UNITED STATES

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): June 16, 2014

 

ANGLESEA ENTERPRISES, INC.

(Exact name of registrant as specified in its charter)

 

Nevada   000-54883   27-4841391
(State or other jurisdiction   (Commission File Number)   (IRS Employer
of incorporation)       Identification No.)

 

176 East Main Street

Westborough, MA 01581

(Address of Principal Executive Offices)

 

Anglesea Enterprises, Inc.

13799 Park Blvd., Suite 147

Seminole, Florida 33776

(Former name or former address, if changed

since last report)

 

(727) 393-7439

Registrant’s telephone number, including area code

 

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:

 

¨   Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

¨   Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

¨   Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

¨   Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 
 

 

Forward Looking Statements

 

This Current Report on Form 8-K and other reports filed by registrant from time to time with the Securities and Exchange Commission (collectively, the “Filings”) contain or may contain forward-looking statements and information that is based upon beliefs of, and information currently available to, registrant’s management, as well as estimates and assumptions made by registrant’s management. When used in the Filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan” or the negative of these terms and similar expressions as they relate to registrant or registrant’s management identify forward-looking statements. Such statements reflect the current view of registrant with respect to future events and are subject to risks, uncertainties, assumptions and other factors (including the risks contained in the section of this Current Report on Form 8-K entitled “Risk Factors”) relating to registrant’s industry and registrant’s operations and results of operations. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended or planned.

 

You should not place undue reliance on any forward-looking statement, each of which applies only as of the date of this Current Report on Form 8-K. Except as required by law, we undertake no obligation to update or revise publicly any of the forward-looking statements after the date of this Current Report on Form 8-K to conform our statements to actual results or changed expectations, or the results of any revision to these forward-looking statements.

 

Item 1.01 Entry Into A Material Definitive Agreement

 

On June 16, 2014, Anglesea Enterprises, Inc. a Nevada corporation (“Anglesea” or the “Company”), Anglesea Enterprises Acquisition Corp, a Nevada corporation and wholly-owned subsidiary of Anglesea (“Merger Sub”), Sports Field Holdings, Inc., a privately-held Nevada corporation headquartered in Illinois (“Sports Field”) Leslie Toups and Edward Mass Jr., as individuals (the “Majority Shareholders”), entered into an Acquisition Agreement and Plan of Merger (the “Agreement”) pursuant to which the Merger Sub was merged with and into Anglesea, with Sports Field surviving as a wholly-owned subsidiary of Anglesea (the “Merger”). The transaction (the “Closing”) took place on June 16, 2014 (the “Closing Date”). The Company acquired, through a reverse triangular merger, all of the outstanding capital stock of Sports Field in exchange for issuing Sports Field’s shareholders (the “Sports Field Shareholders”), pro-rata, a total of 11,914,275 shares of the Company’s common stock. Immediately after the Merger was consummated, and further to the Agreement, the majority shareholders and certain affiliates of the Company cancelled a total of 64,500,000 shares of the Company’s common stock held by them (the “Cancellation”). In consideration of the Cancellation of such of common stock, the Company paid the Majority Shareholders an aggregate of $350,000 and released the other affiliates from certain liabilities. In addition, the Company has agreed to spinout to the Majority Shareholders any and all assets related to the Company’s website development business within 30 days after the closing. As a result of the Merger and the Cancellation, the Sports Field Shareholders became the majority shareholders of the Company.

 

Upon completion of the Merger, on June 16, 2014, Anglesea merged with Sports Field in a short-form merger transaction (the “Short Form Merger”) under Nevada law. Upon completion of the Short Form Merger, the Company became the parent company of the Sport Field’s wholly owned subsidiaries, Sports Field Contractors LLC (“Sports Field Contractors”), SportsField Engineering, Inc. (“Sports Field Engineering”) and Athletic Construction Enterprises, Inc. (“Athletic Construction” and together with “Sports Field Contractors” and SportsField Engineering, collectively, referred to hereinafter as “Sports Field”). In connection with the Short Form Merger, the Company will change its name to Sports Field Holdings, Inc.

 

In January 2014, Sports Field commenced a private placement of its common stock with a group of accredited investors (the “Private Placement Investors”). Pursuant to those certain subscription agreements between Sports Field and the Private Placement Investors, Sports Field sold an aggregate of 5,000,000 shares of its common stock for an aggregate purchase price of $5,000,000 or $1.00 per share (the “Private Placement”). The Company completed the Private Placement on February 28, 2014. Pursuant to the Agreement, each Private Placement Investor will receive one share of Anglesea for each one share purchased under the Private Placement.

  

The directors and majority shareholders of Anglesea have approved the Agreement and the transactions contemplated under the Agreement. The directors of Sports Field have approved the Agreement and the transactions contemplated thereunder and as of the Closing Date will own approximately 92% of the Company’s common stock.

 

 
 

 

A copy of the Agreement is included as Exhibit 2.1 to this Current Report and is hereby incorporated by reference. All references to the Agreement and other exhibits to this Current Report are qualified, in their entirety, by the text of such exhibits.

 

This transaction is discussed more fully in Section 2.01 of this Current Report. The information therein is hereby incorporated in this Section 1.01 by reference.

 

Item 2.01 Completion of Acquisition or Disposition of Assets

 

CLOSING OF THE AGREEMENT

 

As described in Item 1.01 above, on June 16, 2014, the Company effectuated a Merger which resulted in Sports Field, a product development, engineering, manufacturing and construction company that designs and builds athletic facilities, as well as supplies its own proprietary high - end synthetic turf products to the sports industry, becoming our wholly-owned subsidiary. On the Closing Date, pursuant to the terms of the Agreement, we acquired all of the outstanding capital stock of Sports Field. In exchange, we issued to the Sports Field Shareholders, their designees or assigns, 11,914,275 shares of our common stock or 92% of the shares of the Company’s common stock issued and outstanding after the Closing.

   

Pursuant to the terms of the Agreement, certain affiliates of the Company cancelled a total of 64,500,000 shares of the Company’s Common Stock held by them. Following the above transactions, there are 12,947,275 shares of the Company’s common stock issued and outstanding.

 

The directors and majority shareholders of the Company have approved the Agreement and the transactions contemplated under the Agreement. The directors of Sports Field and Sports Field Shareholders have approved the Agreement and the transactions contemplated thereunder. Immediately following the Closing of the Merger the Company changed its business plan to that of Sports Field.

 

References to “we”, “our”, “us”, or “our Company”, from this point forward refer to Anglesea Enterprises, Inc. as currently constituted with Sports Field as our operating subsidiary.

 

BUSINESS OF SPORTS FIELD

 

Background

 

Anglesea Enterprises, Inc. was incorporated in the State of Nevada on February 8, 2011. Our activities since inception consisted of providing marketing and web-related services to small businesses including the design and development of original websites, creative writing and graphics, virtual tours, audio/visual services, marketing analysis and search engine optimization. We have not had any significant development of our business nor have we received any revenue. Due to the lack of results in our attempt to implement our original business plan, management determined it was in the best interests of the shareholders to look for other potential business opportunities that might be available to the Company. Immediately following the Closing of the Agreement and completion of the Short Form Merger, the Company changed its business plan to that of Sports Field. The Company plans to take the steps to immediately change its name to “Sports Field Holdings, Inc.” as well as its trading symbol to better reflect its current business to its shareholders.

 

Sports Field Holdings, Inc. (“Sports Field Holdings”), a Nevada corporation, was formed on September 7, 2012. The Company’s operations are performed through its wholly owned subsidiaries, Sports Field Contractors, LLC, an Illinois limited liability company (“Sports Field Contractors”) Sports Field Engineering, Inc. a Florida corporation (“Sports Field Engineering”) and Athletic Construction Enterprises, Inc. a Florida corporation (“Athletic Construction”, and together with “Sports Field Engineering”, “Sports Field Contractors” and “Sports Field Holdings”, collectively Sports Field). Sports Field is a product development, engineering, manufacturing and construction company that designs and builds athletic facilities, as well as supplies its own proprietary high - end synthetic turf products to the sports industry.

 

According to the Synthetic Turf Council, in 2012, over 1000 new synthetic turf athletic fields were installed. Synthetic turf fields have become the field of choice for public and private schools, municipal parks and recreation departments, non-profit and for profit sports venue businesses, residential and commercial landscaping and golf related venues due to the spiraling costs associated with maintaining natural grass athletic fields and the demand for increased playing time, durability of the playing surface and the ability to play on that surface in any weather conditions.

 

 
 

 

As synthetic turf athletic fields and synthetic turf have truly become the viable alternative to natural grass fields, there are a number of technical issues that have arisen through the evolution of the development of turf and the systems designed around its installation. Sports Field has focused on addressing the main technical issues that still remain with synthetic turf athletic fields and synthetic turf.

 

Since its inception in 2011 through the present, Sports Field has completed a total of 20 contracts. These contracts encompass a variety of projects from the engineer, design and build of entire football stadiums such as Sacred Heart Griffin High School, in Springfield, Illinois, to the installation of a specialized lacrosse field at Fairfield University, in Fairfield, Connecticut. We have also designed, engineered and installed baseball stadiums, soccer fields, indoor soccer facilities, softball fields for private sports venues, public and private high schools and public and private universities.

 

Lines of Business

 

Sports Field, has three primary lines of business which are all integral parts of the operating company and the organization s overall business model.

 

Sports Field is a product development, engineering and design-build construction company, engaged in the design, engineering, constructing, and construction management of athletic facilities, and sports complexes.

 

Engineering and construction management of sports facilities are two of the primary lines of business. The third line of business can be categorized as design, development, and manufacturing of sports surfacing products and associated pre-engineered construction systems.

 

Civil Engineering generates approximately 20% of gross revenues for the Company, while sports facilities products and construction, and construction management accounts for roughly 80% of the Company’s gross revenues. Approximately 40%, of the 80% of gross revenues for sports facilities construction and construction management, are products and systems sales.

 

Target Markets

 

Our main target market is the more than 50,000 colleges, universities, high schools and primary schools in the United States with athletic programs, both public and private. Municipality parks and recreations departments also represent a potential significant market for the Company.

 

Additionally, we target private sports venue businesses, non-profit sports associations and venues and sports associations of all major sports, including; football, soccer, baseball, softball, lacrosse, field hockey, rugby, as well as track and field.

 

We also intend to market to youth leagues and all semi-professional and professional sports leagues.

 

Products and Services

 

We manufacture (through a third-party manufacturer) and sell our own proprietary, patent-pending, synthetic turf products, including, a high - end synthetic turf system, Eco-Sistem®, based on surface heat reduction which incorporates a proprietary, third-party pre-engineered structural base system, and our proprietary infill matrix called Organite™, an eco-safe antimicrobial infill alternative that is lead-free. The Company also provides design and engineering services, as well as construction management for the development and building of athletic facilities at colleges, universities, high schools and primary schools, both public and private. In addition, these services are offered to municipalities, the Federal Aviation Administration (“FAA”), private businesses, as well as the residential and commercial landscaping market, the golf industry and golf-related venues such as driving ranges, practice putting greens, and the miniature golf market.

 

 
 

 

Products and Usage

 

Base Construction

 

Conventional free-draining stone bases incorporate an inherent engineering conflict – drainage capacity vs. grade stability. In addition, the infiltration rate of the stone base cannot be accurately measured or predicted and degrades over time. To address these issues, we invented vertical-to-horizontal drainage technology, using a third party’s pre-engineered structural base system. Our drainage methodology eliminates the engineering conflicts, practically eliminates invasive excavation, greatly reducing material import and export. Further, it is not susceptible to variances in sub-soil conditions and it is calculable, predictable and constant over time as to drainage capacity and infiltration rate, providing a predictable and constant profile for “G-Max” reduction. G-Max is a measurement of how much force the surface will absorb, the higher the G-Max rating the less absorption of force by the surface.

 

Our proprietary system includes:

 

 

Slot Drawing of the base panel:

 

 

Top and bottom view of the base Thin-panel 7 Parasolid:

 

 
 

 

 

Shock Attenuation

 

The National Football League’s (the “NFL”) recent attention to head injuries is reflected in its adoption of new standards for impact forces. New NFL guidelines require that NFL fields have a G-MAX value that is not greater than 100 (based on the “Clegg” method of calculating G-MAX). We believe that this criterion will eventually trickle-down and apply to all sports surfaces, and all artificial turf fields will have to maintain a G-Max below 100 (Clegg) for the life of the product. Many of the most popular turf systems use sand as the majority component of infill material, mixed with crumb rubber, or ground up discarded automobile tires, that are known to contain lead, chromium and other toxic heavy metals. Sand has a significantly higher specific gravity than rubber. As a result, the sand separates and falls to the bottom of the infill matrix where it compacts over time. This compacting of sand results in such a field’s G-MAX value increasing, usually to well above the maximum allowable G-Max for NFL Fields. For this reason, we have invented virtually “sandless” polyorganic infilled artificial turf. Sports Field’s Eco-Sistem s urface system combines the predictable G-Max enhancing pre-engineered structural base panel system with a high-mass turf configuration and virtually “sandless” organic infill to provide a surface system that is guaranteed to never exceed 100 G-Max (Clegg) for the life of the product.

 

Heat Reduction

 

Artificial turf produces a higher temperature ambient above the playing surface due to absorption of solar energy (electromagnetic radiation). The reflectivity or albedo of an artificial turf system, including the infill, is generally lower than natural grass (darker colors absorb more electromagnetic radiation) due to the exposure of dark infill. Further, artificial turf and rubber infill do not naturally contain and hold moisture, to provide evaporative cooling, as natural grass and soils do. Given a specific material (in this case, PE fiber or recycled tire rubber), the darker the color of the material, the more electromagnetic radiation will be absorbed and subsequently re-radiated to the ambient above the playing surface. The darker the area of the playing surface, the more elevated the temperatures to which athletes are exposed during play.

 

Additionally, because artificial turfs tend to “lay-over” and expose more surface area directly to the sun’s radiation, insolation (solar radiation energy received) can increase, dramatically. In hot, dry (less cloudy/low humidity) climates, and especially in southern latitudes, the preponderance of exposed black (rubber) material is likely to create an unhealthy, excessively hot, playing condition. Not only is the air temperature above the surface excessive, but also the surface temperature of the black rubber can actually be dangerous to touch.

 

 
 

 

To address these concerns, Sports Field created EcoGreen , which boasts minimal exposed infill and is the coolest infilled artificial turf possible (for any chosen color of grass fiber) and the albedo of the alternative infill is much higher (cooler) because of its tan color. Additionally, the organic infill can hold water to extend evaporative cooling. In addition, the superior memory of the 360-micron monofilament decreases insolation, by significantly reducing “lay-over”, (lay-over or “matting” is the failure of the synthetic grass filaments to remember their desired vertical configuration and, instead, to assume a horizontal alignment by breaking sharply at the point of exit from the infill. When the filaments are in a horizontal position the angle of exposure to the sun’s rays is greatly reduced, maximizing the absorption of heat-energy, a process known as insolation). Available testing indicates a 35 degree Fahrenheit decrease in surface temperature in full sun conditions, as compared with the leading competitor.

 

Athletic Performance

 

Sports Field has also invented “replicated grass”™. We believe you should “run on the grass – not on the infill.” Consequently, we design the surface with more synthetic turf blades of grass (almost two and a half times as much as the leading competitor) and much less infill. Our shorter tuft-height and higher face-weight combine to produce a surface with almost three times the blade-density of leading competitors. The result is a surface with increased infill stability because if the infill can be displaced, there is no way to maintain consistent performance characteristics. Because our infill is so stable and does not displace under normal use, there is no change in performance characteristics over time and the infill does not require grooming or replacement on a regular basis. Our dynamic design affords athletes natural “ball-action”, or “ball roll”, and “natural foot-feel”, or “foot action”.

 

 

Sustainability and Disposal Procedures

 

We believe every artificial turf field will eventually require replacement in 10 to 20 years. Each one of these full-sized fields typically contains approximately 225,000 pounds of recycled-tire rubber, 25,000 pounds of synthetic grass filament fibers, which contain undetermined levels of heavy metals and 15,000 pounds of urethane coating. In addition, a majority of the fields contain more than 500,000 pounds of sand containing silica, which may also contain fungi and mold and, unfortunately, cannot be separated from the rubber. Many states define these products (or are likely to in the near future) as ‘special waste’ or as hazardous waste, which requires special handling. For example, Connecticut no longer permits the landfilling of waste tire rubber.

 

 
 

 

When removed turf requires special handling and disposal sites, as almost all turf of conventional design will require, the cost, including OSHA and Environmental Protection Agency compliant removal, transportation and special hazards disposal fees, will likely exceed $100,000. In many cases, the disposal costs and fees alone will exceed that amount by a significant margin. Consideration of the ecological effects, which affect the eventual disposal costs of all components of a proposed artificial turf installation, is an important determination of the financial viability of a project from the outset. The recyclability and environmentally friendly nature of turf components must be factored into the total project cost in order to avoid burdening the next generation of users with the failure to consider the cost of ignoring the problem.

 

Environmentally friendly, ecologically-safe, recyclable infill, filament yarn and coating materials are available and we are using them in our current products. We believe our products perform, in all respects, as well or better than the ecologically-challenged products traditionally considered. The inclusion of ecologically friendly materials can be accomplished with no additional present cost. All of our products are made from 100% recyclable materials that can be disposed of like any other recyclable material and are not considered to be hazardous waste. Some companies produce fields with potentially toxic materials, such as lead that cannot be recycled. Many older fields are subject to being declared hazardous waste and may need costly special handling for disposal. The inclusion of ecologically friendly materials assures significant reduction in future cost, while minimizing environmental, ecological and health risks.

 

Competition

 

The competitive landscape with respect to manufacturing is very well-established, with seven companies selling the majority of synthetic turf products. Based on management’s experience and knowledge of the synthetic turf industry, Field Turf is the leading manufacturer of synthetic turf athletic fields and synthetic turf products, with what we believe is roughly 60% of the overall market and is one of the only companies operating in this space that we characterize as a true manufacturer. ShawSports, Astroturf, LLC, Sprint Turf, Pro Grass, A-Turf, and Hellas Construction are all purveyors of synthetic turf athletic fields with varying degrees of manufacturing and assembly. We estimate that these six companies account for approximately 30% of synthetic turf athletic field sales. There remains over 20 other distributors, and to varying degrees manufacturers and assemblers, of synthetic turf products that account for the remaining 10% of the synthetic turf athletic fields market. These applications run the entire gamut of synthetic turf from residential and commercial landscaping, to golf applications, parks and recreation, private parks, airports, highway medians, downhill skiing, and other applications.

 

The competitive landscape from an installation and construction perspective looks very different when compared to the landscape of the manufacturing side of the industry. In regard to installation and construction of artificial turf fields and athletic facilities, the industry is very much fragmented. There are no clear national leaders from the perspective of facilities construction. The bulk of the construction is provided by local or regional general contracting firms that specialize in certain phases of synthetic turf athletic fields and facility construction, but, to our knowledge, none that offer a true turn-key operation, to include their own in-house engineering staff. Sports Field offers full service design and engineering services, with forensic studies of athletic facilities to properly prepare and recommend custom specifications based on specific circumstances unique to every facility. In addition, the Company will provide full service turn-key construction services for the facility depending on a client’s needs, or simply provide project management services for a particular project.

 

Sales and Marketing

 

The Company has received many of its jobs through referral by virtue of its track record on previous jobs and the reputation of management. Sports Field currently has two inside salesman working on a salary basis and has an outside sales team, who are compensated strictly on commission. These professionals maintain high level contacts with the NFL, Major League Baseball, professional soccer leagues, and major universities and colleges. These contacts have introduced the Company to NFL owners, professional athletes, college presidents and athletic directors, head coaches and other important industry contacts. Additionally the Company employs 3 full time professional sale representatives working primarily with colleges as well as public and private high schools, sports associations, sports leagues, parks and recreation departments and public and private sports parks.

 

Our commission-based sales force is active through the United States and will continue to call on relationships with these contacts. The efforts of this group comprise a major component of the Company’s sales and marketing initiatives and these contacts in the professional and collegiate sports industries represent a significant asset as the Company looks to continue its growth.

 

 
 

 

The Company plans to employ targeted and innovative direct marketing to athletic directors, school business managers, college and high school athletic programs, high school football coaches, landscape architects, engineering firms, and municipal parks and recreation departments. Our emphasis is on innovative products and construction methodologies.

 

We intend to engage in the development of marketing initiatives to broaden our user base as well as the industries we serve. We intend to market to our existing user base and initiate contacts with new potential users through various methods, including, without limitation, personal contact by brand ambassadors, user referrals and trade show participation.

 

Growth Strategy

 

Our growth strategy will center around our national marketing campaign and is designed to secure contracts in every major region of the United States, establishing Sports Field as the premier provider of a unique turn-key service that includes design and engineering expertise, along with what we believe to be the leading patent pending turf systems and drainage products available in the industry. We believe that the marriage of civil engineering and material science, combined with a turn-key all-inclusive, single interface service for the client will clearly distinguish Sports Field from its competitors and establish the Company as the leading provider of services and products to the athletic facilities construction industry.

 

By securing contracts and establishing Sports Field in major regions of the country, the Company will seek to leverage those relationships and successful contracts to aggressively market to all potential clients in these regions. Utilizing its network of regional contractors and service providers, Sports Field plans to establish territorial relationships with these providers that will allow the Company to aggressively market to major regions of the country managing these regional contractors and providers to facilitate expansion of the Company’s unique business model throughout the United States.

 

Intellectual Property Rights

 

The Company has filed two provisional patent applications with the United States Patent and Trademark Office:

 

Patent Application # 61726053 titled: artificial turf providing stable infill and durable, invariable shock attenuating capacity and method of manufacture;

 

Patent Application # 61750476 titled: artificial turf providing appearance of natural grass when viewed over high resolution image transmission (HDTV) and including a stable, ecologically-safe, surface heat reducing infill and method of manufacture.

 

Trademarks:

 

Eco-Sistem™

 

EcoGreen™

 

EcoFlo™

 

Replicated Grass™

 

Organite™

 

FieldShield™

 

Sandless™

 

G-MAXFLO ™

 

 
 

 

Service Mark :

 

Bringing Science to the Surface

 

Employees  

 

We have five full time employees, including our Chief Executive Officer, Director of Product Development and General Manager. Additionally, the Company employs three independent contractors including two contract employees for bookkeeping and accounting services. None of Sports Field’s employees are represented by a labor union. For further information see Section 5.02 below.

 

DESCRIPTION OF PROPERTY

 

Our principal office is located at 176 East Main Street, Suite 7, Westborough, MA 01581 and is a 1,750 sq. ft. office space rented at a rate of $2,114.58. This space is utilized for office purposes and it is our belief that the space is adequate for our immediate needs. Additional space may be required as we expand our business activities. We do not foresee any significant difficulties in obtaining additional facilities if deemed necessary.

 

RISK FACTORS

 

You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this offering that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment.

 

 

RISKS RELATING TO OUR INDUSTRY (SPORTS FIELD)

 

THE INSTALLATION OF SYNTHETIC TURF IS A HIGHLY COMPETITIVE INDUSTRY.

 

The installation of synthetic turf is a highly competitive and highly fragmented industry. Competing companies may be able to beat our bids for the more desirable projects. As a result, we may be forced to lower bids on projects to compete effectively, which would then lower the fees we can generate. We may compete for the management and installation of synthetic turf with many entities, including nationally recognized companies. Many competitors may have substantially greater financial resources than we do. In addition, certain competitors may be willing to accept lower fees for their services.

 

THE SUCCESS OF OUR BUSINESS IS SIGNIFICANTLY RELATED TO GENERAL ECONOMIC CONDITIONS AND, ACCORDINGLY, OUR BUSINESS COULD BE HARMED BY THE ECONOMIC SLOWDOWN AND DOWNTURN IN FINANCING OF PUBLIC WORKS CONTRACTS.

 

Our business is closely tied to general economic conditions. As a result, our economic performance and the ability to implement our business strategies may be affected by changes in national and local economic conditions. During an economic downturn funding for public contracts tends to decrease significantly thereby limiting the growth and opportunities available for new and established businesses in the synthetic turf industry. The current recession and the downturn may limit the number of projects that we are able to bid on and limit the opportunities we have to penetrate the synthetic turf industry, stunting the Company’s growth prospects and having a material adverse effect on our business.

 

IF WE ARE UNABLE TO OBTAIN RAW MATERIALS IN A TIMELY MANNER OR IF THE PRICE OF RAW MATERIALS INCREASES SIGNIFICANTLY, PRODUCTION TIME AND PRODUCT COSTS COULD INCREASE, WHICH MAY ADVERSELY AFFECT OUR BUSINESS.

 

The manufacture of our products depends on raw materials derived from petrochemicals such as yarn, backing and infill. If the prices of these raw materials rise significantly, we may be unable to pass on the increased cost to our customers. Our results of operations could be adversely affected if we are unable to obtain adequate supplies of raw materials in a timely manner or at reasonable cost. In addition, from time to time, we may need to reject raw materials that do not meet our specifications, resulting in potential delays or declines in output. Furthermore, problems with our raw materials may give rise to compatibility or performance issues in our products, which could lead to an increase in customer returns or product warranty claims. Errors or defects may arise from raw materials supplied by third parties that are beyond our detection or control, which could lead to additional customer returns or product warranty claims that may adversely affect our business and results of operations.

 

 
 

 

WE MUST ANTICIPATE AND RESPOND TO RAPID TECHNOLOGICAL CHANGE.

