SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
___________
 
FORM 8-K
___________
 
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
 
Date Of Report (Date Of Earliest Event Reported): August 31, 2011
 
SF Blu Vu, Inc.
 (Exact Name Of Registrant As Specified In Charter)
 
Nevada
333-149158
26-1212244
(State Or Other Jurisdiction Of Incorporation Or Organization)
(Commission File No.)
(IRS Employee Identification No.)

4695 MacArthur Court, Suite 1430
Newport Beach, CA 92660
(Current Address of Principal Executive Offices)
 
Phone number: 949-475-9086
(Issuer Telephone Number)

(Former Name or Former Address, If Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below
 
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o  Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o Pre-commencement communications pursuant to Rule 14d-2 (b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o Pre-commencement communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR 240.13e-4 (c))

 
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Item 1.01                      Entry into a Material Definitive Agreement

On June 24, 2011, SF Blu Vu, Inc. (the “Issuer” or “Company”) entered into a Purchase Agreement with LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) and the selling members of LVWR (“Selling Members”).  Under the Purchase Agreement, the Selling Members will receive 30,000,000 shares of common stock from the Issuer for 100% of LVWR at the Closing Date.

Item 2.01                      Completion of Acquisition or Disposition of Assets

Concurrent with filing this Current Report on Form 8-K, the Issuer has completed the acquisition of 100% of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”).  As a result of the closing under the Purchase Agreement, the Company’s operations are now focused on the energy food and supplement market and the Company believes it can no longer be deemed a “shell company” as such term is defined in Rule 405 of the Securities Act and Rule 12b-2 of the Exchange Act.  Accordingly, we are providing the information below that would be included in a Form 10 under the Exchange Act, reflecting the Company’s common stock, which is the only class of its securities subject to the reporting requirements of Section 13 or Section 15(d) of the Exchange Act upon consummation of the Purchase Agreement, with such information reflecting the Company and its securities upon consummation of the Purchase Agreement.

In this report, we rely on and refer to information and statistics regarding our industry that we have obtained from a variety of sources. Some of this information is publicly available and has not been specifically prepared for us for use in this report or otherwise. Although we believe that this information is generally reliable, we cannot guarantee, nor have we independently verified, the accuracy and completeness of such third party information.

FORM 10 DISCLOSURES

FORM 10
Item 1 – BUSINESS

History

The Company was formed in Nevada on October 9, 2007 under the name Semper Flowers, Inc.  On May 15, 2009, the Company changed its name to SF Blu Vu, Inc.  Under the Purchase Agreement with LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) and the selling members of LVWR (“Selling Members”), the Company plans to change its name to LIVEWIRE ERGOGENICS INC. promptly after the Closing.

LiveWire Energy chews are the flagship product of Livewire MC2, LLC, the Company’s wholly owned subsidiary.  LiveWire Energy chews deliver a proprietary blend of ingredients that offer a similar energy boost as an 8 oz Red Bull (80mg caffeine) or a 2 oz  5-Hour Energy shot (138 mg caffeine), but are about the size of a Starburst candy. The LiveWire Energy chew is not a gum, it dissolves quickly in the mouth delivering its active ingredients including B-Vitamins, caffeine, and other energy boosters. LiveWire Energy chews come in seven different flavors including Citrus Mango (90 mg caffeine), Pomaberry  (90 mg caffeine), Chocolate (100 mg caffeine), Mint Chocolate (120 mg caffeine), Sour Apple (90 mg caffeine), Cinnamon Fire (90 mg caffeine), and Coffee  (100 mg caffeine).
 
 
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The LiveWire Energy chew is ideal for anyone who wants an energy boost within reach anytime, anywhere. Its convenience and portability are perfect for consumers with an action packed lifestyle, and its taste and affordability will help it tap into an estimated 19.7 billion dollar industry by 2013, a 160% increase from 2008 (Datamonitor 2008a).  The company currently estimates it sells its products in over 3000 retailers nationwide including Casey’s General Stores, Tedeschi Food Shops, Moto Mart, and various independent retailers.

Distribution is currently focused in the Midwest and East with planned expansion into the West through strategic relationships with Southwest and West Coast distribution companies. We will be locating new distributors through various tradeshows and trade consultants.

LiveWire MC2, LLC was established in 2008 to market and monetize several innovations in supplemental nutritional delivery systems. LiveWire is focused on consumer convenience and portability in the delivery of the nutritional supplements that consumers already demand. The LiveWire Energy chew is an example of meeting a consumer demand for an energy boost while offering a low sugar, convenient “grab & go” alternative to a beverage in the form of a small soft chew.

In addition to the huge energy supplement category, the company has also identified several additional unique and proprietary nutritional supplement formulas it intends to bring to market.

How we do what we do:

Development of the proprietary formula is accomplished by monitoring consumer input and reaction to new products and flavors. The company is consumer driven and continually strives to keep products relevant, fresh and consistent with the positioning of LiveWire.
LiveWire will use whatever means necessary to track, monitor and optimize our product line, company positioning and remain engaged with our target audience in order to provide a positive and meaningful relationship. In doing so, we engage in actionable primary research among our constituencies that will include but not limited to:

·   Focus Groups
·   Attitude, awareness and usage
·   Tracking Studies
·   Sales channel trends
·   Athlete network

In the course of producing the energy chew product, the company follows a process flow that includes the following steps the ensure quality control measures:

1)   Acquire raw materials
2)   Deliver raw materials to the contract manufacturer
3)   Supervise production of chew batches maintaining quality checks
4)   Upon approval, the contract manufacturer cut-wraps chews
5)   Bulk chews are quality checked and delivered to our packing facility
6)   Orders are processed and packaged as needed
7)   Orders are shipped based on scheduling requirements
 
 
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LiveWire MC2 is engaged in the development, marketing, sale, and distribution of a multi-functional soft chew. There are 5 market segments targeted to specific lifestyles and consumer demands:

1)   Energy Supplements – Ingredients such as caffeine, B-vitamins, ginseng
2)   Health and Beauty – Anti-oxidants, Relaxation
3)   Sports Hydration – Carbohydrates and Electrolytes
4)   Private label
5)   Other – Additional opportunities as they are identified

In basic form the chew provides a palatable, multi-functional delivery system allowing us to load a variety of functional ingredients to suit our marketing and product objectives. LiveWire has worked with our contract manufacturer to develop a flash thermal process that greatly improves mouth feel and consumer experience.

New development does not require a material amount of company resources. All raw materials are sourced from existing supplier inventories. In the case a supplier ceases to offer the needed raw materials we require, we would either secure an alternate source or acquire the ability to produce the raw.

Industry:

Energy Chews – The Next Evolution in the Energy Supplement Category

The global market for sports nutrition products should reach $91.8 billion by 2013.  Sports food currently represents the second-largest market segment, and should reach $2.5 billion in 2013.  Source: BCC Research.  The US has the world’s largest market for sports performance and energy products by some distance. In 2010, market value was worth an estimated US $17.73B, equivalent to 42% of the global total.”  Source: Leatherhead Food Research.

The energy food category, now ranging from candy-like offerings to gluten-free, organic, vegan bars, keeping even health obsessed athletes satisfied, has grown massively over the past several years, thanks mostly to an ever evolving product mix.  According to data from Leisure Trends Group’s Outdoor RetailTRAK, energy food has developed into a $30M category for the outdoor industry with dollar sales growing 20 percent over the past 12 months (Nov ’09 through Oct ’10). (Sports Insight Jan/Feb 2011).

The Energy Food category has seen dollar sales growing at 20 percent over the last 12 months. In just two years, sales of energy chews grew 168 percent. Chew sales grew 43 percent in RY ’10 while energy bars, still the category’s volume leader, grew 13 percent during the same period. (Sports Insight Jan/Feb 2011).

Energy chews are the next natural extension in the explosive energy drink and energy shot market by providing a convenient and portable alternative. Typically wrapped in foil and weighing in at a mere 6 grams, energy chews resemble a small piece of candy (i.e. Starburst) and are formulated with functional ingredients such as B-vitamins, caffeine, and other energy boosters. Energy chews are not gum; they dissolve quickly in your mouth and are ideal for anyone who wants an energy boost within reach anytime, anywhere.

Consumers have mainly been limited to hot coffee or cold energy drinks when looking for their daily pick-me-up or a quick boost before sports or exercise. But there are many times when a beverage just isn’t a viable option because heating and cooling are not convenient and the desire to keep restroom visits to a minimum is a priority. By eliminating all the liquid and any need for refrigeration or heating, energy chews seem to provide the optimal combination of convenience and portability. Long-haul truckers report, “less liquid in, equals less liquid out and fewer stops.” LiveWire is poised to tap into the 150 million coffee drinkers looking for a daily boost. According to the National Coffee Association and Specialty Coffee Association of America, more than 150 million Americans (18 and older) drink coffee on a daily basis.
 
 
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Although research indicates significant overlap with the energy drink category, industry insiders believe that energy chews may appeal to an even larger group of consumers. We’ve seen retailers continue to search for additional ways to satisfy the consumers evolving demands for better energy products, and energy chews seem to offer them the opportunity to do so without sacrificing valuable cooler space.  The energy supplement category was initially targeted towards athletes looking for ergogenic aids (performance enhancers), but has expanded well beyond this niche market. The popularity of energy supplement drinks among the younger generation is evidenced by 34% of 18 to 24 year olds being regular energy supplement drink users (Mintel 2009). Another report found that about one-half of college students consumed at least 1 energy drink supplement per month to increase energy levels (Institute of Food Technologist 2010 and Miller 2008).

The energy supplement category has excelled where many other functional food categories have found only niche-level success because it has delivered a very real benefit to a very real market need – namely giving an increase sense of energy and wellbeing to a fatigued society. It has quickly broached the mainstream, being purchased from teens to octogenarians in markets the world over.

As one of the fastest growing segments in the energy category in 2011, energy chews offer the retailer highly sought-after incremental sales by acting as an add-on purchase and is poised to become a category all its own. We’ve seen energy drinks appeal to young audiences and extreme sports enthusiasts, while energy shots are targeted more towards the typical office worker, but energy chews could be the overall winning formula in this new market segment appealing to the broadest range of consumers.

From the retailer’s perspective, energy chews have many advantages including their small size, flexibility to be placed anywhere in the store, no need for refrigeration, and their price point. For example, we’ve seen LiveWire Energy chews offered at $1.19 for two chews at all Casey’s General Stores throughout the Midwest as compared to drinks and shots priced between $2.00 and $3.00 each. And one LiveWire chew is equivalent to an 8 oz energy drink or an energy shot, so the savings are significant and the result is that consumers typically buy multiple chews at one time.

Strategically, the convenience store was established as the first wave of distribution for the category with the number of stores in the U.S. topping 146,300 as of December 31, 2010 (NACS/Neilson TDLinx 2011 Convenience Industry Store Count). The convenience channel is ideal because it offers speed of service to time-starved consumers who want to get in and out of the store quickly.

•           37% of respondents to a c-store study said they purchase energy/nutrition bars 2 to 3 times a week or more (c-store study, September 2004)

•           25% percent of c-store shoppers bought a snack where energy was the primary reason for the purchase.

Marketers of foods and beverages are constantly finding new ways to enhance their products with the addition of functional ingredients, to which they're finding an increasingly accepting and willing audience. Functional foods are one of the fastest growing categories of food products in the United States and consumers in the 18 – 29 year old age group are the major consumers of functional vitamin-fortified food and beverages, and energy, sports and weight-loss supplements.  The consumption of these products creates substantial future growth potential for innovative supplement extensions as these consumer groups age.

The U.S. alone represents one-third of the global nutrition market, and functional food sales are projected to exceed $30 billion by the end of the decade.  The following Top-5 Convenience Store Wholesalers represent over 100,000 deliveries per week.
 
1. McLane Grocery Distribution    40,000 (locations served)
2.   Core-Mark Holding Co. 21,000
3.  Eby-Brown Co. 13,500
4. H.T. Hackney Co. 25,000
5. GSC Enterprises Inc  8,000

Overall, the US is anticipated to become the largest consumer in the energy supplement market by 2013.  New offerings are critical for growth and currently the energy drink market is saturated and cooler shelf space is limited. Functional foods in the energy category are wide open.  Energy chews are there to capture a large share.

 
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Market Potential for Energy Chews

• Energy category is mature and still growing
• Most major energy drinks have shown increase in sales comparing 2008 to 2007 (1)
• 774% Increase in energy production from 2001 thru 2008 (2)
• Sports Drink volume first decline in production occurred in 2008 (2)
• Functional Beverage showed first decline in sales in 2008 (5%) since 2004
• Energy drinks are perceived as expensive
• Energy “Shots” established a convenience niche

Characteristics of Energy Supplement Users:

• Uses products to help improve their sense of wellbeing
• Uses products to help gain and edge or advantage
• Exercises at least one time per week
• Weekend Warrior – Participate in outdoor activities
• Higher rate of risk taking
• Success and winning are important goals
• Keener sense of adventure
• Important to be attractive to opposite sex
• Like to do unconventional things

Reasons for using Energy Supplements:

• Energy Boost
• Mental Alertness
• Health & Nutrition
• Weight Management
• Social status

Sources:
1. Infoscan R3eviews Information Resources US F/D/MX (Supermarkets, Drugstores, Mass Merchandise Outlets,
Excluding Walmart) Ending Dec 2008
2. Beverage Marketing Corp

 
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Competitor Matrix

Name
Company
Serving Size
Caffeine per Serving
Calories per Serving
Sugar per Serving
           
Chews
         
LiveWire Energy
LiveWire Ergogenics
1 chew
100mg
15
4g
FRS Healthy Energy
FRS
2 chews
20mg
40
6g
Buzz Bites
Vroom Foods
1 chew
100mg
25
3g
Honey Stinger
EN-R-G Foods Inc
10 chews
32mg
160
24g
Clif Bloks
Clif Bar
3 pcs
50mg
100
12g
Hi Octane
ToGo Brands
1 chew
80 - 100mg
20
3g
Gu Chomps
GU Energy Labs
4 pcs
0 mg
90
11g
           
Drinks
         
Red Bull
Red Bull GBh
8.3 fl oz
80mg
110
27 g
Monster
Hansen's
8 fl oz
80mg
100
27g
5-Hour Energy
Living Essentials
2 fl oz
138mg
4
0g

Marketing Strategy:

Our marketing objectives include building awareness for the LiveWire brand and products, stimulate trial, build repeat purchase, build brand loyalty, support LiveWire brand and brand attributes. The company will constantly explore products that support the LiveWire mission and continuously measure and optimize metrics that contribute to LiveWire’s success.

Strategies include, recognizing key lifestyle and psychographic drivers that contribute interest acceptance and purchase of LiveWire Energy chews. The company reaches out to the consumer in the environment in which they are most receptive such as: social media, action sports, concerts, and additional targeted active lifestyle events.

Our core target audience includes 18-34 year old male (70%) and females (30%). These individuals are active, athletic, daring, adventurous, multi-taskers, and young at heart.  We currently plan to reach our target audience through media outlets such as television, social media, website marketing, and strategic billboard placement. We also focus on local area retail marketing, college marketing, product sampling, athlete support, sponsorship, special events, endorsements, public relations and branded vehicles as part of our strategic marketing mix.

Orders:

LiveWire produces and ships all orders utilizing just-in-time inventory processes and currently has no backlogs.

Employees:

Currently we have three employees. We also utilize a network of independent brokers and distributors as well as specialized consultants.  The company anticipates an office staff of 5 that include clerical, operations, administrative and customer service.

Properties:

No current plans to acquire property or equipment.   At present, we rent a small office located at 1260 North Hancock Street, Suite 105, Anaheim, CA 92807 under a month to month agreement, and a warehouse located at 1747 S Douglass Rd, Suite C, Anaheim CA 92806 under a 1 year lease.
 
 
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Copyrights and Trade Secrets

The Company’s products are not patented but the formulations are protected trade secrets. We will protect our brand and image to the extent the law provides through trademark notifications. We are not reliant on heavy R&D and the costs associated with those efforts. Because of our close relationship with our contract manufacturer, our research and development costs are kept low and built into the cost of product.

Material Regulation

The FDA categorizes LiveWire Energy and similar products as “dietary supplements.” All dietary supplements must comply with DSHEA (Dietary Supplement Health and Education Act) regulations for manufacturing practices, labeling, and must use approved ingredients the FDA categorizes as GRAS (Generally Recognized as Safe). As long as a dietary supplement contains GRAS ingredients, the FDA does not require testing and approval. LiveWire Energy contains safe levels of vitamins, caffeine, taurine, and other nutrients recognized as safe by the FDA.

Subsidiaries

The Company owns 100% of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”).  LVWR is the operating subsidiary.

Material events

The Company will explore and entertain mergers and acquisitions as part of a strategic growth strategy within the industry.  At present, management is not aware of or pursing a specific company for a business combination.

Projections

The company had gross revenues of approximately $150,000 during the year ended December 31, 2010.  Between January 1, 2011 and August 31, 2011, the Company’s gross revenues have exceeded $350,000.

Consequences of delays

The Company is seeking growth capital of $250,000 to $1,000,000 during the next 12 months.  If outside funds are not obtained through the sale of securities or other financing arrangements, the Company’s revenue will be limited.

Item 1A - RISK FACTORS

Management of the Company intends for the Company and its wholly owned subsidiary LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) to become a profitable entity with its focus on providing Chewable Energy Supplements and other functional foods as determined by needs.  The risks and uncertainties described below are not the only ones faced. Additional risks and uncertainties not known to the Company or ones known now, but believed to be less significant could also impair the business. If any of the following risks actually occur, the business, financial condition or operating results could be negatively affected.  Among other things, consider the following:

THE COMPANY IS SUBJECT TO THE RISKS INHERENT IN THE CREATION OF A NEW BUSINESS.

The Company is subject to substantially all the risks inherent in the creation of a new business. As a result of its small size and capitalization and limited operating history, the Company is particularly susceptible to adverse effects of changing economic conditions and consumer tastes, competition, and other contingencies or events beyond the control of the Company. It may be more difficult for the Company to prepare for and respond to these types of risks and the risks described elsewhere than for a company with an established business and operating cash flow.
 
 
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OUR REVENUE GROWTH RATE DEPENDS PRIMARILY ON OUR ABILITY TO EXECUTE OUR BUSINESS PLAN.

We may not be able to adequately generate and adhere to the goals, objectives, strategies and tasks as defined in our business plan.

ANY FAILURE TO MAINTAIN ADEQUATE GENERAL LIABILITY, COMMERCIAL, AND SERVICE LIABILITY INSURANCE COULD SUBJECT US TO SIGNIFICANT LOSSES OF INCOME.

Any general, commercial and/or service liability claims will have a material adverse effect on our financial condition.

COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.

We will compete with many well-established companies such as FRS Healthy Energy, ToGo Brands, Clif Bar, GU Energy Labs, and EN-R-G Foods Inc. Indirect competitors include Red Bull, Monster, and 5-Hour Energy. Aggressive pricing by our competitors or the entrance of new competitors into our markets could reduce our revenue and profit margins.

LIMITED OPERATING HISTORY, INITIAL OPERATING LOSSES.

The Company is presently a development stage Company with limited operating history and only nominal capital. Additionally, though the Management Team has varied and extensive business backgrounds and technical expertise, they have little substantive prior working running energy chew operations.  Because of the limited operating history, it is very difficult to evaluate the business and the future prospects. The Company will encounter risks and difficulties.  If objectives are not achieved, the Company may not realize sufficient revenues or net income to succeed.

THE COMPANY MAY USE MORE CASH THAN GENERATED .

The company anticipates using standard financing models and credit facilities.  The Company may experience negative operating cash flows for the foreseeable future. The Company may need to raise additional capital in the future to meet the operating and investing cash requirements. The Company may not be able to find additional financing, if required, on favorable terms or at all. If additional funds are raised through the issuance of equity, equity-related or debt securities, these securities may have rights, preferences or privileges senior to those of the rights of the common stock holders who may experience additional dilution to their equity ownership.

NO ASSURANCE OF PROFITABILITY.

The Company has generated revenues from operations.  There can be no assurance that the Company will be profitable.

DEPENDENCE ON MANAGEMENT.

The Company will rapidly and significantly expand its operations and anticipates that significant expansion of its operations, including administrative facilities, will continue to be required in order to address potential market opportunities. The rapid growth will place, and is expected to continue to place, a significant strain on the Company’s management, operational, and financial resources. The Company's success is principally dependent on its current management personnel for the operation of its business.

THE COMPANY MUST HIRE EXPERIENCED PERSONNEL, ACQUIRE EQUIPMENT AND EXPAND FACILITIES IN ANTICIPATION OF INCREASED BUSINESS.

The Company may not be able to hire or retain qualified staff. If qualified and skilled staff are not attracted and retained, growth of the business may be limited. The ability to provide high quality service will depend on attracting and retaining educated staff, as well as professional experiences that is relevant to our market, including for marketing, technology and general experience in (manufacturing energy supplements). There will be competition for personnel with these skill sets. Some technical job categories may experience severe shortages in the United States.

FAILURE TO MANAGE THE GROWTH COULD REDUCE REVENUES OR NET INCOME.

Rapid expansion strains infrastructure, management, internal controls and financial systems. The Company may not be able to effectively manage the growth or expansion. To support growth, the Company plans to hire new employees. This growth may also strain the Company’s ability to integrate and properly train these new employees. Inadequate integration and training of employees may result in underutilization of the workforce and may reduce revenues or net income.
 
 
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THE COMPANY MAY ACQUIRE OTHER BUSINESSES OR PRODCUTS SUITABLE FOR THE COMPANY’S PLANNED EXPANSION; IF THIS HAPPENS, THE COMPANY MAY BE UNABLE TO INTEGRATE THEM INTO THE EXISTING BUSINESS, AND/OR MAY IMPAIR OUR FINANCIAL PERFORMANCE.

If appropriate opportunities present themselves, the Company may acquire businesses, technologies, services or products that are believed to be strategically viable. There are currently no understandings, commitments or agreements with respect to any acquisition, aside from acquiring the necessary equipment to begin operations.

FUTURE GOVERNMENT REGULATION MAY ADD TO OPERATING COSTS .

The Company operates in an environment of uncertainty as to potential government regulation via (energy supplement manufacturing).  We believe that we are not subject to direct regulation, other than regulations applicable to businesses generally. Laws and regulations may be introduced and court decisions may affect our business.  Any future regulation may have a negative impact on the business by restricting the method of operation or imposing additional costs.

NOTE: In addition to the above risks, businesses are often subject to risks not foreseen or fully appreciated by the management.  Potential Investors should keep in mind other potential risks that could be important, although not mentioned or anticipated.
 
Item 2 - Financial Information

Exhibit 99.1 to this report contains (i) the Report of Independent Registered Public Accounting Firm; (ii) the audited balance sheet of LiveWire MC2, LLC as of December 31, 2010 and 2009 and t he related statements of operations, of stockholders’ equity and of cash flows for the years then ended; (iii) the un audited balance sheet of LiveWire MC2, LLC as of the periods ending March 31, 2011 and 2010 and t he related statements of operations, of stockholders’ equity and of cash flows for the periods then ended; and (iv) the un audited balance sheet of LiveWire MC2, LLC as of the periods ending June 30, 2011 and 2010 and t he related statements of operations, of stockholders’ equity and of cash flows for the periods then ended.

Item 3 – Properties

At present, we rent a small office located at 1260 North Hancock Street, Suite 105, Anaheim, CA 92807 under a month to month agreement, and a warehouse located at 1747 S Douglass Rd, Suite C, Anaheim CA 92806 under a 1 year lease.

Item 4 - Security Ownership of Certain Beneficial Owners and Management

The following alphabetical table sets forth the ownership, as of August 31, 2011, of our Common Stock by each person known by us to be the beneficial owner of more than 5% of our outstanding Common Stock, each of our directors and executive officers; and all of our directors and executive officers as a group.  The information presented below regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the SEC and is not necessarily indicative of ownership for any other purpose. This table is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to this table and subject to community property laws where applicable, we believe that each of the shareholders named in this table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth below, applicable percentages are based upon 49,933,529 shares of Common Stock outstanding as of August 31, 2011.

Name of Beneficial Owner
 
Title of Class
 
Amount and
Nature of
Beneficial
Ownership
 
Percentage
 
Bill Hodson, Board Member, Chief Executive Officer, Treasurer
 
Common Stock
  9,429,000   19%  
Brad J. Nichols, Board Member, President, Chief Operating Officer
 
Common Stock
  9,729,000   19%  
Richard O. Weed, Board Member, Corporate Secretary
 
Common Stock
  1,600,000   3%  
 
Item 5 - Directors and Executive Officers Executive Officers and Directors

Below are the names and certain information regarding our executive officers and directors.
 
Name
Age
Position
Bill Hodson
45
Board Member, Chief Executive Officer, Treasurer
Brad J. Nichols
47
Board Member, President, Chief Operating Officer
Richard O. Weed
49
Board Member, Corporate Secretary
 
Set forth below is a biographical description of our executive officers and directors based on information supplied by each of them.

Bill J. Hodson, age 45, Director, Chief Executive Officer, Treasurer.

Bill J. Hodson is Chief Executive Officer of LiveWire Ergogenics, Inc and a member of its Board of Directors. Mr. Hodson is responsible for the strategic direction of the firm's branding, sales and marketing strategies. He co-founded the company with Mr. Brad Nichols after identifying a unique “edible” delivery system for active ingredients in the supplemental nutritional marketplace. Mr. Hodson has detailed insights regarding development and implementation of the company’s innovative product strategy.

Previously, he was Executive Vice President of LiveWire Sports Group from September 2003 until May 2008. Hodson was responsible for overseeing all of LWSG’s operations, which included the launch of several sports publications and one of the country’s largest sports consumer expos.

Prior to LiveWire, he served as Sales Director for Winn Golf Grips and was responsible for building the company’s national sales force and launch of what is now considered the top golf grip in the industry.
 
 
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Most notably, Mr. Hodson has been credited with the launch a popular kids’ game called “pogs” on mainland USA. The game originated in Hawaii, and Hodson seized the opportunity to capitalize on an untapped market in Southern California. His small operation exploded into an international phenomenon in just a few short years.

Mr. Hodson began his professional career in the securities industry as a stockbroker specializing in early stage nutracuetical and biotechnology companies.

Brad J. Nichols, age 47, Director, President, Chief Operating Officer.

Brad J. Nichols is President and Chief Operating Officer of LiveWire Ergogenics, Inc and a member of the Board of Directors. Mr. Nichols is responsible for the day-to-day management of the business operations. He co-founded the company with Mr. Bill Hodson and brings a solid business background as well as creative vision in product development and supplier management. Mr. Nichols is a highly influential cross-functional leader, and has helped the company achieve superior levels of financial and operational performance.

Prior to LiveWire Ergogenics, Mr. Nichols founded and grew LiveWire Creative Services into a multi-million dollar vertical market graphics and proposal support company specializing in the aerospace industry. In, 2009 Mr. Nichols turned over the reigns to Ms. Dianne Nichols and continues to provide strategic direction.

Previously, Mr. Nichols was Executive Vice President of Industrial Publications and Graphics, Inc. He managed the daily operations and client services for this successful technical services company, doubling their revenues within the first 2 years of taking over that position.
Mr. Nichols earned a Bachelor of Arts degree in Economics from the University of California at Davis.

Richard O. Weed, age 49, Board Member and Secretary.

On December 10, 2009, Richard O. Weed was appointed President, Principal Executive Officer, Chief Financial Officer, Secretary and sole member of the Board of Directors.  Following the appointment of Bill Hodson as Chief Executive Officer and Treasurer on August 31, 2011, Mr. Weed remains on the Board of Directors and serves as Secretary.  For the past 10 years, Mr. Weed has been a partner in Weed & Co. LLP, Newport Beach, CA, a law firm that provides advice on capital formation and business strategy, including litigation. He received a B.B.A. degree from the University of Texas at Austin in 1984, a Juris Doctor degree from St. Mary's University School of Law in 1987 and an M.B.A degree from the University of Southern California in 1992. In addition, Mr. Weed was an Adjunct Professor of Law at Western State University College of Law, Irvine, California from 1994-1996 and an Adjunct Professor of Business at DeVry Institute of Technology, Long Beach, California in 1997. He is currently a member of the State Bar of California and State Bar of Texas. Mr. Weed serves as an officer and director of Focus Gold Corporation and Endeavor Power Corp.

Significant Employees

We have no significant employees other than the executive officers described above.

Family Relationships

There are no familial relationships among any of our officers and directors.

Involvement in Certain Legal Proceedings

No director, person nominated to become a director, executive officer, promoter, or control person of our company has, during the last five years: (i) been convicted in or is currently subject to a pending a criminal proceeding (excluding traffic violations and other minor offenses); (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to any federal or state securities or banking or commodities laws including, without limitation, in any way limiting involvement in any business activity, or finding any violation with respect to such law, nor (iii) had any bankruptcy petition been filed by or against any business of which such person was an executive officer or a general partner, whether at the time of the bankruptcy or for the two years prior thereto.

Section 16(a) Beneficial Ownership Reporting Compliance

The Company is not aware of any reporting person that failed to file on a timely basis, reports required by Section 16(a) of the Exchange Act during the most recent fiscal year.
 
 
11

 

Board Composition
 
Our Bylaws provide that the Board of Directors shall consist of one or more members, but not more than nine, with the exact number to be fixed by our shareholders or our Board of Directors. Each director serves for a term that expires at the next regular meeting of the shareholders or until his successor is elected and qualified. We currently have three directors, Bill J. Hodson, Brad J. Nichols, and Richard O. Weed.
 
Committees of the Board of Directors

We do not presently have a separately constituted audit committee, compensation committee, nominating committee, executive committee or any other committees of our Board of Directors. We do not have an audit committee “financial expert.” Our entire Board of Directors acts as our audit committee and handles matters related to compensation and nominations of directors.

Potential Conflicts of Interest

Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.

Director Independence

We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” Our determination of independence of directors is made using the definition of “independent director” contained in Rule 4200(a)(15) of the Marketplace Rules of the NASDAQ Stock Market (“NASDAQ”) , even though such definitions do not currently apply to us because we are not listed on NASDAQ. We have determined that none of our directors currently meet the definition of “independent” as within the meaning of such rules as a result of their current positions as our executive officers.

Stockholder Communications with the Board

We have not implemented a formal policy or procedure by which our stockholders can communicate directly with our Board of Directors. Nevertheless, every effort has been made to ensure that the views of stockholders are heard by the Board of Directors or individual directors, as applicable, and that appropriate responses are provided to stockholders in a timely manner. We believe that we are responsive to stockholder communications, and therefore have not considered it necessary to adopt a formal process for stockholder communications with our Board. During the upcoming year, our Board will continue to monitor whether it would be appropriate to adopt such a process.

Code of Ethics

We have adopted a Code of Ethics within the meaning of Item 406(b) of Regulation S-K of the Securities Exchange Act of 1934. The Code of Ethics applies to directors and senior officers, such as the principal executive officer, principal financial officer, controller, and persons performing similar functions.

Item 6 - Executive Compensation

Mr. Hodson, Director, Chief Executive Officer, and Treasurer, has a written five year Employment Agreement with the Company.  Mr. Hodson receives base salary of $260,000 per year.  The Employment Agreement contains provisions for an increase to $400,000 per year depending upon certain operating milestones for the Company.

Mr. Nichols, Director, Chief Operating Officer, and President, has a written five year Employment Agreement with the Company.  Mr. Nichols receives base salary of $260,000 per year.  The Employment Agreement contains provisions for an increase to $400,000 per year depending upon certain operating milestones for the Company.

Mr. Weed, Director and Corporate Secretary, is a partner with Weed & Co. LLP.  Weed & Co. LLP has a written fee agreement to perform legal services.  Under the fee agreement, Weed & Co. LLP receives a fixed fee of $10,000 per month.  Further, Mr. Weed receives $1,500 per month for serving as Corporate Secretary.
 
 
12

 

Item 7 - Certain Relationships and Related Transactions, and Director Independence

Except as indicated below, there were no material transactions, or series of similar transactions, since inception of the Company and during its current fiscal period, or any currently proposed transactions, or series of similar transactions, to which the Company was or is to be a party, in which the amount involved exceeds $60,000, and in which any director or executive officer, or any security holder who is known by the Company to own of record or beneficially more than 5% of any class of the Company's common stock, or any member of the immediate family of any of the foregoing persons, has an interest.

Mr. Hodson, Director, Chief Executive Officer, and Treasurer, has a written five year Employment Agreement with the Company.  Mr. Hodson receives base salary of $260,000 per year.  The Employment Agreement contains provisions for an increase to $400,000 per year depending upon certain operating milestones for the Company.

Mr. Nichols, Director, Chief Operating Officer,  and President, has a written five year Employment Agreement with the Company.  Mr. Nichols receives base salary of $260,000 per year.  The Employment Agreement contains provisions for an increase to $400,000 per year depending upon certain operating milestones for the Company.

Mr. Weed, Director and Corporate Secretary, is a partner with Weed & Co. LLP.  Weed & Co. LLP has a written fee agreement to perform legal services.  Under the fee agreement, Weed & Co. LLP receives a fixed fee of $10,000 per month.  Further, Mr. Weed receives $1,500 per month for serving as Corporate Secretary.  On July 19, 2011, the Company issued 1,000,000 shares of the newly created Series A Preferred Stock to Weed & Co. LLP in exchange for a $100,000 reduction of the outstanding accounts payable, being the equivalent of One Cent ($0.1) per share of Series A Preferred Stock.

Item 8 - Legal Proceedings

The Company is not a party to any legal proceeding.

Item 9 - Market Price of and Dividends on the Registrant’s Common Equity and Related Stockholder Matters

Market Information

Our common stock has the trading symbol SFBL.  At present, our common stock is not eligible for the clearing and custody services of the Depository Trust Company.  We are working to correct this situation.  On May 5 th and 6 th , 2011, there were 105,000 shares of our common stock traded on the OTC market at prices between $.15 - $.20 per share.  There has been no active trading in the Company’s securities. As a result of the thin trading in the Company’s stock, the Company believes that the price at which the Company’s stock may trade on a given day does not necessarily represent fair value.

Holders
 
We had 51 stockholders of record of our common stock as of August 31, 2011, including shares held in street name.
 
Dividends
 
We have not paid any cash dividends to stockholders. The declaration of any future cash dividend will be at the discretion of our Board of Directors and will depend upon our earnings, if any, our capital requirements and financial position, general economic conditions and other pertinent factors. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, into our business.
 
Securities Authorized For Issuance under Equity Compensation Plans
 
We do not have any compensation plan under which equity securities are authorized for issuance.

Item 10 - Recent Sales of Unregistered Securities

In May 2011, the Company sold 15,000,000 shares of common stock at par value of $0.001 for total proceeds of $15,000.  There was no general solicitation, no advertisement, and resale restrictions were imposed by placing a Rule 144 legend on the certificates.  The persons who received securities have such knowledge in business and financial matters that he/she/it is capable of evaluating the merits and risks of the transaction.  This transaction was exempt from registration under the Securities Act of 1933, based upon Section 4(2) for transactions by the issuer not involving any public offering.
 
 
13

 

Item 11 - Description of Registrant’s Securities

General

Our Articles of Incorporation authorize the issuance of One Hundred Million (100,000,000) shares of common stock, $.0001 par value per share and Ten Million (10,000,000) shares of preferred stock, $.0001 par value per share. Further, the classes or series may have such voting powers (full, limited, extra, or none), such preferences, relative rights, and qualifications, limitations or restrictions as stated in the resolutions adopted by the board of directors.

Common Stock

Upon the closing of the Purchase Agreement with the Selling Members of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”), we have 49,933,529 shares of common stock outstanding.

Holders of our common stock are entitled to one vote for each share on all matters submitted to a stockholder vote. Holders of common stock do not have cumulative voting rights and each holder is entitled to one vote for each director vacancy being filled. Directors are elected by a plurality of the votes cast in the election of directors. Therefore, holders of a majority of the shares of common stock voting for the election of directors can elect all of the directors. Except as otherwise expressly provided by the laws of the State of Nevada, or by the Articles of Incorporation, at any and all meetings of the stockholders of the Company, for a quorum, there must be present, either in person or by proxy, stockholders owning a majority of the issued and outstanding shares of the capital stock of the Company entitled to vote at the meeting. A vote by the holders of a majority of our outstanding shares is required to effectuate certain fundamental corporate changes such as liquidation, merger or an amendment to our articles of incorporation.

Holders of common stock are entitled to share equally in all dividends that the board of directors, in its discretion, declares from legally available funds. In the event of a liquidation, dissolution or winding up, each outstanding share of common stock entitles its holder to participate pro rata in all assets that remain after payment of liabilities.

Holders of our common stock have no pre-emptive rights, no conversion rights and there are no redemption provisions applicable to our common stock.

Dividend Policy

We have never declared or paid any cash dividends on our common stock. We currently intend to retain future earnings, if any, to finance the expansion of our business. As a result, we do not anticipate paying any cash dividends in the foreseeable future.

