Securities
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
During the three months ended March 31, 2015 the Company issued a total of 468,295 shares of its common stock as follows:
a)
During January 2015, the Company issued 58,092 shares of common stock to a corporation for conversion of $250 note payable and $40 of accrued interest. These shares were valued at $0.005 per share.
b)
During February 2015, the Company issued 177,072 shares of common stock to a corporation for conversion of $750 note payable and $136 of accrued interest. These shares were valued at $0.005 per share.
c)
During March 2015, the Company issued 162,264 shares of common stock to Capital Consulting for conversion of $500 note payable and $41 of accrued interest. These shares were valued at $0.005 per share.
d)
During February 2015, James Hodge, our chairman of the board of directors, was issued 70,867 unregistered shares of the Company’s common stock in final settlement of a consulting agreement. These shares were valued at $0.08467 per share or $6,000.
With respect to the sales of all securities
·
the aggregate shares of common stock were issued to eight United States residents and a Canadian resident in reliance on Section 4(2) and Rule 506 promulgated under the Securities Act of 1933, as amended. The shares of common stock have not been registered under the Securities Act or under any state securities laws and may not be offered or sold without registration with the United States Securities and Exchange Commission or an applicable exemption from the registration requirements. The investors acknowledged that the securities to be issued have not been registered under the Securities Act, that they understood the economic risk of an investment in the securities, and that they had the opportunity to ask questions of and receive answers from our management concerning any and all matters related to acquisition of the securities;
·
the sale was made to a sophisticated or accredited investor, as defined in Rule 502;
·
we gave the purchaser the opportunity to ask questions and receive answers concerning the terms and conditions of the offering and to obtain any additional information which we possessed or could acquire without unreasonable effort or expense that is necessary to verify the accuracy of information furnished;
·
at a reasonable time prior to the sale of securities, we advised the purchaser of the limitations on resale in the manner contained in Rule 502(d)2; and
·
neither we nor any person acting on our behalf sold the securities by any form of general solicitation or general advertising.
23
Use of Proceeds of Registered Securities.
There were no proceeds from the sales the Company’s unregistered common stock during the three months ended March 31, 2015.
Penny Stock Regulation.
Shares of our common stock are subject to rules adopted the Securities and Exchange Commission that regulate broker-dealer practices in connection with transactions in “penny stocks”. Penny stocks are generally 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 those 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 those rules; to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission, which contains the following:
·
a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
·
a description of the broker’s or dealer’s duties to the customer and of the rights and remedies available to the customer with respect to violation to such duties or other requirements of securities’ laws
·
a brief, clear, narrative description of a dealer market, including "bid" and "ask” prices for penny stocks and the significance of the spread between the "bid" and "ask" price;
·
a toll-free telephone number for inquiries on disciplinary actions;
·
definitions of significant terms in the disclosure document or in the conduct of trading in penny stocks; and
·
such other information and is in such form (including language, type, size and format), as the Securities and Exchange Commission shall require by rule or regulation.
Prior to effecting any transaction in penny stock, the broker-dealer also must provide the customer the following:
·
the bid and offer quotations for the penny stock;
·
the compensation of the broker-dealer and its salesperson in the transaction:
·
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; 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 those rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitably statement. These disclosure requirements may have the effect of reducing the trading activity in the secondary market for a stock that becomes subject to the penny stock rules. Holders of shares of our common stock may have difficulty selling those shares because our common stock will probably be subject to the penny stock rules.
Purchases of Equity Securities.
None during the period covered by this report.
Item 3. Defaults Upon Senior Securities
None
Item 4. Mine Safety Disclosure
None
Text extracted from the filing as submitted to EDGAR. Formatting, tables and exhibits are simplified for reading; the original document is authoritative for anything you rely on.