 

The market for our products and services is characterized by technological developments and evolving industry standards. These factors will require us to continually improve the performance and features of our products and services and to introduce new products and services, particularly in response to offerings from our competitors, as quickly as possible. As a result, we might be required to expend substantial funds for and commit significant resources to the conduct of continuing product development. We may not be successful in developing and marketing new products and services that respond to competitive and technological developments, customer requirements, or new design and production techniques. Any significant delays in product development or introduction could have a material adverse effect on our operations.

 

WE RELY UPON THIRD-PARTY MANUFACTURERS AND SUPPLIERS, WHICH PUTS US AT RISK FOR THIRD-PARTY BUSINESS INTERRUPTIONS.

 

Success for our business depends in part on our ability to retain third party manufacturers and suppliers to provide subparts for our products and materials for the services we provide. Although in several cases we do hold long term contracts with important manufacturers, and suppliers, third-parties may not perform as we expect. If manufacturers and suppliers fail to perform, our ability to market products and to generate revenue would be adversely affected. Our failure to deliver products and services in a timely manner could lead to customer dissatisfaction and damage to our reputation, cause customers to cancel contracts and to stop doing business with us.

 

LOWER THAN EXPECTED DEMAND FOR OUR PRODUCTS AND SERVICES WILL IMPAIR OUR BUSINESS AND COULD MATERIALLY ADVERSELY AFFECT OUR RESULTS OF OPERATIONS AND FINANCIAL CONDITION.

 

Currently there are approximately 7,000 synthetic turf fields installed in the U.S. and approximately 1,000 new fields installed every year, according to the Synthetic Turf Council. Given that there are approximately 50,000 colleges and high schools in the U.S. with athletic programs, in so far as athletic fields are concerned, at some point in the future saturation will slow the growth of the industry. If we meet a lower demand for our products and services than we are expecting, our business, results of operations and financial condition are likely to be materially adversely affected. Moreover, overall demand for synthetic turf products and services in general may grow slowly or decrease in upcoming quarters and years because of unfavorable general economic conditions, decreased spending by schools and municipalities in need of synthetic turf products or otherwise. This may reflect a saturation of the market for synthetic turf. To the extent that there is a slowdown in the overall market for synthetic turf, our business, results of operations and financial condition are likely to be materially adversely affected.

 

WE MAY BE SUBJECT TO THE RISK OF SUBSTANTIAL ENVIRONMENTAL LIABILITY AND LIMITATIONS ON OUR OPERATIONS BROUGHT ABOUT BY THE REQUIREMENTS OF ENVIRONMENTAL LAWS AND REGULATIONS

 

Sports Field may be subject to various federal, state and local environmental, health and safety laws and regulations concerning issues such as, wastewater discharges, solid and hazardous materials and waste handling and disposal, landfill operation and closure. There have been a number of ecological concerns that have arisen from the creation of synthetic turf and the evolution of the synthetic turf industry. One of the biggest concerns to surface most recently is the amount of lead in some of the products used in the manufacture and installation of synthetic turf and synthetic turf systems such as crumb rubber. Crumb rubber is rubber used from recycled tires and used as an infill product in most synthetic turf athletic fields in the U.S. and has shown to contain levels of lead that many argue could potentially be harmful to humans. In addition, many of the yarns used to make synthetic turf blades contain levels of lead that are also coming into question as to potential health hazards. Due to the many concerns that are now arising regarding the levels of lead contained in many synthetic turf products, the disposal of old synthetic turf fields may become an issue with municipal land-fills and could in fact add significant costs to the disposal of these worn out fields. It is possible that these old fields could be declared hazardous materials in the future by municipal land-fills, which would add enormous costs to the disposal of such products and the cost to dispose of these materials could in fact be as much as the original cost to purchase and install such fields. While Sports Field believes that it is and will continue to manufacture products in compliance with all applicable environmental laws and regulations, the risks of substantial additional costs and liabilities related to compliance with such laws and regulations are an inherent part of our business.

 

 
 

 

RISKS RELATED TO OUR COMPANY

 

WE HAVE LIMITED OPERATING HISTORY.

 

To date, our efforts have been focused primarily on the development and marketing of our business model. We have limited operating history for investors to evaluate the potential of our business development. We may not operate profitably and we may not have adequate working capital to meet our obligations as they become due.

 

WE NEED ADDITIONAL CAPITAL TO DEVELOP OUR BUSINESS.

 

The development of our services will require the commitment of substantial resources to implement our business plan. In addition, substantial expenditures will be required to enable us to complete projects in the future. Currently, we have no established bank-financing arrangements. Therefore, it is likely we would need to seek additional financing through subsequent future private offerings of our equity securities, or through strategic partnerships and other arrangements with corporate partners.

 

We cannot give you any assurance that any additional financing will be available to us, or if available, will be on terms favorable to us. The sale of additional equity securities will result in dilution to our stockholders. The occurrence of indebtedness would result in increased debt service obligations and could require us to agree to operating and financing covenants that would restrict our operations. If adequate additional financing is not available on acceptable terms, we may not be able to implement our business development plan or continue our business operations.

 

WE NEED TO MANAGE GROWTH IN OPERATIONS TO MAXIMIZE OUR POTENTIAL GROWTH AND ACHIEVE OUR EXPECTED REVENUES AND OUR FAILURE TO MANAGE GROWTH WILL CAUSE A DISRUPTION OF OUR OPERATIONS, RESULTING IN THE FAILURE TO GENERATE REVENUE.

 

In order to maximize potential growth in our current and potential markets, we believe that we must expand our marketing operations and eventually, begin to manufacture our principal product ourselves. This expansion will place a significant strain on our management and our operational, accounting, and information systems. We expect that we will need to continue to improve our financial controls, operating procedures, and management information systems. We will also need to effectively train, motivate, and manage our employees. Our failure to manage our growth could disrupt our operations and ultimately prevent us from generating the revenues we expect.

 

In order to achieve the above mentioned targets, the general strategies of our company are to maintain and search for hard-working employees who have innovative initiatives, while at the same time, keep a close eye on any and all expanding opportunities.

 

WE MAY INCUR SIGNIFICANT COSTS TO ENSURE COMPLIANCE WITH UNITED STATES CORPORATE GOVERNANCE AND ACCOUNTING REQUIREMENTS.

 

We may incur significant costs associated with our public company reporting requirements, costs associated with newly applicable corporate governance requirements, including requirements under the Sarbanes-Oxley Act of 2002 and other rules implemented by the U.S. Securities and Exchange Commission (the “SEC”). We expect all of these applicable rules and regulations to significantly increase our legal and financial compliance costs and to make some activities more time consuming and costly. We also expect that these applicable rules and regulations may make it more difficult and more expensive for us to obtain director and officer liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified individuals to serve on our board of directors or as executive officers. We are currently evaluating and monitoring developments with respect to these newly applicable rules, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.

 

 
 

 

We cannot be certain that any patents will be issued with respect to our current or potential patent applications.

 

As of the date hereof, we have filed two patent applications and intend to file two additional patent applications in one or more jurisdictions and have no issued patents. We do not know whether any of our patent applications will result in the issuance of patents or whether the examination process will require us to narrow the scope of our claims. To the extent any of our applications proceed to issuance as a patent, any such future patent may be opposed, contested, circumvented, designed around by a third party or found to be invalid or unenforceable. The process of seeking patent protection can be lengthy and expensive. Some of our technology may not covered by any patent or patent application.

 

WE HAVE NOT REGISTERED OUR TRADEMARKS AND THUS MAY BE SUBJECT TO CLAIMS OF INFRINGEMENT OR HAVE DIFFICULTY PREVENTING OTHERS FROM USING OUR MARKS.

 

We have not obtained federal registration of any of the trademarks we use in our business, including Eco-Sistem™, EcoGreen™, G-MAXFLOW™ or our name or logo. Currently, we are asserting common law protection by holding the marks out to the public as the property of Sports Field. However, no assurance can be given that this common low assertion will be effective to prevent others from using the marks concurrently or in other locations. In the event someone asserts ownership to a mark, we may incur legal costs to enforce any unauthorized use of the marks or defend ourselves against any claims.

 

We may suffer losses if our reputation is harmed.

 

Our ability to attract and retain customers and employees may be adversely affected to the extent our reputation is damaged. If we fail, or appear to fail, to deal with various issues that may give rise to reputational risk, we could harm our business prospects. These issues include, but are not limited to, appropriately dealing with potential conflicts of interest, legal and regulatory requirements, ethical issues, money-laundering, privacy, record-keeping, sales and trading practices, and the proper identification of the legal, reputational, credit, liquidity, and market risks inherent in our business. Failure to appropriately address these issues could also give rise to additional legal risk to us, which could, in turn, increase the size and number of claims and damages asserted against us or subject us to regulatory enforcement actions, fines, and penalties.

 

WE DEPEND ON OUR KEY MANAGEMENT PERSONNEL AND THE LOSS OF THEIR SERVICES COULD ADVERSELY AFFECT OUR BUSINESS.

 

We place substantial reliance upon the efforts and abilities of Joseph DiGeronimo, our Chief Executive Officer, and our other executive officers. Though no individual is indispensable, the loss of the services of these executive officers could have a material adverse effect on our business, operations, revenues or prospects. We do not maintain key man life insurance on the lives of these individuals.

 

If we fail to establish and maintain an effective system of internal control, we may not be able to report our financial results accurately or to prevent fraud. Any inability to report and file our financial results accurately and timely could harm our reputation and adversely impact the trading price of our Common Stock.

 

Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. As a result, our small size and any current internal control deficiencies may adversely affect our financial condition, results of operation and access to capital. 

 

We currently have insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of US GAAP and SEC disclosure requirements. Additionally, there is a lack of formal process and timeline for closing the books and records at the end of each reporting period and such weaknesses restrict the Company’s ability to timely gather, analyze and report information relative to the financial statements.

 

 
 

 

Because of the Company’s limited resources, there are limited controls over information processing. There is inadequate segregation of duties consistent with control objectives. Our Company’s management is composed of a small number of individuals resulting in a situation where limitations on segregation of duties exist. In order to remedy this situation we would need to hire additional staff. Currently, the Company is unable to hire additional staff to facilitate greater segregation of duties but will reassess its capabilities after completion of the Offering.

 

RISKS RELATED TO OUR COMMON STOCK

 

OUR SHARES OF COMMON STOCK HAVE NO TRADING AND THERE CAN BE NO ASSURANCE THAT THERE will BE AN ACTIVE MARKET FOR OUR SHARES OF COMMON STOCK EITHER NOW OR IN THE FUTURE

 

Our shares of common stock have not been publicly traded, and the price if traded may not reflect our value. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. The market liquidity will be dependent on the perception of our operating business and any steps that our management might take to bring us to the awareness of investors. There can be no assurance given that there will be any awareness generated. Consequently, investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for any loans.

 

WE MAY BE SUBJECT TO PENNY STOCK RULES WHICH WILL MAKE THE SHARES OF OUR COMMON STOCK MORE DIFFICULT TO SELL.

 

We may be subject now and in the future to the SEC’s “penny stock” rules if our shares common stock sell below $5.00 per share. Penny stocks generally are equity securities with a price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document prepared by the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny stock held in the customer’s account. The bid and offer quotations, and the broker-dealer and salesperson compensation information must be given to the customer orally or in writing prior to completing the transaction and must be given to the customer in writing before or with the customer’s confirmation.

 

In addition, the penny stock rules require that prior to a transaction the broker dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock may find it more difficult to sell their securities.

 

SALES OF OUR CURRENTLY ISSUED AND OUTSTANDING STOCK MAY BECOME FREELY TRADABLE PURSUANT TO RULE 144 AND MAY DILUTE THE MARKET FOR YOUR SHARES AND HAVE A DEPRESSIVE EFFECT ON THE PRICE OF THE SHARES OF OUR COMMON STOCK

 

A substantial majority of our outstanding shares of common stock are “restricted securities” within the meaning of Rule 144 under the Securities Act. As restricted shares, these shares may be resold only pursuant to an effective registration statement or under the requirements of Rule 144 or other applicable exemptions from registration under the Act and as required under applicable state securities laws. Rule 144 provides in essence that an Affiliate (as such term is defined in Rule 144(a)(1)) of an issuer who has held restricted securities for a period of at least six months (one year after filing Form 10 information with the SEC for shell companies and former shell companies) may, under certain conditions, sell every three months, in brokerage transactions, a number of shares that does not exceed the greater of 1% of a company’s outstanding shares of common stock or the average weekly trading volume during the four calendar weeks prior to the sale (the four calendar week rule does not apply to companies quoted on the OTC Bulletin Board). Rule 144 also permits, under certain circumstances, the sale of securities, without any limitation, by a person who is not an Affiliate of the Company and who has satisfied a one-year holding period. A sale under Rule 144 or under any other exemption from the Act, if available, or pursuant to subsequent registrations of our shares of common stock, may have a depressive effect upon the price of our shares of common stock in any active market that may develop.

 

 
 

 

YOU WILL EXPERIENCE DILUTION OF YOUR OWNERSHIP INTEREST BECAUSE OF THE FUTURE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK AND OUR PREFERRED STOCK.

 

In the future, we may issue our authorized but previously unissued equity securities, resulting in the dilution of the ownership interests of our present stockholders. We are currently authorized to issue an aggregate of 270,000,000 shares of capital stock consisting of 250,000,000 shares of common stock, par value $0.00001 and 20,000,000 shares of blank check preferred stock, par value $0.00001.

 

We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for common stock in connection with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes, or for other business purposes. The future issuance of any such additional shares of our common stock or other securities may create downward pressure on the trading price of our common stock. There can be no assurance that we will not be required to issue additional shares, warrants or other convertible securities in the future in conjunction with hiring or retaining employees or consultants, future acquisitions, future sales of our securities for capital raising purposes or for other business purposes, including at a price (or exercise prices) below the price at which shares of our common stock are trading.

 

WE DO NOT EXPECT TO PAY DIViDENDS AND INVESTORS SHOULD NOT BUY OUR COMMON STOCK EXPECTING TO RECEIVE DIVIDENDS.

 

We have not paid any dividends on our common stock in the past, and do not anticipate that we will declare or pay any dividends in the foreseeable future. Consequently, investors will only realize an economic gain on their investment in our common stock if the price appreciates. Investors should not purchase our common stock expecting to receive cash dividends. Because we do not pay dividends, and there may be limited trading, investors may not have any manner to liquidate or receive any payment on their investment. Therefore, our failure to pay dividends may cause investors to not see any return on investment even if we are successful in our business operations. In addition, because we do not pay dividends we may have trouble raising additional funds, which could affect our ability to expand our business operations.

 

 
 

 

Management’s Discussion And Analysis Of Financial Condition AND Plan Of Operations

 

This Current Report on Form 8-K contains forward-looking statements. These include statements about our expectations, beliefs, intentions or strategies for the future, which we indicate by words or phrases such as “anticipate,” “expect,” “intend,” “plan,” “will,” “we believe,”“management believes” and similar language. Except for the historical information contained herein, the matters discussed in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and elsewhere in this Current Report are forward-looking statements that involve risks and uncertainties. The factors listed in the section captioned “Risk Factors,” as well as any cautionary language in this Current Report, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from those projected. Except as may be required by law, we undertake no obligation to update any forward-looking statement to reflect events after the date of this Current Report on Form 8-K.

 

Overview

 

We intend for this discussion to provide information that will assist in understanding our financial statements, the changes in certain key items in those financial statements, and the primary factors that accounted for those changes, as well as how certain accounting principles affect our financial statements. This discussion should be read in conjunction with our financial statements and accompanying notes for the three months ended March 31, 2014 and 2013, and for the years ended December 31, 2013 and 2012.

 

We are a product development, engineering, manufacturing and construction company that designs, engineers and builds athletic facilities, as well as supplies its own proprietary technologically advanced, patent-pending synthetic turf products to the industry.

 

Business Overview

 

Sports Field Holdings Inc., through its wholly owned operating subsidiary Sports Field Contractors, has three primary lines of business which are all integral parts of the operating company and the organization s overall business model.

 

Sports Field Contractors is a product development, engineering and design-build construction company, engaged in the design, engineering, constructing, and construction management of athletic facilities, and sports complexes.

 

Engineering and construction management of sports facilities are two of the primary lines of business. The third line of business can be categorized as design, development, and manufacturing of sports surfacing products and associated pre-engineered construction systems.

 

 
 

 

Civil Engineering generates approximately 20% of gross revenues for the Company, while sports facilities products and construction, and construction management accounts for roughly 80% of the Company’s gross revenues. Approximately 40%, of the 80% of gross revenues for sports facilities construction and construction management, are products and systems sales.

 

Our main target market is the more than 50,000 colleges, universities, high schools and primary schools in the United States with athletic programs, both public and private. Municipality parks and recreations departments also represent a potential significant market for the Company.

 

Additionally, we target private sports venue businesses, non-profit sports associations and venues and sports associations of all major sports, including; football, soccer, baseball, softball, lacrosse, field hockey, rugby, as well as track and field.

 

We also intend to market to youth leagues and all semi-professional and professional sports leagues.

 

Results of Operations

 

Summary of Statements of Operations for the Three Months Ended March 31, 2014 and 2013:

 

    Three Months Ended  
   

March 31,

2014

   

March 31,

2013

 
Revenue   $ 118,633     $ 355,070  
Gross profit   $ 25,535     $ 250,828  
Operating expenses   $ 885,722     $ 131,398  
Net (loss) income from operations   $ (860,187)     $ 119,430  
Other expenses   $ 35,596     $ 2,239  
Net (loss) income attributable to common shareholder   $ (895,783)     $ 117,101  
(Loss) income per common share – basic and diluted   $ (0.07)     $ 0.01  

 

Revenue

 

Revenue was $118,633 for the three months ended March 31, 2014, as compared to $355,070 for the comparable period ended March 31, 2013, a decrease of $236,437. The decrease in revenue is primarily attributable to a decrease in the size of the contracts during the three months ended March 31, 2014 compared to the three months ended March 31, 2013.

 

Gross Profit

 

Gross profit percentage decreased from a gross profit of 71% during the three months ended March 31, 2013, to a gross profit of 22% during the three months ended March 31, 2014. The decrease in gross profit is primarily attributable to the mix of jobs in progress, whereby the jobs in progress during the three months ended March 31, 2014 were more labor-intensive and lower margin that the jobs in progress during the three months ended March 31, 2013.

 

Operating Expenses

 

Operating expenses for the three months ended March 31, 2014, was $885,722, as compared to $131,398 for the three months ended March 31, 2013, an increase of $754,324. The increase is primarily attributable to the approximate $400,000 increase in professional fees in relation to the Company plans to go public in the near future.

 

Other Expenses

 

Other expense for the three months ended March 31, 2014, was $35,596, as compared to $2,329 for the three months ended March 31, 2013. The increase is primarily attributable to the $25,000 expense for the forfeiture on a deposit to purchase land.

 

Net (Loss) Income Attributable to Common Shareholder

 

Net loss attributable to common shareholder for three months ended March 31, 2014, was $(895,783) or a basic and diluted loss per share of $(0.07), as compared to net income of $117,101 or basic and diluted income per share of $0.01, for the three months ended March 31, 2013.

 

 
 

 

Liquidity and Capital Resources

 

The following table summarizes total current assets, liabilities and working capital at March 31, 2014, compared to December 31, 2013:

 

    March 31, 2014    

December 31, 2013

    Increase/Decrease  
Current Assets   $ 2,983,485     $ 109,806     $ 2,873,679  
Current Liabilities   $ 427,736     $ 1,740,381     $ (1,312,645)  
Working Capital (Deficit)   $ 2,555,749     $ (1,630,575)     $ 4,186,324  

 

At March 31, 2014, we had a working capital of $2,555,749, as compared to a working capital deficit of $(1,630,575), at December 31, 2013, an increase of $4,186,324. The increase is primarily attributable to the approximate $4.3 million in net proceeds received during the private placement of common stock through Spartan capital during the three months ended March 31, 2014.

 

Net Cash

 

Net cash used in operating activities for the three months ended March 31, 2014 and 2013 was $1,046,368 and $33,378, respectively. The net loss attributable to common shareholder for the three months ended March 31, 2014, was $(895,783) compared to net income attributable to common shareholder for the three months ended March 31, 2013 of $117,101.

 

Net cash used in investing activities during the three months ended March 31, 2014 was $33,131 compared to $35,237 for the 2013 comparable period.

 

Financings

 

Net cash provided by financing activities for the three months ended March 31, 2014 and 2013 was $3,933,561 and $340,265, respectively. During the three months ended March 31, 2014, the Company received approximately $4.3 million in net proceeds received during the private placement of common stock through Spartan capital and re-paid $391,183 in promissory notes and accrued interest on those notes. During the three months ended March 31, 2013, the Company received $380,000 through the issuance of convertible promissory notes.

  

Off-Balance Sheet Arrangements

 

As of March 31, 2014 and December 31, 2013, the Company had no off-balance sheet arrangements.

 

Critical Accounting Policies

 

We believe that the following accounting policies are the most critical to aid you in fully understanding and evaluating this “Management’s Discussion and Analysis of Financial Condition and Results of Operation.”

 

 
 

 

Revenue and Cost Recognition

 

Revenues from construction contracts are included in contract revenue in the consolidated statements of operations and are recognized under the percentage-of-completion accounting method. The percent complete is measured by the cost incurred to date compared to the estimated total cost of each project. This method is used as management considers expended cost to be the best available measure of progress on these contracts, the majority of which are completed within one year, but may occasionally extend beyond one year. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts.

 

Contract costs include all direct material and labor costs and those indirect costs related to contract performance and completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. General and administrative costs are charged to expense as incurred.

Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. An amount equal to contract costs incurred that are attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated.

 

Costs and estimated earnings in excess of billings are comprised principally of revenue recognized on contracts (on the percentage-of-completion method) for which billings had not been presented to customers because the amount were not billable under the contract terms at the balance sheet date. In accordance with the contract terms, any unbilled receivables at period end will be billed subsequently. Amounts are billed based on contractual terms. Billings in excess of costs and estimated earnings represent billings in excess of revenues recognized.

 

 

Use of Estimates

 

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

 

The Company’s significant estimates and assumptions include the fair value of stock based compensation; the carrying value, recoverability and impairment, if any, of long-lived assets. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.

 

Management bases its estimates on historical experience and on various assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources.

 

Management regularly reviews its estimates utilizing currently available information, changes in facts and circumstances, historical experience and reasonable assumptions. After such reviews, and if deemed appropriate, those estimates are adjusted accordingly. Actual results could differ from those estimates.

 

Property and Equipment

 

Property and equipment is stated at historical cost less accumulated depreciation and amortization. Depreciation and amortization is computed on a straight-line basis over the estimated useful lives of the assets, varying from 3 to 5 years or, when applicable, the life of the lease, whichever is shorter.

 

 
 

 

Stock-Based Compensation 

 

All stock-based payments to employees and to nonemployee directors for their services as directors, including any grants of restricted stock and stock options, are measured at fair value on the grant date and recognized in the statements of operations as compensation or other expense over the relevant service period. Stock-based payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable the measurement date is the date the award is issued.

 

Fair Value of Financial Instruments

 

We follow paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair value of our financial instruments and paragraph 820-10-35-37 of the FASB Accounting Standards Codification (“Paragraph 820-10-35-37”) to measure the fair value of our financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (“U.S. GAAP”), and expands disclosures about fair value measurements. To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The fair value hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority to unobservable inputs.

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers . Amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011-230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014-09. The amendments in this Update are effectively for the Company for annual reporting periods beginning after 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014-09 on the consolidated financial statements.

 

MANAGEMENT

 

Directors

 

The following sets forth the current members of our board of directors (“Board”) and information concerning their ages and background. All directors hold office until the next annual meeting of stockholders or until their respective successors are elected, except in the case of death, resignation or removal:

 

Name   Age   Position
         
Joseph DiGeronimo   63   Chief Executive Officer, Director
         
Daniel Daluise   66   Director, Director of Product Development
         
Philip Christiansen   67   Director

 

A brief biography of each of our directors is more fully set forth in Item 5.02, which is incorporated herein by reference.

 

Committees

 

We currently do not have any committees in place but anticipate establishing an audit committee, compensation committee and governance and nominating committee in the near future.

 

Independent Directors

 

For purposes of determining independence, the Company has adopted the definition of independence as contained in NASDAQ Market Place Rules 4200. Pursuant to the definition, the Company has determined that one of its directors currently qualify as independent.

 

Employment Agreements

 

Section 5.02(e) is hereby incorporated by reference.

 

Family Relationships

 

There are no family relationships amongst our officers and directors.

 

 
 

 

Code of Ethics

 

We currently do not have a code of ethics that applies to our officers, employees and directors, including our Chief Executive Officer and senior executives.

 

EXECUTIVE COMPENSATION

 

Anglesea Summary Compensation

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by Anglesea during the period from inception (February 8, 2011) through March 31, 2014.

 

Name and
Principal Position
  Year   Salary
($)
    Bonus
($)
    Stock
Awards
($)
    Option
Awards
($)
    Non-Equity
Incentive
Plan
Compensation
($)
    Non-
Qualified
Deferred
Compensation
Earnings
($)
    All Other
Compensation
($)
    Totals
($)
 
(1)   2013   $ 0       0       0       0       0       0     $ 1,200     $ 1,200  
    2012   $ 0       0       0       0       0       0     $ 1,200     $ 1,200  
    2011   $ 0       0       0       0       0       0     $ 0     $ 0  
(2)   2013   $ 0       0       0       0       0       0     $ 0     $ 0  
    2012   $ 0       0       0       0       0       0     $ 420     $ 420  
    2011   $ 0       0       0       0       0       0     $          

 

(1)

Mr. James Christie is a founder and, until June 9, 2014, was Chief Executive Officer, President and director of the Company and has not received any personal compensation for his services as such.