Preferred Stock

The Company’s Articles of Incorporation authorizes Ten Million (10,000,000) shares of $.0001 par value preferred stock and states the board by resolution only and without further action or approval, may cause the Corporation to issue one or more classes or one or more series of preferred stock within any class thereof and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the board of directors, and to fix the number of shares constituting any classes or series and to increase or decrease the number of shares of any such class or series.
 
The Company’s directors on July 19, 2011 adopted resolutions determining the Designations, Rights and Preferences of the Series A Preferred Stock consisting of One Million (1,000,000) shares.  The Series A Preferred Stock is senior to the common stock and all other shares of Preferred Stock that may be later authorized.  Each outstanding share of Series A Preferred Stock has One Thousand (1,000) votes on all matters submitted to the stockholders and votes with the common stock on all matters.  The Series A Preferred Stock voting separately as a class has the right to elect three persons to serve on the board of directors.  The shares of Series A Preferred (i) do not have a liquidation preference; (ii) do not accrue, earn, or participate in any dividends; and (iii) are not subject to redemption by the Corporation.
 
After December 31, 2012, each outstanding share of Series A Preferred Stock may be converted, at the option of the owner, into fifty (50) shares of the Company's common stock; provided however, that no conversion shall be permitted unless (i) the Company's common stock is quoted for public trading in the United States or other international securities market and (ii) the Company's market capitalization (i.e., the number of issued and outstanding shares of common stock multiplied by the daily closing price) has exceeded Fifty Million Dollars ($50,000,000) for 90 consecutive trading days.
 
 
14

 

In addition to any other rights provided by law, the Company shall not, without first obtaining the affirmative vote or written consent of the holders of ninety percent (90%) of the outstanding shares of Series A Preferred Stock, do any of the following:

·  
take any action which would either alter, change or affect the rights, preferences, privileges or restrictions of the Series A Preferred or increase the number of shares of such series authorized hereby or designate any other series of Preferred Stock;

·  
increase the size of any equity incentive plan(s) or arrangements;

·  
make fundamental changes to the business of the Company;

·  
make any changes to the terms of the Series A Preferred or to the Company’s Articles of Incorporation or Bylaws, including by designation of any stock;

·  
create any new class of shares having preferences over or being on a parity with the Series A Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series A Preferred then outstanding;

·  
make any change in the number of authorized directors, currently five (5);

·  
repurchase any of the Company's Common Stock;

·  
sell, convey or otherwise dispose of, or create or incur any mortgage, lien, charge or encumbrance on or security interest in or pledge of, or sell and leaseback, all or substantially all of the property or business of the Company or more than 50% of the stock of the Company;

·  
make any payment of dividends or other distributions or any redemption or repurchase of stock or options or warrants to purchase stock of the Company; or

·  
make any sales of additional Preferred Stock.

No share or shares of Series A Preferred acquired by the Company by reason of conversion or otherwise shall be reissued as Series A Preferred, and all such shares thereafter shall be returned to the status of undesignated and unissued shares of Preferred Stock of the Company.

On July 19, 2011, the Company issued 1,000,000 shares of the newly created Series A Preferred Stock to Weed & Co. LLP, or its designee, in exchange for a $100,000 reduction of the outstanding accounts payable, being the equivalent of One Cent ($0.1) per share of Series A Preferred Stock.

Options

We have not issued and do not have any outstanding options to purchase shares of our common stock.

Transfer Agent

Our transfer agent is Continental Stock Transfer & Trust Co., 17 Battery Place, New York NY 10004. Tel: (212) 845-3218 and Fax: (212) 616-7615
 
 
15

 

Item 12 - Indemnification of Directors and Officers

As permitted by Section 78.7502 of the Nevada Revised Statutes, Article VII of the Company’s Bylaws indemnifies any officer, director or control person of the Company from liability, thereby making the Company responsible for any expenses or damages incurred by such officer, director or control person in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.

The full text of Article VII of the bylaws of the Company is as follows:

“Section 5. Indemnification.

“(a) The Corporation shall indemnify any person who was, or is threatened to be made, a party to a proceeding (as hereinafter defined) by reason of the fact that he or she (i) is or was a director, officer, employee or agent of the Corporation, or (ii) while a director, officer, employee or agent of the Corporation, is or was serving at the request of the Corporation as a director, officer, employee, agent or similar functionary of another corporation, partnership, joint venture, trust or other enterprise, to the fullest extent permitted under the Revised Statutes of the State of Nevada, as the same exists or may hereafter be amended. Such right shall be a contract right and as such shall run to the benefit of any director or officer who is elected and accepts the position of director or officer of the Corporation or elects to continue to serve as a director or officer of the Corporation while this Article VII is in effect. The rights conferred above shall not be exclusive of any other right which any person may have or hereafter acquire under any statute, bylaw, resolution of stockholders or directors, agreement or otherwise.
 
“(b) As used herein, the term “proceeding” means any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, any appeal in such an action, suit or proceeding and any inquiry or investigation that could lead to such an action, suit or proceeding.
 
“(c) A director or officer of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director or officer, except for liability (i) for acts or omissions which involve intentional misconduct, fraud or a knowing violation of law; or (ii) for the payment of distributions in violation of the Revised Statutes of the State of Nevada. Any repeal or amendment of this Article VII by the shareholders of the Corporation shall be prospective only, and shall not adversely affect any limitation on the personal liability of a director or officer of the Corporation arising from an act or omission occurring prior to the time of such repeal or amendment. In addition to the circumstances in which a director or officer of the Corporation is not personally liable as set forth in the foregoing provisions of this Article VII, a director or officer shall not be liable to the Corporation or its stockholders to such further extent as permitted by any law hereafter enacted, including, without limitation, any subsequent amendment to the Revised Statutes of the State of Nevada.”

We expect that each member of the Company’s board of directors and each officer of the Company (each such individual, an “Indemnitee”) may enter into an indemnification agreement (the “Indemnification Agreement”) with the Company, pursuant to which the Company will indemnify Indemnitee for, and hold Indemnitee harmless from and against, any Losses or Expenses (as such terms are defined in the Indemnification Agreement) at any time incurred by or assessed against Indemnitee arising out of or in connection with the service of Indemnitee as a director, advisory director, Board Committee member, officer, employee or agent of the Company or an affiliate, whether the basis of such proceeding is alleged action in an official capacity or in any other capacity while serving as an Officer or Director of the Company or of an affiliate, to the fullest extent permitted by law.

Disclosure of Commission Position on Indemnification for Securities Act Liabilities

Insofar as indemnification for liabilities arising under the Securities Act of 1933 (“the “Act”) may be permitted to directors, officers and controlling persons of the small business issuer pursuant to the foregoing provisions, or otherwise, the small business issuer 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 small business issuer of expenses incurred or paid by a director, officer or controlling person of the small business issuer in the successful defense of any action, suit or proceeding) is asserted by a director, officer or controlling person in connection with the securities being registered, the small business issuer will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

Item 13 - Financial Statements and Supplementary Data.

The audited financial statements of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) for the year ended December 31, 2010 and the interim unaudited financial statements of LVWR for the periods ended March 31, 2011 and June 30, 2011 are included as Exhibit 99.1

Item 14 - Changes In and Disagreements With Accountants on Accounting and Financial Disclosure

None.  Sherb & Co., LLP has served as the Company’s auditor since 2008.
 
 
16

 

Item 3.02 Unregistered Sales of Equity Securities.

As part of the closing under the Purchase Agreement dated June 24, 2011, pursuant to which the Company acquired 100% of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”), the Company issued 30,000,000 shares of its common stock to the 9 selling members of LVWR.  There was no general solicitation, no advertisement, and resale restrictions were imposed by placing a Rule 144 legend on the certificates for the securities.  The persons that received securities have such knowledge in business and financial matters that he/she/it are capable of evaluating the merits and risks of the transaction.  The offer and sale of these securities was made pursuant to the exemption from registration provided by Section 4(2) promulgated under the U.S. Securities Act of 1933, as amended.

Item 5.01 Changes in Control of Registrant

As explained more fully in Item 2.01, on June 11, 2010, the Company acquired 100% of LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”), the Company issued 30,000,000 shares of its common stock to the 9 selling members of LVWR.  Bill Hodson and Brad Nichols became members of the Company’s board of directors and became officers of the Company.

As previously disclosed in the Form 8-K filed December 10, 2009, Richard O. Weed was elected to the Board of Directors by the stockholders holding a majority of the voting power of the corporation.  Thereafter, Mr. Weed was appointed as President, Secretary and Treasurer of the Company. Mr. Weed remains as Secretary and a director of the Company following the appointment of Bill J. Hodson as CEO, Treasurer, and Brad J. Nichols as President, COO.

Item 5.06 Change in Shell Company Status

The Company has ceased to be a shell company as a result of the Purchase Agreement with LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) and the selling members of LVWR (“Selling Members”).  Full details regarding that transaction are provided in response to Items 1.01 and 2.01 of this current report.

Section 9 Financial Statement and Exhibits

Item 9.01 Financial Statement and Exhibits
 
3.1   Certificate of Designation of the Series A Preferred Stock
10.1    Purchase Agreement dated June 24, 2011
10.2   Fee Agreement with Weed & Co. LLP
10.3   Executive Employment Agreement – Brad Nichols
10.4   Executive Employment Agreement – Bill Hodson
99.1    Financial Statements of LIVEWIRE MC2, LLC
 
 
17

 
 

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
  SF Blu Vu, Inc.
 
       
Dated: September 2, 2011
By:
/s/Bill J. Hodson
 
   
Bill Hodson
 
   
Chief Executive Officer
 
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
18
Exhibit 3.1
SECRETARY OF STATE SEAL ROSS MILLER  
Secretary of State  
204 North Carson Street, Suite 1  
Carson City, Nevada 89701-4520  
(775) 684-5708  
Website: www.nvsos.gov  
 
   
Filed in the office of   
ROSS MILLER SIGNATURE
Ross Miller
Document Number
20110532110-56
   
Filing Date and Time
07/19/2011 4:09 PM
Certificate of Designation
 
Secretary of State
State of Nevada
Entity Number
E0701642007-5
(PURSUANT TO NRS 78.1955)
     
       
       
 
USE BLACK INK ONLY - DO NOT HIGHLIGHT
ABOVE SPACE IS FOR OFFICE USE ONLY

Certificate of Designation For
Nevada Profit Corporations
(Pursuant to NRS 78.1955)
 
1.   Name of corporation:      
  SF BLU VU, INC.
       
2.  By resolution of the board of directors pursuant to a provision in the articles of incorporation this certificate establishes the following regarding the voting powers, designations, preferences, limitations, restrictions and relative rights of the following class or series of stock.
RESOLVED, that . a special class of preferred stock of the Corporation be and are hereby created out of the Ten Million (10,000,000) shares of preferred stock available for issuance, such series to be designed as Series A Preferred Stock, consisting of One Million (1,000,000) shares, of which the preferences and ,relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Corporation's Certificate of Incorporation), shall be as stated on the following pages.
       
3.  Effective date of filing: (optional)
     
 
(must not be later than 90 days after the certificate is filed)
   
       
4.  Signature: (required)
     
       
X /s/ Richard O. Weed      
Signature of Officer Richard O. Weed, President
   
 
Filing Fee: $175.00
 
IMPORTANT: Failure to include any of the above information and submit with the proper fees may cause this filing to be rejected.
 
This form must be accompanied by appropriate fees.
Nevada Secretary of State Stock Designation
 
Revised: 3-6-09
 
 
1

 


 
CERTIFICATE OF DESIGNATIONS, PREFERENCES, AND RIGHTS
 
OF THE
 
SERIES A CONVERTIBLE PREFERRED STOCK
 
OF
 
SF BLU VU, INC.
 
SF Blu Vu, Inc., a corporation organized under the and existing under the laws of Nevada (the "Corporation"),
 
DOES HEREBY CERTIFY:
 
The Corporation's Articles of Incorporation authorizes Ten Million (10,000,000) shares of $.0001 par value preferred stock and states the board by resolution only and without further action or approval, may cause the Corporation to issue one or more classes or one or more series of preferred stock within any class thereof and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or resolutions adopted by the board of directors, and to fix the number of shares constituting any classes or series and to increase or decrease the number of shares of any such class or series.
 
NOW THEREFORE pursuant to the authority contained in the Articles of Incorporation, and in accordance with the provisions of the applicable law of Nevada, the Corporation's directors on July 19, 2011 have duly adopted the following resolutions determining the Designations, Rights and Preferences of a special class of its authorized Preferred Stock, herein designated as Series A Preferred Stock.
 
RESOLVED, that a special class of preferred stock of the Corporation be and are hereby created out of the Ten Million (10,000,000) shares of preferred stock available for issuance, such series to be designed as Series A Preferred Stock, consisting of One Million (1,000,000) shares, of which the preferences and relative rights and qualifications, limitations or restrictions thereof (in addition to those set forth in the Corporation's Certificate of Incorporation), shall be as stated below:
 
The powers, preferences and rights granted to the Series A Preferred (as defined below) or the holders thereof are as follows:
 
Designation and Rank. The series of Preferred Stock shall be designated the "Series A Preferred Stock" (the "Series A Preferred") and shall consist of One Million (1,000,000) shares. The Series A Preferred shall be senior to the common stock and all other shares of Preferred Stock that may be later authorized.
 
 
2

 
 
Voting, Liquidation, Dividends, and Redemption. Each outstanding share of Series A Preferred Stock shall have one thousand (1,000) votes on all matters submitted to the stockholders of the Corporation and shall vote with the common stock on all matters. The Series A Preferred voting separately as a class shall have the right to elect three persons to serve on the Corporation's board of directors. The shares of Series A Preferred shall (i) not have a liquidation preference; (ii) not accrue, earn, or participate in any dividends; and (iii) not be subject to redemption by the Corporation.
 
Conversion. After December 31, 2012, each outstanding share of Series A Preferred Stock may be converted, at the option of the owner, into fifty (50) shares of the Corporation's common stock; provided however, that no conversion shall be permitted unless (i) the Corporation's common stock is quoted for public trading in the United States or other international securities market and (ii) the Corporation's market capitalization (i.e., the number of issued and outstanding shares of common stock multiplied by the daily closing price) has exceeded Fifty Million Dollars ($50,000,000) for 90 consecutive trading days.
 
Covenants.
 
In addition to any other rights provided by law, the Corporation shall not, without first obtaining the affirmative vote or written consent of the holders of ninety percent (90%) of the outstanding shares of Series A Preferred, do any of the following:
 
 
·
take any action which would either alter, change or affect the rights, preferences, privileges or restrictions of the Series A Preferred or increase the number of shares of such series authorized hereby or designate any other series of Preferred Stock;
 
 
·
increase the size of any equity incentive plan(s) or arrangements;
 
 
·
make fundamental changes to the business of the Corporation;
 
 
·
make any changes to the terms of the Series A Preferred or to the Corporation's Articles of Incorporation or Bylaws, including by designation of any stock;
 
 
·
create any new class of shares having preferences over or being on a parity with the Series A Preferred as to dividends or assets, unless the purpose of creation of such class is, and the proceeds to be derived from the sale and issuance thereof are to be used for, the retirement of all Series A Preferred then outstanding;
 
 
·
make any change in the number of authorized directors, currently five (5);

 
·
repurchase any of the Corporation's Common Stock;
 
 
·
sell, convey or otherwise dispose of, or create or incur any mortgage, lien, charge or encumbrance on or security interest in or pledge of, or sell and leaseback, all or substantially all of the property or business of the Corporation or more than 50% of the stock of the Corporation;
 
 
·
make any payment of dividends or other distributions or any redemption or repurchase of stock or options or warrants to purchase stock of the Corporation; or
 
 
·
make any sales of additional Preferred Stock.
 
Reissuance. No share or shares of Series A Preferred acquired by the Corporation by reason of conversion or otherwise shall be reissued as Series A Preferred, and all such shares thereafter shall be returned to the status of undesignated and unissued shares of Preferred Stock of the Corporation.
 
 
3

 
 
The undersigned being the President and Secretary of the Corporation hereby declares under penalty of perjury that the foregoing is a true and correct copy of the Certificate of Designation of the Rights and Preferences of the Series A Preferred Stock of SF Blu Vu, Inc.. duly adopted by the Board of Directors of the Corporation on July 19, 2011.
 
       
 
By:
/s/ Richard O. Weed  
    Name: Richard  O. Weed  
    Title: President & Secretary  
       
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
4
Exhibit 10.1
 
 
PURCHASE AGREEMENT



This Purchase Agreement (“Agreement”) is made to be effective as of June 30, 2011 among SF BLU VU, INC., a Nevada corporation, (“Purchaser”) and LIVEWIRE MC2, LLC, a California limited liability company, (“LVWR”) and the selling members of LVWR, identified on the signature pages (“Selling Members”).

WHEREAS, Purchaser has common stock eligible for trading on the over-the-counter market and files reports with the United States Securities and Exchange Commission (“SEC”) under Section 12(g) of the Exchange Act.

WHEREAS, Purchaser and the Selling Members desire to enter a transaction to combine business operations (the “Transaction”) so that LVWR will become a wholly-owned subsidiary of Purchaser.

NOW, THEREFORE, for good and valuable consideration, Purchaser, LVWR, and the Selling Members agree as follows.

1.           At the Closing Date, Purchaser agrees to issue Thirty Million (30,000,000) shares of its common stock (the “Securities”) for 100% of the outstanding membership interests of LVWR, subject to the terms and conditions of this Agreement.

2.           At the Closing Date, the Selling Members agree to transfer to Purchaser 100% of the outstanding membership interests of LVWR, subject to the terms and conditions of this Agreement.

3.           The Closing Date shall mean the date of Purchaser’s filing of a Form 8-K (the “Super 8-K”) with the SEC.  Purchaser, LVWR, and the Selling Members agree to use reasonable efforts to cause the Super 8-K to be filed by August 31, 2011.

The Closing will take place at the offices of Weed & Co. LLP, 4695 MacArthur Court, Suite 1430, Newport Beach, California 92660 on the Closing Date in accordance with the terms of this Agreement, or at such other place or time as the parties mutually agree.
 
 
1

 

REPRESENTATIONS AND WARRANTIES OF PURCHASER

4.           Purchaser makes the following representations and warranties.

4.1           Organization and Authority.  Purchaser is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada, with the corporate power and authority to carry on its business as now being conducted.  The execution and delivery of this Agreement and the consummation of the Transaction has been, or will be prior to closing, duly authorized by all requisite corporate actions on the part of Purchaser. This Agreement has been duly executed and delivered by Purchaser and constitutes the valid, binding, and enforceable obligation of Purchaser.