(2)

Ms. Leslie Toups is a founder and, until the Merger, was executive director of the Company and has not received any personal compensation as such.

 

Option Grants Table

 

There were no individual grants of stock options to purchase our common stock made to the executive officers named in the Summary Compensation Table from inception through March 31, 2014.

  

 
 

 

Sports Field Summary Compensation

 

The following summary compensation table sets forth all compensation awarded to, earned by, or paid to the named executive officers paid by us during the periods ended December 31, 2013, 2012 and 2011.

 

Name and
Principal Position
  Year     Salary
($)
      Bonus
($)
      Stock
Awards
($)
      Option
Awards
($)
      Non-Equity
Incentive
Plan
Compensation
($)
      Non-
Qualified
Deferred
Compensation
Earnings
($)
      All Other
Compensation
($)
      Totals
($) 
 
                                                                     
Joseph DiGeronimo
Chief Executive Officer(1)
  2013   70,00 0       0       0       0       0       0       0     $ 70,000  
    2012   0       0       0       0       0       0       0     0  
    2011   0       0       0       0       0       0       0     0  
                                                                     
Jeremy Strawn                                                                    
Former President(3)   2013   $ 65,799       0       0       0       0       0       0     $ 65,799  
    2012   $ 38,000       0       0       0       0       0       0     $ 38,000  
    2011   $ 0       0       0       0       0       0       0     $ 0  
                                                                     
William Michaels
Former Chief Operating Officer(4)
  2013   $ 65,799       0       0       0       0       0       0     $ 65,799  
    2012   $                   38,000       0       0       0       0       0       0     $     38,000  
    2011   $ 0       0       0       0       0       0       0     $ 0  
                                                                     
Daniel Dalusie
Director of Product Development
  2013   $ 12,000       0       0       0       0       0       0     $ 12,000  
    2012   $ 0       0       0       0       0       0       0     $ 0  
    2011   $ 0       0       0       0       0       0       0     $ 0  
                                                                     
Mark Driver
Former Chief Executive Officer(2)
  2013   $ 65,799       0       0       0       0       0       0     $ 65,799  
    2012   $ 38,000       0       0       0       0       0       0     $ 38,000  
    2011   0       0       0       0       0       0       0     0  

   

1. Mr. DiGeronimo became the Company’s Chief Executive Officer and director on September 24, 2013. Prior to that date, Mr. DiGeronimo was a consultant to the Company and wages reflected in the table represent compensation for such consulting services.
2. On August 22, 2013, Mr. Mark L. Driver, resigned from his position as the Company’s Chief Executive Officer and Director. On September 29, 2013, the Company entered into a settlement, severance and release agreement (the “Driver Agreement”) with Mr. Driver to formalize the terms and conditions of Mr. Driver’s resignation. Pursuant to the Driver Agreement, upon cancellation of Mr. Driver’s 2,079,000 shares of the Company’s common stock, the Company was to issue (i) 90,000 shares to Mr. Mark L. Diver (the “Mark Driver Shares”) and (ii) 90,000 shares to Mrs. Debbie Cliffe Driver (the “Debbie Cliffe Shares” together with the Mark Driver Shares, the “Driver Shares”) Mr. Driver is also to receive three payments of $2,000 for an aggregate payment of $6,000. As of the date hereof, the Drivers and their relatives or affiliates do not own any shares in the Company.
3.

On May 22, 2014, Mr. Jeremy Strawn resigned from his positions as President and director of the Company. On May 22, 2014, the Company entered into a separation agreement and release (the “Strawn Agreement”) with Mr. Strawn to formalize the terms and conditions of Mr. Strawn’s resignation.

4.

On May 12, 2014, Mr. William Michaels’ employment with the Company was terminated.

 

 
 

 

Aggregated Option Exercises and Fiscal Year-End Option Value Table

 

There were no stock options exercised since the date of inception of the Company, February 8, 2011, through the date of this Current Report on Form 8-K by the executive officers named in the Summary Compensation Tables.

 

Long-Term Incentive Plan (“LTIP”) Awards Table

 

There were no awards made to named executive officers in the last completed fiscal year under any LTIP.

 

Compensation of Directors

 

Currently the Company does not pay its board members for their service to the Board but, it may do so in the future.

 

Option Plan

 

We currently do not have a Stock Option Plan, however, we may wish to issue stock options pursuant to a Stock Option Plan in the future. Such stock options may be awarded to management, employees, members of the Company’s Board of Directors and consultants of the Company.

  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

The Company’s officers and stockholders or a Company under common control, have advanced funds to the Company for travel related and working capital purposes. The loans are due on demand and bear no interest. As of March 31, 2014 there were $45,782 of advances outstanding.

 

The Company has advanced funds to the Company’s officers and stockholders of a company under common control for travel related and working capital purposes. The loans are due on demand and bear no interest. As of December 31, 2013 and 2012, there were $56,385 and $0 in advances receivable, respectively, and were reported as loans receivable, related party on the balance sheet.

 

During the years ended December 31, 2013 and 2012, the Company utilized All Synthetics Group, a company under the control of Jeremy Strawn, the Company’s former President and director, to acquire products and services where vendor purchase lines had been previously established. For the years ended December 31, 2013 and 2012, the Company purchased an aggregate of $27,818 and $262,282 of products and services through All Synthetics Group. As of December 31, 2013 and 2012, the Company had $26,927 and $45,782 in advances payable, respectively, and were reported as loans payable, related party on the balance sheet.

 

Until April 2014, the Company leased its space for operations on a month to month basis with undefined payment terms from Jeremy Strawn, the Company’s former President and former director.  Rent expense for the years ended December 31, 2013 and 2012 was $23,465 and $2,840, respectively.

 

Other than the aforementioned, none of our officers, directors, proposed director nominees, beneficial owners of more than 10% of our shares of common stock, or any relative or spouse of any of the foregoing persons, or any relative of such spouse who has the same house as such person or who is a director or officer of any parent or subsidiary of our Company, has any direct or indirect material interest in any transaction to which we are a party since our incorporation or in any proposed transaction to which we are proposed to be a party. In the event a related party transaction is proposed, such transaction will be presented to our board of directors for consideration and approval. Any such transaction will require approval by a majority of the disinterested directors and such transactions will be on terms no less favorable than those available to disinterested third parties.

 

PRE-CLOSING PRINCIPAL STOCKHOLDERS

 

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of June 16, 2014, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown.

 

Name   Number of
Shares
Beneficially
Owned
    Percent of
Class
 
Leslie Toups(1)                
13799 Park Blvd., Suite 147,                
Seminole, FL 33776     60,000,000       90.86 %
                 
Edward G. Mass Jr.                
2323 State Road 580                
Clear Water FL, 33761     6,000,000       9.09 %
                 
James Christie                
13799 Park Blvd., Suite 147,                
Seminole, FL 33776     1,000       0.001 %
                 
All Executive Officers and Directors as a group (2)            
Total     60,001,000       90.86 %

 

  (1)

Based on 66,033,000 shares of common stock outstanding as of June 16, 2014.

 

 
 

  

POST-CLOSING PRINCIPAL STOCKHOLDERS  

 

The following table provides the names and addresses of each person known to us to own more than 5% of our outstanding shares of common stock as of June 16, 2014, and by the officers and directors, individually and as a group. Except as otherwise indicated, all shares are owned directly and the shareholders listed possesses sole voting and investment power with respect to the shares shown.

 

Name(1)   Number of Common
Shares Owned(2)
    Percentage of Class(3)  
Joseph DiGeronimo     500,000       4 %
Philip Christiansen     20,000       *  
Dan Daluise     500,000       4 %
Officers and Directors as a Group (3)     1,020,000       8 %

 

(1) Except as otherwise indicated, the persons named in this table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them, subject to community property laws where applicable and to the information contained in the footnotes to this table. Unless otherwise indicated, the address of the beneficial owner is 176 East Main Street, Westborough MA 62558.
(2)

Pursuant to Rules 13d-3 and 13d-5 of the Exchange Act, beneficial ownership includes any shares as to which a shareholder has sole or shared voting power or investment power, and also any shares which the shareholder has the right to acquire within 60 days, including upon exercise of common shares purchase options or warrants. There are 12,947,275 shares of common stock issued and outstanding as of June 16, 2014.

(3) Based on 12,947,275 issued and outstanding shares of common stock.

 

* Less than one percent.

   

DESCRIPTION OF SECURITIES

 

General

 

The Company is authorized to issue an aggregate number of 270,000,000 shares of capital stock, of which 20,000,000 shares are preferred stock, $0.00001 par value per share and 250,000,000 shares are common stock, $0.00001 par value per share.

 

 
 

 

Preferred Stock

 

The Company authorized to issue 20,000,000 shares of preferred stock, $0.00001 par value per share. Currently we have no shares of preferred stock issued and outstanding.

 

Common Stock

 

The Company is authorized to issue 250,000,000 shares of common stock, $0.00001 par value per share. After the Merger we currently have 12,947,275 shares of common stock issued and outstanding.

 

Each share of common stock shall have one (1) vote per share for all purpose. Our common stock does not provide a preemptive, subscription or conversion rights and there are no redemption or sinking fund provisions or rights. Our common stock holders are not entitled to cumulative voting for purposes of electing members to our board of directors.

 

Dividends

 

We have not paid any cash dividends to our shareholders. The declaration of any future cash dividends is at the discretion of our board of directors and depends upon our earnings, if any, our capital requirements and financial position, our general economic conditions, and other pertinent conditions. It is our present intention not to pay any cash dividends in the foreseeable future, but rather to reinvest earnings, if any, in our business operations.

 

Warrants

 

As of June 16, 2014, t here are 500,000 outstanding warrants to purchase our common shares. The warrants are exercisable for a term of five years with an exercise price of $1.00.

 

Options

 

There are no outstanding options to purchase our securities.

 

While there is no established public trading market for our Common Stock, our Common Stock is quoted on the OTC Markets OTCQB and OTCBB, under the symbol “AGSE”.

 

The market price of our Common Stock is subject to significant fluctuations in response to variations in our quarterly operating results, general trends in the market and other factors, over many of which we have little or no control. In addition, broad market fluctuations, as well as general economic, business and political conditions, may adversely affect the market for our Common Stock, regardless of our actual or projected performance.

 

Holders

 

As of June 16, 2014, we have 12,947,275 shares of our common stock par value, $0.00001, issued and outstanding. There are approximately 131 holders of our common stock. 

 

Transfer Agent and Registrar

 

The Transfer Agent for our capital stock is VStock Transfer, LLC., located at 77 Spruce Street, Suite 201, Cedarhurst, NY 11516.

   

Penny Stock Regulations

 

The Securities and Exchange Commission has adopted regulations which generally define “penny stock” to be an equity security that has a market price of less than $5.00 per share. Our Common Stock, when and if a trading market develops, may fall within the definition of penny stock and be subject to rules that impose additional sales practice requirements on broker-dealers who sell such securities to persons other than established customers and accredited investors (generally those with assets in excess of $1,000,000, or annual incomes exceeding $200,000 individually, or $300,000, together with their spouse).

 

 
 

 

For transactions covered by these rules, the broker-dealer must make a special suitability determination for the purchase of such securities and have received the purchaser’s prior written consent to the transaction. Additionally, for any transaction, other than exempt transactions, involving a penny stock, the rules require the delivery, prior to the transaction, of a risk disclosure document mandated by the Securities and Exchange Commission relating to the penny stock market. The broker-dealer also must disclose the commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and, if the broker-dealer is the sole market-maker, the broker-dealer must disclose this fact and the broker-dealer’s presumed control over the market. Finally, monthly statements must be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. Consequently, the “penny stock” rules may restrict the ability of broker-dealers to sell our Common Stock and may affect the ability of investors to sell their Common Stock in the secondary market.

    

Dividend Policy

 

Any future determination as to the declaration and payment of dividends on shares of our Common Stock will be made at the discretion of our board of directors out of funds legally available for such purpose. We are under no contractual obligations or restrictions to declare or pay dividends on our shares of Common Stock. In addition, we currently have no plans to pay such dividends. Our board of directors currently intends to retain all earnings for use in the business for the foreseeable future. See “Risk Factors.”

 

Equity Compensation Plan Information

 

Currently, there is no equity compensation plan in place.

 

LEGAL PROCEEDINGS

 

On May 5, 2014, Sports Field was named as a defendant in a civil lawsuit in the Circuit Court of the Seventh Judicial Circuit in Sangamon County, Illinois.  Sallenger Incorporated, as plaintiff, is making certain claims against the Company in connection with a mechanics lien and for unjust enrichment.  The Company is currently evaluating the claims and is resolved to adamantly defend its rights.

 

Other than as mentioned above, there are no material proceedings to which any director or officer, or any associate of any such director or officer, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. No director or executive officer has been a director or executive officer of any business which has filed a bankruptcy petition or had a bankruptcy petition filed against it during the past ten years. No current director or executive officer has been convicted of a criminal offense or is the subject of a pending criminal proceeding during the past ten years. No current director or executive officer has been the subject of any order, judgment or decree of any court permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities during the past ten years. No current director or officer has been found by a court to have violated a federal or state securities or commodities law during the past ten years.

 

In addition, there are no material proceedings to which any affiliate of our Company, or any owner of record or beneficially of more than five percent of any class of voting securities of our Company, is a party that is adverse to our Company or any of our subsidiaries or has a material interest adverse to our Company or any of our subsidiaries. We are not currently involved in any litigation that we believe could have a materially adverse effect on our financial condition or results of operations.

 

However, from time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. Litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business.

 

RECENT SALES OF UNREGISTERED SECURITIES

 

Reference is made to Item 3.02 of this Current Report on Form 8-K for a description of recent sales of unregistered securities, which is hereby incorporated by reference.

 

 
 

 

INDEMNIFICATION OF OFFICERS AND DIRECTORS

 

The directors and officers of the Company are indemnified as provided by the Nevada corporate law and our Bylaws. We have agreed to indemnify each of our directors and certain officers against certain liabilities, including liabilities under the Securities Act of 1933. Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers and controlling persons pursuant to the provisions described above, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than our payment of expenses incurred or paid by our director, officer or controlling person in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of our 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.

 

We have been advised that in the opinion of the Securities and Exchange Commission indemnification for liabilities arising under the Securities Act 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 is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

Pursuant to the Agreement, June 16, 2014, we issued 11,914,275 shares of our Common Stock to the Sports Field Shareholders, their affiliates or assigns, in exchange for 100% of the outstanding shares of Sports Field. Such securities were not registered under the Securities Act of 1933.

 

These securities were not registered under the Securities Act. These securities qualified for exemption under Section 4(2) of the Securities Act since the issuance of securities by us did not involve a public offering. The offering was not a “public offering” as defined in Section 4(2) due to the insubstantial number of persons involved in the deal, size of the offering, manner of the offering and number of securities offered. We did not undertake an offering in which we sold a high number of securities to a high number of investors. In addition, these shareholders had the necessary investment intent as required by Section 4(2) of the Securities Act since the Conventions Shareholders agreed to and received share certificates bearing a legend stating that such securities are restricted pursuant to Rule 144 of the Securities Act. This restriction ensures that these securities would not be immediately redistributed into the market and therefore not be part of a “public offering.” Based on an analysis of the above factors, we have met the requirements to qualify for exemption under Section 4(2) of the Securities Act.

 

Item 4.01 Changes in Registrant’s Certifying Accountant.

 

(a) Dismissal of Independent Registered Public Accounting Firm

 

On June 16, 2014, our board of directors dismissed De Joya Griffith & Company LLC (“ De Joya Griffith ”), as our independent registered public accountant.

 

De Joya Griffith’s report on the financial statements for Anglesea Enterprises, Inc. for the fiscal years ended Septemer 30, 2013 and 2012 contained no adverse opinion or disclaimer of opinion, and were not qualified or modified as to uncertainty, audit scope or accounting principle, other than for a going concern.

 

During the fiscal years ended September 30, 2013 and 2012, and in the subsequent interim period through June 16, 2014, the date of dismissal, there were no disagreements with De Joya Griffith on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of De Joya Griffith, would have caused them to make reference to the subject matter of the disagreements in its reports on the financial statements for such year. During the fiscal years ended September 30, 2013 and 2012, and in the subsequent interim period through June 12, 2014, the date of dismissal, there were no reportable events as defined in Item 304(a)(1)(v) of Regulation S-K.

 

We have provided a copy of the above disclosures to De Joya Griffith and requested De Joya Griffith to provide it with a letter addressed to the U.S. Securities and Exchange Commission stating whether or not De Joya Griffith agrees with the above disclosures. A copy of De Joya Griffith’s letter, dated June 16, 2014, confirming its agreement with the disclosures in this Item 4.01 is attached as Exhibit 16.1 to this Form 8-K.  

  

 
 

 

(b) New Independent Registered Public Accounting Firm

 

On June 16, 2014, our board of directors approved the engagement of Rosenberg Rich Baker Berman and Company, Certified Public Accountants (“ RRBB ”), as the Company’s new independent registered public accounting firm.

 

During the fiscal year ended September 30, 2013 and September 30, 2012, and the subsequent interim period prior to the engagement of RRBB, the Company has not consulted RRBB regarding (i) the application of accounting principles to any specified transaction, either completed or proposed; (ii) the type of audit opinion that might be rendered on the Company’s financial statements, and either a written report was provided to the registrant or oral advice was provided that the new accountant concluded was an important factor considered by the registrant in reaching a decision as to the accounting, auditing or financial reporting issue; or (iii) any matter that was either the subject of a disagreement (as defined in Item 304(o)(1)(iv)) or a reportable event (as defined in Item 304(a)(1)(v)).

 

Item 5.01 Changes in Control of Registrant.

 

As explained more fully in Item 2.01, in connection with the Merger, on June 16, 2014, we issued 11,914,275 shares of our Common Stock to the Sports Field Shareholders, their affiliates or assigns in exchange for the transfer of 100% of the outstanding shares of Sports Field by the Sports Field Shareholders. As such, immediately following the Merger, the Sports Field Shareholders hold approximately 92% of the total combined voting power of all classes of our outstanding stock entitled to vote. Reference is made to the disclosures set forth under Item 2.01 of this Current Report on Form 8-K, which disclosure is incorporated herein by reference.

 

In connection with the Closing of the Merger, and as explained more fully in Item 2.01 above under the section titled “Management” and in Item 5.02 of this Current Report dated June 16, 2014, Mr. James Christie, Anglesea’s former Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, and director was removed from his positions as such by a majority vote the shareholders and the board of directors of the Company. Ms. Leslie Toups also resigned from her position as a member of the board of directors.

 

Further, effective June 16, 2014, Mr. Joseph DiGeronimo, Mr. Daniel Daluise, and Mr. Philip Christiansen, were appointed as members of our board of directors. Finally, effective June 16, 2014, our Directors appointed the following officers:

 

Name   Age   Position
         
Joseph DiGeronimo   63   Chief Executive Officer, Secretary
         

Daniel Daluise

 

Philip Christiansen

 

66

 

67

 

Director, Director of Product Development

 

Director

  

Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.

 

(a) Resignation of Directors

 

Effective June 16, 2014, Mr. James Christie was removed from his position on the board of directors and Ms. Leslie Toups resigned as members of the board of directors. There were no disagreements between Mr. Christie or Ms. Toups and us or any officer or director of the Company.

 

(b) Resignation of Officers

 

Effective June 16, 2014, Mr. Christie was removed as our Chief Executive Officer, and Principal Accounting Officer.

 

(c) Appointment of Directors

 

Effective June 16, 2014, the following persons were appointed as members of the Board of Directors:

 

Name   Age   Position
         
Joseph DiGeronimo   63   Chief Executive Officer, Secretary, Director
         
Daniel Daluise   66   Director of Product Development, Director
         
Philip Christiansen   67   Director

 

 
 

 

Please see also Section 5.02(d) of this current report, whose information is herein incorporated by reference.

 

(d) Appointment of Officers

 

Effective June 16, the directors appointed the following persons as our executive officers, with the respective titles as set forth opposite his or her name below:

 

Name   Age   Position
         
Joseph DiGeronimo   63   Chief Executive Officer, Secretary
         
Daniel Daluise   66   Director, Director of Product Development

 

The business background descriptions of the newly appointed officers and directors are as follows:

 

Joseph DiGeronimo, 63, Chief Executive Officer, Director

 

Mr. Joseph DiGeronimo, 63, combines over 40 years of experience in sports facilities consultation, construction management, and specialized athletic projects, design and construction. Mr. DiGeronomo founded DMA Sports Design Group, LLC in 1976 (formerly DiGeronimo Associates), a professional consulting organization specializing in the design, engineering and testing of sports facilities and specialized athletic facilities. Mr. DiGerinomo has served as the managing member of DMA since 1976. Mr. DiGeronimo is currently under contract with the National Football League to provide a continuous testing program of all game-day and practice fields for compliance with safety and performance standards. Mr. DiGeronimo has designed and constructed hundreds of specialized athletic projects across the U.S. and internationally. Mr. DiGeronimo has served four U.S. Presidents by providing design, engineering and construction services for specialized sports applications at the White House. He is a leading sports engineering expert and provides forensic services and expert witness testimony for litigation involving athletic products and facilities. Mr. Digeronimo is an owner of Sports Labs USA, a testing company, specializing in the testing of athletic facilities. The firm provides full service sports testing of athletic facilities with experience in field safety and performance. Mr. DiGeronimo is currently the Chief Executive Officer and a director of Sports Field Holdings, Inc.

 

Mr. DiGeronimo received a degree in civil engineering from the University of Detroit in1973.

 

Daniel Daluise, 66, Director, Director of Product Development

 

Mr. Daniel Daluise, age 66, brings over 34 years of experience in athletic surfacing industry senior management, following a 9-year career in chemical applications sales engineering. Previously, he had been involved with seven companies in the athletic surfacing industry, holding positions including Chief Executive Officer, President and Director of Product Development. From October 2005 through March 2008, Mr. Daluise was the Vice President for Product Development for GSE Lining Technology, Inc., a drainage composite and commercial lining manufacturer. From February 2001 to October 2005, he was President and CEO for ProGreen Sport Surfaces, Inc., a company involved in the design, sale and installation of artificial turf. From January 1998 to November 2000, he was Director of Product Development for SafeTurf International, Inc., a company involved in the manufacture and installation of artificial turf that focused on the marketing of the SprinTurf synthetic turf brand. From January 1982 to June 1998, Mr. Daluise was president and CEO of Tracks Unlimited, Inc. and Sprintrax, Inc., companies involved in the development, sale and installation of synthetic running track surfaces.

 

Mr. Daluise has a Bachelor of Science degree, in industrial engineering, from Manhattan College.

 

 
 

 

Philip G. Christiansen, 67, Director

 

Mr. Philip G. Christiansen, age 67, combines over 46 years of experience in Civil Engineering as Principal Civil Engineer with professional engineering licenses in 14 states. Previously he was employed as an Engineer with the New York State Department of Health and the NY Department of Environmental Conservation, as an Environmental Engineer with Stone & Webster, Inc., and as a Project Engineer with Metcalf & Eddy Engineering Corp. From 1983 through present, Mr. Christiansen has been the President and principal engineer for Christiansen & Sergi, Inc., a Civil engineering and Land Survey business.

 

Mr. Christiansen has an undergraduate degree from Manhattan College and an MS from University of Cincinnati.

 

Family Relationships

 

There are no family relationships with any of our officers and directors.

 

EMPLOYMENT AGREEMENTS OF THE EXECUTIVE OFFICERS

 

Effective December 1, 2011, the Company and Mr. Christie, our Chief Executive Officer and President, entered into a two (2) year employment agreement (the “Employment Agreement”). Mr. Christie shall not be entitled to any compensation, bonus payment or benefits until the Company has reached $250,000 in gross revenues (the “Revenue Milestone”).  Upon the Company reaching the Revenue Milestone, Mr. Christie shall be entitled to an annual salary of $75,000 (the “Base Salary”). Among other things, Mr. Christie is responsible for overseeing all operations of the Company including but not limited to evaluation of business opportunities, and the Company’s substantive and financial reporting requirements of the Securities Exchange Act of 1934, as amended. Upon the Company reaching the Revenue Milestone, Mr. Christie shall also be entitled to all reasonable and customary fringe benefits, including, but not limited to, medical, dental, disability and life insurance, vacation and sick leave. The Company will reimburse of all his reasonable and necessary travel, entertainment or other related expenses incurred by him in carrying out his duties and responsibilities under the agreement.

 

In the event that Mr. Christie’s employment is terminated by the Company without cause including but not limited to an involuntary change in position or termination of Mr. Christie as a result of a material breach of this Agreement by the Company (any of the foregoing, an “Involuntary Termination”), Mr. Christie shall receive from the Company, through the effective date of the Involuntary Termination:  (i)  the Base Salary, including relevant cost of living adjustments; (ii) (a) compensation for all accrued, unexpired vacation time and (b) any applicable outstanding expense reimbursements; and (iii) an additional two weeks’ pay of Mr. Christie’s then current Base Salary.

 

Mr. Christie may elect, by written notice to the Company, to terminate his employment with continued pay through the Employment Agreement term if (i) the Company sells all of its assets, (ii) the Company merges with another business entity with a change in control, (iii) more than 50% of the outstanding stock is acquired by a third party, or (iv) the Company defaults in making payments required to Mr. Christie under this agreement.

 

For two years following his resignation or termination, Mr. Christie will not work for or provide any services in any capacity to any competitor and will not solicit any of the Company’s customers or accounts.

 

Sports Field Employment Agreements

 

  Joseph DiGeronimo, Chief Executive Officer

 

On November 18, 2013, the Company entered into an employment agreement with Mr. Joseph DiGeronimo, in connection with his appointment as the Company’s Chief Executive Officer (the “DiGeronimo Employment Agreement”). Mr. DiGeronimo shall perform all duties and accept all responsibilities as are customarily associated with or generally incident to the position of Chief Executive Officer. The initial term of the Agreement is for a period of thirty-six (36) months, commencing on November 18, 2013 (the “Commencement Date”). The term of the DiGeronimo Employment Agreement will be automatically extended for additional terms of twelve (12) months each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Board gives prior written notice of non-renewal no later than sixty (60) days prior to the expiration of the then-current Term.

 

 
 

 

During the Term, the Company will pay Mr. DiGeronimo a base salary at the annual rate of $120,000 and Mr. DiGeronimo shall be eligible for an annual incentive bonus based on the review and recommendation of the Board of Directors (the “Board”) in accordance with criteria determined by the Board. Additionally, the Board may, in its discretion, grant certain equity and option awards. Mr. DiGeronimo shall receive vacation pay, health insurance and other benefits in accordance with Company policies. In the event Mr. DiGeronimo’s employment is terminated (i) by the Company for Cause (as such term is defined in the DiGeronimo Employment Agreement), (ii) by Mr. DiGeronimo breaching the DiGeronimo Employment Agreement or (iii) by Mr. DiGeronimo without Good Reason (as such term is defined in the DiGeronimo Employment Agreement) then certain initial shares of the Company’s common stock issued to Mr. DiGeronimo prior to the Commencement Date shall be recouped by the Company, with the Company receiving a larger percentage of such shares the earlier the DiGeronimo Employment Agreement is so terminated, all in accordance with the terms and conditions of the DiGeronimo Employment Agreement. If Mr. DiGeronimo’s employment is terminated by Mr. DiGeronimo for Good Reason, Mr. DiGeronimo will be entitled to receive his salary and benefits for the remaining unexpired term of the agreement.

 

Mr. DiGeronimo is bound to keep confidential, and not disclose except as expressly permitted, the Company’s trade secrets and confidential and proprietary information. Mr. DiGeronimo, during the term of his employment, and for a two (2) year period thereafter, regardless of the reason therefor, is prohibited from soliciting, inducing, aiding or suggesting to: (i) any employee to leave such employ, (ii) any contractor, consultant or other service provider to terminate such relationship, or (iii) any customer, agency, vendor, or supplier of the Company to cease doing business with the Company. Further, Mr. DiGeronimo is prohibited from engaging in a venture or business substantially similar to that of the Company or that is in direct or indirect competition with the Company in the United States during the Term. The Company shall indemnify Mr. DiGeronimo to the maximum extent permitted under the Nevada Revised Statutes, or any successor thereto, and shall promptly advance any expenses incurred by him.

 

Daniel Daluise, Director of Product Development

 

On November 18, 2013, the Company entered into an employment agreement with Mr. Daniel Daluise, in connection with his appointment as the Company’s Head of Product Development (the “Daluise Employment Agreement”). Mr. Daluise shall perform all duties and accept all responsibilities as are customarily associated with or generally incident to the position as the Head of Product Development. The initial term of the Agreement is for a period of thirty-six (36) months, commencing on November 18, 2013 (the “Commencement Date”). The term of the Daluise Employment Agreement will be automatically extended for additional terms of twelve (12) months each (each a “Renewal Term” and together with the Initial Term, the “Term”), unless either the Board gives prior written notice of non-renewal no later than sixty (60) days prior to the expiration of the then-current Term.

 

During the Term, the Company will pay Mr. Daluise a base salary at the annual rate of $96,000 and Mr. Daluise shall be eligible for an annual incentive bonus based on the review and recommendation of the Board of Directors (the “Board”) in accordance with criteria determined by the Board. Additionally, the Board may, in its discretion, grant certain equity and option awards. Mr. Daluise shall receive vacation pay, health insurance and other benefits in accordance with Company policies. In the event Mr. Daluise’s employment is terminated (i) by the Company for Cause (as such term is defined in the Daluise Employment Agreement), (ii) by Mr. Daluise breaching the Daluise Employment Agreement or (iii) by Mr. Daluise without Good Reason (as such term is defined in the Daluise Employment Agreement) then certain initial shares of the Company’s common stock issued to Mr. Daluise prior to the Commencement Date shall be recouped by the Company, with the Company receiving a larger percentage of such shares the earlier the Daluise Employment Agreement is so terminated, all in accordance with the terms and conditions of the Daluise Employment Agreement. If Mr. Daluise’s employment is terminated by Mr. Daluise for Good Reason, Mr. Daluise will be entitled to receive his salary and benefits for the remaining unexpired term of the agreement.

 

Mr. Daluise is bound to keep confidential, and not disclose except as expressly permitted, the Company’s trade secrets and confidential and proprietary information. Mr. Daluise, during the term of his employment, and for a two (2) year period thereafter, regardless of the reason therefor, is prohibited from soliciting, inducing, aiding or suggesting to: (i) any employee to leave such employ, (ii) any contractor, consultant or other service provider to terminate such relationship, or (iii) any customer, agency, vendor, or supplier of the Company to cease doing business with the Company. Further, Mr. Daluise is prohibited from engaging in a venture or business substantially similar to that of the Company or that is in direct or indirect competition with the Company in the United States during the Term. The Company shall indemnify Mr. Daluise to the maximum extent permitted under the Nevada Revised Statutes, or any successor thereto, and shall promptly advance any expenses incurred by him.

 

Item 5.06 Change in Shell Company Status.

 

As described in Item 1.01 and Item 2.01 of this Form 8-K, on June 16, 2014, we entered into the Agreement and consummated the Merger, pursuant to which we acquired all of the issued and outstanding common stock of Sports Field in exchange for the issuance of 11,914,275, shares of the Company.

 

 
 

 

As a result of the Merger and the completion of the Short Form Merger, Sports Field became our wholly-owned operating subsidiary and, upon the issuance of the 11,914,275 shares of Common Stock of the Company, the Sports Field Shareholders own approximately 92% of all of our issued and outstanding Common Stock. We currently have a total of 12,947,275 issued and outstanding shares of Common Stock.

 

As the result of the consummation of the Merger, we are no longer a shell company as that term is defined in Rule 12b-2 of the Securities Exchange Act of 1934, as amended.

 

Item 8.01 Other Items

 

As a result of the Merger, the Company is changing its fiscal year end from September 30 to December 31.

  

Item 9.01 Financial Statement and Exhibits.

 

(a) Financial Statements of Business Acquired. The Audited Financial Statements of Sports Field, are filed as Exhibit 99.2 to this Current Report on Form 8-K and are incorporated herein by reference.

 

(d) Exhibits. Exhibit No. Description

 

Exhibit
No.
  Description
2.1   Acquisition and Plan of Merger Agreement dated June 16, 2014 by and among Anglesea Enterprises, Inc., Anglesea Enterprises Acquisition Corp., and Sports Field Holdings, Inc.*
     
2.2   Short Form Merger Agreement dated June 16, 2014 by and between Anglesea Enterprises, Inc. and Sports Field Holdings, Inc. *
     
3.1   Certificate of Incorporation (incorporated herein by reference to Exhibit 3.1 to the Company’s Form S-1 filed with the Securities and Exchange Commission on January 24, 2012).
     
3.2   By-Laws (incorporated herein by reference to Exhibit 3.2 to the Company’s Form S-1 filed with the Securities and Exchange Commission on January 24, 2012).
     
3.3   Certificate of Incorporation of Sports Field Holdings, Inc.*
     
3.4   By-Laws of Sports Field Holdings, Inc.*
     
10.1   Employment Agreement, dated November 18, 2013 by and between Sports Field Holdings, Inc. and Joseph DiGeronimo. *
     
10.2   Employment Agreement, dated November 18, 2013 by and between Sports Field Holdings, Inc. and Daniel Daluise.*
     
16.1   Letter by De Joya Griffith dated June 16, 2014.*
     
99.1   Letter of Resignation from Leslie Toups, dated June 16, 2014  *
     
99.2   Sports Field’s audited financial statements for the fiscal years ended December 31, 2013 and December 31, 2012.*
     
99.3   Sports Field’s unaudited financial statements for the three months ended March 31, 2014.*

  

Filed Herewith.

 

 
 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act of 1933, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

  Anglesea Enterprises, Inc.
       
Date: June 17, 2014 By: /s/ Joseph DiGeronimo
  Name: Joseph DiGeronimo
  Title: Chief Executive Officer

 

 

 

ACQUISITION AGREEMENT AND PLAN OF MERGER

 

This ACQUISITION AGREEMENT AND PLAN OF MERGER (this “Agreement”) is made and entered into on this 16th day of June, 2014, by and among Anglesea Enterprises, Inc., a corporation incorporated under the laws of the State of Nevada (the “Parent”), Anglesea Enterprises Acquisition Corp., a corporation incorporated under the laws of the State of Nevada and a wholly-owned subsidiary of the Parent (the “Merger Sub”), Leslie Toups, an individual residing at 13799 Park Blvd., Suite 147, Seminole, FL 33776 and Edward G. Mass Jr. an individual residing at 2323 State Road 580 Clear Water FL, 33761 (Mr. Toups and Mr. Mass Jr., together, the “Majority Shareholders”), and Sports Field Holdings, Inc., a corporation incorporated under the laws of the State of Nevada (“Sports Field”).

 

WITNESSETH:

 

WHEREAS , Parent is a corporation incorporated under the laws of the State of Nevada pursuant to Articles of Incorporation filed with the Nevada Secretary of State on February 8, 2011 (the “Articles of Incorporation”);

 

WHEREAS, the Merger Sub is a corporation incorporated under the laws of the State of Nevada pursuant to Articles of Incorporation filed with the Nevada Secretary of State on May 14, 2014 and is a wholly-owned subsidiary of Parent;

 

WHEREAS, Sports Field is a corporation incorporated under the laws of the State of Nevada pursuant to Articles of Incorporation filed with the Nevada Secretary of State on September 6, 2012;

 

WHEREAS, the Majority Shareholders currently own the majority of the issued and outstanding shares of Common Stock of the Parent;

 

WHEREAS, the board of directors of the Parent and the Merger Sub as well as a majority of the Parents shareholders have each determined that a merger of Merger Sub with and into Sports Field (the “Merger”), upon the terms and subject to the conditions set forth in this Agreement, is in the best interests of the Parent, the Merger Sub and the shareholders thereof, and as such, the respective boards of directors of each have approved the Merger;

 

WHEREAS, the board of directors of Sports Field have determined that the Merger, upon the terms and subject to the conditions set forth in this Agreement, is in the best interests of the shareholders of Sports Field and its board of directors has approved the Merger;

 

WHEREAS, the Parent, Merger Sub, Majority Shareholders and Sports Field desire to make certain representations, warranties, covenants and agreements in connection with the Merger, as well as prescribe various conditions precedent to the effectiveness of the Merger;

 

WHEREAS, for federal income tax purposes, the parties intend that the Merger shall qualify as a reorganization under the provisions of Section 368(a)(2)(E) of the Internal Revenue Code of 1986, as amended (the “Code”) and shall be a tax free exchange;

  

NOW, THEREFORE , in consideration of the representations, warranties, covenants and agreements contained herein, the parties agree as follows:

 

ARTICLE I.

DEFINITIONS

 

When used in this Agreement (and any Exhibits and Schedules in which terms are not otherwise defined), the following terms shall have the following meanings:

 

1.01 Common Stock . “Common Stock” shall mean the outstanding shares of common stock, $0.00001 par value, of Parent or Merger Sub, as context dictates.

 

 
 

 

1.02 Articles of Merger . “Articles of Merger” shall mean Articles of Merger in substantially the form attached to this Agreement as Exhibit A and to be filed with the Secretary of State of the State of Nevada.

 

1.03 Closing . “Closing” and “Closing Date” shall mean the closing of the transactions contemplated by this Agreement.

 

1.04 Effective Time . “Effective Time” shall mean the date on which the Articles of Merger are properly filed with the Secretary of State of the State of Nevada, as required under the applicable provisions of the law of such jurisdiction, or at such other time as is permissible in accordance with the Nevada Revised Statutes (“NRS”).

 

1.05 Liens . “Lien” shall mean any mortgage, pledge, security interest, encumbrance, lien or charge of any kind, including, without limitation, any conditional sale or other title retention agreement, any lease in the nature thereof and the filing of or agreement to give any financing statement under the Uniform Commercial Code of any jurisdiction and including any lien or charge arising by statute or other law.

 

1.06 Sports Field Shares . “Sports Field Share(s)” shall mean the shares of common stock, par value $0.001 per share, of Sports Field Holdings, Inc.

 

1.07 Material Adverse Change; Material Adverse Effect . “Material Adverse Change” or “Material Adverse Effect” means, when used in connection with Sports Field, Parent or Merger Sub, any change or effect that either individually or in the aggregate with all other such changes or effects is materially adverse to the business, assets, properties, condition (financial or otherwise) or results of operations of such party taken as a whole.

 

1.08 Person . “Person” means an individual, corporation, partnership, joint venture, association, trust, unincorporated organization or other entity.

 

1.09 Subsidiary . A “Subsidiary” of any person means another person, an amount of the voting securities, other voting ownership or voting partnership interests of which is sufficient to elect at least a majority of its Board of Directors or other governing body (or, if there are no such voting interests, fifty percent (50%) or more of the equity interests) is owned directly or indirectly by such first person.

  

1.10 Surviving Corporation . “Surviving Corporation” shall have the meaning set forth in Section 2.01.

 

1.11 Tax Return . “Tax Return” shall include all returns and reports (including elections, declarations, disclosures, schedules, estimates and information returns (including Form 1099 and partnership returns filed on Form 1065, as applicable) required to be supplied to a Tax authority relating to Taxes.

 

ARTICLE II.

THE MERGER

 

2.01 The Merger . Upon the terms and subject to the conditions set forth in this Agreement and the Articles of Merger and in accordance with the NRS, Sports Field shall be merged with and into Merger Sub at the Effective Time. At the Effective Time, the Merger Sub shall merge with Sports Field, and Sports Field shall continue as a subsidiary of the Parent and shall continue its corporate existence under the laws of the State of Nevada (the “Surviving Corporation”).

 

2.02 Effective Time . The Merger shall become effective on the date and at the time the Articles of Merger are filed with the Secretary of State of Nevada in accordance with provisions of the NRS, or at such other time as is permissible in accordance with the NRS. The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the “Effective Time.”

 

2.03 Closing . The closing of the Merger (the “Closing”) shall occur concurrently with the Effective Time (the “Closing Date”). The Closing shall occur at the offices of Lucosky Brookman LLP, 101 Wood Avenue South, 5 th Floor, Woodbridge, NJ, 08830, unless another place is agreed to in writing by the parties hereto.

 

 
 

 

2.04 Manner and Basis of Converting Shares .

 

(a) Each Sports Field Share that shall be outstanding immediately prior to the Effective Time shall, by virtue of the Merger and without any action on the part of the holder thereof, be converted into the right to receive one share of Common Stock of the Merger Sub, which will immediately thereafter be exchanged for one share of Common Stock of the Parent, so that at the Effective Time, Parent shall be the holder of all of the issued and outstanding shares of Sports Field and the Sports Field Shareholders shall have received one share of the Common Stock of Parent for every one share of Sports Field owned immediately prior to the Effective Time.

  

(b)  Prior to the Effective Time, the shareholders of the Merger Sub shall surrender certificates, if applicable, evidencing one hundred (100%) percent of the Merger Sub’s Common Stock.  As of the Effective Time, all Common Stock of the Merger Sub issued and outstanding immediately prior to the Effective Time shall no longer be outstanding and shall automatically be cancelled and retired and exchanged for shares of Common Stock of the Parent and simultaneously therewith the Parent will issue and deliver eleven million nine hundred thousand fourteen two hundred seventy five (11,914,275) shares of its Common Stock to the Merger Sub representing the shares to be issued in exchange for one hundred (100%) percent of Sports Field’s Shares. 

 

(c) The Sports Field Shares, which immediately prior to the Effective Time constitute all of the issued and outstanding shares of common stock of Sports Field beneficially owned by the stockholders listed on its books and records, shall, by virtue of the Merger and without any action on the part of the holders thereof, be converted into the right to receive one share of Common Stock of the Parent for each one Sports Field’s Share.  The Merger Sub will issue to the Sports Field’s Shareholders, as of the Effective Time, eleven million nine hundred thousand fourteen two hundred seventy five (11,914,275) shares of the Parent’s Common Stock, in exchange for the Sports Field Shares.

 

(d) Parent shall issue to each Sports Field Shareholder the number of shares of Common Stock of the Parent that such stockholder shall be entitled to receive as set forth in Section 2.04 (b) hereof.  To the extent that any certificates evidencing shares of Sports Field common stock were issued prior to the Effective Time, each such certificate or an affidavit and indemnification in form reasonably acceptable to counsel for the Parent stating that such stockholder has lost such certificate(s) must be surrendered or delivered to Parent, as the case may be, and all such shares shall be deemed at and after the Effective Time to have no value.

 

2.05 Effective Date of Merger . As soon as practicable following the satisfaction or waiver of the conditions set forth in Article IV, the parties shall file the Articles of Merger with the Secretary of State of the State of Nevada executed in accordance with the relevant provisions of the NRS and shall make all other filings or recordings required thereunder. The Merger shall become effective at such date as the Articles of Merger are duly filed with the Secretary of State of Nevada, or at such other time as is permissible in accordance with the NRS and Sports Field shall agree (the time the Merger becomes effective being the “Effective Time of the Merger”). Parent shall use reasonable efforts to have the Closing Date and the Effective Time of the Merger to be the same day.

 

2.06 Effects of the Merger . The Merger shall have the effects set forth in the applicable provisions of the NRS.

 

2.07 Articles of Incorporation; Bylaws; Purposes .

 

(a) The Articles of Incorporation of the Parent in effect immediately prior to the Effective Time of the Merger shall be the Articles of Incorporation of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

  

(b) The Bylaws of the Parent in effect at the Effective Time of the Merger shall be the Bylaws of the Surviving Corporation until thereafter changed or amended as provided therein or by applicable law.

 

(c) The purposes of the Surviving Corporation and the total number of its authorized common stock shall be as set forth in the Certificate of Incorporation of the Parent in effect immediately prior to the Effective Time of the Merger until such time as such purposes and such number may be amended as provided in the Certificate of Incorporation of the Surviving Corporation and by applicable law.

 

 
 

 

ARTICLE III.

EFFECT OF THE MERGER ON THE COMMON STOCK

AND THE GOVERNANCE OF THE CONSTITUENT CORPORATIONS

 

3.01 Effect on Common Stock . As of the Effective Time of the Merger, by virtue of the Merger and without any action on the part of the holders of the Sports Field Shares:

 

(a) Cancellation of Certain shares of the Majority Shareholder . On the Closing Date Sports Field shall pay $350,000 to the Majority Shareholders for the cancellation of the aggregate of 65,000,000 shares of the Parent. In addition, in further consideration for the cancellation of these shares, the Majority Shareholder will be entitled to retain and continue to operate that certain business which the Parent is operating prior to the Effective Time, including, but not limited to, that certain website development business in operation prior to the Effective Time (the “Existing Business”). The Majority Shareholder shall assume any and all assets and liabilities related to the Existing Business and the Existing Business shall operate, following the Effective Time, separately and independently of the Parent and the Merger Sub and utilizing a different name than that of the name of the Parent or the Merger Sub.

 

(b) Exchange . Each Sports Field Share issued and outstanding immediately prior to the Effective Time of the Merger shall be converted so that approximately one (1) share of Merger Sub’s Common Stock is issued for each one Sports Field Share held (the “Merger Consideration”) and shall subsequently be exchanged for Parent’s Common Stock at a ratio of one-to-one (1:1) (the “Exchange Ratio”). For purposes of illustration, Sports Field shareholders currently own 11,914,275 of Sports Field Shares which will be converted on a pro-rata basis in exchange for 11,914,275 of the Merger Sub’s Common Stock and subsequently 11,914,275 of the Parent’s Common Stock.

 

(c) Assumption . All options to purchase Sports Field Shares then outstanding, and all outstanding warrants to purchase Sports Field Shares then outstanding in each case whether vested or unvested, shall be assumed by Parent in accordance with Section 3.01(d) hereof.

  

(d) Stock Options and Warrants . Each outstanding option to purchase Sports Field Shares (each a “Stock Option”), and all outstanding warrants to purchase Sports Field Shares then outstanding, whether or not vested (each a “Warrant”), shall by virtue of the Merger be assumed by Parent. Each Stock Option and Warrant so assumed by Parent under this Agreement will continue to have, and be subject to, the same terms and conditions of such options immediately prior to the Effective Time of the Merger (including, without limitation, any repurchase rights or vesting provisions and provisions regarding the acceleration of vesting on certain transactions), except that (i) each Stock Option and Warrant will be exercisable (or will become exercisable in accordance with its terms) for that number of whole shares of Parent’s Common Stock equal to the product of the number of Sports Field Shares that were issuable upon exercise of such Stock Option or Warrant immediately prior to the Effective Time of the Merger multiplied by the Exchange Ratio, rounded down to the nearest whole number of shares of Parent’s Common Stock if the said product is equal to or less than the fraction of one-half (.5) of one share of Parent’s Common Stock or rounded up to the nearest whole number of shares of Parent’s Common Stock if the said product is greater than the fraction of one-half (.5) of one share of Parent’s Common Stock, and (ii) the per share exercise price for the shares of Parent’s Common Stock issuable upon exercise of such assumed Stock Option and Warrant will be equal to the quotient determined by dividing the exercise price per each Sports Field Share at which such Option and Warrant were exercisable immediately prior to the Effective Time of the Merger by the Exchange Ratio, rounded up to the nearest whole cent. Parent shall comply with the terms of all such Stock Options and Warrants and use its best efforts to ensure, to the extent required by, and permitted under the Code or other relevant laws and regulations that any Stock Option that qualified for tax treatment under Section 424(b) of the Code prior to the Effective Time of the Merger continue to so qualify after the Effective Time of the Merger. Parent shall take all corporate actions necessary to reserve for issuance a sufficient number of shares of Parent’s Common Stock for delivery upon exercise of all Stock Options and Warrants.

 

(e) Fractional Stock . No fractional shares of Common Stock shall be issued in the Merger. If the product of the number of shares a Sports Field shareholder holds immediately prior to the Closing would result in the issuance of a fractional share of Merger Sub’s Common Stock, that product will be rounded down to the nearest whole number of shares of Merger Sub’s Common Stock if it is equal to or less than the fraction of one-half (.5) of one share or round up to the nearest whole number of shares of Merger Sub’s Common Stock if it is greater than the fraction of one-half (.5) of one share of Merger Sub’s Common Stock.

 

 
 

 

(f) Transaction Disclosure . The officers and directors of Parent existing prior to the Effective Time shall cooperate and sign an undertaking to assist the Surviving Corporation in all respects disclosing the transactions set forth herein and other information required by the Securities Act of 1933, as amended (the “Securities Act”) and the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

 

(g) No Further Certificates . There shall be no further transfer on the records of Sports Field of certificates representing Sports Field Shares and there shall be no further transfer on the records of the Merger Sub of certificates representing securities of the Merger Sub following the Effective Time of the Merger. If any certificate for shares of Common Stock is to be issued in a name other than that in which the certificate for Merger Sub’s or Sports Field’s securities surrendered for exchange is registered, it shall be a condition of such exchange that the certificate so surrendered shall be properly endorsed, with signature guaranteed, or otherwise in proper form for transfer and that the person requesting such exchange shall pay to Parent or its transfer agent any transfer or other taxes or other costs required by reason of the issuance of certificates for such shares of Common Stock in a name other than that of the registered holder of the certificate surrendered, or establish to the satisfaction of Parent or its transfer agent that all taxes have been paid.

  

(h) No Further Ownership Rights in Sports Field Shares . All shares of Common Stock of the Parent issued upon the surrender of Sports Field Shares in accordance with the terms of this Article III shall be deemed to have been issued (and paid) in full satisfaction of all rights pertaining to Sports Field Shares.

 

(j) Governance . The Board of Directors of the Parent and Sports Field will have an identical composition with the same members sitting on each Board of Directors. Subject to annual shareholder votes, the composition of the Board of Directors of the Parent and Sports Field will remain identical thereafter.

 

ARTICLE IV.

CONDITIONS PRECEDENT TO THE OBLIGATION

OF Sports Field TO EFFECT THE MERGER

 

The obligation of Sports Field to effect the Merger is subject, at the option of Sports Field, to the fulfillment on or prior to the Closing Date of the following conditions, any one or more of which may be waived by Sports Field and its shareholders in writing:

 

4.01 Representations and Covenants . The representations and warranties of the Parent, Merger Sub and Majority Shareholders contained in this Agreement shall be true in all respects on and as of the Closing Date with the same force and effect as though made on and as of the Closing Date. The Parent, Merger Sub and Majority Shareholder shall each have performed and complied with all covenants and agreements required by this Agreement to be performed or complied with by the Parent, Merger Sub and/or Majority Shareholder on or prior to the Closing Date.

 

4.02 Governmental Permits and Approvals in Corporate Resolutions . Any and all permits and approvals from any governmental or regulatory body required for the lawful consummation of the Closing shall have been obtained. The Boards of Directors and shareholders of Parent and Merger Sub shall have each approved the transactions contemplated by this Agreement, and Parent and Merger Sub shall have delivered to Sports Field resolutions by their respective Boards of Directors and shareholders each certified by an officer of Parent and Merger Sub, as applicable, authorizing the transactions contemplated by this Agreement.