4.2           Ability to Carry Out Agreement.  To the best of Purchaser's knowledge and belief, the execution and performance of this Agreement will not violate, or result in a breach of, or constitute a default in, any provisions of applicable law, any agreement, instrument, judgment, order or decree to which Purchaser is a party or to which Purchaser is subject.  No consents of any persons under any contract or agreement required to be disclosed pursuant to this Agreement are required for the execution, delivery, and performance by Purchaser of this Agreement.

4.3           The Securities.  The Securities will be issued at Closing, free and clear of liens, claims, and encumbrances, and Purchaser has all necessary right and power to issue the Securities to the Selling Members as provided in this Agreement without the consent or approval of any person, firm, corporation, or governmental authority.

4.4           Capitalization of Purchaser.  Purchaser is a Nevada corporation in good standing.  Purchaser’s authorized capital consists of two classes of stock.  One class of stock consists of 100,000,000 shares of $.0001 par value common stock, of which 19,933,529 shares are issued and outstanding.  One class of stock consists of 10,000,000 shares of $.0001 par value Preferred Stock, of which 1,000,000 shares have been designated Series A Preferred Stock and are issued and outstanding.  The board of directors, by resolution only and without further action or approval, may cause the corporation to issue one or more classes or one or more series of Preferred Stock within any class thereof and which classes or series may have such voting powers, full or limited, or no voting powers, and such designations, preferences and relative, participating, optional or other special rights, and qualifications, limitations or restrictions thereof, as shall be standard expressed in the resolution or resolutions adopted by the board of directors, and to fix the number of shares constituting any classes or series and to increase or decrease the number of shares of any such class or series.

4.5           No Undisclosed Liabilities.   Purchaser has no liabilities, which are not specified in its SEC filings.  Purchaser has ongoing relationships with its transfer agent, Continental Stock Transfer & Trust Co., its accountants, Sherb & Co., its legal counsel, Weed & Co. LLP, and its Secretary, Richard O. Weed, that will continue after the Closing Date.

4.6.           SEC Reporting Obligations.  Purchaser will be current with its SEC reporting obligations on the Closing Date.

4.7           Status of the Purchaser.  Purchaser is a reporting issuer pursuant to the Exchange Act.  Purchaser participates in the Pink OTC Markets Electronic Quotation Service.

4.8           Date of Representations and Warranties.  Each of the representations and warranties of Purchaser set forth in this Agreement is true and correct at and as of the Closing Date, with the same force and effect as though made at and as of the Closing Date, except for changes permitted or contemplated by this Agreement.  Without limiting the generality of the foregoing, Purchaser represents and warrants that immediately prior to the Closing Date, its liabilities will be $100,000 or less.
 
 
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REPRESENTATIONS AND WARRANTIES OF LVWR

5.           LVWR makes the following representations and warranties.

5.1.           Organization and Authority.  LVWR is a California limited liability company in good standing.  The execution and delivery of this Agreement and the consummation of the Transaction has been, or will be prior to closing, duly authorized by all requisite actions on the part of LVWR.  This Agreement has been duly executed and delivered by LVWR and constitutes the valid, binding, and enforceable obligation of LVWR.

5.2           Ability to Carry Out Agreement.  To the best of LVWR 's knowledge and belief, the execution and performance of this Agreement will not violate, or result in a breach of, or constitute a default in, any provisions of applicable law, any agreement, instrument, judgment, order or decree to which LVWR is a party or to which LVWR is subject.  No consents of any persons under any contract or agreement required to be disclosed pursuant to this Agreement are required for the execution, delivery, and performance by LVWR of this Agreement.

REPRESENTATIONS AND WARRANTIES OF THE SELLING MEMBERS

6.           The Selling Members, each individually, make the following representations and warranties.

6.1.           Financial Statements.  The Selling Members have furnished or will furnish Purchaser with true and complete copies of the audited financial statements of LVWR, including balance sheet and the related statements of operations, statement of changes in capital and cash flows for the most recently completed fiscal year (December 31, 2010) and unaudited financial statements for all subsequent interim periods.  The financial statements shall fairly present in all material respects the financial position of LVWR in conformity with GAAP.

6.2           Disclosure.  This Agreement does not, and the documents and certificates executed by the Selling Members or otherwise furnished by the Selling Members and/or LVWR to Purchaser do not contain any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading.

6.3           Conduct of Business as Usual.  Up until the Closing Date, the Selling Members shall insure that LVWR's operations shall be conducted only in the usual and ordinary course, and that no change will be made to such operations that might adversely affect the value to be transferred to Purchaser.

6.4           Best Efforts. The Selling Members shall use their best efforts to fulfill all conditions of the Closing including the timely solicitation of affirmative consent of all third parties necessary to effect a Closing under this Agreement.

6.5           Tax Advice.  The Selling Members shall consult with tax advisors, tax lawyers and accountants of their own choosing to satisfy themselves concerning the tax character of the transactions contemplated by this Agreement.  The Selling Members acknowledge that tax consequences, if any, of this Agreement shall be the responsibility of the party incurring the same.
 
 
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COVENANTS AND AGREEMENTS OF THE SELLING MEMBERS

7.           Up to and including the Closing Date, the Selling Members covenant that:

7.1 Access and Information. After the execution of this Agreement, the Selling Members will permit Purchaser to have reasonable access to all information necessary to verify the representations and warranties made herein.  After the Closing, the Selling Members will continue to permit Purchaser access to such additional documentation and information as is reasonably necessary to completion of the Transaction.

COVENANTS AND AGREEMENTS OF THE PURCHASER

8.           Up to and including the Closing Date, Purchaser covenants that:

8.1           Affirmative Covenants.   From the date hereof through the Closing Date, Purchaser will take every action reasonably required of it to satisfy the conditions to Closing set forth in this Agreement and otherwise to ensure the prompt and expedient consummation of the Transaction substantially as contemplated by the provisions of this Agreement, and will exert all reasonable efforts to cause the Transaction to be consummated.

8.2           Access and Information.   Purchaser shall provide to the Selling Members  and to the their accountants, counsel and other representatives reasonable access during normal business hours during the period prior to the Closing to all of its properties, books, contracts, commitments, records (including, but not limited to, tax returns), but no investigation pursuant to this section shall affect any representations or warranties of Purchaser.

8.3           Conduct of Business Pending the Closing of the Transaction.   Prior to the consummation of the Transaction or the termination of this Agreement pursuant to its terms, unless the Selling Members shall otherwise consent in writing, and except as otherwise contemplated by this Agreement, Purchaser shall comply with each of the following:

(1) The business of Purchaser shall be conducted only in the ordinary and usual course, Purchaser shall use reasonable efforts to keep intact its business organization and goodwill, keep available the services of its officers and employees and maintain good relationships with suppliers, lenders, creditors, distributors, employees, customers, and other persons having business or financial relationships with Purchaser, and Purchaser shall immediately notify the Selling Members  of any event or occurrence or emergency material to, and not in the ordinary and usual course of business of, Purchaser.

(2) Purchaser shall not (a) amend its Articles of Incorporation (or similar charter document) or Bylaws (or similar governing document), or (b) split, combine, or reclassify any of its outstanding securities or declare, set aside, or pay any dividend or other distribution on or make or agree or commit to make any exchange for or redemption of any such securities payable in cash, stock, or property.

(3) Purchaser shall not (a) issue or agree to issue any additional shares of, or rights of any kind to acquire any shares of, its capital stock of any class, or (b) enter into any contract, agreement, commitment, or arrangement with respect to any of the foregoing.

(4) Purchaser shall not create, incur, or assume any long-term or short-term indebtedness for money borrowed or make any capital expenditures or commitment for capital expenditures, except in the ordinary course of business and consistent with past practice.
 
 
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(5) Purchaser shall not (a) adopt, enter into, or amend any bonus, profit-sharing, compensation, stock option, warrant, pension, retirement, deferred compensation, employment, severance, termination, or other employee benefit plan, agreement, trust fund, or arrangement for the benefit or welfare of any officer, director or employee; or (b) agree to any material (in relation to historical compensation) increase in the compensation payable or to become payable to, or any increase in the contractual term of employment of, any officer, director, or employee, except, with respect to employees who are not officers or directors, in the ordinary course of business in accordance with past practice.

(6) Purchaser shall not sell, lease, mortgage, encumber, or otherwise dispose of or grant any interest in any of Purchaser’s assets or properties, except for sales, encumbrances, and other dispositions or grants in the ordinary course of business and consistent with past practice and except for liens for taxes not yet due or liens or encumbrances that are not material in amount or effect and do not impair the use of Purchaser’s property, or as specifically provided for or permitted in this Agreement.

(7) Purchaser shall not enter into, or terminate, any material contract, agreement, commitment, or understanding.

(8) Purchaser shall not enter into any agreement, commitment, or understanding, whether in writing or otherwise, with respect to any of the matters referred to in Paragraphs (1) through (7), inclusive, of this section.

(9) Purchaser will file properly and promptly when due all federal, state, local, foreign and other tax returns, reports, and declarations required to be filed by Purchaser and will pay, or make full and adequate provision for the payment of, all taxes and governmental charges due from or payable by Purchaser.

(10) Purchaser will comply with all laws and regulations applicable to Purchaser and Purchaser’s operations.

8.4           Publicity.   Prior to the Closing any written news releases by Purchaser pertaining to this Agreement or the Transaction shall be submitted to the Selling Members for review and approval prior to release by Purchaser, and shall be released only in a form approved by the Selling Members.

8.5           Offer to Convert Outstanding Notes of LVWR to Common Stock.  Promptly after the Closing, Purchase will cooperate with the conversion of any Outstanding Notes of LVWR such that each One Dollar (USD$1.00) of principal and interest on the notes shall receive 5 shares of Purchaser’s common stock.  Any shares of Purchaser’s common stock issued in the conversion shall be restricted securities and subject to lock-up and no-sale agreements for a minimum of 365 days following issuance.

9.           TERMINATION

9.1           Termination Without Cause.  This Agreement may be terminated at any time prior to the Closing Date without cost or penalty to either party by mutual consent of the Selling Members and Purchaser.

9.2           Termination with Cause.  This Agreement may be terminated, with the terminating party to be reimbursed by the other party of all expenses and costs related to this Agreement, if:

(A) Breach or Noncompliance by the Selling Members.  The Selling Members shall fail to comply in any material aspect with any of their representations, warranties, or obligations under this Agreement, or if any of the representations or warranties made by the Selling Members under this Agreement shall be inaccurate in any material respect and is not cured within ten (10) business days of notice of such breach.

(B) Breach or Noncompliance by Purchaser. Purchaser shall fail to comply in any material aspect with any of its representations, warranties, or obligations under this Agreement, or if any of the representations or warranties made by Purchaser under this Agreement shall be inaccurate in any material respect and is not cured within ten (10) business days of notice of such breach.
 
 
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10.           SECURITIES REGISTRATION; DISCLOSURE

10.1           Private Transaction.  The Selling Members understand that the shares issued pursuant to this Agreement, have not been nor will they be registered under the Securities Act, but are issued pursuant to an exemption from such registration.  The Securities will be restricted securities and subject to lock-up and no-sale agreements for a minimum of 365 days following issuance.

10.2           Access to Information.  The Selling Members represents that, by virtue of their economic bargaining power or otherwise, they have had access to or has been furnished with, prior to or concurrently with Closing, the same kind of information that would be available in a registration statement under the Securities Act should registration of the shares issued pursuant to this Agreement have been necessary, and that they have had the opportunity to ask questions of and receive answers from Purchaser's officers and directors, or any party acting on their behalf, concerning the business of Purchaser and that they have had the opportunity to obtain any additional information, to the extent that Purchaser possesses such information or can acquire it without unreasonable expense or effort, necessary to verify the accuracy of information obtained or furnished by Purchaser.

11.           INDEMNIFICATION

11.1           Indemnification by Purchaser.  Purchaser shall indemnify, save and hold harmless the Selling Members  and their affiliates, employees, accountants, auditors, attorneys, partners, agents, and other representatives from and against any and all costs, losses (including, without limitation, diminution in value), liabilities, damages, lawsuits, deficiencies, adverse claims, taxes and expenses (whether or not resulting from third-party claims), including, without limitation, interest, penalties, reasonable attorneys' fees and all amounts paid in investigation, defense or settlement of any of the foregoing (collectively, "Damages"), incurred in connection with or resulting from any breach of any covenant or warranty, or the inaccuracy of any representation made by the Purchaser in or pursuant to this Agreement.

11.2           Indemnification by Selling Members.  The Selling Members shall indemnify, save and hold harmless Purchaser, and its affiliates, officers, employees, directors, accountants, auditors, attorneys, partners, agents and other representatives, from and against any and all Damages incurred in connection with or arising out of or resulting from any breach of any covenant or warranty, or the inaccuracy of any representation, made by the Selling Members in or pursuant to this Agreement.

11.3           Defense of Third-Party Claims.  If any lawsuit or enforcement action is filed against any party entitled to the benefit of indemnification pursuant to this Agreement, written notice thereof shall be given to the indemnifying party as promptly as practicable (and in any event no later than fifteen (15) days after the service of the citation or summons); provided, however, that the failure of any indemnified party to give timely notice shall not affect the rights to indemnification contemplated by this Agreement, except to the extent that the indemnifying party demonstrates actual damage caused by such failure.  After such notice, if the indemnifying party shall acknowledge in writing to the indemnified party that the indemnifying party shall be obligated pursuant to the terms of its indemnification pursuant to this Agreement in connection with such lawsuit or action, then the indemnifying party shall be entitled, if such party so decides, to take control of the defense and investigation of such lawsuit or action and to employ and engage attorneys of its own choice to handle and defend the same, at the indemnifying party's cost, risk and expense; provided, however, that the indemnifying party and its counsel shall proceed with diligence and in good faith with respect thereto.  The indemnified party shall cooperate in all reasonable respects with the indemnifying party and such attorneys in the investigation, trial and defense of such lawsuit or action and any appeal resulting therefrom; provided, however, that the indemnified party may, at its own cost, participate in the investigation, trial and defense of such lawsuit or action and any appeal resulting therefrom.

12.           POST-CLOSING ITEMS

12.1           Name Change.  As soon as practicable after the Closing, Purchaser shall cause its name to be changed to LIVEWIRE ERGOGENICS INC.

12.2           Change of Officers and Directors.  As soon as practicable after the Closing, the Purchaser shall enter employment agreements with Bill Hodson and Brad Nichols.
 
 
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13.           MISCELLANEOUS PROVISIONS

13.1           Survival of Representations and Warranties.  All representations, warranties, and covenants made by any party in this Agreement shall survive the Closing hereunder and the consummation of the transactions contemplated hereby for two (2) years from the Closing Date. The Selling Members and Purchaser are executing and carrying out the provisions of this Agreement in reliance on the representations, warranties, and covenants and agreements contained in this Agreement or at the Closing of the transactions herein provided for including any investigation upon which they might have made or any representations, warranty, agreement, promise, or information, written or oral, made by the other party or any other person other than as specifically set forth herein.

13.2           Costs and Expenses.  Subject to Section 9.2 herein, all costs and expenses in the proposed sale and transfer described in this Agreement shall be borne by the Selling Members and Purchaser in the following manner:

(A) Attorney Fees and Costs.  Each party has been encouraged to and received an opportunity to be represented by its own attorney(s) in this transaction.  Each party shall pay the fees of its own attorney(s), if any, except as may be expressly set forth herein to the contrary.

(B) Costs of Closing.  Each party shall bear its reasonable share of all other Closing costs and expenses arising from this Agreement.

13.3           Further Assurances.  At any time and from time to time, after the effective date, each party will execute such additional instruments and take such action as may be reasonably requested by the other party to confirm or perfect title to any property transferred hereunder or otherwise to carry out the intent and purposes of this Agreement.

13.4           Waiver.  Any failure of any party to this Agreement to comply with any of its obligations, agreements, or conditions hereunder may be waived in writing by the party to whom such compliance is owed. The failure of any party to this Agreement to enforce at any time any of the provisions of this Agreement shall in no way be construed to be a waiver of any such provision or a waiver of the right of such party thereafter to enforce each and every such provision. No waiver of any breach of or non-compliance with this Agreement shall be held to be a waiver of any other or subsequent breach or non-compliance.

13.5           Headings.  The paragraph and subparagraph headings in this Agreement are inserted for convenience only and shall not affect in any way the meaning or interpretation of this Agreement.

13.6           Counterparts.  This Agreement may be executed simultaneously in two or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.

13.7           Governing Law.  This Agreement shall be governed by the laws of the United States, State of California.

13.8           Binding Effect.  This Agreement shall be binding upon the parties hereto and inure to the benefit of the parties, their respective heirs, administrators, executors, successors, and assigns.

13.9           Entire Agreement.  This Agreement contains the entire agreement between the parties hereto and supersedes any and all prior agreements, arrangements, or understandings between the parties relating to the subject matter of this Agreement.  No oral understandings, statements, promises, or inducements contrary to the terms of this Agreement exist. No representations, warranties, covenants, or conditions, express or implied, other than as set forth herein, have been made by any party.

13.10           Severability. I f any part of this Agreement is deemed to be unenforceable the balance of the Agreement shall remain in full force and effect.

13.11           Amendment.  This Agreement may be amended only by a written instrument executed by the parties or their respective successors or assigns.
 
 
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13.12           Facsimile Counterparts.  A facsimile, telecopy or other reproduction of this Agreement may be executed by one or more parties hereto and such executed copy may be delivered by facsimile of similar instantaneous electronic transmission device pursuant to which the signature of or on behalf of such party can be seen, and such execution and delivery shall be considered valid, binding and effective for all purposes. At the request of any party hereto, all parties agree to execute an original of this Agreement as well as any facsimile, telecopy or other reproduction hereof.

13.13           Time is of the Essence. Time is of the essence of this Agreement and of each and every provision hereof.

IN WITNESS WHEREOF, the parties have executed this Agreement the day and year first above written.
 
 
“Purchaser”
 
 
SF BLU VU, INC., a Nevada corporation
 
     
 
By: _____________________
 
 
Name: Richard O. Weed
 
 
Title: President
 
 
“LVWR”
LIVEWIRE MC2, LLC, a California limited liability company,



By: _____________________
Name: Bill Hodson
Title: President
 
 
LIVEWIRE MC2, LLC
 
 
SSN or EIN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 

[continued on following page]

 
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“Selling Members”


By: _____________________
Name: Bill Hodson, 31.43
 
 
 
 
 
Bill Hodson SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 
 
By: _____________________
Name: Brad Nichols, 32.43
 
 
 
 
 
Brad Nichols SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


By: _____________________
Name: Danya Thompson, 7
 
 
 
 
 
Danya Thompson SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


[continued on following page]

 
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By: _____________________
Name: Terry Barnaby, 5
 
 
 
 
 
Terry Barnaby SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


By: _____________________
Name: Tony Torgerud, 7
 
 
 
 
 
Tony Torgerud SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


By: _____________________
Name: Dave Brown, 2
 
 
 
 
 
Dave Brown SSN  __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 
 
[continued on following page]

 
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By: _____________________
Name: Jim Beuchler, 0.14
 
 
 
 
 
Jim Beuchler SSN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


LiveWire SW


By: _____________________
Name: ______________, 10
Title: __________________
 
 
 
 
 
LiveWire SW EIN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


[continued on following page]

 
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LiveWire NE


By: _____________________
Name: ______________, 5
Title: __________________
 
 
 
 
 
 
LiveWire NE EIN __________________________________
 
     
 
Complete Mailing Address
 
 
_____________________________________________
 
 
_____________________________________________
 
 
_____________________________________________
 


 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
12
Exhibit 10.2
Weed & Co. llp

4695 MacArthur Court, Suite 1430, Newport Beach, California 92660
Telephone (949) 475-9086  Facsimile  (949) 475-9087
 
 
email: rick@weedco.com
(949) 475-9086 ext. 22
 
  July 1, 2011
 
Board of Directors
SF Blu Vu, Inc.
4695 MacArthur Court, STE 1430
Newport Beach, CA 92660

RE: Legal Services

Greetings:

The purpose of this letter is to memorialize the fee agreement between SF Blu Vu, Inc., a Nevada corporation, and its subsidiaries (“CLIENT”), and Weed & Co. LLP, a California limited liability partnership (“Law Firm”).

Annual Compliance Package ($10,000/month) includes: (i) the annual report on Form 10-K or similar filing for the OTC Markets Information Service; (ii) the annual meeting of stockholders; (iii) three quarterly reports on Form 10-Q or similar filing for the OTC Markets Information Service; and (iv) up to four current reports on Form 8-K or similar filing for the OTC Markets Information Service.

Commencing July 1, 2011 and continuing through June 30, 2012, Law Firm shall render the legal services described above as the Annual Compliance Package for a fixed fee of $10,000, payable monthly, in arrears.  CLIENT may engage Law Firm on any new matters in exchange for payment of fees determined in accordance with this agreement.  Law Firm makes no promises or guarantees regarding the outcome of matters upon which Law Firm is engaged to represent CLIENT.

To protect both of the parties and to comply with professional obligations, we have already discussed with each other and resolved any potential conflicts of interest with present or former clients.  The services that Law Firm will provide shall be in accordance with the following terms and conditions.  We advise you to seek the advice of independent counsel before signing this agreement.

Professional Fees

Fees will be based upon the reasonable value of Law Firm’s services as determined in accordance with the American Bar Association Model Code of Professional Responsibility and the California & Texas Rules of Professional Conduct.  Fees will be based on the rates charged by Law Firm.
 
 
W:\The UpTurn Inc\FeeK - UPTR.doc
 
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Weed & Co. llp
 
 
Law Firm’s rate is $300 per hour.  It is anticipated that CLIENT and Law Firm will agree on a fixed fee for special projects from time to time.  The fixed fee arrangements for special projects will be agreed to in writing. Law Firm's fees will be paid in cash and as follows:

Costs and Expenses

CLIENT understands that in the course of representation, it may be necessary for Law Firm to incur certain costs or expenses. CLIENT will reimburse Law Firm for certain costs or expenses actually incurred and reasonably necessary for completing the assigned matter, as long as the charges for costs and expenses are competitive with other sources of the same products or services and approved by CLIENT in advance. More particularly, CLIENT will reimburse Law Firm in accordance with the following guidelines:

1. Computer-Related Expenses - CLIENT will reimburse Law Firm for computerized research and research services. However, any charges over $500 per month will require approval. CLIENT also encourages Law Firm to utilize computer services that will enable Law Firm to more efficiently manage the projects.

2. Travel - CLIENT will reimburse Law Firm for expenses in connection with out of town travel. However, CLIENT will only reimburse for economy class travel and, where necessary, for the reasonable cost of a rental car. All related travel expenses, i.e., lodging and meals, must be reasonable under the circumstances.

3. Filing Fees & Court Costs - CLIENT will reimburse Law Firm for expenses incurred in connection with filing fees and court costs, if any, but will not be responsible for sanctions or penalties imposed due to the conduct of Law Firm.

CLIENT shall pay and hold Law Firm harmless from all such costs and expenses incurred on CLIENT's behalf.  Law Firm may, but shall not be obligated to, advance funds on CLIENT's behalf. In such event, CLIENT agrees to reimburse Law Firm upon demand for the amounts advanced. Substantial outside fees (such as state filing fees or SEC filing services) may be referred to CLIENT for direct payment.

Billing

All bills will include a summary statement of the kinds of services rendered during the relevant period.  CLIENT expects that Law Firm will maintain back-up documentation for all expenses.  CLIENT expects to be billed monthly or at the conclusion of each project and agrees to pay Law Firm’s invoices within fifteen days of receipt.  Law Firm shall bill in increments of one-quarter (1/4) hour unless otherwise agreed in writing.
 
 
 
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Weed & Co. llp
 
 
Delay in Payment

In the event that any of Law Firm's bills remain unpaid for more than 60 days after receipt by CLIENT, Law Firm shall have the right to discontinue rendering further services to CLIENT in connection with any matter then being handled for CLIENT by Law Firm and to take appropriate action to collect such fees.

Involvement of Client

CLIENT expects to be kept closely involved with the progress of Law Firm’s services in this matter. Law Firm will keep CLIENT apprised of all material developments in this matter, and will provide sufficient notice to enable a representative to attend meetings, conferences, and other proceedings.

There may be times when Law Firm will need to obtain information from CLIENT. All requests for access to documents, employees, or other information shall be granted without unreasonable delay.

Termination

CLIENT shall have the right to terminate Law Firm’s engagement by written notice at any time.  Law Firm has the same right to terminate this engagement, subject to an obligation to give CLIENT reasonable notice to permit it to obtain alternative representation or services and subject to applicable ethical provisions.  Law Firm will be expected to provide reasonable assistance in effecting a transfer of responsibilities to the new service provider.

Disputes

The laws of the State of California shall govern the interpretation of this agreement, including all rules or codes of ethics that apply to the provision of services.  All disputes between us arising out of this engagement that cannot be settled shall be resolved in a federal or state court located in Orange County, California.

If the foregoing accurately reflects our agreement regarding professional services, please sign and return a duplicate copy of this letter.  Thank you in advance for your prompt attention to this matter.
 
 
 
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Weed & Co. llp
 
   
Very truly yours,
 
         
 
 
By:
/s/  Richard O. Weed  
      Richard O. Weed  
      Managing Partner  
         
Approved and Agreed
       
SF Blu Vu, Inc.        
         
By: /s/ Richard O. Weed        
Name: Richard O. Weed        


 
 
4
Exhibit 10.3
 
EXECUTIVE EMPLOYMENT AGREEMENT
 
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), dated July 20, 2 0 1 1, is by and between Brad Nichols ("Employee") and SF BLU VU, INC. ("Employer").
 
RECITALS:
 
WHEREAS, Employer's board of directors (the "Board") desires to employ Employee in an executive capacity and the Employee desires to be so employed in such capacity;
 
WHEREAS, Employer may file for a company name change after the date this agreement was executed, the term “Employer” applies to the then current company name;
 
NOW THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
 
ARTICLE I
 
Term
 
1.1 Employment. Employer employs Employee and Employee accepts employment under the terms and conditions of this Agreement.
 
1.2 Term. This agreement is effective as of the date of this agreement. The term for employment under this Agreement shall be for five (5) years and shall be effective simultaneously with the CLOSING DATE defined in the PURCHASE AGREEMENT between SF BLU VU, INC., LIVEWIRE MC2, LLC, and the SELLING MEMBERS of LIVEWIRE MC2, LLC, and shall terminate after 60 months, unless extended by mutual agreement of the parties. Upon mutual agreement of the parties, this Agreement may be extended for an additional period upon written notice given to Employee not less than three (3) months prior to the termination of this Agreement.
 
A. Option Term. Upon mutual agreement of the parties, and upon the condition that there is no breach of any condition or term of this Agreement at the time of exercise, this Agreement may be extended for an additional twelve (12) months on the same terms and conditions of this Agreement, unless modified or amended upon the written consent of Employer and Employee.
 
 
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ARTICLE II
Compensation
 
2.1 Compensation. For all services rendered by Employee, Employer shall pay Employee the base salary commencing on the effective employment date of this agreement, of $260,000 per year. Salary payments shall be subject to the deferred salary terms of this agreement as well as withholding and other applicable taxes.
 
A. Salary Adjustment. Employer and Employee recognize that certain " Events" (as defined in the following paragraphs) may occur which will give rise to a salary increase. Upon the occurrence of any one of the Events listed in the following paragraphs, Employee's salary shall be increased to twice (2 times) the current base salary per year during the term of this Agreement, and will become the new base salary. Such increase shall be automatic upon the happening of any one of the Events listed below.
 
B. Definition of "Events." For purposes of this Agreement and particularly, the salary increases described in the foregoing paragraph, any one of the following shall be considered an "Event":
 
i.            Merger. A merger with a third party entity, whereby at least fifty-­‐one percent (51%) of Employer's outstanding common stock is merged with such entity.
 
ii.           Sale/Acquisition. A sale or acquisition of at least fifty-­‐one percent of Employer's outstanding common stock or the sale of all or substantially all of Employer's assets to a third party entity.
 
iii.          Capital. Employer's raising at least $4 million through the sale of equity securities.
 
iv.          Debt Facility. A debt facility is put in place offering Employer a debt facility of at least $6 million.
 
C. Employee Exit Option. Upon any Event involving items i or ii above, Employee shall have the option to continue employment as described in the foregoing paragraphs or terminate employment and receive a one time payment of four (4) times the employee’s current base salary.
 
D. Other Salary Adjustment. Upon employer reaching a 12 month trailing revenue of $4 million, Employee's base salary shall automatically increase to $400,000 if current base salary is less.
 
 
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2.2 Earned Monetary Bonuses. Employee shall be entitled to an annual bonus as determined by the Employer's Board of Directors. Employee's performance shall be reviewed annually to determine the payment of bonuses.
 
2.3 Automobile Allowance. Employee shall be entitled to an automobile allowance of $500 per month, payable in equal payments. Employer shall pay Employee's automobile insurance and reasonable maintenance. 100% of the Automobile Allowance shall be deferred for 12 months and subject to section 2.8 “Deferred Compensation Payment” of this agreement.
 
2.4 Stock Option Consideration. Employee, as partial consideration for his services, shall be entitled to receive Stock Options as determined by the Employer's Board of Directors. Such determination shall be made on an annual basis.
 
2.5 Employee Benefits. In addition to the foregoing, Employee shall be entitled to the following:
 
A.     Health Insurance. Upon implementation of an Employee Health Insurance plan by Employer, Employer shall provide and pay for health, dental and life insurance for Employee and his family with an insurance carrier of Employer's choice. The benefits offered under this paragraph shall include a standard executive employee health and life insurance program.
 
B.     Expenses. Employee may incur reasonable expenses for promoting Employer's business, including expenses for entertainment, travel and similar items. Employer will reimburse Employee for all such reasonable expenses upon Employee's presentation of an itemized account of such expenditures. Employer shall provide Employee with a Diner's Club, American Express or other credit card for his use in promoting and representing Employer, dependent upon Employee's credit worthiness.
 
C.     Vacations. During the Term, Employee shall be entitled to paid vacation time of five (5) weeks per year of the Term, with any partial year determined on a pro rata basis. Vacation time shall be accrued and used in accordance with the Employer’s policy as it may be established from time to time. In addition, Employee shall receive other paid time-­‐off in accordance with the Employer's policies for senior executives; as such policies may exist from time to time.
 
2.6 Base Salary Review. The Board of Directors of Employer shall review the Base Salary annually and may make adjustments to increase but not decrease such Base Salary, in accordance with the compensation practices and guidelines of the Employer. The Base Salary shall not be reduced during the Term without Employee’s express prior written consent.
 
 
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2.7 Deferred Compensation. Unless the Board of Directors chooses to increase sooner, employee will initially be paid a reduced amount equal to $5000 per month, with the balance of the base salary deferred per the following:
 
A.  After 6 months or when employer's 12 month trailing revenue reaches $1 million, monthly paid amount will be increased to $10,000 with the remaining balance continuing to be deferred.
 
B.   After 12 months or when employer's 12 month trailing revenue reaches $2 million, monthly paid amount will be increased to the employee’s full salary.
 
2.8 Deferred Compensation Payment. Total Deferred compensation amount shall be paid at earliest possible opportunity or upon the occurrence of any Event from 2.1 “Compensation” and including any of the following:
 
A.
The sale of substantially all of the Employer's assets to a single purchaser or group of associated purchasers; or
B.
The sale, exchange, or other disposition, in one transaction of the majority of the Employer's outstanding corporate shares; or
C.
Any other change of control of the Employer; or
D.
The Employer's decision to terminate its business and liquidate its assets; or
E.
The merger or consolidation of the Employer with another company; or
F.
Bankruptcy or chapter 11 reorganization; or
G.
Once 12 mo revenue run rate reaches $5 mil.; or
H.
Upon payment terms agreeable to employee; or
I.
Termination of employment; or
J.
Attempted or successful demotion of employee in any way
 
Employee shall have two payment options for payment of the deferred compensation amount with the total amount paid equaling either the total deferred salary due plus an annual interest rate of prime + 8%, OR 5 shares for every dollar owed.
 
2.9 Equity. It is acknowledged that Employee has received restricted stock and stock options (collectively, "Equity") with specific terms and conditions provided in the relevant documentation. Employer agrees that there will be no change made to adversely affect such Equity in any such documentation during the Term, without the prior written consent of Employee.
 
 
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ARTICLE III
 
Duties of Employee
 
3.1 Duties. Employee is engaged as Chief Operating Officer; President; and as a member of the Board of Directors; and shall have authority over such decision-­‐making and managerial duties regarding the business of Employer; and shall supervise and direct all of the business of Employer according to business plans and strategies provided by Employer, reporting only to the Board. The precise services of Employee may be extended or curtailed by mutual agreement of Employer and Employee from time to time.
 
3.2 Extent of Services. Employee shall use Employee's good faith best efforts and judgment in performing Employee's duties required hereunder. Employee shall devote such time, attention and energies to the business of the Employer as are reasonably necessary to satisfy Employee's required responsibilities and duties hereunder.
 
3.4 Appointment to Board of Directors. Upon the effective employment date of this agreement, employee shall be immediately appointed to the Board of Directors of the employer.
 
3.5 Accountability. Employee shall be directly responsible to the Board.
 
ARTICLE IV
 
Duties of Employer
 
4.1 Payment of Compensation and Provision of Benefits. During the terms hereof, Employer agrees to pay all compensation, benefits, allowances, deferred compensation and Flexible Time Off due to Employee as set forth herein.
 
4.2 Working Facilities. Employer shall provide offices, and such other facilities and services as are suitable to his position and appropriate for the performance of his duties.
 
ARTICLE V
 
Disability; Death During Employment
 
5.1 Disability. If Employee is unable to perform his services by reason of illness or incapacity for a period of more than one (1) month, the compensation thereafter payable to him during the continued period of such illness or incapacity for a period not to exceed twelve (12) months, shall be seventy percent (70%) of Employee's then current salary. Employee's full compensation shall be reinstated upon his recovery. Notwithstanding anything to the contrary, Employer may terminate this Agreement at any time after Employee shall be absent from his employment, for whatever cause, for a continuous period of more than twelve months (12), and the obligations of Employer shall thereupon terminate, except as obligated under continued benefits provided herein. If it is determined, pursuant to the terms of this Agreement, that Employee is disabled or incapacitated and cannot discharge the duties and responsibilities contemplated hereunder, Employer shall have the right to hire an employee to replace him in whatever position he may have at that time.
 
 
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A. Disability Insurance. In lieu of the foregoing, Employer may obtain disability insurance for Employee. Should this occur, paragraph 5.1 shall be null and void and the terms of said disability insurance shall govern, so long as the terms in such policy are equal to or greater than the terms outlined in Section 5.1.
 
5.2 Death During Employment. If Employee dies during the term of employment, Employer shall pay to the estate of Employee the compensation which would otherwise be payable to Employee up to the end of the month in which death occurs. In addition, Employer shall pay a sum equal to two (2) year's compensation payable in three equal monthly installments after the death of Employee to the spouse of Employee or if he is not survived by his spouse, then to Employee's heirs in equal shares, or if there are no such surviving heirs, to the estate of Employee.
 
ARTICLE VI
 
Confidential Information; Trade Secrets; Proprietary Rights
 
6.1 Confidentiality. Employee hereby acknowledges that he has received information regarding the business of Employer, including but not limited to customer lists, product information, business strategy, employee agreements, which information is confidential information (the "Confidential Information"). The parties hereto recognize and acknowledge that the Confidential Information is proprietary and integral to Employer's business and agrees to keep such Confidential Information confidential and not disclose the same to any third person, corporation and/or entity for a period of two (2) years subsequent to the termination of this Agreement or termination of Employee with cause.
 
ARTICLE VII
 
Non-­‐Competition
 
7.1 Non-­‐Competition. During Employee's term of employment set forth in this Agreement, Employee will not directly or indirectly be an owner, partner, director, manager, officer or employee or otherwise render services to any business that competes with Employer.
 
 
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ARTICLE VIII
 
Termination
 
8.1 Termination With Cause. With cause, Employer may terminate this Agreement upon an affirmative vote of a majority of the members of the Board, and upon thirty (30) days' written notice to Employee by providing Employee a Notice of Termination, which shall set forth in reasonable detail the Employer's basis for such termination. In such event, Employee shall continue to render his services and shall be paid his regular compensation up to the date of termination. Employee shall be entitled to receive payment for any unreimbursed expenses incurred, accrued but unpaid Base Salary and other accrued but unpaid employee benefits as provided in this Agreement. Severance allowance shall be equal to six (6) month's salary of Employee. For purposes of this Agreement, "with cause" shall be defined as:
 
(i) Employee's conviction of a felony or of any crime involving moral turpitude, and affirmance of such conviction following the exhaustion of any appeals; (ii) willful refusal of Employee to substantially perform all of his duties and responsibilities, or Employee's persistent willful neglect of duty or chronic, willful unapproved absenteeism other than for a temporary or permanent Disability, which remains uncured following thirty days after written notice of
such alleged Cause by the Board of Directors; or (iii) any material and substantial breach by Employee of other terms and conditions of this Agreement, which, in the reasonable, good faith judgment of the Board of Directors, has a material adverse financial effect on the Company or on Employee's ongoing abilities to carry out his duties under this Agreement and which remains uncured following thirty days after written notice of such alleged Cause by the Board of Directors.
 