 

4.03 Satisfactory Business Review . Sports Field and their representatives shall have completed the review of the business of Parent and Merger Sub and none of the information revealed thereby or in the financial statements included in the Parent SEC Documents (as defined herein) and/or delivered to Sports Field prior to the Closing Date has resulted in, or in the opinion of them may result in, an adverse change in the assets, properties, business, operations or condition (financial or otherwise) of Parent or Merger Sub.

 

 
 

 

4.04 No Material Adverse Change . Between the date of this Agreement and the Closing Date: (a) there shall have been no Material Adverse Change to Parent or Merger Sub or their respective business, financial position, or results of operation excluding events which affect companies businesses generally; (b) there shall have been no adverse federal, state, or local legislative or regulatory change affecting in any material respect the services, products or business of Parent or Merger Sub; and (c) none of the properties or assets of Parent or Merger Sub or its subsidiaries shall be damaged by fire, flood, casualty, act of God or the public enemy or other cause (regardless of insurance coverage for such damage) which damage may, in the opinion of Sports Field have a Material Adverse Effect on Parent or Merger Sub.

 

4.05 Litigation . No action, suit, or proceeding shall have been instituted before any court or governmental or regulatory body or instituted or threatened by any governmental or regulatory body, to restrain, modify or prevent the carrying out of the transactions contemplated hereby, or to seek damages or a discovery order in connection with such transactions, or which has or may have, in the opinion of Sports Field, a Material Adverse Effect on the assets, properties, business, operations, or condition (financial or otherwise) of Parent or Merger Sub.

 

4.06 Review of Financial Statements . Sports Field’s designated representatives shall complete a satisfactory review of financial statements of Parent and Merger Sub immediately prior to Closing in accordance with the provisions herein.

 

4.07 Financial Condition . Merger Sub shall have no assets and no liabilities at the time of Closing.

 

4.08 Merger Sub Operations . Merger Sub shall have conducted no operations, had no activity and have not issued or undertaken any obligation to issue any securities of any nature other than in connection with the Merger as set forth herein.

 

4.09 Other Documents . Parent and Merger Sub shall have delivered such other documents, instruments, and certificates, if any, as are required to be delivered pursuant to the provisions of this Agreement or which may reasonably be requested by Sports Field in furtherance of the provisions of this Agreement, including, but not limited to, the documents, instruments and certificates contained in Article V hereof.

 

4.10 Agreement . The officers of Parent and Merger Sub shall have delivered to Sports Field duly executed copies of this Agreement and the Certificate of Merger as required by applicable law.

 

4.11 Approval . This Agreement and the transactions contemplated by this Agreement shall have been approved by the board of directors of Sports Field, the majority of the shareholders and board of directors of the Parent and one hundred percent (100%) of the shareholders of the Merger Sub.

 

4.12 Other Legal Requirements . All statutory and other legal requirements for the valid consummation of the Merger shall have been fulfilled. No law or regulation shall have passed or been enacted that would prevent the consummation of the transactions contemplated by this Agreement.

 

ARTICLE V.

DOCUMENTS TO BE DELIVERED TO SPORTS FIELD

BY PARENT AND MERGER SUB

 

5.01 Documents . The following documents shall be delivered to Sports Field by Parent and the Merger Sub prior to closing:

 

 
 

 

(a) Certified copies of resolutions of the Board of Directors and shareholders of the Parent and Merger Sub approving and authorizing the execution, delivery and performance of this Agreement and authorizing all of the necessary and proper action to enable Parent and Merger Sub to comply with the terms of this Agreement.

 

(b) The corporate book of Parent and Merger Sub.

 

(c) A list of the authorized and outstanding securities of Parent and Merger Sub certified by their transfer agents.

 

(d) A list of the officers and directors of Parent and Merger Sub.

 

(e) Certified copies of the Articles of Incorporation and bylaws currently in effect of Parent and Merger Sub.

 

(f) Copies of all contracts, agreements or commitments in which Parent or Merger Sub is a party.

 

(g) A list of all fringe benefit plans and programs applying to employees of Parent and Merger Sub including but not limited to, pension, profit sharing, life insurance, medical, bonus, incentive and similar plans and the approximate annual cost of each.

 

(h) A list of all employees of Parent and Merger Sub.

 

(i) A list of all letters, patents, patent applications, inventions upon which patent application have not yet been filed, trade names, trademarks, trademark registrations and applications, copyrights, copyright registrations, both domestic and foreign presently owned by Parent and Merger Sub together with the corporate owner.

 

(j) Copies of all financing or loan agreements, mortgages or similar agreements to which Parent and Merger Sub are a party.

 

(k) Copies of all powers of attorney granted by Parent or Merger Sub.

 

(l) A list of any insurance policy owned by Parent or Merger Sub, with the name of the insurance carrier, the policy number, a brief description of the coverage, the annual premium, the corporate owner and any claims pending.

 

(m) Such other instruments and documents as are required to be delivered pursuant to the provisions of this Agreement or which may be requested by Sports Field prior to the Closing Date.

  

ARTICLE VI.

REPRESENTATIONS AND WARRANTIES

 

6.01 Representations and Warranties of Sports Field . Except as otherwise disclosed by Sports Field prior to the Closing Date, Sports Field represents and warrants to Parent as follows:

 

(a) Organization, Standing and Corporate Power . Sports Field is a corporation duly incorporated, validly existing and in good standing under the laws of the State of Nevada and has the requisite organizational power and authority to carry on its business as now being conducted. Sports Field is duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Material Adverse Effect.

 

(b) Subsidiaries . Sports Field Contractors, LLC, SportsField Engineering, Inc. and Athletic Construction Enterprises, Inc. are the only subsidiaries of Sports Field.

 

 
 

 

(c) Capital Structure . The issued and outstanding shares of Sports Field consists of 11,914,275 shares that are held by approximately ______ shareholders as listed on the Company’s books and records and set forth on Schedule I hereto. Sports Field has no other securities of any nature issued, reserved for issuance or outstanding. All outstanding Sports Field Shares are duly authorized, validly issued, fully paid and non-assessable and not subject to preemptive rights.

 

(d) Authority; Non-contravention . Sports Field has the requisite power and authority to enter into this Agreement and to consummate the Merger. The execution and delivery of this Agreement by Sports Field and the consummation by Sports Field of the transactions contemplated hereby have been duly authorized by all necessary corporate action on the part of Sports Field. This Agreement has been duly executed and delivered by Sports Field and constitutes a valid and binding obligation of Sports Field, enforceable against Sports Field in accordance with its terms. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions hereof will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any material lien upon any of the properties or assets of Sports Field, except, with respect to this Agreement, for the filing of the Articles of Merger with the Secretary of State of Nevada.

  

(f) Litigation; Labor Matters; Compliance with Laws .

 

(i) To the knowledge of Sports Field’s officers or directors, there is no suit, action or proceeding or investigation pending or threatened against or affecting Sports Field or any basis for any such suit, action, proceeding or investigation that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or prevent, hinder or materially delay the ability of Sports Field to consummate the transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against Sports Field having, or which, insofar as reasonably could be foreseen by Sports Field, in the future could have, a Material Adverse Effect.

 

(ii) To the knowledge of Sports Field’s officers or directors, the conduct of the business of Sports Field complies with all statutes, laws, regulations, ordinances, rules, judgments, orders, decrees or arbitration awards applicable thereto.

 

6.02 Representations and Warranties of Parent, Merger Sub and Majority Shareholder . Except as set forth in the disclosure schedule delivered by Parent to Sports Field at the time of execution of this Agreement, Parent, Merger Sub and Majority Shareholder each represent and warrant to Sports Field as follows:

 

(a) Organization, Standing and Corporate Power . Parent and Merger Sub are (or at Closing will be) duly incorporated, validly existing and in good standing under the laws of the State of Nevada and each has the requisite corporate power and authority to carry on its business as now being conducted. Parent and Merger Sub are duly qualified or licensed to do business and is in good standing in each jurisdiction in which the nature of its business or the ownership or leasing of its properties makes such qualification or licensing necessary, other than in such jurisdictions where the failure to be so qualified or licensed (individually or in the aggregate) would not have a Material Adverse Effect with respect to Parent.

 

(b) Subsidiaries .

 

(i) The Parent has no Subsidiaries other than the Merger Sub. Merger Sub is an entity duly organized, validly existing and in good standing under the laws of the jurisdiction of its organization. The Merger Sub was formed solely to effectuate the Merger and has not conducted any business operations since its organization. The Parent has delivered or made available to Sports Field complete and accurate copies of the charter, bylaws or other organizational documents of the Merger Sub. The Merger Sub has no assets, it has no liabilities or other obligations, and it is not in default under or in violation of any provision of its charter, bylaws or other organizational documents. All shares of the Merger Sub are owned by the Parent free and clear of any restrictions on transfer (other than restrictions under the Securities Act and state securities laws), claims, security interests, options, warrants, rights, contracts, calls, commitments, equities and demands. There are no outstanding or authorized options, warrants, rights, agreements or commitments to which the Parent or the Merger Sub is a party or which are binding on any of them providing for the issuance, disposition or acquisition of any capital stock of the Merger Sub (except as contemplated by this Agreement). There are no outstanding stock appreciation, phantom stock or similar rights with respect to the Merger Sub. There are no voting trusts, proxies or other agreements or understandings with respect to the voting of any capital stock of the Merger Sub.

 

 
 

 

(ii) At all times from February 8, 2011 through the date of this Agreement, the business and operations of the Parent have been conducted exclusively through the Parent.

 

(iii) The Parent does not control directly or indirectly or have any direct or indirect participation or similar interest in any corporation, partnership, limited liability company, joint venture, trust or other business association which is not a Subsidiary.

 

(c) Capital Structure . The authorized capital stock of Parent consists of (i) 250,000,000 shares of common stock, $0.00001 par value, of which 66,033,000 shares are issued and outstanding as of the date hereof, (ii) 20,000,000 shares of preferred stock, $0.00001 par value, of which no shares are issued and outstanding as of the date hereof. There are no outstanding bonds, debentures, notes or other indebtedness or other securities of Parent having the right to vote (or convertible into, or exchangeable for, securities having the right to vote) on any matters on which shareholders of Parent may vote. There are no outstanding securities, options, warrants, calls, rights, commitments, agreements, arrangements or undertakings of any kind to which Parent is a party or by which it is bound obligating Parent to issue, deliver or sell, or cause to be issued, delivered or sold, additional Common Stock of Parent or other equity or voting securities of Parent or obligating Parent to issue, grant, extend or enter into any such security, option, warrant, call, right, commitment, agreement, arrangement or undertaking.  There are no outstanding contractual obligations, commitments, understandings or arrangements of Parent to repurchase, redeem or otherwise acquire or make any payment in respect of any Common Stock of the Parent or any other securities of Parent. There are no agreements or arrangements pursuant to which Parent is or could be required to register Parent’s Common Stock or other securities under the Securities Act or other agreements or arrangements with or among any holders of Parent or with respect to any securities of Parent. The official shareholders report delivered to Sports Field from Parent’s transfer agent is complete and accurate in all respects.

 

(d) Authority; Non-contravention . Parent, the Merger Sub and the Majority Shareholder have all requisite authority to enter into this Agreement and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by Parent and Merger Sub and the consummation by Parent and Merger Sub of the transactions contemplated by this Agreement have been (or at Closing will have been) duly authorized by all necessary corporate action on the part of Parent and Merger Sub. This Agreement has been duly executed and delivered by and constitutes a valid and binding obligation of Parent, Merger Sub and the Majority Shareholder, enforceable in accordance with its terms. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated by this Agreement and compliance with the provisions of this Agreement will not, conflict with, or result in any breach or violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of or “put” right with respect to any obligation or to loss of a material benefit under, or result in the creation of any lien upon any of the properties or assets of Parent or Merger Sub under, (i) the Articles of Incorporation or bylaws of Parent or Merger Sub or the comparable charter or organizational documents of any other Subsidiary of Parent or Merger Sub, (ii) any loan or credit agreement, note, bond, mortgage, indenture, lease or other agreement, instrument, permit, concession, franchise or license applicable to Parent, Merger Sub or their respective properties or assets, or (iii) subject to the governmental filings and other matters referred to in the following sentence, any judgment, order, decree, statute, law, ordinance, rule, regulation or arbitration award applicable to Parent, Merger Sub or their respective properties or assets, other than, in the case of clauses (ii) and (iii), any such conflicts, breaches, violations, defaults, rights, losses or liens that individually or in the aggregate could not have a Material Adverse Effect with respect to Parent or Merger Sub or could not prevent, hinder or materially delay the ability of Parent or Merger Sub to consummate the transactions contemplated by this Agreement. No consent, approval, order or authorization of, or registration, declaration or filing with, or notice to, any governmental entity is required by or with respect to Parent or Merger Sub in connection with the execution and delivery of this Agreement by Parent or Merger Sub or the consummation by Parent or Merger Sub, as the case may be, of any of the transactions contemplated by this Agreement, except for the filing of the Articles of Merger with the Secretary of State of the State of Nevada, as required, and such other consents, approvals, orders, authorizations, registrations, declarations, filings or notices as may be required under the “blue sky” laws of various states.

 

 
 

 

(f) SEC Documents; Undisclosed Liabilities . Parent has filed all reports, schedules, forms, statements and other documents as required by the U.S. Securities and Exchange Commission (the “SEC”) and Parent has delivered or made available to Sports Field all reports, schedules, forms, statements and other documents filed with the SEC (collectively, and in each case including all exhibits and schedules thereto and documents incorporated by reference therein, the “Parent SEC Documents”). The Parent SEC Documents complied in all material respects with the requirements of the Securities Act or the Exchange Act, as the case may be, and the rules and regulations of the SEC promulgated thereunder applicable to such Parent SEC documents, and none of the Parent SEC Documents (including any and all consolidated financial statements included therein) as of such date contained any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Except to the extent revised or superseded by a subsequent filing with the SEC (a copy of which has been provided to Sports Field prior to the date of this Agreement), none of the Parent SEC Documents contains any untrue statement of a material fact or omits to state any material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. The consolidated financial statements of Parent included in such Parent SEC Documents comply as to form in all material respects with applicable accounting requirements and the published rules and regulations of the SEC with respect thereto, have been prepared in accordance with generally accepted accounting principles (except, in the case of unaudited consolidated quarterly statements, as permitted by Form 10-Q of the SEC) applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present the consolidated financial position of Parent and its consolidated subsidiaries as of the dates thereof and the consolidated results of operations and changes in cash flows for the periods then ended (subject, in the case of unaudited quarterly statements, to normal year-end audit adjustments as determined by Parent’s independent accountants). Except as set forth in the Parent SEC Documents, at the date of the most recent audited financial statements of Parent included in the Parent SEC Documents, neither Parent nor any of its subsidiaries had, and since such date neither Parent nor any of such subsidiaries has incurred, any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to Parent.

  

(g) Absence of Certain Changes or Events . Except as disclosed in the Parent SEC Documents, since the date of the most recent financial statements included in the Parent SEC Documents, Parent and Merger Sub have conducted their business only in the ordinary course consistent with past practice in light of its current business circumstances, and there is not and has not been: (i) any Material Adverse Change with respect to Parent or Merger Sub; (ii) any condition, event or occurrence which, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect or give rise to a Material Adverse Change with respect to Parent or Merger Sub; (iii) any event which, if it had taken place following the execution of this Agreement, would not have been permitted by Section 7.01 without the prior consent of Sports Field; or (iv) any condition, event or occurrence which could reasonably be expected to prevent, hinder or materially delay the ability of Parent and Merger Sub to consummate the transactions contemplated by this Agreement.

 

(g) Litigation; Labor Matters; Compliance with Laws .

 

(i) There is no suit, action or proceeding or investigation pending or threatened against or affecting Parent, Merger Sub or the Majority Shareholder or any basis for any such suit, action, proceeding or investigation that, individually or in the aggregate, could reasonably be expected to have a Material Adverse Effect with respect to Parent or Merger Sub or prevent, hinder or materially delay the ability of Parent, Merger Sub or the Majority Shareholder to consummate the transactions contemplated by this Agreement, nor is there any judgment, decree, injunction, rule or order of any governmental entity or arbitrator outstanding against Parent or Merger Sub having, or which, insofar as reasonably could be foreseen by Parent or Merger Sub, in the future could have, any such effect.

 

(ii) Parent and Merger Sub are not a party to, or bound by, any collective bargaining agreement, contract or other agreement or understanding with a labor union or labor organization, nor is it the subject of any proceeding asserting that it has committed an unfair labor practice or seeking to compel it to bargain with any labor organization as to wages or conditions of employment nor is there any strike, work stoppage or other labor dispute involving it pending or, to its knowledge, threatened, any of which could have a Material Adverse Effect with respect to Parent.

 

 
 

 

(iii) The conduct of the business of Parent and Merger Sub complies with all statutes, laws, regulations, ordinances, rules, judgments, orders, decrees or arbitration awards applicable thereto.

 

(h) Tax Returns and Tax Payments. Parent and Merger Sub have timely filed all tax returns required to be filed by them, have paid all taxes shown thereon to be due and have provided adequate reserves in their financial statements for any taxes that have not been paid, whether or not shown as being due on any returns. No material claim for unpaid taxes have been made or become a lien against the property of Parent or Merger Sub or is being asserted against Parent or Merger Sub, no audit of any tax return of Parent or Merger Sub is being conducted by a tax authority, and no extension of the statute of limitations on the assessment of any taxes has been granted by Parent or Merger Sub and is currently in effect.

  

(i) Environmental Matters . Parent and Merger Sub are in compliance with all applicable Environmental Laws except for such violation thereof would not have a Material Adverse Effect. “Environmental Laws” means all applicable federal, state and local statutes, rules, regulations, ordinances, orders, decrees and common law relating in any manner to contamination, pollution or protection of human health or the environment, and similar state laws.

 

(j) Material Contract Defaults . Parent, Merger Sub and Majority Shareholders are not, or have not, received any notice or have any knowledge that any other party is, in default in any respect under any Material Contract; and there has not occurred any event that with the lapse of time or the giving of notice or both would constitute such a material default.  For purposes of this Agreement, a “Material Contract” means any contract, agreement or commitment that is effective as of the Closing Date to which Parent or Merger Sub is a party (i) with expected receipts or expenditures in excess of $100,000, (ii) requiring Parent or Merger Sub to indemnify any person, (iii) granting exclusive rights to any party, (iv) evidencing indebtedness for borrowed or loaned money in excess of $100,000 or more, including guarantees of such indebtedness, or (v) which, if breached by Parent or Merger Sub in such a manner would (A) permit any other party to cancel or terminate the same (with or without notice of passage of time) or (B) provide a basis for any other party to claim money damages (either individually or in the aggregate with all other such claims under that contract) from Parent or Merger Sub or (C) give rise to a right of acceleration of any material obligation or loss of any material benefit under any such contract, agreement or commitment.

 

(k) Properties . Parent and Merger Sub have good, clear and marketable titles to all the tangible properties and tangible assets reflected in the latest balance sheet as being owned by Parent or Merger Sub or acquired after the date thereof which are, individually or in the aggregate, material to Parent’s or Merger Sub’s business (except properties sold or otherwise disposed of since the date thereof in the ordinary course of business), free and clear of all material liens.

 

(l) Trademarks and Related Contracts .

 

(i) Except as disclosed in this Agreement, Parent and/or Merger Sub (i) owns or has the right to use, free and clear of all Liens, claims and restrictions, all patents, trademarks, service marks, trade names, copyrights, licenses and rights with respect to the foregoing used in or necessary for the conduct of its business as now conducted or proposed to be conducted without infringing upon or otherwise acting adversely to the right or claimed right of any Person under or with respect to any of the foregoing and (ii) is not obligated or under any liability to make any payments by way of royalties, fees or otherwise to any owner or licensor of, or other claimant to, any patent, trademark, service mark, trade name, copyright or other intangible asset, with respect to the use thereof or in connection with the conduct of its business or otherwise.

  

(ii) Parent or Merger Sub owns and has the unrestricted right to use all trade secrets, if any, including know-how, negative know-how, formulas, patterns, programs, devices, methods, techniques, inventions, designs, processes, computer programs and technical data and all information that derives independent economic value, actual or potential, from not being generally known by competitors (collectively, “ intellectual property ”) required for or incident to the development, operation and sale of all products and services sold by Parent, free and clear of any right, Lien or claim of others; provided , however , the possibility exists that other Persons, completely independent of Parent, Merger Sub or its employees or agents, could have developed intellectual property similar or identical to that of Parent or Merger Sub. Except as disclosed in the Agreement, the officers and directors of Parent and Merger Sub are not aware of any such development of substantially identical trade secrets or technical information by others.

 

 
 

 

(m) Certain Employee Payments . Parent and Merger Sub are not parties to any employment agreement which could result in the payment to any current, former or future director or employee of Parent or Merger Sub of any money or other property or rights or accelerate or provide any other rights or benefits to any such employee or director as a result of the transactions contemplated by this Agreement, whether or not (i) such payment, acceleration or provision would constitute a “parachute payment” (within the meaning of Section 280G of the Code), or (ii) some other subsequent action or event would be required to cause such payment, acceleration or provision to be triggered.

 

(n) Financial Statements . The audited financial statements and unaudited interim financial statements of the Parent included in the SEC Documents (i) complied as to form in all material respects with applicable accounting requirements and, as appropriate, the published rules and regulations of the SEC with respect thereto when filed, (ii) were prepared in accordance with GAAP applied on a consistent basis throughout the periods covered thereby (except as may be indicated therein or in the notes thereto, and in the case of quarterly financial statements, as permitted by Form 10-Q under the Exchange Act), (iii) fairly present the consolidated financial condition, results of operations and cash flows of the Parent as of the respective dates thereof and for the periods referred to therein, and (iv) are consistent with the books and records of the Parent.

 

(o) Undisclosed Liabilities . Neither of the Parent nor the Merger Sub has any liability (whether known or unknown, whether absolute or contingent, whether liquidated or unliquidated and whether due or to become due), except for (a) liabilities shown on the balance sheet contained in the most recent Form 10-Q filed with the SEC, (b) liabilities which have arisen since the date of the balance sheet contained in the most recent Form 10-Q filed with the SEC in the ordinary course of business which do not exceed $5,000.00 in the aggregate and (c) contractual and other liabilities incurred in the ordinary course of business which are not required by GAAP to be reflected on a balance sheet.

 

(p) Powers of Attorney . There are no outstanding powers of attorney executed on behalf of the Parent or the Merger Sub.

  

(q) Certain Business Relationships with Affiliates . No Affiliate of the Parent or of the Merger Sub (a) owns any property or right, tangible or intangible, which is used in the business of the Parent or Merger Sub, (b) has any claim or cause of action against the Parent or Merger Sub, or (c) owes any money to, or is owed any money by, the Parent or Merger Sub.

 

ARTICLE VII.

COVENANTS RELATING TO CONDUCT OF BUSINESS PRIOR TO MERGER

 

7.01 Conduct of Parent and Merger Sub . From the date of this Agreement and until the Effective Time, or until the prior termination of this Agreement, the Parent and Merger Sub shall not, unless mutually agreed to in writing:

 

(a) engage in any transaction, except in the normal and ordinary course of business, or create or suffer to exist any lien or other encumbrance upon any of their respective assets or which will not be discharged in full prior to the Effective Time;

 

(b) sell, assign or otherwise transfer any of their assets, or cancel or compromise any debts or claims relating to their assets, other than for fair value, in the ordinary course of business, and consistent with past practice;

 

(c) (i) directly or indirectly redeem, purchase or otherwise acquire to redeem, purchase or otherwise acquire any shares of Parent or Merger Sub Common Stock; (ii) issue or agree to issue any additional shares of, or options, warrants rights of any kind to acquire any shares of Parent or Merger Sub Common Stock; or (iii) amend its certificate of incorporation or bylaws, or split, combine or reclassify the outstanding Common Stock of Parent or Merger Sub or declare, set aside or pay any dividend payable in cash, stock or property or make any distribution with respect to any such stock.

 

 
 

 

(d) fail to use reasonable efforts to preserve intact their present business organizations, keep available the services of their employees and preserve its material relationships with customers, suppliers, licensors, licensees, distributors and others, to the end that its good will and on-going business not be impaired prior to the Effective Time;

 

(e) except for matters related to complaints by former employees related to wages, suffer or permit any Material Adverse Change to occur with respect to Parent and Merger Sub or their respective business or assets; or

 

(f) make any material change with respect to their business in accounting or bookkeeping methods, principles or practices, except as required by GAAP.

   

ARTICLE VIII.

ADDITIONAL AGREEMENTS

 

8.01 Access to Information; Confidentiality .

 

(a) Each party hereto shall, and shall cause its officers, employees, counsel, financial advisors and other representatives to, afford to any other party and its representatives reasonable access during normal business hours during the period prior to the Effective Time of the Merger to its properties, books, contracts, commitments, personnel and records and, during such period, the parties shall, and shall cause each of its officers, employees and representatives to, furnish promptly to any other party all information concerning its business, properties, financial condition, operations and personnel as such other party may from time to time reasonably request. For the purposes of determining the accuracy of the representations and warranties of each party set forth herein and compliance by each party of its obligations hereunder, during the period prior to the Effective Time of the Merger, each party shall provide each other party and its representatives with reasonable access during normal business hours to its properties, books, contracts, commitments, personnel and records as may be necessary to enable each party to confirm the accuracy of the representations and warranties of each other party set forth herein and compliance by each party of their obligations hereunder, and, during such period, cause its, officers, employees and representatives to, furnish promptly to each party upon its request (i) a copy of each report, schedule, registration statement and other document filed by it during such period pursuant to the requirements of federal or state securities laws and (ii) all other information concerning its business, properties, financial condition, operations and personnel as such other party may from time to time reasonably request. Except as required by law, each party will hold, and will cause its respective directors, officers, employees, accountants, counsel, financial advisors and other representatives and affiliates to hold, any nonpublic information concerning another party in strict confidence.