8 . 2 Termination Without Cause. Employer may terminate Employee without cause upon thirty (30) days written notice. Upon termination without cause by employer, Employee shall be entitled to cash compensation equal to the greater of the following: (A) the then existing base salary of Employee, as defined in Article 2.1, for the remainder of the term of this Agreement; or (B) four (4) times the then existing base salary of Employee, as defined in Article 2.1, for a period of one (1) year from the date of termination without cause. In the event of termination without cause, all cash compensation and deferred amounts due, as referred to above, shall be paid to Employee on a bi-­‐monthly basis.
 
8.3 Termination Upon Sale of Business. Notwithstanding anything to the contrary, Employer may terminate this Agreement upon thirty (30) days' written notice upon the happening of any of the following events which any one event will be treated as a termination without cause for purposes of severance allowance pursuant to this Agreement.
 
A.          The sale by Employer of substantially all of its assets to a single purchaser or a group of associated purchasers;
 
B.           The sale, exchange or other disposition, in one transaction, of at least fifty percent (50%) of the outstanding common shares of the Employer;
 
C.           A decision by Employer to terminate its business and liquidate its assets; or the merger or consolidation of Employer in a transaction in which the shareholders of Employer receive at least fifty percent (50%) of the outstanding voting shares of the new or continuing corporation.
 
D.          Notwithstanding the foregoing, should Employer agree to sell all or substantially all of its assets, Employer shall purchase Employee's Shares for an amount of the greater of the Stock Purchase Price or the same price sold by other of Employer's shareholders.
 
 
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8.4 Surviving Benefits. Employee will continue to receive the highest level of benefits received for a period of 5 years after termination.
 
 
ARTICLE IX
 
General Provisions
 
9.1. Waiver of Breach. The waiver by Employer of breach of any provisions of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of Employer.
 
9.2 Assignment. Employee acknowledges that the services to be rendered by him are unique and personal. Accordingly, Employee may not assign any of his rights under this Agreement. The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer.
 
9.3 Modification. This Agreement may not be modified, changed or altered orally but only by an agreement in writing signed by the party against an enforcement of any waiver, change, modification, extension or discharge as sought.
 
9.4. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California.
 
9.5 Integration Clause. This instrument contains the entire agreement between the parties hereto and supersedes any and all prior written and/or oral agreements. This Agreement may be altered or modified only in writing signed by the parties hereto.
 
9.6 Notices. Any notice required or desired to be given under this Agreement shall be deemed given if in writing sent by certified mail to the parties at each party's last known address.
 
9.7 Attorneys' Fees. Should any party seek the enforcement of any term of this Agreement, the prevailing party thereunder shall be entitled to attorneys' fees and costs for the enforcement of such term or provision.
 
9.8 Arbitration. In the event of any dispute arising under this Agreement, including any dispute regarding the nature, scope or quality of services provided by either party hereto, its is hereby agreed that such dispute shall be resolved by binding arbitration to be conducted by the American Arbitration, to be arbitrated in accordance with its rules and regulations and procedures in Orange County, California. In the event of any such arbitration, pending resolution of the arbitration and the award of costs by the arbitrator, each party hereto shall advance one-­‐half of the amounts, if any, requested by the arbitrator and/or the sponsoring organization.
 
 
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IN WITNESS WHEREOF, the parties executed this Agreement as of the date first written above.
 
 
EMPLOYEE      
       
       
Brad Nichols
     
       
 
EMPLOYER    
       
By:      
Richard O. Weed, CEO, CFO    
       
SF BLU VU, INC.    
 
 
 
 
 
 
 
 
 
 
 
 
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Exhibit 10.4
 
EXECUTIVE EMPLOYMENT AGREEMENT
 
THIS EXECUTIVE EMPLOYMENT AGREEMENT (this "Agreement"), dated July 20, 2 0 1 1, is by and between Bill Hodson ("Employee") and SF BLU VU, INC. ("Employer").
 
RECITALS:
 
WHEREAS, Employer's board of directors (the "Board") desires to employ Employee in an executive capacity and the Employee desires to be so employed in such capacity;
 
WHEREAS, Employer may file for a company name change after the date this agreement was executed, the term “Employer” applies to the then current company name;
 
NOW THEREFORE, in consideration of the mutual covenants and conditions hereinafter set forth and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:
 
ARTICLE I
 
Term
 
1.1 Employment. Employer employs Employee and Employee accepts employment under the terms and conditions of this Agreement.
 
1.2 Term. This agreement is effective as of the date of this agreement. The term for employment under this Agreement shall be for five (5) years and shall be effective simultaneously with the CLOSING DATE defined in the PURCHASE AGREEMENT between SF BLU VU, INC., LIVEWIRE MC2, LLC, and the SELLING MEMBERS of LIVEWIRE MC2, LLC, and shall terminate after 60 months, unless extended by mutual agreement of the parties. Upon mutual agreement of the parties, this Agreement may be extended for an additional period upon written notice given to Employee not less than three (3) months prior to the termination of this Agreement.
 
A. Option Term. Upon mutual agreement of the parties, and upon the condition that there is no breach of any condition or term of this Agreement at the time of exercise, this Agreement may be extended for an additional twelve (12) months on the same terms and conditions of this Agreement, unless modified or amended upon the written consent of Employer and Employee.
 
 
 
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ARTICLE II
 
Compensation
 
2.1 Compensation. For all services rendered by Employee, Employer shall pay Employee the base salary commencing on the effective employment date of this agreement, of $260,000 per year. Salary payments shall be subject to the deferred salary terms of this agreement as well as withholding and other applicable taxes.
 
A. Salary Adjustment. Employer and Employee recognize that certain
" Events" (as defined in the following paragraphs) may occur which will give rise to a salary increase. Upon the occurrence of any one of the Events listed in the following paragraphs, Employee's salary shall be increased to twice (2 times) the current base salary per year during the term of this Agreement, and will become the new base salary. Such increase shall be automatic upon the happening of any one of the Events listed below.
 
B. Definition of "Events." For purposes of this Agreement and particularly, the salary increases described in the foregoing paragraph, any one of the following shall be considered an "Event":
 
i.             Merger. A merger with a third party entity, whereby at least fifty-­‐one percent (51%) of Employer's outstanding common stock is merged with such entity.
 
ii.            Sale/Acquisition. A sale or acquisition of at least fifty-­‐one percent of Employer's outstanding common stock or the sale of all or substantially all of Employer's assets to a third party entity.
 
iii.           Capital. Employer's raising at least $4 million through the sale of equity securities.
 
iv.           Debt Facility. A debt facility is put in place offering Employer a debt facility of at least $6 million.
 
C. Employee Exit Option. Upon any Event involving items i or ii above, Employee shall have the option to continue employment as described in the foregoing paragraphs or terminate employment and receive a one time payment of four (4) times the employee’s current base salary.
 
D. Other Salary Adjustment. Upon employer reaching a 12 month trailing revenue of $4 million, Employee's base salary shall automatically increase to $400,000 if current base salary is less.
 
 
 
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2.2 Earned Monetary Bonuses. Employee shall be entitled to an annual bonus as determined by the Employer's Board of Directors. Employee's performance shall be reviewed annually to determine the payment of bonuses.
 
2.3 Automobile Allowance. Employee shall be entitled to an automobile allowance of $500 per month, payable in equal payments. Employer shall pay Employee's automobile insurance and reasonable maintenance. 100% of the Automobile Allowance shall be deferred for 12 months and subject to section 2.8 “Deferred Compensation Payment” of this agreement.
 
2.4 Stock Option Consideration. Employee, as partial consideration for his services, shall be entitled to receive Stock Options as determined by the Employer's Board of Directors. Such determination shall be made on an annual basis.
 
2.5 Employee Benefits. In addition to the foregoing, Employee shall be entitled to the following:
 
A.     Health Insurance. Upon implementation of an Employee Health Insurance plan by Employer, Employer shall provide and pay for health, dental and life insurance for Employee and his family with an insurance carrier of Employer's choice. The benefits offered under this paragraph shall include a standard executive employee health and life insurance program.
 
B.     Expenses. Employee may incur reasonable expenses for promoting Employer's business, including expenses for entertainment, travel and similar items. Employer will reimburse Employee for all such reasonable expenses upon Employee's presentation of an itemized account of such expenditures. Employer shall provide Employee with a Diner's Club, American Express or other credit card for his use in promoting and representing Employer, dependent upon Employee's credit worthiness.
 
C.     Vacations. During the Term, Employee shall be entitled to paid vacation time of five (5) weeks per year of the Term, with any partial year determined on a pro rata basis. Vacation time shall be accrued and used in accordance with the Employer’s policy as it may be established from time to time. In addition, Employee shall receive other paid time-­‐off in accordance with the Employer's policies for senior executives; as such policies may exist from time to time.
 
2.6 Base Salary Review. The Board of Directors of Employer shall review the Base Salary annually and may make adjustments to increase but not decrease such Base Salary, in accordance with the compensation practices and guidelines of the Employer. The Base Salary shall not be reduced during the Term without Employee’s express prior written consent.
 
 
 
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2.7 Deferred Compensation. Unless the Board of Directors chooses to increase sooner, employee will initially be paid a reduced amount equal to $5000 per month, with the balance of the base salary deferred per the following:
 
A.   After 6 months or when employer's 12 month trailing revenue reaches $1 million, monthly paid amount will be increased to $10,000 with the remaining balance continuing to be deferred.
 
B.    After 12 months or when employer's 12 month trailing revenue reaches $2 million, monthly paid amount will be increased to the employee’s full salary.
 
2.8 Deferred Compensation Payment. Total Deferred compensation amount shall be paid at earliest possible opportunity or upon the occurrence of any Event from 2.1 “Compensation” and including any of the following:
 
A. The sale of substantially all of the Employer's assets to a single purchaser or group of associated purchasers; or
B. The sale, exchange, or other disposition, in one transaction of the majority of the Employer's outstanding corporate shares; or
C. Any other change of control of the Employer; or
D. The Employer's decision to terminate its business and liquidate its assets; or
E. The merger or consolidation of the Employer with another company; or
F. Bankruptcy or chapter 11 reorganization; or
G. Once 12 mo revenue run rate reaches $5 mil.; or
H. Upon payment terms agreeable to employee; or
I. Termination of employment; or
J. Attempted or successful demotion of employee in any way
 
Employee shall have two payment options for payment of the deferred compensation amount with the total amount paid equaling either the total deferred salary due plus an annual interest rate of prime + 8%, OR 5 shares for every dollar owed.
 
2.9 Equity. It is acknowledged that Employee has received restricted stock and stock options (collectively, "Equity") with specific terms and conditions provided in the relevant documentation. Employer agrees that there will be no change made to adversely affect such Equity in any such documentation during the Term, without the prior written consent of Employee.
 
 
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ARTICLE III
 
Duties of Employee
 
3.1 Duties. Employee is engaged as Chief Executive Officer; and as a member of the Board of Directors; and shall have authority over such decision-­‐making and managerial duties regarding the business of Employer; and shall supervise and direct all of the business of Employer according to business plans and strategies provided by Employer, reporting only to the Board. The precise services of Employee may be extended or curtailed by mutual agreement of Employer and Employee from time to time.
 
3.2 Extent of Services. Employee shall use Employee's good faith best efforts and judgment in performing Employee's duties required hereunder. Employee shall devote such time, attention and energies to the business of the Employer as are reasonably necessary to satisfy Employee's required responsibilities and duties hereunder.
 
3.4 Appointment to Board of Directors. Upon the effective employment date of this agreement, employee shall be immediately appointed to the Board of Directors of the employer.
 
3.5 Accountability. Employee shall be directly responsible to the Board.
 
ARTICLE IV
 
Duties of Employer
 
4.1 Payment of Compensation and Provision of Benefits. During the terms hereof, Employer agrees to pay all compensation, benefits, allowances, deferred compensation and Flexible Time Off due to Employee as set forth herein.
 
4.2 Working Facilities. Employer shall provide offices, and such other facilities and services as are suitable to his position and appropriate for the performance of his duties.
 
ARTICLE V
 
Disability; Death During Employment
 
5.1 Disability. If Employee is unable to perform his services by reason of illness or incapacity for a period of more than one (1) month, the compensation thereafter payable to him during the continued period of such illness or incapacity for a period not to exceed twelve (12) months, shall be seventy percent (70%) of Employee's then current salary. Employee's full compensation shall be reinstated upon his recovery. Notwithstanding anything to the contrary, Employer may terminate this Agreement at any time after Employee shall be absent from his employment, for whatever cause, for a continuous period of more than twelve months (12), and the obligations of Employer shall thereupon terminate, except as obligated under continued benefits provided herein. If it is determined, pursuant to the terms of this Agreement, that Employee is disabled or incapacitated and cannot discharge the duties and responsibilities contemplated hereunder, Employer shall have the right to hire an employee to replace him in whatever position he may have at that time.
 
 
 
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A. Disability Insurance. In lieu of the foregoing, Employer may obtain disability insurance for Employee. Should this occur, paragraph 5.1 shall be null and void and the terms of said disability insurance shall govern, so long as the terms in such policy are equal to or greater than the terms outlined in Section 5.1.
 
5.2 Death During Employment. If Employee dies during the term of employment, Employer shall pay to the estate of Employee the compensation which would otherwise be payable to Employee up to the end of the month in which death occurs. In addition, Employer shall pay a sum equal to two (2) year's compensation payable in three equal monthly installments after the death of Employee to the spouse of Employee or if he is not survived by his spouse, then to Employee's heirs in equal shares, or if there are no such surviving heirs, to the estate of Employee.
 
ARTICLE VI
 
Confidential Information; Trade Secrets; Proprietary Rights
 
6.1 Confidentiality. Employee hereby acknowledges that he has received information regarding the business of Employer, including but not limited to customer lists, product information, business strategy, employee agreements, which information is confidential information (the "Confidential Information"). The parties hereto recognize and acknowledge that the Confidential Information is proprietary and integral to Employer's business and agrees to keep such Confidential Information confidential and not disclose the same to any third person, corporation and/or entity for a period of two (2) years subsequent to the termination of this Agreement or termination of Employee with cause.
 
ARTICLE VII
 
Non-­‐Competition
 
7.1 Non-­‐Competition. During Employee's term of employment set forth in this Agreement, Employee will not directly or indirectly be an owner, partner, director, manager, officer or employee or otherwise render services to any business that competes with Employer.
 
 
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ARTICLE VIII
Termination
 
8.1 Termination With Cause. With cause, Employer may terminate this Agreement upon an affirmative vote of a majority of the members of the Board, and upon thirty (30) days' written notice to Employee by providing Employee a Notice of Termination, which shall set forth in reasonable detail the Employer's basis for such termination. In such event, Employee shall continue to render his services and shall be paid his regular compensation up to the date of termination. Employee shall be entitled to receive payment for any unreimbursed expenses incurred, accrued but unpaid Base Salary and other accrued but unpaid employee benefits as provided in this Agreement. Severance allowance shall be equal to six (6) month's salary of Employee. For purposes of this Agreement, "with cause" shall be defined as:
 
(i) Employee's conviction of a felony or of any crime involving moral turpitude, and affirmance of such conviction following the exhaustion of any appeals; (ii) willful refusal of Employee to substantially perform all of his duties and responsibilities, or Employee's persistent willful neglect of duty or chronic, willful unapproved absenteeism other than for a temporary or permanent Disability, which remains uncured following thirty days after written notice of such alleged Cause by the Board of Directors; or (iii) any material and substantial breach by Employee of other terms and conditions of this Agreement, which, in the reasonable, good faith judgment of the Board of Directors, has a material adverse financial effect on the Company or on Employee's ongoing abilities to carry out his duties under this Agreement and which remains uncured following thirty days after written notice of such alleged Cause by the Board of Directors.
 
8 . 2 Termination Without Cause. Employer may terminate Employee without cause upon thirty (30) days written notice. Upon termination without cause by employer, Employee shall be entitled to cash compensation equal to the greater of the following: (A) the then existing base salary of Employee, as defined in Article 2.1, for the remainder of the term of this Agreement; or (B) four (4) times the then existing base salary of Employee, as defined in Article 2.1, for a period of one (1) year from the date of termination without cause. In the event of termination without cause, all cash compensation and deferred amounts due, as referred to above, shall be paid to Employee on a bi-­‐monthly basis.
 
8.3 Termination Upon Sale of Business. Notwithstanding anything to the contrary, Employer may terminate this Agreement upon thirty (30) days' written notice upon the happening of any of the following events which any one event will be treated as a termination without cause for purposes of severance allowance pursuant to this Agreement.
 
A.   The sale by Employer of substantially all of its assets to a single purchaser or a group of associated purchasers;
 
B.    The sale, exchange or other disposition, in one transaction, of at least fifty percent (50%) of the outstanding common shares of the Employer;
 
C.    A decision by Employer to terminate its business and liquidate its assets; or the merger or consolidation of Employer in a transaction in which the shareholders of Employer receive at least fifty percent (50%) of the outstanding voting shares of the new or continuing corporation.
 
D.    Notwithstanding the foregoing, should Employer agree to sell all or substantially all of its assets, Employer shall purchase Employee's Shares for an amount of the greater of the Stock Purchase Price or the same price sold by other of Employer's shareholders.
 
8.4 Surviving Benefits. Employee will continue to receive the highest level of benefits received for a period of 5 years after termination.
 
 
 
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ARTICLE IX
 
General Provisions
 
9.1. Waiver of Breach. The waiver by Employer of breach of any provisions of this Agreement by Employee shall not operate or be construed as a waiver of any subsequent breach by Employee. No waiver shall be valid unless in writing and signed by an authorized officer of Employer.
 
9.2 Assignment. Employee acknowledges that the services to be rendered by him are unique and personal. Accordingly, Employee may not assign any of his rights under this Agreement. The rights and obligations of Employer under this Agreement shall inure to the benefit of and shall be binding upon the successors and assigns of Employer.
 
9.3 Modification. This Agreement may not be modified, changed or altered orally but only by an agreement in writing signed by the party against an enforcement of any waiver, change, modification, extension or discharge as sought.
 
9.4. Governing Law. This Agreement shall be governed by and construed under the laws of the State of California.
 
9.5 Integration Clause. This instrument contains the entire agreement between the parties hereto and supersedes any and all prior written and/or oral agreements. This Agreement may be altered or modified only in writing signed by the parties hereto.
 
9.6 Notices. Any notice required or desired to be given under this Agreement shall be deemed given if in writing sent by certified mail to the parties at each party's last known address.
 
9.7 Attorneys' Fees. Should any party seek the enforcement of any term of this Agreement, the prevailing party thereunder shall be entitled to attorneys' fees and costs for the enforcement of such term or provision.
 