 

(b) No investigation pursuant to this Section 8.01 shall affect any representations or warranties of the parties herein or the conditions to the obligations of the parties hereto.

 

8.02 Best Efforts . Upon the terms and subject to the conditions set forth in this Agreement, each of the parties agrees to use its best efforts to take, or cause to be taken, all actions, and to do, or cause to be done, and to assist and cooperate with the other parties in doing, all things necessary, proper or advisable to consummate and make effective, in the most expeditious manner practicable, the Merger and the other transactions contemplated by this Agreement. The parties hereto will use their best efforts and cooperate with one another (i) in promptly determining whether any filings are required to be made or consents, approvals, waivers, permits or authorizations are required to be obtained (or, which if not obtained, would result in an event of default, termination or acceleration of any agreement or any put right under any agreement) under any applicable law or regulation or from any governmental authorities or third parties, including parties to loan agreements or other debt instruments and including such consents, approvals, waivers, permits or authorizations as may be required to transfer the assets and related liabilities of Sports Field to the Surviving Corporation in the Merger, in connection with the transactions contemplated by this Agreement, and (ii) in promptly making any such filings, in furnishing information required in connection therewith and in timely seeking to obtain any such consents, approvals, permits or authorizations. The parties hereto shall mutually cooperate in order to facilitate the achievement of the benefits reasonably anticipated from the Merger.

 

 
 

 

8.03 Public Announcements . The parties hereto will consult with each other before issuing, and provide each other the opportunity to review and comment upon, any press release or other public statements with respect to the transactions contemplated by this Agreement and shall not issue any such press release or make any such public statement prior to such consultation, except as may be required by applicable law or court process. The parties have to agree that the initial press release or releases to be issued with respect to the transactions contemplated by this Agreement shall be mutually agreed upon prior to the issuance thereof except as may be required by applicable law or court process.

 

8.04 Expenses . All costs and expenses incurred in connection with this Agreement and the transactions contemplated hereby shall be paid by the party incurring such expenses.

 

8.05 Payment of Liabilities . Recognizing the need to extinguish all existing liabilities of Parent and Merger Sub prior to the Merger, Sports Field has indicated it will not enter into this Agreement unless Parent and Merger Sub have arranged for the payment and discharge of all of Parent’s and Merger Sub’s liabilities, contingent or otherwise, including all of Parent’s and Merger Sub’s accounts payable totaling approximately $41,498, including any outstanding legal fees incurred prior to the Closing Date. Accordingly, Parent and Merger Sub shall arrange for the payment and discharge of all such liabilities.

 

8.06 No Solicitation . No party shall authorize or permit any of its officers, directors, agents, representatives, or advisors to (a) solicit, initiate or encourage or take any action to facilitate the submission of inquiries, proposals or offers from any person relating to any matter concerning any merger, consolidation, business combination, recapitalization or similar transaction involving Sports Field, Parent or Merger Sub, other than the transaction contemplated by this Agreement or any other transaction the consummation of which would or could reasonably be expected to impede, interfere with, prevent or delay the Merger or which would or could be expected to dilute the benefits to Sports Field of the transactions contemplated hereby. The parties hereto will immediately cease and cause to be terminated any existing activities, discussions and negotiations with any parties conducted heretofore with respect to any of the foregoing.

 

ARTICLE IX.

TERMINATION, AMENDMENT AND WAIVER

 

9.01 Termination . This Agreement may be terminated and abandoned at any time prior to the Effective Time of the Merger in the event of any of the following:

 

(a) by mutual written consent of Parent, Merger Sub, Majority Shareholders and Sports Field;

 

(b) by any party hereto, if any governmental entity shall have issued an order, decree or ruling or taken any other action permanently enjoining, restraining or otherwise prohibiting the Merger and such order, decree, ruling or other action shall have become final and non-appealable;

 

(c) by any party hereto, if the Merger shall not have been consummated on or before June 3, 2014 (other than as a result of the failure of the party seeking to terminate this Agreement to perform its obligations under this Agreement required to be performed at or prior to the Effective Time of the Merger);

  

(d) by Sports Field, if a Material Adverse Change shall have occurred, in the sole discretion of Sports Field, since the time in which the due diligence and other financial documentation was originally delivered to Sports Field by the Majority Shareholder and the Closing Date;

 

(e) by Parent, Merger Sub or the Majority Shareholders, if Sports Field willfully fails to perform in any material respect any of its material obligations under this Agreement;

 

(f) by Sports Field, if Parent, Merger Sub or Majority Shareholder willfully fails to perform in any material respect any of their respective obligations under this Agreement; and

 

(g) by Sports Field if the due diligence investigation by Sports Field of the Parent and Merger Sub is not satisfactory to Sports Field in its sole discretion.

 

 
 

 

9.02 Effect of Termination . In the event of termination of this Agreement by any party as provided in Section 9.01, this Agreement shall forthwith become void and have no effect, without any liability or obligation on the part of any party, other than the provisions of Section 8.01 and Section 10.02. Nothing contained in this Section shall relieve any party for any breach of the representations, warranties, covenants or agreements set forth in this Agreement.

 

9.03 Amendment . This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.

 

9.04 Extension; Waiver . Subject to Section 8.02 at any time prior to the Effective Time of the Merger, the parties may (a) extend the time for the performance of any of the obligations or other acts of the other parties, (b) waive any inaccuracies in the representations and warranties contained in this Agreement or in any document delivered pursuant to this Agreement, or (c) waive compliance with any of the agreements or conditions contained in this Agreement.  Any agreement on the part of a party to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. The failure of any party to this Agreement to assert any of its rights under this Agreement or otherwise shall not constitute a waiver of such rights.

 

9.05 Procedure for Termination, Amendment, Extension or Waiver . A termination of this Agreement pursuant to Section 9.01, an amendment of this Agreement pursuant to Section 9.03 or an extension or waiver of this Agreement pursuant to Section 9.04 shall, in order to be effective, require in the case of Parent, Merger Sub or Sports Field, action by the corporation’s Board of Directors and in the case of the Majority Shareholder, written authorization.

 

9.06 Return of Documents . In the event of termination of this Agreement for any reason, the parties will return to the other applicable party all of the other party’s documents, work papers, and other materials (including copies) relating to the transactions contemplated in this Agreement, whether obtained before or after execution of this Agreement. The parties will not use any information so obtained from the other party for any purpose and will take all reasonable steps to have such other party’s information kept confidential.

  

ARTICLE X.

INDEMNIFICATION AND RELATED MATTERS

 

10.01 Survival of Representations and Warranties . The representations and warranties of the parties made in Article VI of this Agreement shall not survive beyond the two-year anniversary of the Effective Time.

 

10.02 Indemnification by the Majority Stockholder . The Majority Shareholders shall indemnify the Parent, Merger Sub, Sports Field and the Surviving Corporation in respect of, and hold it harmless against, loss, liability, deficiency, damages, expense or cost (including without limitation amounts paid in settlement, interest, court costs, costs of investigators, fees and expenses of attorneys, accountants, financial advisors and other experts, and other expenses of litigation, arbitration or otherwise) (“Damages”) incurred or suffered by Parent, Merger Sub, Sports Field and/or the Surviving Corporation resulting from:

 

(a) any misrepresentation, breach of warranty or failure to perform any covenant or agreement of Parent, Merger Sub and/or the Majority Shareholders contained in this Agreement;

 

(b) any claim by a stockholder or former stockholder of the Parent, Merger Sub, or any other person or entity, seeking to assert, or based upon: (i) ownership or rights to ownership of any shares of Common Stock of the Parent or the Merger Sub; (ii) any rights under the certificate of incorporation or bylaws of the Parent or Merger Sub; or (iii) any claim that his, her or its shares of Common Stock were wrongfully repurchased cancelled or reissued by the Parent or Merger Sub.

 

The Majority Shareholders expressly acknowledge and agree that its indemnification pursuant to this Section is wholly independent of any other indemnity owed by any other party or any other remedy available to Sports Field, Parent, Merger Sub and/or the Surviving Corporation (as applicable, the “Indemnitee”). The Indemnitee may enforce the indemnity provided herein independently of any other remedy the Indemnitee may have against any other party at any time, and it shall not be necessary for the Indemnitee to proceed upon or against and/or exhaust any other remedy before proceeding to enforce the indemnity provided herein. The Majority Shareholder expressly waives any right to require the Indemnitee to proceed against any other party and agrees that Indemnitee may proceed against the Majority Shareholders or any other party in such order as Indemnitee shall determine in its sole and absolute discretion. Indemnitee may file a separate action or actions against the Majority Shareholders, whether action is brought or prosecuted with respect to or against any other Person, or whether any other Person is joined in any such action or actions.

 

 
 

 

10.03 Notice of Indemnification . In the event that the Indemnitee shall threaten, assert or institute against the Majority Shareholders any claim or demand in respect of which payment may be sought, including, without limitation, pursuant to Section 10.02 hereof, the Indemnitee shall promptly cause written notice of the assertion of any such claim or demand (an “Indemnity Claim”) of which it has knowledge to be forwarded to the Majority Shareholders in accordance with Section 11.01.  Any notice of an Indemnity Claim shall state specifically the provision with respect to which the Indemnity Claim is made, the facts giving rise to such alleged basis for the Indemnity Claim, and the amount of the liability asserted against the Majority Shareholders.  Within ten (10) days of the receipt of such written notice, the Majority Shareholders shall notify the Indemnitee in writing of his intent to contest the Indemnity Claim or to accept liability thereunder. In the event that no written notice is received by the Indemnitee within ten (10) days of the original receipt by the Majority Shareholders of the written notice of the Indemnity Claim, the Majority Shareholders hereby acknowledge and agree to accept liability as proposed in the Indemnity Claim.

 

ARTICLE XI.

GENERAL PROVISIONS

 

11.01 Notices . All notices, demands, requests, consents, approvals, and other communications required or permitted hereunder shall be in writing and, unless otherwise specified herein, shall be (i) personally served, (ii) deposited in the mail, registered or certified, return receipt requested, postage prepaid, (iii) delivered by reputable air courier service with charges prepaid, or (iv) transmitted by hand delivery, telegram, or facsimile, addressed as set forth below or to such other address as such party shall have specified most recently by written notice. Any notice or other communication required or permitted to be given hereunder shall be deemed effective (a) upon hand delivery or delivery by facsimile, with accurate confirmation generated by the transmitting facsimile machine, at the address or number designated below (if delivered on a business day during normal business hours where such notice is to be received), or the first business day following such delivery (if delivered other than on a business day during normal business hours where such notice is to be received) or (b) on the first business day following the date of mailing by express courier service, fully prepaid, addressed to such address, or upon actual receipt of such mailing, whichever shall first occur. The addresses for such communications shall be:

 

(a) if to Parent or Merger Sub prior to the Effective Time, to:

 

Anglesea Enterprises, Inc.

13799 Park Blvd., Suite 147,

Seminole, Florida 33776

Attn: Leslie Toups

Telephone: (727) 393-7439

 

with a copy to (which shall not constitute notice):

 

Jody M. Walker, Esq.

7841 South Garfield Way

Centennial, CO 80122

  

(b) if to Parent or Merger Sub after the Effective Time, to:

 

Anglesea Enterprises, Inc.

C/O Sports Field Holdings, Inc.

176 East Main Street,

Westborough, MA 01581

Attn: Joseph DiGeronimo

Telephone: (305) 389-7545

 

 
 

 

with a copy to (which shall not constitute notice):

 

Lucosky Brookman LLP

101 Wood Avenue South, 5 th Floor

Woodbridge, NJ 08830

Attn: Joseph M. Lucosky, Esq.

Telephone (732) 395-4400

 

(c) if to Sports Field and/or the Surviving Corporation to:

 

Sports Field Holdings, Inc.

176 East Main Street,

Westborough, MA 01581

Attn: Joseph DiGeronimo

Telephone: (305) 389-7454

 

with a copy to (which shall not constitute notice):

 

Lucosky Brookman LLP

101 Wood Avenue South, 5 th Floor

Woodbridge, NJ 08830

Attn: Joseph M. Lucosky, Esq.

Telephone (732) 395-4400

 

(d) if to Majority Shareholders to:

 

Leslie Toups

13799 Park Blvd., Suite 147,

Seminole, Florida 33776

Telephone: (727) 393-7439

 

Edward G. Mass Jr.

2323 State Road 580

Clear Water FL, 33761

 

with a copy to (which shall not constitute notice):

 

Jody M. Walker, Esq.

7841 South Garfield Way

Centennial, CO 80122

 

11.02 Interpretation . When a reference is made in this Agreement to a Section, Exhibit or Schedule, such reference shall be to a Section of, or an Exhibit or Schedule to, this Agreement unless otherwise indicated. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement. Whenever the words “include”, “includes” or “including” are used in this Agreement, they shall be deemed to be followed by the words “without limitation”.

  

11.03 Entire Agreement; No Third-Party Beneficiaries . This Agreement and the other agreements referred to herein constitute the entire agreement, and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter of this Agreement. This Agreement is not intended to confer upon any person other than the parties any rights or remedies.

 

 
 

 

11.04 Governing Law . This Agreement shall be governed by and construed in accordance with the laws of the State of New Jersey without regard to principles of conflicts of laws. Any action brought by either party hereto against the other concerning the transactions contemplated by this Agreement shall be brought only in the state courts of New Jersey or in the federal courts located in the state of New Jersey. The parties to this Agreement hereby irrevocably waive any objection to jurisdiction and venue of any action instituted hereunder and shall not assert any defense based on lack of jurisdiction or venue or based upon forum non conveniens . The parties hereto agree to submit to the in person am jurisdiction of such courts and hereby irrevocably waive trial by jury. The prevailing party shall be entitled to recover from the other party its reasonable attorney’s fees and costs.

 

11.05 Assignment . Neither this Agreement nor any of the rights, interests or obligations under this Agreement shall be assigned, in whole or in part, by operation of law or otherwise by any of the parties without the prior written consent of the other parties. Subject to the preceding sentence, this Agreement will be binding upon, inure to the benefit of, and be enforceable by, the parties and their respective successors and assigns.

 

11.06 Further Assurances . From time to time after the date hereof and without further consideration from Sports Field, the Majority Shareholders shall execute and deliver, or cause to be executed and delivered, to Sports Field such further instruments of sale, assignment, transfer and delivery, and take such other action as Sports Field may reasonably request in order to consummate the transactions contemplated hereby.

 

11.07 Severability . Whenever possible, each provision or portion of any provision of this Agreement will be interpreted in such manner as to be effective and valid under applicable law but if any provision or portion of any provision of this Agreement is held to be invalid, illegal or unenforceable in any respect under any applicable law or rule in any jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision or portion of any provision in such jurisdiction, and this Agreement will be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein.

 

11.08 Counterparts . This Agreement may be executed in one or more identical counterparts, all of which shall be considered one and the same instrument and shall become effective when one or more such counterparts shall have been executed by each of the parties and delivered to the other parties.

 

11.09 Time . Time is of the essence in the performance of the parties respective obligations herein contained.

  

11.10 Recitals, Disclosure Schedules and Exhibits . The Recitals, Disclosure Schedules and Exhibits to this Agreement are incorporated herein, by this reference, made a part hereof as if fully set forth herein.

  

[-signature page follows-]

 

 
 

 

IN WITNESS WHEREOF , the undersigned have caused their duly authorized officers to execute this Agreement as of the date first above written.

 

 

ANGLESEA ENTERPRISES, INC. ,

as Parent

     
  By: /s/ Leslie Toups
    Name: Leslie Toups
    Title: Executive Director
     
 

ANGLESEA ENTERPRISES ACQUISITION CORP.,

as Merger Sub

     
  By: /s/ Leslie Toups
    Name: Leslie Toups
    Title: Executive Director  
     
    MAJORITY SHAREHOLDERS
     
    /s/ Leslie Toups
    Leslie Toups, as an individual  
     
    /s/ Edward G. Mass Jr.
    Edward G. Mass Jr., as an individual
     
  SPORTS FIELD HOLDINGS, INC.
     
  By: /s/ Joseph DiGeronimo
    Name: Joseph DiGeronimo
    Title: Chief Executive Officer  

  

 

 

 

AGREEMENT AND PLAN OF MERGER

 

THIS AGREEMENT AND PLAN OF MERGER, dated as of June 16, 2014 (the “Agreement”), by and between Anglesea Enterprises, Inc., a Nevada corporation (the “Parent”) and Sports Field Holdings, Inc. a Nevada corporation, and subsidiary of the Parent (the “Subsidiary”).

 

WITNESSETH:

 

WHEREAS, the Parent desires to acquire all the assets, and to assume all of the liabilities and obligations, of the Subsidiary by means of a merger of the Subsidiary with and into the Parent, with the Parent being the surviving corporation (the “Merger”);

 

WHEREAS, the Parent owns one hundred percent (100%) of the outstanding shares of the Subsidiary’s stock entitled to vote;

 

WHEREAS, Section 92A.180 of the Nevada Revised Statutes (“NRS”) authorizes the merger of a subsidiary corporation into a parent corporation;

 

WHEREAS, the Parent shall be the surviving entity (the “Surviving Corporation”) and continue its existence as a Nevada corporation; and

 

WHEREAS, the board of directors of each of the Parent and the Subsidiary, respectively, have approved this Agreement and the consummation of the Merger.

 

NOW THEREFORE, the parties hereto hereby agree as follows:

 

1.           The Merger .

 

(a)          At the Effective Time (as defined below), (i) the Subsidiary shall be merged with and into the Parent, (ii) the separate existence of the Subsidiary shall cease, and (iii) the Surviving Corporation shall be the surviving entity and continue its existence as a Nevada corporation.

 

(b)          The Merger shall become effective upon the filing of (i) an Articles of Merger with the Secretary of State of the State of Nevada in such form as is required by, and executed in accordance with, the applicable provisions of the NRS.  The time at which the Merger shall become effective as aforesaid is referred to hereinafter as the “Effective Time.”

 

2.           Exchange of Capital Stock .  At the Effective Time, each share of common stock, $0.00001 par value per share, of the Subsidiary that is issued and outstanding immediately prior to the Effective Time shall not be converted or exchanged in any manner into shares of the Surviving Corporation and shall be cancelled.  Each issued and outstanding share of common stock, par value $0.00001 per share of the Parent (the “Parent Common Stock”), shall not be converted or exchanged in any manner, but as of the Effective Time shall represent one share of common stock of the Surviving Corporation.

 

3.           The Surviving Corporation .

 

(a)          The Articles of Incorporation of the Parent, in effect immediately prior to the Effective Time, shall be the Articles of Incorporation of the Surviving Corporation, unless and until thereafter amended in accordance with its terms and applicable law, except that Article First of the Surviving Corporation’s Articles of Incorporation shall be amended to change the Surviving Corporation’s name to “Sports Field Holdings, Inc.” as soon as practicable.  The bylaws of the Parent, in effect immediately prior to the Effective Time, shall be the bylaws of the Surviving Corporation, unless and until thereafter amended in accordance with applicable law.

 

 
 

 

(b)          As soon as practicable after the Effective Time, the name of the Surviving Corporation shall be amended to Sports Field Holdings, Inc.

 

4.           Transfer and Conveyance of Assets and Assumption of Liabilities .

 

(a)          At the Effective Time, the Parent shall continue in existence as the Surviving Corporation; and without further transfer, all the property, rights, privileges, powers and franchises of the Subsidiary shall vest in the Surviving Corporation without further act or deed; and all debts, liabilities, obligations, restrictions, disabilities and duties of the Subsidiary shall become the debts, liabilities, obligations, restrictions, disabilities and duties of the Surviving Corporation; and any claim or judgment against the Subsidiary may be enforced against the Surviving Corporation in accordance with Section 92A.250 of the NRS.

 

(b)          If at any time the Parent shall consider or be advised that any further assignment, conveyance or assurance is necessary or advisable to vest, perfect or confirm of record in the Surviving Corporation the title to any property or right of the Subsidiary, or otherwise carry out the provisions hereof, the proper representatives of the Subsidiary, as of the Effective Time, shall execute and deliver any and all proper deeds, assignments and assurances, and do all things necessary and proper to vest, perfect or convey title to such property or right in the Surviving Corporation in order to carry out the provisions hereof.

 

5.           Miscellaneous .

 

(a)          Joseph DiGeronimo, Chief Executive Officer of the Parent, shall be authorized, at such time in his sole discretion as he deems appropriate, to execute, acknowledge, verify, deliver, file and record, for and in the name of the Parent, any and all documents and instruments including, without limitation, the Articles of Incorporation of the Surviving Corporation, and the Articles of Merger and the Certificate of Ownership, and shall do and perform any and all acts required by applicable law which the Surviving Corporation deems necessary or advisable, in order to effectuate the Merger.

 

(b)          The representations, warranties and agreements contained in any certificate or other writing delivered pursuant hereto shall not survive the Effective Time or the termination of this Agreement.

 

(c)          Any provision of this Agreement may, subject to applicable law, be amended or waived prior to the Effective Time if, and only if, such amendment or waiver is in writing and signed by the Parent and the Subsidiary.

 

(d)          No failure or delay by any party hereto in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege.  The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law.

 

(e)          All prior or contemporaneous agreements, contracts, promises, representations, and statements, if any, between the Subsidiary and the Parent, or their representatives, are merged into this Agreement, and this Agreement shall constitute the entire understanding between the Subsidiary and the Parent with respect to the subject matter hereof.

 

(f)          The provisions of this Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns, provided that no party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the consent of the other party hereto.

 

 
 

 

(g)          This Agreement shall be construed in accordance with and governed by the internal laws of the State of Nevada, without reference to principles of conflicts of law.

 

(h)          This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument.  This Agreement shall become effective when each party hereto shall have received the counterpart hereof signed by the other party hereto.

 

[-Signature Page Follows-]

 

 
 

 

[-SIGNATURE PAGE TO AGREEMENT AND PLAN OF MERGER-]

 

IN WITNESS WHEREOF, the undersigned have executed this instrument as of the date first written above.

 

ANGLESEA ENTERPRISES, INC.  
a Nevada corporation  
     
By: /s/ Joseph DiGeronimo  
  Name: Joseph DiGeronimo  
  Title: Chief Financial Officer  
     
SPORTS FIELD HOLDINGS, INC.  
a Nevada corporation  
     
By: /s/ Joseph DiGeronimo  
  Name: Joseph DiGeronimo  
  Title: Chief Executive Officer  

 

 

 

 

 

  

 
 

 

 

 

 
 

 

 

   

 
 

 

 

   

 

 

BYLAWS

 

OF

 

SPORTS FIELD HOLDINGS, INC.

 

a Nevada Corporation

 

ARTICLE ONE

OFFICES

 

Section 1.1 REGISTERED OFFICE - The registered office of Sports Field Holdings, Inc. (the “Corporation”) shall be in the City of Las Vegas, State of Nevada.

 

Section 1.2 OTHER OFFICES - The Corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the Corporation may require.

 

ARTICLE TWO

MEETINGS OF STOCKHOLDERS

 

Section 2.1 PLACE - All annual meetings of the stockholders shall be held at the registered office of the Corporation or at such other place within or without the State of Nevada as the directors shall determine. Special meetings of the stockholders may be held at such time and place within or without the State of Nevada as shall be stated in the notice of the meeting, or in a duly executed waiver of notice thereof.

 

Section 2.2 ANNUAL MEETINGS - Annual meetings of the stockholders, commencing with the year 2013, shall be held on the 15th day of June each year if not a legal holiday and, if a legal holiday, then on the next secular day following, or at such other time as may be set by the Board of Directors from time to time, at which the stockholders shall elect by vote a Board of Directors and transact such other business as may properly be brought before the meeting.

 

Section 2.3 SPECIAL MEETINGS - Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by the statute or by the Articles of Incorporation, may be called by the Chief Executive Officer or by resolution of the Board of Directors or at the request in writing of stockholders owning a majority in amount of the entire capital stock of the Corporation issued and outstanding and entitled to vote. Such request shall state the purpose of the proposed meeting.

 

 
 

 

Section 2.4 NOTICE OF MEETINGS - Notices of meetings shall be in writing and signed by the Chief Executive Officer or President or the Secretary or an Assistant Secretary or by such other person or persons as the directors shall designate. Such notice shall state the purpose for which the meeting is called and the time and the place, which may be within or without this State, where it is to be held. A copy of such notice shall be either delivered personally to or shall be mailed, postage prepaid to each stockholder of record entitled to vote at such meeting not less than ten nor more than sixty days before such meeting. If mailed, it shall be directed to a stockholder at his address as it appears upon the records of the Corporation and upon such mailing of any such notice, the service thereof shall be complete and the time of the notice shall be to run from the date upon which such notice is deposited in the mail for transmission to such stockholder. Personal delivery of any such notice to any officer of a Corporation or association or to any member of a partnership shall constitute delivery of such notice to such Corporation, association or partnership. In the event of the transfer of stock after delivery of such notice of and prior to the holding of the meeting it shall not be necessary to deliver of mail notice of the meeting to the transferee.

 

Section 2.5 PURPOSE OF MEETINGS - Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.

 

Section 2.6 QUORUM - The holders of a majority of the stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Articles of Incorporation. If however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until such quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified.

 

Section 2.7 VOTING - When a quorum is present or represented at any meeting, the vote of the holders of a majority of the stock have voting power present in person or represented by proxy shall be sufficient to elect directors or to decide any questions brought before such meeting, unless question is one upon which by express provision of the statutes or of the Articles of Incorporation, a different vote is required in which case such express provision shall govern and control the decision of such question.

 

Section 2.8 SHARE VOTING - Each stockholder of record of the Corporation shall be entitled at each meeting of stockholders to one vote for each share of stock standing in his name of the books of the Corporation. Upon the demand of any stockholder, the vote for directors and the vote upon any question before the meeting shall be by ballot.

 

Section 2.9 PROXY - At any meeting of the stockholders any stockholder may be represented and vote by proxy or proxies appointed by an instrument in writing. In the event any such instrument in writing shall designate two or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all of the persons so designated unless the instrument shall otherwise provide. No proxy or power of attorney to vote shall be used to vote at a meeting of the stockholders unless it shall have been filed with the secretary of the meeting when required by the inspectors of election. All questions regarding the qualification of voters, the validity of proxies and the acceptance or rejection of votes shall be decided by the inspectors of election who shall be appointed by the Board of Directors, or if not so appointed, then by the presiding officer of the meeting.

 

 
 

 

Section 2.10 WRITTEN CONSENT IN LIEU OF MEETING - Any action which may be taken by the vote of the stockholders at a meeting may be taken without a meeting if authorized by the written consent of stockholders holding at least a majority of the voting power, unless the provisions of the statutes or of the Articles of Incorporation require a greater proportion of voting power to authorize such action in which case such greater proportion of written consents shall be required.

 

ARTICLE THREE

DIRECTORS

 

Section 3.1 POWERS - The business of the Corporation shall be managed by its Board of Directors which may exercise all such power of the Corporation and do all such lawful acts and things as are not by statute or by the Articles of Incorporation or by these Bylaws directed or required to be exercised or done by the stockholders.

 

Section 3.2 NUMBER OF DIRECTORS AND TERM- The number of directors which shall constitute the whole board shall be at least one (1). The number of directors may from time to time be increased or decreased to not less than one nor more than fifteen by action of the Board of Directors. The directors shall be elected at the Annual Meeting of the Stockholders each director elected shall hold office until his successor is elected and qualified. Directors need not be stockholders.

 

Section 3.3 REMOVAL OF DIRECTORS – Any one or more of the directors may be removed for cause by action of the Board of Directors. Any of all of the directors may be removed with or without cause by majority vote of the stockholders.

 

Section 3.4 VACANCIES - Vacancies in the Board of Directors including those caused by an increase in the number of directors, may be filled by a majority of the remaining directors, though less than a quorum, or by a sole remaining director, and each director so elected shall hold office until his successor is elected at an annual or a special meeting of the stockholders.

A vacancy or vacancies in the Board of Directors shall be deemed to exist in case of the death, resignation or removal of any directors, or if the authorized number of directors be increased, or if the stockholders fail at any annual or special meeting of stockholders at which any director or directors are elected to elect the full authorized number of directors to be voted for at that meeting.

 

The stockholders may elect a director or directors at any time to fill any vacancy or vacancies not filled by the directors. If the Board of Directors accepts the resignation of a director tendered to take effect at a future time, the Board or the stockholders shall have the power to elect a successor to take office when the resignation is to become effective.

 

No reduction of the authorized number of directors shall have the effect of removing any director prior to the expiration of his term of office.

 

 
 

 

ARTICLE FOUR

MEETINGS OF THE BOARD OF DIRECTORS

 

Section 4.1 PLACE - Regular meetings of the Board of Directors shall be held at any place within or without the State which has been designated from time to time by resolution of the Board or by written consent of all members of the Board. In the absence of such designation, regular meetings shall be held at the registered office of the Corporation. Special meetings of the Board may be held either at a place so designated or at the registered office.

 

Section 4.2 FIRST MEETING - The first meeting of each newly elected Board of Directors shall be held immediately following the adjournment of the meeting of stockholders and at the place thereof. No notice of such meeting shall be necessary to the directors in order legally to constitute the meeting, provided a quorum be present. In the event such meeting is not so held, the meeting may be held at such time and place as shall be specified in a notice given as hereinafter provided for special meetings of the Board of Directors.

 

Section 4.3 REGULAR MEETINGS - Regular meetings of the Board of Directors may be held without call or notice at such time and at such place as shall from time to time be fixed and determined by the Board of Directors.

 

Section 4.4 SPECIAL MEETINGS - Special meetings of the Board of Directors may be called by the Chief Executive Officer, Chairman or the President or by any two Directors.

 

Written notice of the time and place of special meetings shall be delivered personally to each director, or sent to each director by mail or by other form of written communication, charges prepaid, addressed to him at his address as it is shown upon the records, or if not readily ascertainable, at the place in which the meetings of the directors are regularly held. In case such notice is mailed or telegraphed, it shall be deposited in the United States mail or delivered to the telegraph company at least forty-eight (48) hours prior to the time of the holding of the meeting. In case such notice is delivered as above provided, it shall be so delivered at least twenty-four (24) hours prior to the time of the holding of the meeting. Such mailing, telegraphing or delivery as above provided shall be due, legal and personal notice to such director.

 

Section 4.5 NOTICE - Notice of the time and place of holding an adjourned meeting need not be given to the absent directors if the time and place be fixed at the meeting adjourned.

 

Section 4.6 WAIVER - The transactions of any meeting of the Board of Directors, however called and noticed or wherever held, shall be as valid as though had at a meeting duly held after regular call and notice, if a quorum be present, and if, wither before or after the meeting, each of the directors not present signs a written waiver of notice, or a consent to holding such meeting, or an approval of the minutes thereof. All such waivers, consents or approvals shall be filed with the corporate records or made a part of the minutes of the meeting.

 

 
 

 

Section 4.7 QUORUM - A majority of the authorized number of directors shall be necessary to constitute a quorum for the transaction of business, except to adjourn as hereinafter provided. Every act or decision done or made by a majority of the directors present at a meeting duly held at which a quorum is present shall be regarded as the act of the Board of Directors, unless a greater number be required by law or by the Articles of Incorporation. Any action of a majority, although not at a regularly called meeting, and the record thereof, if assented to in writing by all of the other members of the Board shall be as valid and effective in all respects as if passed by the Board in a regular meeting.

 

Section 4.8 ADJOURNMENT - A quorum of the directors may adjourn any directors meeting to meet again at a stated day and hour; provided, however, that in the absence of a quorum, a majority of the directors present at any directors meeting, whether regular or special, may adjourn from time to time until the time fixed for the next regular meeting of the Board.

 

ARTICLE FIVE

COMMITTEES OF DIRECTORS

 

Section 5.1 POWER TO DESIGNATE - The Board of Directors may, by resolution adopted by a majority of the whole Board, designate one or more committees of the Board of Directors, each committee to consist of one or more of the directors of the Corporation which, to the extent provided in the resolution, shall have and may exercise the power of the Board of Directors in the management of the business and affairs of the Corporation and may have power to authorize the seal of the Corporation be affixed to all papers which may require it. Such committee or committees shall have such name or names as may be determined from time to time by the Board of Directors. The members of any such committee present at any meeting and not disqualified from voting may, whether or not they constitute a quorum, unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. At meetings of such committees, a majority of the members or alternate members shall constitute a quorum for the transaction of business, and the act of a majority of the members or alternate members at any meeting at which there is a quorum shall be the act of the committee.

 

Section 5.2 REGULAR MINUTES - The committees shall keep regular minutes of their proceedings and report the same to the Board of Directors.

 

Section 5.3 WRITTEN CONSENT - Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting if a written consent thereto is signed by all members of the Board of Directors or of such committee, as the case may be, and such written consent is filed with the minutes of the proceedings of the Board or committee.

 

 
 

 

ARTICLE SIX

COMPENSATION OF DIRECTORS

 

Section 6.1 COMPENSATION - The directors may be paid for their expenses of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like reimbursement and compensation for attending committee meetings.

 

ARTICLE SEVEN

NOTICES

 

Section 7.1 NOTICE - Notices to directors and stockholders shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by telegram.

 

Section 7.2 CONSENT - Whenever all parties entitled to vote at any meeting, whether directors or stockholders, consent, either by a writing on the records of the meeting or filed with the secretary, or by presence at such meeting and oral consent entered on the minutes, or by taking part in the deliberations at such meeting without objection, the doings of such meetings shall be valid as if had at a meeting regularly called and noticed, and at such meeting any business may be transacted which is not excepted from the written consent or to the consideration of which no objection for want of notice is made at the time, and if any meeting be irregular for want of notice or of such consent, provided a quorum was present at such meeting, the proceedings of said meeting may be ratified and approved and rendered likewise valid and the irregularity or defect therein waived by a writing signed by all parties having the right to vote at such meeting; and such consent or approval of stockholders may be by proxy or attorney, but all such proxies and powers of attorney must be in writing.

 

Section 7.3 WAIVER OF NOTICE - Whenever any notice whatever is required to be given under the provisions of the statutes, of the Articles of Incorporation or of these Bylaws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto.

 

ARTICLE EIGHT

OFFICERS

 

Section 8.1 APPOINTMENT OF OFFICERS - The officers of the Corporation shall be chosen by the Board of Directors and shall include, but not be limited to, a President, a Secretary and a Treasurer. Any person may hold two or more offices.

 

Section 8.2 ADDITIONAL OFFICERS - The Board of Directors may appoint a Vice Chairman of the Board, Vice-Presidents and one or more Assistant Secretaries and Assistant Treasurers and such other officers and agents as it shall deem necessary who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors.

 

Section 8.3 SALARIES - The salaries and compensation of all officers of the Corporation shall be fixed by the Board of Directors.

 

 
 

 

Section 8.4 VACANCIES - The officers of the Corporation shall hold office at the pleasure of the Board of Directors. Any officer elected or appointed by the Board of Directors may be removed at any time by the Board of Directors. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors.

 

Section 8.5 Chief Executive Officer. The Chief Executive Officer, subject to the control of the Board of Directors, shall in general supervise and control all of the business and affairs of the Corporation. He may sign, with the Secretary or any other proper officer of the Corporation thereunto authorized by the Board of Directors, certificates for shares of the Corporation, any deeds, mortgages, bonds, contracts, or other instruments which the Board of Directors has authorized to be executed, except in cases where the signing and execution thereof shall be expressly delegated by the Board of Directors or by these bylaws to some other officer or agent of the Corporation, or shall be required by law to be otherwise signed or executed; and in general shall perform all duties incident to the office of Chief Executive Officer and such other duties as may be prescribed by the Board of Directors from time to time. The Board of Directors shall elect the Chairman of the Board of Directors from its membership. He shall preside at the meetings of the Board and Shareholders and perform such other duties as may be assigned to him by the Board of Directors from time to time.

 

Section 8.6 PRESIDENT - The President shall preside at all meetings of the shareholders and at all meetings of the Board of Directors at which he may be present. He shall have the usual powers and duties vested in the President of a Corporation. He shall have power to select and appoint all necessary officers and employees of the Corporation, except those selected by the Board of Directors, and to remove all such officers and employees except those selected by the Board of Directors, and make new appointments to fill vacancies. He may delegate any of his powers to a Vice-President of the Corporation.

 

Section 8.7 VICE-PRESIDENT - The Vice-President shall act under the direction of the President and in the absence or disability of the President shall perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe. The Board of Directors may designate one or more Executive Vice-Presidents or may otherwise specify the order of seniority of the Vice-Presidents. The duties and powers of the President shall descend to the Vice-Presidents in such specified order of seniority.

 

Section 8.8 SECRETARY - The Secretary shall act under the direction of the President. Subject to the direction of the President he shall attend all meetings of the Board of Directors and all meetings of the stockholders and record the proceedings. He shall perform like duties for the standing committees when required. He shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the President or the Board of Directors.

 

 
 

 

Section 8.9 ASSISTANT SECRETARIES - The Assistant Secretaries shall act under the direction of the President. In order of their seniority, unless otherwise determined by the President or the Board of Directors, they shall, in the absence or disability of the Secretary, perform the duties and exercise the powers of the Secretary. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.

 

Section 8.10 TREASURER - The Treasurer shall act under the direction of the President. Subject to the direction of the President he shall have custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all monies and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. He shall disburse the funds of the Corporation as may be ordered by the President or the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all of his transactions as Treasurer and of the financial condition of the Corporation.

 

Section 8.11 ASSISTANT TREASURER - The Assistant Treasurer in the order of their seniority, unless otherwise determined by the President or the Board of Directors, shall, in the absence or disability of the Treasurer, perform the duties and exercise the powers of the Treasurer. They shall perform such other duties and have such other powers as the President or the Board of Directors may from time to time prescribe.

 

ARTICLE NINE

CERTIFICATES OF STOCK

 

Section 9.1 SHARE CERTIFICATES - Every stockholder shall be entitled to have a certificate signed by the either the Chief Executive Officer, President or a Vice-President and the Treasurer or an Assistant Treasurer or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. If the Corporation shall be authorized to issue more than one class of stock or more than one series of any class, the designations, preferences and relative, participating, optional or other special rights of the various classes of stock or series thereof and the qualifications, limitations or restrictions of such rights, shall be set forth in full or summarized on the face or back of the certificate which the Corporation shall issue to represent such stock.

 

Section 9.2 TRANSFER AGENTS - If a certificate is signed (a) by a transfer agent other than the Corporation or its employees or (b) by a registrar other than the Corporation or its employees, the signatures of the officers of the Corporation may be facsimiles. In case any officer who has signed or whose facsimile signature has been placed on a certificate shall cease to be such officer before such certificate is issued, such certificate may be issued with the same effect as though the person had not ceased to be such officer. The seal of the Corporation, or a facsimile thereof, may, but need not be, affixed to certificates of stock.

 

 
 

 

Section 9.3 LOST OR STOLEN CERTIFICATES - The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to advertise the same in such manner as it shall require and/or give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.

 

Section 9.4 SHARE TRANSFERS - Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation, if it is satisfied that all provisions of the laws and regulations applicable to the Corporation regarding the transfer and ownership of shares have been complied with, to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

 

Section 9.5 VOTING SHAREHOLDER - The Board of Directors may fix in advance a date not exceeding sixty (60) days preceding the date of any meeting of stockholders, or the date for the payment of any dividend, or the date for the allotment of rights, or the date when any change or conversion or exchange of capital stock shall go into effect, or a date in connection with obtaining the consent of stockholders for any purpose, as a record date for the determination of the stockholders entitled to notice of and to vote at any such meeting, and any adjournment thereof, or entitled to receive payment of any such dividend, or to give such consent, and in such case, such stockholders, and only such stockholders as shall be stockholder of record on the date so fixed, shall be entitled to notice of and to vote at such meeting, or any adjournment thereof, or to receive payment of such dividend, or to receive such allotment of rights, or to exercise such rights, or to give such consent, as the case may be, notwithstanding any transfer of any stock on the books of the Corporation after any such record date fixed as aforesaid.

 

Section 9.6 SHAREHOLDERS RECORD - The Corporation shall be entitled to recognize the person registered on its books as the owner of shares to be the exclusive owner for all purposes including voting and dividends, and the Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of Nevada.

 

ARTICLE TEN

GENERAL PROVISIONS

 

Section 10.1 DIVIDENDS - Dividends upon the capital stock of the Corporation, subject to the provisions of the Articles of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property or in shares of the capital stock, subject to the provisions of the Articles of Incorporation.

 

Section 10.2 RESERVES - Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the directors may from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies, or for equalizing dividends or for repairing or maintaining any property of the Corporation or for such other purpose as the directors think conducive to the interest of the Corporation, and the directors may modify or abolish any such reserve in the manner in which it was created.

 

 
 

 

Section 10.3 CHECKS - All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

Section 10.4 FISCAL YEAR - The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

 

Section 10.5 CORPORATE SEAL - The Corporation may or may not have a corporate seal, as may from time to time be determined by resolution of the Board of Directors. If a corporate seal is adopted, it shall have inscribed thereon the name of the Corporation and the words “Corporate Seal” and “Nevada”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.

 

ARTICLE ELEVEN

INDEMNIFICATION

 

Every person who was or is a party or is threatened to be made a party to or is involved in any action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that he or a person of whom he is the legal representative is or was a director or officer of the Corporation or is or was serving at the request of the Corporation for its benefit as a director or officer of another Corporation, or as its representative in a partnership, joint venture, trust or other enterprise, shall be indemnified and held harmless to the fullest extent legally permissible under the General Corporation Law of the State of Nevada from time to time against all expenses, liability and loss (including attorneys' fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him in connection herewith. The expenses of officers and directors incurred defending a civil or criminal action, suit or proceeding must be paid by the Corporation as they are incurred and in advance of the final disposition of the action, suit or proceeding upon receipt of any undertaking by or on behalf of the director or officer to repay the amount if it is ultimately determined by a court of competent jurisdiction that he is not entitled to be indemnified by the Corporation. Such right of indemnification shall be a contract right which may be enforced in any manner desired by the person. Such right of indemnification shall not be exclusive of any other right which such directors, officers or representatives may have or hereafter acquire and, without limiting the generality of such statement, they shall be entitled to their respective rights of indemnification under any bylaw, agreement, vote of stockholders, provision of law or otherwise, as well as their rights by this Article.

 

The Board of Directors may cause the Corporation to purchase and maintain insurance on behalf of any person who is or was a director or officer of the Corporation, or is or was serving at the request of the Corporation as a director or officer of another Corporation, or as its representative in a partnership, joint venture, trust or other enterprise, against any liability asserted against such person and incurred in any such capacity or arising out of such status, whether or not the Corporation would have the power to indemnify such person.

 

 
 

 

The Board of Directors may from time to time adopt further Bylaws with respect to indemnification and may amend these and such Bylaws to provide at all times the fullest indemnification permitted by the General Corporation Law of the State of Nevada.

 

ARTICLE TWELVE

AMENDMENTS

 

Section 12.1 BY SHAREHOLDER - The Bylaws may be amended by a majority vote of all the stock issued and outstanding and entitled to vote at any annual or special meeting of the stockholders, provided notice of intention to amend shall have been contained in the notice of the meeting.

 

Section 12.2 BY BOARD OF DIRECTORS - The Board of Directors by a majority vote of the whole Board at any meeting may amend these Bylaws, including Bylaws adopted by the stockholders, but the stockholders may from time to time specify particular provisions of the Bylaws which shall not be amended by the Board of Directors.

 

 

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) made as of November 18, 2013 (the “Effective Date”), by and between SPORTS FIELD HOLDINGS, INC., a Nevada corporation, with offices at 1106 Carroll Street, Pawnee, Illinois 62558 (hereinafter called the “Company”), and Joseph DiGeronimo, residing at 5 Apple Hill Road, Sturbridge, Massachusetts 01566 (hereinafter called the “Executive”).

 

WITNESSETH:

 

WHEREAS, as of the date hereof, Executive holds 500,000 of the Company's common stock, par value US $0.001 per share that the Company issued to the Executive (the “Initial Shares”);

 

WHEREAS, the Company has engaged an investment bank for the purpose of raising capital in a going public transaction (the “Capital Raise”);

 

WHEREAS, it is a condition precedent for the Capital Raise that the Company and Executive enter into this Agreement; and

 

WHEREAS, the Company, the investment bank and Executive seek to induce potential investors to consummate their investment in the Company as contemplated in the Capital Raise, and to such ends, seek to satisfy a condition precedent by entering into this Agreement;

 

WHEREAS, this agreement shall supersede any and all prior agreements, whether oral or written, related to the Executive’s duties and the Initial Shares;

 

WHEREAS, the Company desires to employ the Executive to perform services for the Company, and the Executive desires to perform such services, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.            EMPLOYMENT

 

The Company agrees to employ the Executive, and the Executive agrees to serve the Company in an executive capacity upon the terms and conditions hereinafter set forth.

 

2.            TERM

 

The term of this Agreement is for a period of thirty-six (36) months, beginning on the Effective Date (the “Initial Term”). This Agreement is automatically renewable for successive terms of twelve (12) months (each a “Renewal Term”). For purposes of this Agreement, the Initial Term and any Renewal Term are hereinafter collectively referred to as the “Term.” The Board shall provide Executive with written notice of non-renewal at least sixty (60) days before the end of the Term.

 

 
 

 

3.            COMPENSATION

 

(a)   Base Salary. The Company agrees to pay the Executive during the Term hereof a salary at the annual rate of one hundred twenty thousand dollars ($120,000). All salary, bonus, or other compensation payable to the Executive shall be subject to the customary withholding, FICA, medical and other tax and other employment taxes and deductions as required by federal, state and local law with respect to compensation paid by an employer to an employee. The Board of Directors and any committees thereof shall perform an annual review of Executive’s salary based on a review of Executive’s performance of his duties and the Company’s other compensation policies.

 

(b)    Incentive Bonus . In addition to the foregoing salary, Executive shall be eligible for an annual incentive bonus (“Incentive Bonus”) based on the review and recommendation of the Board of Directors in compliance with criteria determined by the Board of Directors. The Incentive Bonus shall be payable annually in cash and/or equity.

 

(c)      Equity . The Company may grant to Executive certain equity and option awards, as agreed and approved from time to time by the Board of Directors.

 

4.            DUTIES

 

The Executive is hereby employed as Chief Executive Officer of the Company and shall perform the following services in connection with the general business of the Company:

 

(a)           Duties as Chief Executive Officer . Executive shall have such duties, responsibilities and authority as are commensurate and consistent with the position of Chief Executive Officer of a company and as may, from time to time, be assigned to him by the Board of Directors. Executive shall report directly to the Board of Directors. During the Term, Executive shall devote his full business time and efforts to the performance of his duties hereunder, unless otherwise explicitly authorized by the Board. The Executive will comply and be bound by the Company’s written operating policies, procedures and practices from time to time in effect during Executive’s employment. Executive represents and warrants that he is free to enter into and fully perform this Agreement and the agreements referred to herein without breach of any agreement or contract to which he is a party or by which he is bound.

 

(b)           Compliance . The Executive hereby agrees to observe and comply with such reasonable rules and regulations of the Company as may be duly adopted from time to time by the Company's Board of Directors and otherwise to carry out and perform those orders, directions and policies stated to him from time to time by the Company's Board of Directors, either as specified in the minutes of the proceedings of the Board of Directors of the Company or otherwise in writing that are reasonably necessary and appropriate to carry out his duties hereunder. Such orders, directions and policies shall be legal and shall be consistent with the Executive's position as CEO.

 

 
 

 

5.            EXTENT OF SERVICES

 

The Executive agrees to serve the Company faithfully and to the best of his ability and shall devote his full time, attention and energies to the business of the Company during customary business hours. The Executive agrees to carry out his duties in a competent and professional manner and to at all times promote the best interests of the Company. The Executive shall not , during the Term of his employment hereunder, engage in any other business, whether or not pursued for profit. Nothing contained herein shall be construed as preventing the Executive from investing in any other business or entity which is not in competition with the business of the Company. Nothing contained herein shall be construed as preventing the Executive from (1) engaging in personal business affairs and other personal matters, (2) serving on civic or charitable boards or committees, or (3) serving on the board of directors of companies that do not compete directly or indirectly with the Company, provided however, that none of such activities materially interferes with the performance of his duties under this Agreement and provided further that the Board of Directors approves of each such proposed appointment which approval shall not be unreasonably withheld.

 

6.            BENEFITS AND EXPENSES

 

During the Term, Executive shall be entitled to, and the Company shall provide, the following benefits in addition to those specified in Section 3:

 

(a)           Vacation . Beginning on January 1, 2014, the Executive shall be entitled to four (4) weeks vacation in each twelve (12) month period during the Term. Vacation may be taken at such time(s) as Executive may determine provided that such vacation does not interfere with the Company's business operations. The Executive must use his vacation in any event by May 31 of the year next following the year in which the vacation accrues or such vacation time shall expire. The Executive shall not be entitled to compensation for unused vacation except that, upon termination of his employment and so long as it is consistent with section 7 herein, the Company shall pay to the Executive for all of his accrued, unexpired vacation time. The Executive shall accrue 1.66 vacation days per month beginning on January 1, 2014.

 

(b)           Expense Reimbursement . The Company shall reimburse the Executive upon submission of vouchers or receipts for his out-of-pocket expenses for travel, entertainment, meals and the like reasonably incurred by him pursuant to his employment hereunder in accordance with the general policy of the Company as adopted by its Board of Directors from time to time.

 

(c)           Health Insurance . The Company shall provide the Executive with health insurance in the coverages consistent with those provided to other similarly situated executives of the Company.

 

(d)           Disability Insurance . If the Company maintains disability insurance, then the Company shall provide a disability policy for the Executive comparable to the policies in force for other similarly situated executives in the Company.

 

 
 

 

(e)           Other Benefits. The Company shall provide to the Executive the same benefits it makes available to other similarly situated executives of the Company as determined from time to time by the Board of Directors.         

 

7.            TERMINATION; DISABILITY; RESIGNATION; TERMINATION WITHOUT CAUSE

 

(a)           Termination for Cause . The Company shall have the right to terminate the Executive's employment hereunder:

 

(1)         For Cause upon such termination, Executive shall have no further duties or obligations under this Agreement (except as provided in Section 8) and the obligations of the Company to Executive shall be as set forth below. For purposes of this Agreement, “Cause” shall mean:

 

(A)         Executive’s indictment or conviction of a felony or any crime involving moral turpitude under federal, state or local law;

 

(B)         Executive’s failure to perform (other than as a result of Executive's being Disabled), in any material respect, any of his duties or obligations under or in accordance with this Agreement for any reason whatsoever and the Executive fails to cure such failure within ten business days following receipt of notice from the Company;

 

(C)         Executive commits any dishonest, malicious or grossly negligent act which is materially detrimental to the business or reputation of the Company, or the Company’s business relationships, provided, however, that in such event the Company shall give the Executive written notice specifying in reasonable detail the reason for the termination;

 

(D)         Any intentional misapplication by Executive of the Company’s funds or other material assets, or any other act of dishonesty injurious to Employer committed by Executive; or

 

(E)         Executive’s use or possession of any controlled substance or chronic abuse of alcoholic beverages, which use or possession the Board of Directors reasonably determines renders Executive unfit to serve in his capacity as a senior executive of the Company.