9.8 Arbitration. In the event of any dispute arising under this Agreement, including any dispute regarding the nature, scope or quality of services provided by either party hereto, its is hereby agreed that such dispute shall be resolved by binding arbitration to be conducted by the American Arbitration, to be arbitrated in accordance with its rules and regulations and procedures in Orange County, California. In the event of any such arbitration, pending resolution of the arbitration and the award of costs by the arbitrator, each party hereto shall advance one-­‐half of the amounts, if any, requested by the arbitrator and/or the sponsoring organization.
 
 
 
8

 
 
IN WITNESS WHEREOF, the parties executed this Agreement as of the date first written above.
 
 
EMPLOYEE      
       
       
Bill Hodson
     
       
 
EMPLOYER    
       
By:      
Richard O. Weed, CEO, CFO    
       
SF BLU VU, INC.    
 
 
 
9
Exhibit 99.1
 
 
 
INDEX TO FINANCIAL STATEMENTS

The Report of Independent Registered Public Accounting Firm…………… Page 1

The audited balance sheet of LiveWire MC2, LLC as of December 31, 2010 and 2009 and t he related statements of operations, of stockholders’ equity and of cash flows for the years then ended, and notes to financial tatements…………………………………… Pages 2-10

T he un audited balance sheet of LiveWire MC2, LLC as of the periods ending March 31, 2011 and 2010 and t he related statements of operations, of stockholders’ equity and of cash flows for the periods then ended, and notes to financial statements…………… Pages 11-17

T he un audited balance sheet of LiveWire MC2, LLC as of the periods ending June 30, 2011 and 2010 and t he related statements of operations, of stockholders’ equity and of cash flows for the periods then ended, and notes to financial statements………………. Pages 18-24
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To: The Board of Directors and Shareholders
LiveWire MC2, LLC
Anaheim, California

I have audited the accompanying balance sheet of LiveWire MC2, LLC as of December 31, 2010 and 2009 and the related statements of operations, of stockholders’ equity and of cash flows for the years then ended. These financial statements are the responsibility of the Company’s management.  My responsibility is to express an opinion on these financial statements based on my audit.

I conducted my audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that I plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation.  I believe that my audit provides a reasonable basis for my opinion.

In my opinion, based on my audit, the financial statements referred to above present fairly, in all material respects, the financial position of LiveWire MC2, LLC as of December 31, 2010 and 2009  and the results of its operations and its cash flows for the years then ended in conformity with United States generally accepted accounting principles.

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company as at December 31, 2010 had not established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  These factors raise substantial doubt concerning the Company’s ability to continue as a going concern.  Its ability to continue as a going concern is dependent on the successful stimulation of sales in order to fund operating losses and become profitable.  If the Company is unable to make it profitable, the Company could be forced to cease development of operations.  Management cannot provide any assurances that the Company will be successful in its operation.  The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.


The Company has determined that it is not required to have, nor was I engaged to perform, an audit of the effectiveness of its documented internal controls over financial reporting.

/ s /

John Kinross-Kennedy
Certified Public Accountant
Irvine, California
June 9, 2011

 
1

 

LiveWire MC2, LLC
Balance Sheet
as at December 31, 2010 & 2009
 
             
             
Assets
           
   
2010
   
2009
 
Current Assets
           
Cash and Cash Equivalents
  $ 1,813     $ 695  
Accounts Receivable
    8,101       8,212  
Inventory
    4,000       4,000  
                 
   Total Current Assets
    13,914       12,907  
                 
Fixed Assets
               
Automobiles
    15,377       -  
Accumulated Depreciation
    1,538       -  
                 
Total Fixed Assets
    13,839       -  
                 
    Total Assets
  $ 27,753     $ 12,907  
                 
                 
Liabilities and Members' Capital
               
                 
Liabilities
               
Curent Liabilities
               
Accounts Payable
  $ 20,753     $ 43,195  
Officers Loans
    7,410       36,960  
                 
Total Liabilities
    28,163       80,155  
                 
Members' Capital (Deficit)
               
Members' Contributions
    113,000       5,000  
Accumularted Deficit
    (113,410 )     (72,248 )
                 
Members' Capital (Deficit)
    (410 )     (67,248 )
                 
Total Liabilities and Members' Capital (Deficit)
  $ 27,753     $ 12,907  

 
2

 
 
 LiveWire MC2, LLC
 Statement of Operations
 for the year ended and three months ended December 31, 2010 and 2009
 
                         
                         
   
For the three months ended
   
For the year ended
 
   
December 31,
   
December 31,
 
   
2010
   
2009
   
2010
   
2009
 
                         
                         
 Sales
  $ 11,278     $ 25,508     $ 147,564     $ 160,840  
         Cost of goods sold
    807       30,251       91,439       140,372  
                                 
 Gross Profit
    10,471       (4,743 )     56,125       20,468  
                                 
 Selling Costs
                               
 Promotion
    2,648       1,134       14,307       17,155  
                                 
 General and Administrative Costs
                               
 Advertising
    9,904       1,340       17,551       1,365  
 Professional Fees
    90       1,135       810       1,595  
 Shipping Cost
    1,331       3,580       6,195       14,175  
 Bad Debts
    -       4,944       -       4,944  
 Depreciation
    769       -       1,538       -  
 Other General and Administrative Costs
    9,896       10,412       45,944       30,356  
      21,990       21,411       72,038       52,435  
                                 
    Total Expenses
    24,638       22,545       86,345       69,590  
                                 
 Net Income before other income and expenses
    (14,167 )     (27,288 )     (30,220 )     (49,122 )
                                 
  Other Income & Expenses
                               
 Interest Expense
  $ (10,157 )   $ (300 )   $ (10,942 )   $ (992 )
                                 
                                 
  Net Income
    (24,324 )     (27,588 )     (41,162 )     (50,114 )

 
3

 
 
LiveWire MC2, LLC
Statement of Changes in Stockholders' Equity
For  the period from Incorporation, January 7, 2008, to December  31, 2010
 
                   
                   
   
Members'
   
Accumulated
   
Members'
 
   
Contributions
   
Deficit
   
Equity
 
                   
Balances at Incorporation, January 7, 2008
  $ -     $ -     $ -  
Members' Contributions
    5,000       -       5,000  
Net loss, period ended December 31, 2008
            (22,134 )     (22,134 )
                         
Balances at December 31, 2008
  $ 5,000     $ (22,134 )   $ (17,134 )
Net loss, year ended December 31, 2009
            (50,114 )     (50,114 )
                         
Balances at December 31, 2009
  $ 5,000     $ (72,248 )   $ (67,248 )
Members' contributions in 2010
    108,000               108,000  
Net loss, year ended December 31, 2010
            (41,162 )     (41,162 )
                         
Balances at December 31, 2010
  $ 113,000     $ (113,410 )   $ (410 )
                         

 
4

 
 
 Live Wire MC2, LLC
 Statement of Cash Flows
 For the year ended December 31, 2010 and 2009
 
             
             
   
2010
   
2009
 
             
 Cash Flows From Operating Activities:
           
 Net Income (Loss)
  $ (41,162 )   $ (50,114 )
 Adjustments to reconcile net loss to net cash
               
 used by operating activities:
               
 Depreciation
    1,538       -  
  Change in operating assets and liabilities:
               
  Accounts Receivable
    111       (5,328 )
  Accounts Payable
    (22,442 )     24,641  
Net Cash (Used by) Operating Activities
    (61,955 )     (30,801 )
                 
 Cash Flows From Investing Activities
               
Fixed Assets
    (15,377 )     -  
                 
Net Cash (used by) Investing Activities
    (15,377 )     -  
                 
                 
 Cash Flows From Financing Activities
               
  Members' Contributions
    108,000       -  
  Proceeds of loan from officers
    (29,550 )     29,110  
     Net Cash provided by Financing Activities
    78,450       29,110  
                 
      1,118       (1,691 )
 Net Increase in Cash
               
      695       2,386  
 Cash at Beginning of Period
               
    $ 1,813     $ 695  
 Cash at End of Period
               
                 
                 
Cash Paid:  Interest
  $ 10,942     $ 992  
 Income Taxes
  $ -     $ -  

 
5

 
 
LiveWire MC2, LLC.
A California Limited Liability Company

NOTES TO THE FINANCIAL STATEMENTS

December 31, 2010 & December 31, 2009
(Stated in U.S. dollars)


NOTE 1 - BUSINESS AND CONTINUED OPERATIONS
 
LiveWire MC2, LLC was organized under the laws of the State of California on January 7, 2008. The Company was formed for the purpose of developing and marketing consumable energy supplements.

Current Business of the Company
 
LiveWire MC2, LLC developed an energy supplement and associated retail packaging and commenced initial market penetration of their product.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

These financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted December 31 as the fiscal year-end.

Cash and equivalents

Cash and equivalents include investments with initial maturities of three months or less.

Use of Estimates

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

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued   ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1:  Quoted prices in active markets for identical assets or liabilities.
 
 
6

 

Level 2:  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of December 31, 2009 & December 31, 2010, reflect:

Cash:  Level One measurement based on bank reporting.

Inventory
 
    2010     2009  
Finished Goods
           
    $ 4,000     $ 4,000  
 
Inventories are stated at the lower of cost or market value.  Inventories consist primarily of finished goods, i.e., packaged consumable energy supplements,  manufactured under contract. Cost includes only the wholesale cost.  Market value represents net realizable value. A periodic inventory system is maintained by 100% count.    Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.  The inventory was thus kept at the same level year to year.

Property and Equipment
 
   
2010
   
2009
 
             
Equipment  (Auto)
  $ 15,377     $ 0  
Accumulated depreciation
    (1,538 )     0  
 
  $ 13,839     $ 0  
Depreciation    $ 1,538     $ 0  
 
Equipment is stated at cost less accumulated depreciation and depreciated using straight line methods over the estimated useful lives of the related assets ranging from 7 to 10 years.  Maintenance and repairs are expensed currently. The cost of normal maintenance and repairs is charged to operations as incurred.  Major overhaul that extends the useful life of existing assets is capitalized.  When equipment is retired or disposed, the costs and related accumulated   depreciation are eliminated and the resulting profit or loss is recognized in income.
 
The Company purchased an automobile in June 2010 for $13,839.  It was painted in the livery of the Company.
 
 
7

 
 
Long-lived assets

The Company accounts for long-lived assets under the FASB (Financial Accounting Standards Board) ASC (Accounting Standard Codification) 340-10 Other Assets and Deferred Costs ,  (SFAS 142 and 144: “ Accounting for Goodwill and Other Intangible Assets ” and “ Accounting for Impairment or Disposal of Long-Lived Assets ”) . In accordance with ASC 340-10, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset will not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.

Income Taxes

The Company utilizes FASB ACS 740, “ Income Taxes ,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.  The Company generated a deferred tax credit through net operating loss carry forward.  However, a valuation allowance of 100% has been established, as the realization of the deferred tax credits is not reasonably certain, based on going concern considerations outlined below.  Net operating losses of approximately $130,000  are available through the year  2025.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company had a net loss of ($41,162) in 2010, ($50,114 in 2009).  The Company had a positive cash flow of $1,118 in 2010, the result of members’ contributions, and a negative cash flow of 1,691 in 2009.   The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources.  Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of members’ interests.  However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and 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.
 
NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

In January 2010, the FASB issued ASU No. 2010-01, amending SFAS No. 168, “The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles.” This Standard codified in ASC 105 is being modified to include the authoritative and non-authoritative levels of GAAP. This amendment is effective for financial statements issued for interim and annual periods ending after September 15, 2009. ASU No. 2010-01 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In January 2010, the FASB issued ASU No. 2010-08, “Technical Corrections to various Topics.” This Standard is being updated to eliminate outdated or inconsistent GAAP standards and to clarify the Boards original intent mainly with regards to derivatives and hedging. This is effective for the first reporting period (including interim periods) beginning after issuance. ASU No. 2010-08 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.
 
 
8

 

In January 2010, the FASB issued ASU No. 2010-06, “Improving Disclosures about Fair Value Measurements” related to ASC Topic 820-10.  This update requires new disclosures to; transfers in or out of Levels 1 and 2, activity in Level 3fair value measurements, Level of disaggregation, and disclosures about inputs and valuation techniques. This amendment will be effective for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years. ASU No. 2010-06 has no impact on the Company’s results of operations, financial condition or cash flows.

In January, 2010, the FASB issued ASU 2010-06, Improving Disclosures about Fair Value Measurements. The standard amends ASC Topic 820, Fair Value Measurements and Disclosures to require additional disclosures related to transfers between levels in the hierarchy of fair value measurement. The standard does not change how fair values are measured. The standard is effective for interim and annual reporting periods beginning after December 15, 2009. As a result, it is effective for the Company in the first quarter of fiscal year 2010. The Company does not believe that the adoption of ASU 2010-06 will have a material impact on its financial statements.

In February 2010, the FASB issued ASU No. 2010-09, “Subsequent Events (ASC Topic 855), Amendments to Certain Recognition and Disclosure Requirements.” This Standard update requires a SEC Filer to (1) evaluate subsequent events through the date that the financial statements are issued or available to be issued, (2) defines “SEC Filer” as an entity that is required to file or furnish its financial statements with either the SEC or, with respect to an entity subject to Section 12(i) of the Securities Exchange Act of 1934, as amended, the appropriate agency under that Section, (3) not be bound to disclosing the date through which subsequent events have been evaluated, (4) note the definition of public entity is not longer defined nor necessary for Topic 855, (5) note the scope of the reissuance disclosure requirements is refined to include revised financial statements only. These Updates are effective for interim or annual periods ending after June 15, 2010. ASU No. 2010-09 has no effect on the Company’s financial position, statement of operations, or cash flows at this time.

In March 2010, the FASB issued ASU No. 2010-11, "Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives" (codified within ASC 815 - Derivatives and Hedging).  ASU 2010-11 improves disclosures originally required under SFAS No. 161.  ASU 2010-11 is effective for interim and annual periods beginning after June 15, 2010.  The adoption of this statement had no effect on the Company’s reported financial position or results of operations.
 
In April 2010, the FASB issued ASU No. 2010-17, "Revenue Recognition - Milestone Method (Topic 605): Milestone Method of Revenue Recognition" (codified within ASC 605 - Revenue Recognition).  ASU 2010-17 provides guidance on defining a milestone and determining when it may be appropriate to apply the milestone method of revenue recognition for research or development transactions.  ASU 2010-17 is effective for interim and annual periods beginning after June 15, 2010.  The adoption of this statement had no effect on the Company’s reported financial position or results of operations.
 

In May 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-19 (ASU 2010-19), Foreign Currency (Topic 830): Foreign Currency Issues: Multiple Foreign Currency Exchange Rates.  The amendments in this Update are effective as of the announcement date of March 18, 2010.  The Company does not expect the provisions of ASU 2010-19 to have any effect on the Company’s reported financial position or results of operations.
 
NOTE 4 – OFFICERS’ LOANS
 
2010     2009  
         
$ 7,410     $ 36,960  
 
Officers’ loans carry no interest, have no terms of repayment, and are payable on demand.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

There were no commitments or contingencies in the years ended December 31, 2010 and 2009.
 
 
9

 
 
NOTE 6 – MEMBERS’ CAPITAL.

At incorporation January 7, 2008 the President, Brad Nichols and the Chief Executive Officer, Bill Hodgson, each contributed $2,500.

On June 21, 2010 a member contributed $50,000.

On July  15, 2010 a member contributed $1,000.

On October 10, 2010 a member contributed $50,000

On December 17, 2010 a member contributed $7,000.

As at December 31, 2010, the members had contributed a total of $113,000.

NOTE 7 – LITIGATION

There were no legal proceedings against the Company with respect to matters arising in the ordinary course of business. Neither the Company nor any of its officers or directors is involved in any other litigation either as plaintiffs or defendants, and have no knowledge of any threatened or pending litigation against them or any of the officers or directors.
 
NOTE 8 – SUBSEQUENT EVENTS

Events subsequent to December 31, 2010 have been evaluated through June 9, 2011, the date these statements were available to be issued, to determine whether they should be disclosed to keep the financial statements from being misleading.  Management found no subsequent events to be disclosed.

 
10

 
 
LiveWire MC2, LLC
Balance Sheet
as at March 31, 2011 (Unaudited) & December 31,  2010
 
             
             
   
March 31
   
December 31,
 
Assets
 
2011
   
2010
 
   
(Unaudited)
       
Current Assets
           
Cash and Cash Equivalents
  $ 12,759     $ 1,813  
Accounts Receivable
    4,090       8,101  
Inventory
    4,000       4,000  
                 
   Total Current Assets
    20,849       13,914  
                 
Fixed Assets
               
Automobiles
    15,377       15,377  
Accumulated Depreciation
    2,307       1,538  
                 
Total Fixed Assets
    13,070       13,839.00  
                 
    Total Assets
  $ 33,919     $ 27,753  
                 
                 
Liabilities and Members' Capital
               
                 
Liabilities
               
Curent Liabilities
               
Accounts Payable
  $ 521,624     $ 20,753  
Officers' Loans
    7,410       7,410  
                 
Total Liabilities
    529,034       28,163  
                 
Members' Capital (Deficit)
               
Members' Contributions
    128,000       113,000  
Accumulated Deficit
    (623,115 )     (113,410 )
                 
Members' Capital (Deficit)
    (495,115 )     (410 )
                 
Total Liabilities and Members' Capital (Deficit)
  $ 33,919     $ 27,753  
 
 
11

 
 
 LiveWire MC2, LLC
 Statement of Operations
 For the Three Months Ended March 31, 2011 and 2010
 Unaudited
 
 
             
   
For the three months ended
 
   
March 31,
 
   
2011
   
2010
 
             
 Income
           
 Sales
  $ 22,562     $ 55,617  
         Cost of goods sold
    22,899       9,381  
                 
 Gross Profit
    (337 )     46,236  
                 
 Selling Costs
               
 Promotion
    3,580       2,993  
                 
 General and Administrative Costs
               
  Marketing Expenses
    443,682          
 Advertising
    2,062       552  
 Professional Fees
    3,392       -  
 Shipping Cost
    3,876       1,880  
 Bad Debts
    -       -  
 Depreciation
    769       -  
 Other General and Administrative Costs
    51,755       5,466  
      505,536       7,898  
                 
    Total Expenses
    509,116       10,891  
                 
 Net Income before other income and expenses
    (509,453 )     35,345  
                 
  Other Income & Expenses
               
 Interest Expense
  $ (252 )   $ (164 )
                 
                 
  Net Income
    (509,705 )     35,181  

 
12

 

LiveWire MC2, LLC
Statement of Changes in Stockholders' Equity
For  the period from Incorporation, January 7, 2008, to March  31, 2011
 
                   
                   
   
Members'
   
Accumulated
   
Members'
 
   
Contributions
   
Deficit
   
Equity
 
                   
Balances at Incorporation, January 7, 2008
  $ -     $ -     $ -  
Members' Contributions
    5,000       -       5,000  
Net loss, period ended December 31, 2008
            (22,134 )     (22,134 )
                         
Balances at December 31, 2008
  $ 5,000     $ (22,134 )   $ (17,134 )
Net loss, year ended December 31, 2009
            (50,114 )     (50,114 )
                         
Balances at December 31, 2009
  $ 5,000     $ (72,248 )   $ (67,248 )
Members' contributions in 2010
    108,000               108,000  
Net loss, year ended December 31, 2010
            (41,162 )     (41,162 )
                         
Balances at December 31, 2010
    113,000       (113,410 )     (410 )
Members' contributions in March 31, 2011
    15,000               15,000  
Net loss, three months ended March 31, 2011
            (509,705 )     (509,705 )
                         
Balances at March 31, 2011
  $ 128,000     $ (623,115 )   $ (495,115 )

 
13

 
 
 Live Wire MC2, LLC
 Statement of Cash Flows
 For the Three Months Ended March 31, 2011 and 2010
 (Unaudited)
 
             
   
For the three month ended
 
   
March 31,
 
   
2011
   
2010
 
             
 Cash Flows From Operating Activities:
           
 Net Income (Loss)
    (509,705 )   $ 35,182  
 Adjustments to reconcile net loss to net cash
               
 used by operating activities:
               
     Depreciation
    769       -  
  Change in operating assets and liabilities:
               
     Accounts Receivable
    4,010       3,356  
     Accounts Payable
    500,872       (18,140 )
     Credit Cards
    -       7,834  
 Net Cash (Used by) Operating Activities
    (4,054 )     28,232  
                 
                 
 Cash Flows From Financing Activities
               
    Members' Contributions
    15,000       -  
     Proceeds of loan from officers
               
 Net Cash provided by Financing Activities
    15,000       -  
                 
 Net Increase in Cash
    10,946       28,232  
                 
 Cash at Beginning of Period
    1,813       695  
                 
 Cash at End of Period
    12,759       28,927  
                 
                 
 Cash Paid For:
               
 Interest
  $ -     $ -  
 Income Taxes
  $ -     $ -  

 
14

 
 
LiveWire MC2, LLC.
A California Limited Liability Company

NOTES TO THE FINANCIAL STATEMENTS

March 31, 2011
(Stated in U.S. dollars)

NOTE 1 – BASIS OF PRESENTATION AND NATURE OF OPERATIONS
 
These unaudited financial statements as of and for the three months ended March 31, 2011 reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the period presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end December 31, 2010 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the three month period ended March 31, 2011 are not necessarily indicative of results for the entire year ending December 31, 2011.

LiveWire MC2, LLC was organized under the laws of the State of California on January 7, 2008 as a limited liability corporation. The Company was formed for the purpose of developing and marketing consumable energy supplements.

Current Business of the Company
 
LiveWire MC2, LLC developed an energy supplement and associated retail packaging and commenced initial market penetration of their product.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

These financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted December 31 as the fiscal year-end.

Cash and equivalents

Cash and equivalents include investments with initial maturities of three months or less.

Use of Estimates

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

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued   ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1:  Quoted prices in active markets for identical assets or liabilities.
 
 
15

 

Level 2:  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of March 31, 2011 and 2010 reflect:

Cash:  Level One measurement based on bank reporting.

Inventory
 
    March 31,  
    2011     2010  
Finished Goods
           
    $ 4,000     $ 4,000  

Inventories are stated at the lower of cost or market value.  Inventories consist primarily of finished goods, i.e., packaged consumable energy supplements, manufactured under contract. Cost includes only the wholesale cost.  Market value represents net realizable value. A periodic inventory system is maintained by 100% count.    Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.  The inventory was thus kept at the same level year to year.

Property and Equipment
 
   
2011
   
2010
 
             
Equipment  (Auto)
  $ 15,377     $ 0  
Accumulated depreciation
    (1,538 )     0  
 
  $ 13,839     $ 0  
Depreciation    $ 769     $ 0  
 
Equipment is stated at cost less accumulated depreciation and depreciated using straight line methods over the estimated useful lives of the related assets ranging from 7 to 10 years.  Maintenance and repairs are expensed currently. The cost of normal maintenance and repairs is charged to operations as incurred.  Major overhaul that extends the useful life of existing assets is capitalized.  When equipment is retired or disposed, the costs and related accumulated   depreciation are eliminated and the resulting profit or loss is recognized in income.
 
The Company purchased an automobile in June 2010 for $13,839.  It was painted in the livery of the Company.

Long-lived assets

The Company accounts for long-lived assets under the FASB (Financial Accounting Standards Board) ASC (Accounting Standard Codification) 340-10 Other Assets and Deferred Costs ,  (SFAS 142 and 144: “ Accounting for Goodwill and Other Intangible Assets ” and “ Accounting for Impairment or Disposal of Long-Lived Assets ”) . In accordance with ASC 340-10, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset will not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.
 
 
16

 

Income Taxes

The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized .
 
The Company generated a deferred tax credit through net operating loss carryforward.  However, a valuation allowance of 100% has been established.  Net operating losses of approximately $623,000  are available through the year  2025.

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company had a net loss of ($ 509,705) in the three months ended March 31, 2011, and ($623,115) since inception, January 7, 2008.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources.  Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of members’ interests.  However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and 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.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

On December 1, 2010 the Company adopted guidance issued by the FASB ASU 2010-15 on the consolidation of variable entities.  The new guidance requires revised valuations of whether entities represent variable interest entities, ongoing assessments of control over such entities and additional disclosures for variable interests.  Adoption of the new guidance did not have a material impact on our financial statements.

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of any other pronouncements to have a n impact on its results of operations or financial position.

NOTE 4 – OFFICERS’ LOANS
 
March 31,  
2011     2010  
         
$ 7,410     $ 36,960  
 
Officers’ loans carry no interest, have no terms of repayment, and are payable on demand.
 
NOTE 5 - COMMITMENTS AND CONTINGENCIES

There were no commitments or contingencies in the three months ended March 31, 2011.

NOTE 6 – MEMBERS’ CAPITAL.

During the quarter ended March 31, 2011, on March 31, 2011, a member contributed $15,000.

As at March 31, 2011, the members had contributed a total of $128,000.
 
 
17

 
 
LiveWire MC2, LLC
Balance Sheet
as at June 30, 2011 (Unaudited) & December 31,  2010
 
             
             
   
June 30,
   
December 31,
 
Assets
 
2011
   
2010
 
   
(Unaudited)
       
Current Assets
           
Cash and Cash Equivalents
  $ 3,183     $ 1,813  
Accounts Receivable
    120,023       8,101  
Inventory
    54,341       4,000  
                 
   Total Current Assets
    177,547       13,914  
                 
Fixed Assets
               
Automobiles
    15,377       15,377  
Accumulated Depreciation
    3,076       1,538  
                 
Total Fixed Assets
    12,301       13,839.00  
                 
    Total Assets
  $ 189,848     $ 27,753  
                 
                 
Liabilities and Members' Capital
               
                 
Liabilities
               
Current Liabilities
               
Accounts Payable
  $ 521,738     $ 20,753  
Officers' Loans
    55,000       7,410  
                 
Total Liabilities
    576,738       28,163  
                 
Members' Capital (Deficit)
               
Members' Contributions
    128,000       113,000  
Accumularted Deficit
    (514,890 )     (113,410 )
                 
Members' Capital (Deficit)
    (386,890 )     (410 )
                 
Total Liabilities and Members' Capital (Deficit)
  $ 189,848     $ 27,753  

 
18

 
 
 LiveWire MC2, LLC
 Statement of Operations
 For the Six Months and Three Months ended June 30, 2010
 Unaudited
 
                         
                         
   
For the three months ended
   
For the six months ended
 
   
June 30,
   
June 30,
 
   
2011
   
2010
   
2011
   
2010
 
                         
 Income
                       
 Sales
  $ 347,118     $ 76,626     $ 369,680     $ 132,243  
         Cost of goods sold
    169,602       76,706       192,501       86,087  
                                 
 Gross Profit
    177,516       (80 )     177,179       46,156  
                                 
 Selling Costs
                               
 Promotion
    3,270       3,328       6,850       6,321  
 Marketing
    427       621       443,682       -  
      3,697       3,949       450,532       6,321  
                                 
 General and Administrative Costs
                               
 Advertising
    1,992       837       4,054       1,389  
 Professional Fees
    -       -       3,392       -  
 Shipping Cost
    10,319       5,054       14,195       6,934  
 Depreciation
    769       -       1,538       -  
 Other General and Administrative Costs
    53,176       17,342       104,033       22,713  
      66,256       23,233       127,212       31,036  
                                 
    Total Expenses
    69,953       27,182       577,744       37,357  
                                 
 Net Income before other income and expenses
    107,563       (27,262 )     (400,565 )     8,799  
                                 
  Other Income & Expenses
                               
 Interest Expense
  $ 663     $ 358     $ (915 )   $ (522 )
                                 
                                 
  Net Income
    108,226       (26,904 )     (401,480 )     8,277  

 
19

 
 
LiveWire MC2, LLC
Statement of Changes in Stockholders' Equity
For  the period from Incorporation, January 7, 2008, to June 30, 2011
 
                   
                   
   
Members'
   
Accumulated
   
Members'
 
   
Contributions
   
Deficit
   
Equity
 
                   
Balances at Incorporation, January 7, 2008
  $ -     $ -     $ -  
Members' Contributions
    5,000       -       5,000  
Net loss, period ended December 31, 2008
            (22,134 )     (22,134 )
                         
Balances at December 31, 2008
  $ 5,000     $ (22,134 )   $ (17,134 )
Net loss, year ended December 31, 2009
            (50,114 )     (50,114 )
                         
Balances at December 31, 2009
  $ 5,000     $ (72,248 )   $ (67,248 )
Members' contributions in 2010
    108,000               108,000  
Net loss, year ended December 31, 2010
            (41,162 )     (41,162 )
                         
Balances at December 31, 2010
    113,000       (113,410 )     (410 )
Members' contributions in March 31, 2011
    15,000               15,000  
Net Income, for the period ended June 30, 2011
            (401,480 )     (401,480 )
                         
Balances at June 30, 2011
  $ 128,000     $ (514,890 )   $ (386,890 )

 
20

 
 
 Live Wire MC2, LLC
 Statement of Cash Flows
 (Unaudited)
 
 
             
   
For the six months ended,
 
   
June 30,
 
   
2011
   
2010
 
             
 Cash Flows From Operating Activities:
           
 Net Income (Loss)
    (401,479 )   $ 8,277  
 Adjustments to reconcile net loss to net cash
               
 used by operating activities:
               
     Depreciation
    1,538       -  
  Change in operating assets and liabilities:
               
    Accounts Receivable
    (111,923 )     7,353  
     Inventory
    (50,341 )     -  
     Accounts Payable
    500,985       (5,391 )
  Net Cash (Used by) Operating Activities
    (61,220 )     10,239  
                 
 Cash Flows From Investing Activities
               
 Purchase of equipment
    -       (7,116 )
 Net Cash (used by) Investing Activities
    -       (7,116 )
                 
                 
 Cash Flows From Financing Activities
               
    Members' Contributions
    15,000       50,000  
    Proceeds (repayment) of loan from officers
    47,590       (10,550 )
 Net Cash provided by Financing Activities
    62,590       39,450  
                 
 Net Increase in Cash
    1,370       42,573  
                 
 Cash at Beginning of Period
    1,813       695  
                 
 Cash at End of Period
    3,183       43,268  
                 
                 
 Cash Paid For:
               
 Interest
  $ 915     $ 522  
 Income Taxes
  $ -     $ -  
                 

 
21

 
 
LiveWire MC2, LLC.
A California Limited Liability Company

NOTES TO THE FINANCIAL STATEMENTS

June 30, 2011
(Stated in U.S. dollars)

NOTE 1 – BASIS OF PRESENTATION AND NATURE OF OPERATIONS
 
These unaudited financial statements as of and for the six months ended June 30, 2011 reflect all adjustments which, in the opinion of management, are necessary to present fairly the financial position, results of operations and cash flows for the period presented in accordance with the accounting principles generally accepted in the United States of America. All adjustments are of a normal recurring nature.

These interim financial statements should be read in conjunction with the Company’s financial statements and notes thereto included in the Company’s fiscal year end December 31, 2010 report. The Company assumes that the users of the interim financial information herein have read, or have access to, the audited financial statements for the preceding period, and that the adequacy of additional disclosure needed for a fair presentation may be determined in that context. The results of operations for the six month period ended June 30, 2011 are not necessarily indicative of results for the entire year ending December 31, 2011.

LiveWire MC2, LLC was organized under the laws of the State of California on January 7, 2008 as a limited liability corporation. The Company was formed for the purpose of developing and marketing consumable energy supplements.

Current Business of the Company
 
LiveWire MC2, LLC developed an energy supplement and associated retail packaging and commenced initial market penetration of their product.
 
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Accounting

These financial statements have been prepared using the basis of accounting generally accepted in the United States of America. Under this basis of accounting, revenues are recorded as earned and expenses are recorded at the time liabilities are incurred. The Company has adopted December 31 as the fiscal year-end.

Cash and equivalents

Cash and equivalents include investments with initial maturities of three months or less.

Use of Estimates

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

Fair Value of Financial Instruments

The Financial Accounting Standards Board issued   ASC (Accounting Standards Codification) 820-10 (SFAS No. 157), “Fair Value Measurements and Disclosures" for financial assets and liabilities. ASC 820-10 provides a framework for measuring fair value and requires expanded disclosures regarding fair value measurements.  FASB ASC 820-10 defines fair value as the price that would be received for an asset or the exit price that would be paid to transfer a liability in the principal or most advantageous market in an orderly transaction between market participants on the measurement date.  FASB ASC 820-10 also establishes a fair value hierarchy which requires an entity to maximize the use of observable inputs, where available. The following summarizes the three levels of inputs required by the standard that the Company uses to measure fair value:

Level 1:  Quoted prices in active markets for identical assets or liabilities.
 
 
22

 

Level 2:  Observable inputs other than Level 1 prices, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.

Level 3:  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

The carrying amounts of the Company’s financial instruments as of June 30, 2011 and 2010 reflect:

Cash:  Level One measurement based on bank reporting.

Inventory
 
   
June 30,
 
    2011     2010  
Finished Goods
           
    $ 54,341     $ 4,000  
 
Inventories are stated at the lower of cost or market value.  Inventories consist primarily of finished goods, i.e., packaged consumable energy supplements, manufactured under contract. Cost includes only the wholesale cost.  Market value represents net realizable value. A periodic inventory system is maintained by 100% count.    Inventory is replaced periodically to maintain the optimum stock on hand available for immediate shipment.  The inventory was thus kept at the same level year to year.

Property and Equipment
 
    June 30,   
   
2011
   
2010
 
             
Equipment  (Auto)
  $ 15,377     $ 7,116  
Accumulated depreciation
    (3,076 )     0  
 
  $ 12,301     $ 7,116  
Depreciation    $ 1,538     $ 0  
 
Equipment is stated at cost less accumulated depreciation and depreciated using straight line methods over the estimated useful lives of the related assets ranging from 7 to 10 years.  Maintenance and repairs are expensed currently. The cost of normal maintenance and repairs is charged to operations as incurred.  Major overhaul that extends the useful life of existing assets is capitalized.  When equipment is retired or disposed, the costs and related accumulated   depreciation are eliminated and the resulting profit or loss is recognized in income.
 
The Company purchased an automobile in June 2010 for $13,839.  It was painted in the livery of the Company.
 
Long-lived assets

The Company accounts for long-lived assets under the FASB (Financial Accounting Standards Board) ASC (Accounting Standard Codification) 340-10 Other Assets and Deferred Costs ,  (SFAS 142 and 144: “ Accounting for Goodwill and Other Intangible Assets ” and “ Accounting for Impairment or Disposal of Long-Lived Assets ”) . In accordance with ASC 340-10, long-lived assets, goodwill and certain identifiable intangible assets held and used by the Company are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset will not be recoverable. For purposes of evaluating the recoverability of long-lived assets, goodwill and intangible assets, the recoverability test is performed using undiscounted net cash flows related to the long-lived assets.
 
 
23

 

Income Taxes

The Company utilizes FASB ACS 740, “Income Taxes,” which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements or tax returns.  Under this method, deferred tax assets and liabilities are determined based on the difference between the tax basis of assets and liabilities and their financial reporting amounts based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income.  A valuation allowance is recorded when it is “more likely-than-not” that a deferred tax asset will not be realized .
 
The Company generated a deferred tax credit through net operating loss carryforward.  However, a valuation allowance of 100% has been established.  Net operating losses of approximately $515,000  are available through the year  2025.

Interest and penalties on tax deficiencies recognized in accordance with ACS accounting standards are classified as income taxes in accordance with ASC Topic 740-10-50-19.

Going Concern

The Company’s financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company had a net loss of ($ 401,480) in the six months ended June 30, 2011, and ($514,890) since inception, January 7, 2008.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and to allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease development of operations.

In order to continue as a going concern, develop a reliable source of revenues, and achieve a profitable level of operations the Company will need, among other things, additional capital resources.  Management’s plans to continue as a going concern include raising additional capital through increased sales of product and by sale of members’ interests.  However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans. The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and 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.

NOTE 3. RECENT ACCOUNTING PRONOUNCEMENTS

On December 1, 2010 the Company adopted guidance issued by the FASB ASU 2010-15 on the consolidation of variable entities.  The new guidance requires revised valuations of whether entities represent variable interest entities, ongoing assessments of control over such entities and additional disclosures for variable interests.  Adoption of the new guidance did not have a material impact on our financial statements.

The Company has reviewed issued accounting pronouncements and plans to adopt those that are applicable to it.  The Company does not expect the adoption of any other pronouncements to have a n impact on its results of operations or financial position.

NOTE 4 – OFFICERS’ LOANS
 
June 30,  
2011     2010  
         
$ 55,000     $ 26,410  

Officers’ loans carry no interest, have no terms of repayment, and are payable on demand.

NOTE 5 - COMMITMENTS AND CONTINGENCIES

There were no commitments or contingencies in the six months ended June 30, 2011.

NOTE 6 – MEMBERS’ CAPITAL.

During the six months ended March 31, 2011, on March 31, 2011, a member contributed $15,000.

As at June 30, 2011, the members had contributed a total of $128,000.
 
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