 

In the event the Company terminates the Executive's employment for cause, then the Executive shall be entitled to receive through the date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(b)           Disability . The Company shall have the right to terminate the Executive's employment hereunder:

 

 
 

 

(1)         By reason of the Executive's becoming Disabled for an aggregate period of ninety (90) days in any consecutive three hundred sixty (360) day period (the “Disability Period”).

 

(A)         “Disabled” as used in this Agreement means that, by reason of physical or mental incapacity, Executive shall fail or be unable to substantially perform the essential duties of his employment with or without reasonable accommodation.

 

(B)         In the event Executive is Disabled, during the period of such disability he shall continue to receive his base compensation in the amount set forth in Section 3(a) hereof, which base compensation shall be reduced by the amount of all disability benefits he actually receives under any disability insurance program in place with the Company until the first to occur of (1) the cessation of the Disability or (2) the termination of this Agreement by the Company. During the period of Disability and prior to termination, the Executive shall continue to receive the benefits provided in Section 6 hereof.

 

(C)         For the purposes of this Section 7(b), any amounts to be paid to Executive by the Company pursuant to subsection (B) above, shall not be reduced by any disability income insurance proceeds received by him under any disability insurance policies owned or paid for by the Executive.

 

(D)         If the Executive is terminated at the end of the Disability Period, then the Executive shall receive through the date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(c)           Death . The Company's employment of the Executive shall terminate upon his death and all payments and benefits shall cease upon such date provided, however, that under this Agreement the estate of such Executive shall be entitled to receive through the date of termination (1) his base salary as defined in Section 3(a) hereof and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(d)           Termination by the Executive for Good Reason .

 

The Executive may elect, by written notice to the Company, such notice to be effective immediately upon receipt by the Company, to terminate his employment hereunder if:

 

(1)         The Company sells all or substantially all of its assets and the Executive is not retained or otherwise has his employment terminated;

 

(2)         The Company merges or consolidates with another business entity in a transaction immediately following which the holders of all of the outstanding shares of the voting capital stock of the Company own less than a majority of the outstanding shares of the voting capital stock of the resulting entity (whether or not the resulting entity is the Company); provided, however, that the Executive shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

 
 

 

(3)         More than fifty (50%) percent of the outstanding shares of the voting capital stock of the Company are acquired by a person or group (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934, as amended), which person or group includes neither the Executive nor the holders of the majority of the outstanding shares of the voting capital stock of the Company on the date hereof; provided, however, that the Executive shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

(4)   The Company defaults in making any of the payments required under this Agreement and said default continues for a one hundred eighty (180) day period after the Executive has given the Company written notice of the payment default.

 

If the Executive elects to terminate his employment hereunder pursuant to this Section 7(d), then (1) the Company shall continue to pay to the Executive his salary as provided in Section 3(a) hereof through the end of the current Term; (2) the Company shall continue to provide to the Executive the benefits provided in Section 6 hereof through the end of the current Term; and (3) all of the options granted to the Executive hereunder to purchase shares of the common stock of the Company shall vest immediately and the term of the option shall continue for the period specified in the option had the employment of the Executive not been so terminated.

 

(e)           Resignation . If the Executive voluntarily resigns during the Term of this Agreement or any Renewal Term other than pursuant to Section 7(d) hereof, then all payments and benefits shall cease on the effective date of resignation, provided that under this Agreement the Executive shall be entitled to receive through the date of such resignation (1) his base salary as defined in Section 3(a) hereof and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(f)           Recoupment of Initial Shares . If Executive’s employment is terminated (i) by the Company for Cause, (ii) by Executive breaching this Agreement for any reason whatsoever, or (iii) by Executive without Good Reason, then the following percentages of Initial Shares shall be subject to immediate recoupment by the Company:

 

Termination Date   Percentage of Initial Shares Subject to Recoupment
From Effective Date through June 30, 2014   90%
July 1, 2014 through June 30, 2015   66%
July 1, 2015 through June 30, 2016   33%

 

For the avoidance of doubt, if Executive is employed under this Agreement on July 1, 2016, this Section 7(f) shall no longer be in effect and Executive’s Initial Shares shall not be subject to recoupment by the Company. In addition, this Section 7(f) shall not subject any other compensation given to the Executive under Section 3(a) or 3(b) hereof to recoupment by the Company.

 

 
 

 

8.            CONFIDENTIALITY; RESTRICTIVE COVENANTS; NON COMPETITION

 

(a)           Non-Disclosure of Information .

 

(1)       The Executive recognizes and acknowledges that by virtue of his position as a key executive, he will have access to the lists of the Company's referral sources, suppliers, advertisers and customers, financial records and business procedures, sales force and personnel, programs, software, selling practices, plans, special methods and processes for electronic data processing, special techniques for testing commercial and sales materials and products, custom research services in product development, marketing strategy, product manufacturing techniques and formulas, and other unique business information and records (collectively “Proprietary Information”), as same may exist from time to time, and that they are valuable, special and unique assets of the Company's business. The Executive also may develop on behalf of the Company a personal acquaintance with the present and potential future clients and customers of the Company, and the Executive’s acquaintance may constitute the Company’s sole contact with such clients and customers.

 

(2)         The Executive will not, without the prior written consent of the Company, during the Term of his employment or any time thereafter, except as may be required by competent legal authority or as required by the Company to be disclosed in the course of performing Executive’s duties under this Agreement, disclose trade secrets or other confidential information about the Company, including but not limited to Proprietary Information, to any person, firm, corporation, association or other entity for any reason or any purpose whatsoever or utilize such Proprietary Information for his own benefit or the benefit of any third party; .provided, however, that nothing contained herein shall prohibit the Executive from using his personal acquaintance with any clients or customers of the Company at any time in a manner that is not inconsistent with their remaining as clients or customers of the Company.

 

(3)         All equipment, records, files, memoranda, computer print-outs and data, reports, correspondence and the like, relating to the business of the Company which Executive shall use or prepare or come into contact with shall remain the sole property of the Company. The Executive shall immediately turn over to the Company all such material in Executive's possession, custody or control at such time as this Agreement is terminated.

 

(4)         “Proprietary Information” shall not include information that was a matter of public knowledge on the date of this Agreement or subsequently becomes public knowledge other than as a result of having been revealed, disclosed or disseminated by Executive, directly or indirectly, in violation of this Agreement.

 

(b)           Non-Solicitation . The Executive covenants and agrees that during the term of his employment, and for a two (2) year period immediately following the end of the Term of or earlier termination of this Agreement, regardless of the reason therefor, the Executive shall not solicit, induce, aid or suggest to: (1) any employee to leave such employ, (2) any contractor, consultant or other service provider to terminate such relationship, or (3) any customer, agency, vendor, or supplier of the Company to cease doing business with the Company.

 

 
 

 

(c)           Non-Competition . For purposes of this Section 8(c) the parties agree that the “business of the Company” shall be defined to include the development, manufacture, packaging, advertising, marketing, distribution and sale of turf or turf related products.

 

The Executive covenants and agrees that during the Term, Executive shall not engage in any activity or render service in any capacity, directly or indirectly, (whether as principal, director, officer, investor, employee, consultant or otherwise) for or on behalf of any person or persons or entity in the United States or anywhere else in the world if such activity or service directly or indirectly involves or relates to any (1) business which is in competition with the business of the Company or (2) other business acquired or begun by the Company during the period of the Executive’s employment hereunder but in the latter event only if the Executive was directly involved in the operation of such other business. It is understood and agreed that nothing herein contained shall prevent the Executive from engaging in discussions concerning business arrangements to become effective upon the expiration of the term of this covenant not to compete.

 

(d)           Enforcement . In view of the foregoing, the Executive acknowledges and agrees that it is reasonable and necessary for the protection of the good will, business, trade secrets, confidential information and Proprietary Information of the Company that he makes the covenants in this Section 8 and that the Company will suffer irreparable injury if the Executive engages in the conduct prohibited by Section 8 (a), (b) or (c) of this Agreement. The Executive agrees that upon a breach, threatened breach or violation by him of any of the foregoing provisions of this Section 8, the Company, in addition to all other remedies it may have including an action at law for damages, shall be entitled as a matter of right to injunctive relief, specific performance or any other form of equitable relief in any court of competent jurisdiction without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law, to enjoin and restrain the Executive and each and every other person, partnership, association, corporation or organization acting in concert with the Executive, from the continuance of any action constituting such breach. The Company shall also be entitled to recover from the Executive all of its reasonable costs incurred in the enforcement of this Section 8 including its reasonable legal fees. The Executive acknowledges that the terms of Section 8(a), (b) and (c) are reasonable and enforceable and that , should there be a violation or attempted or threatened violation by the Executive of any of the provisions contained in these subsections, the Company shall be entitled to relief by way of injunction, specific performance or other form of equitable relief. In the event that any of the foregoing covenants in Sections 8 (a), (b) or (c) shall be deemed by any court of competent jurisdiction, in any proceedings in which the Company shall be a party, to be unenforceable because of its duration, scope, or area, it shall be deemed to be and shall be amended to conform to the scope, period of time and geographical area which would permit it to be enforced.

 

(e)            Independent Covenants. The Company and the Executive agree that the covenants contained in this Section 8 shall each be construed as a separate agreement independent of any of the other terms and conditions of this Agreement, and the existence of any claim by the Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense by the Executive to the Company’s enforcement of any of the covenants of this Section 8.

 

 
 

 

9. DISCLOSURE AND ASSIGNMENT OF RIGHTS.

 

(a)            Disclosure. The Executive agrees that he will promptly assign to the Company or its nominee(s) all right, title and interest of the Executive in and to any and all ideas, inventions, discoveries, secret processes, and methods and improvements, together with any and all patents or other forms of intellectual property protection that may be obtainable in connection therewith or that may be issued thereon, such as trademarks, service marks and copyrights, in the United States and in all foreign countries, which the Executive may invent, develop, or improve or cause to be invented developed or improved, on behalf of the Company while engaged in Company related decisions, during the Term or within six (6) months after the Term or earlier termination of this Agreement, which are or were related to the scope of the Company’s business or any work carried on by the Company or to any problems and projects specifically assigned to the Executive. All works and writings which relate to the Company’s business are works for hire under the Copyright Act, and any and all copyrights therefor shall be placed in the name of and inure to the benefit of the Company.

 

(b)            Assignment of Interest. The Executive agrees to disclose immediately to duly authorized representatives of the Company any ideas, inventions, discoveries, processes, methods and improvements covered by the terms of this Section 9 and to execute, at the Company’s expense, all documents reasonably required in connection with the Company’s application for appropriate protection and registration under the federal and foreign patent, trademark, and copyright law and the assignment thereof to the Company’s nominee (s). The Executive hereby appoints the Company’s Chairman as true and lawful attorney in fact with full powers of substitution and delegation to execute acknowledge and deliver any such instruments and assignments, which the Executive shall fail or refuse to execute or deliver.

 

10.          INDEMNIFICATION .

 

The Company shall indemnify the Executive to the maximum extent permitted under the Nevada Revised Statutes, or any successor thereto, and shall promptly advance any expenses incurred by the Executive prior to the final disposition of the proceeding to which such indemnity relates upon receipt from the Executive of a written undertaking to repay the amount so advanced if it shall be determined ultimately that the Executive is not entitled to indemnity under the standards set forth in the Nevada Revised Statutes or its successor. The Employer shall use commercially reasonable efforts to obtain and maintain throughout the Term of the employment of the Executive hereunder directors’ and officers’ liability insurance for the benefit of the Executive. The indemnification obligations of the Company under this Section 10 shall survive the termination of the Term or of this Agreement for any reason whatsoever unless the Agreement is terminated for cause.

 

 
 

 

11.           NOTICES .

 

(a)          Any and all notices or other communications given under this Agreement shall be in writing and shall be deemed to have been duly given on (1) the date of delivery, if delivered in person to the addressee, (2) the next business day if sent by overnight courier, or (3) three (3) days after mailing, if mailed within the continental United States, postage prepaid, by certified or registered mail, return receipt requested, to the party entitled to receive same, at his or its address set forth below.

 

The Company:

Sports Field Holdings, Inc.

1106 Carroll Street

Pawnee, IL 62558

 

If to the Executive:

 

Executive’s address specified above.

 

(b)          The parties may designate by notice to each other any new address for the purposes of this Agreement as provided in this Section 11.

 

12.           MISCELLANEOUS PROVISIONS

 

(a)          This agreement represents the entire Agreement between the parties and supersedes any prior agreement or understanding between them with respect to the subject matter hereof. No provision hereof may be amended, modified, terminated, or revoked except by a writing signed by all parties hereto.

 

(b)          This Agreement shall be binding upon parties and their respective heirs, legal representatives, and successors. Subject to the provisions of Section 7(d) hereof, the rights and interests of Company hereunder may be assigned to (1) a subsidiary or affiliate of the Company or (2) a successor business or successor business entity that is not a subsidiary or affiliate of the Company without the Executive's prior written consent; provided, however, that in either case the assignee continues the same business of the Company. The rights, interests and obligations of Executive are non-assignable.

 

(c)          No waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party against whom the waiver is asserted, and no such waiver shall be deemed the waiver of any subsequent breach or default of the same or similar nature.

 

(d)          If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall affect only such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

(e)          The captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of this Agreement.

 

 
 

 

(f)          Wherever it appears appropriate from the context, each term stated in this the singular or the plural shall include the singular and the plural.

 

(g)          The parties hereto agree that they will take such action and execute and deliver such documents as may be reasonably necessary to fulfill the terms of this Agreement.

 

(h)          The agreements and covenants set forth in Section 8 above shall survive termination or expiration of this Agreement.

 

(i)          The Executive represents and warrants that he is not subject to any prohibition or restriction, oral or written, preventing him from entering into this Agreement and undertaking his duties hereunder.

 

(j)          The Executive acknowledges that he has consulted with counsel and been advised of his rights in connection with the negotiation, execution and delivery of this Agreement including in particular Section 8 of this Agreement.

 

13.           Governing Law . The Agreement shall be construed in accordance with the laws of the State of New Jersey and any dispute under this Agreement will only be brought in the state and federal courts located in the State of New Jersey.

 

14.           Waiver of Jury Trail. THE EXECUTIVE HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY HERETO. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COMPANY ENTERING INTO THIS AGREEMENT. THE COMPANY’S REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.

 

 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the date first above written.

 

  SPORTS FIELD HOLDINGS, INC.
     
  By:  /s/ Joseph DiGeronimo
    Name: Joseph DiGeronimo
    Title: Chief Executive Officer

 

  EXECUTIVE
   
  /s/ Joseph DiGeronimo
  Joseph DiGeronimo

 

 

 

 

EXECUTIVE EMPLOYMENT AGREEMENT

 

This EXECUTIVE EMPLOYMENT AGREEMENT (the “Agreement”) made as of November 18, 2013 (the “Effective Date”), by and between SPORTS FIELD HOLDINGS, INC., a Nevada corporation, with offices at 1106 Carroll Street, Pawnee, Illinois 62558 (hereinafter called the “Company”), and Daniel Daluise, residing at 11 Skylar Drive, Southborough, Massachusetts 01772 (hereinafter called the “Executive”).

 

WITNESSETH:

 

WHEREAS, as of the date hereof, Executive holds 500,000 of the Company's common stock, par value US $0.001 per share that the Company issued to the Executive (the “Initial Shares”);

 

WHEREAS, the Company has engaged an investment bank for the purpose of raising capital in a going public transaction (the “Capital Raise”);

 

WHEREAS, it is a condition precedent for the Capital Raise that the Company and Executive enter into this Agreement; and

 

WHEREAS, the Company, the investment bank and Executive seek to induce potential investors to consummate their investment in the Company as contemplated in the Capital Raise, and to such ends, seek to satisfy a condition precedent by entering into this Agreement;

 

WHEREAS, this agreement shall supersede any and all prior agreements, whether oral or written, related to the Executive’s duties and the Initial Shares;

 

WHEREAS, the Company desires to employ the Executive to perform services for the Company, and the Executive desires to perform such services, on the terms and conditions set forth in this Agreement.

 

NOW, THEREFORE, in consideration of the premises and the mutual promises contained herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.            EMPLOYMENT

 

The Company agrees to employ the Executive, and the Executive agrees to serve the Company in an executive capacity upon the terms and conditions hereinafter set forth.

 

2.           TERM

 

The term of this Agreement is for a period of thirty-six (36) months, beginning on the Effective Date (the “Initial Term”). This Agreement is automatically renewable for successive terms of twelve (12) months (each a “Renewal Term”). For purposes of this Agreement, the Initial Term and any Renewal Term are hereinafter collectively referred to as the “Term.” The Board shall provide Executive with written notice of non-renewal at least sixty (60) days before the end of the Term.

 

 
 

 

3.           COMPENSATION

 

(a)           Base Salary. The Company agrees to pay the Executive during the Term hereof a salary at the annual rate of ninety six thousand dollars ($96,000). All salary, bonus, or other compensation payable to the Executive shall be subject to the customary withholding, FICA, medical and other tax and other employment taxes and deductions as required by federal, state and local law with respect to compensation paid by an employer to an employee. The Board of Directors and any committees thereof shall perform an annual review of Executive’s salary based on a review of Executive’s performance of his duties and the Company’s other compensation policies.

 

(b)           Incentive Bonus . In addition to the foregoing salary, Executive shall be eligible for an annual incentive bonus (“Incentive Bonus”) based on the review and recommendation of the Board of Directors in compliance with criteria determined by the Board of Directors. The Incentive Bonus shall be payable annually in cash and/or equity.

 

(c)           Equity . The Company may grant to Executive certain equity and option awards, as agreed and approved from time to time by the Board of Directors.

 

4.           DUTIES

 

The Executive is hereby employed as Director of Product Development of the Company and shall perform the following services in connection with the general business of the Company:

 

(a)           Duties as Director of Product Development . Executive shall have such duties, responsibilities and authority as are commensurate and consistent with the position of Director of Product Development of a company and as may, from time to time, be assigned to him by the Board of Directors. Executive shall report directly to the Board of Directors and the Chief Executive Officer. During the Term, Executive shall devote his full business time and efforts to the performance of his duties hereunder, unless otherwise explicitly authorized by the Board. The Executive will comply and be bound by the Company’s written operating policies, procedures and practices from time to time in effect during Executive’s employment. Executive represents and warrants that he is free to enter into and fully perform this Agreement and the agreements referred to herein without breach of any agreement or contract to which he is a party or by which he is bound.

 

(b)           Compliance . The Executive hereby agrees to observe and comply with such reasonable rules and regulations of the Company as may be duly adopted from time to time by the Company's Chief Executive Officer and Board of Directors and otherwise to carry out and perform those orders, directions and policies stated to him from time to time, either as specified in the minutes of the proceedings of the Board of Directors of the Company or otherwise in writing that are reasonably necessary and appropriate to carry out his duties hereunder. Such orders, directions and policies shall be legal and shall be consistent with the Executive's position as Director of Product Development.

 

 
 

 

5.           EXTENT OF SERVICES

 

The Executive agrees to serve the Company faithfully and to the best of his ability and shall devote his full time, attention and energies to the business of the Company during customary business hours. The Executive agrees to carry out his duties in a competent and professional manner and to at all times promote the best interests of the Company. The Executive shall not , during the Term of his employment hereunder, engage in any other business, whether or not pursued for profit. Nothing contained herein shall be construed as preventing the Executive from investing in any other business or entity which is not in competition with the business of the Company. Nothing contained herein shall be construed as preventing the Executive from (1) engaging in personal business affairs and other personal matters, (2) serving on civic or charitable boards or committees, or (3) serving on the board of directors of companies that do not compete directly or indirectly with the Company, provided however, that none of such activities materially interferes with the performance of his duties under this Agreement and provided further that the Board of Directors approves of each such proposed appointment which approval shall not be unreasonably withheld.

 

6.           BENEFITS AND EXPENSES

 

During the Term, Executive shall be entitled to, and the Company shall provide, the following benefits in addition to those specified in Section 3:

 

(a)           Vacation . Beginning on January 1, 2014, the Executive shall be entitled to four (4) weeks vacation in each twelve (12) month period during the Term. Vacation may be taken at such time(s) as Executive may determine provided that such vacation does not interfere with the Company's business operations. The Executive must use his vacation in any event by May 31 of the year next following the year in which the vacation accrues or such vacation time shall expire. The Executive shall not be entitled to compensation for unused vacation except that, upon termination of his employment and so long as it is consistent with section 7 herein, the Company shall pay to the Executive for all of his accrued, unexpired vacation time. The Executive shall accrue 1.66 vacation days per month beginning on January 1, 2014.

 

(b)           Expense Reimbursement . The Company shall reimburse the Executive upon submission of vouchers or receipts for his out-of-pocket expenses for travel, entertainment, meals and the like reasonably incurred by him pursuant to his employment hereunder in accordance with the general policy of the Company as adopted by its Board of Directors from time to time.

 

(c)           Health Insurance . The Company shall provide the Executive with health insurance in the coverages consistent with those provided to other similarly situated executives of the Company.

 

(d)           Disability Insurance . If the Company maintains disability insurance, then the Company shall provide a disability policy for the Executive comparable to the policies in force for other similarly situated executives in the Company.

 

 
 

 

(e)           Other Benefits. The Company shall provide to the Executive the same benefits it makes available to other similarly situated executives of the Company as determined from time to time by the Board of Directors.         

 

7.           TERMINATION; DISABILITY; RESIGNATION; TERMINATION WITHOUT CAUSE

 

(a)           Termination for Cause . The Company shall have the right to terminate the Executive's employment hereunder:

 

(1)         For Cause upon such termination, Executive shall have no further duties or obligations under this Agreement (except as provided in Section 8) and the obligations of the Company to Executive shall be as set forth below. For purposes of this Agreement, “Cause” shall mean:

 

(A)         Executive’s indictment or conviction of a felony or any crime involving moral turpitude under federal, state or local law;

 

(B)         Executive’s failure to perform (other than as a result of Executive's being Disabled), in any material respect, any of his duties or obligations under or in accordance with this Agreement for any reason whatsoever and the Executive fails to cure such failure within ten business days following receipt of notice from the Company;

 

(C)         Executive commits any dishonest, malicious or grossly negligent act which is materially detrimental to the business or reputation of the Company, or the Company’s business relationships, provided, however, that in such event the Company shall give the Executive written notice specifying in reasonable detail the reason for the termination;

 

(D)         Any intentional misapplication by Executive of the Company’s funds or other material assets, or any other act of dishonesty injurious to Employer committed by Executive; or

 

(E)         Executive’s use or possession of any controlled substance or chronic abuse of alcoholic beverages, which use or possession the Board of Directors reasonably determines renders Executive unfit to serve in his capacity as a senior executive of the Company.

 

In the event the Company terminates the Executive's employment for cause, then the Executive shall be entitled to receive through the date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(b)           Disability . The Company shall have the right to terminate the Executive's employment hereunder:

 

 
 

  

(1)         By reason of the Executive's becoming Disabled for an aggregate period of ninety (90) days in any consecutive three hundred sixty (360) day period (the “Disability Period”).

 

(A)         “Disabled” as used in this Agreement means that, by reason of physical or mental incapacity, Executive shall fail or be unable to substantially perform the essential duties of his employment with or without reasonable accommodation.

 

(B)         In the event Executive is Disabled, during the period of such disability he shall continue to receive his base compensation in the amount set forth in Section 3(a) hereof, which base compensation shall be reduced by the amount of all disability benefits he actually receives under any disability insurance program in place with the Company until the first to occur of (1) the cessation of the Disability or (2) the termination of this Agreement by the Company. During the period of Disability and prior to termination, the Executive shall continue to receive the benefits provided in Section 6 hereof.

 

(C)         For the purposes of this Section 7(b), any amounts to be paid to Executive by the Company pursuant to subsection (B) above, shall not be reduced by any disability income insurance proceeds received by him under any disability insurance policies owned or paid for by the Executive.

 

(D)         If the Executive is terminated at the end of the Disability Period, then the Executive shall receive through the date of termination: (1) his base salary as defined in Section 3(a) hereof; and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(c)           Death . The Company's employment of the Executive shall terminate upon his death and all payments and benefits shall cease upon such date provided, however, that under this Agreement the estate of such Executive shall be entitled to receive through the date of termination (1) his base salary as defined in Section 3(a) hereof and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(d)           Termination by the Executive for Good Reason .

 

The Executive may elect, by written notice to the Company, such notice to be effective immediately upon receipt by the Company, to terminate his employment hereunder if:

 

(1)         The Company sells all or substantially all of its assets and the Executive is not retained or otherwise has his employment terminated;

 

 
 

 

(2)         The Company merges or consolidates with another business entity in a transaction immediately following which the holders of all of the outstanding shares of the voting capital stock of the Company own less than a majority of the outstanding shares of the voting capital stock of the resulting entity (whether or not the resulting entity is the Company); provided, however, that the Executive shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

(3)         More than fifty (50%) percent of the outstanding shares of the voting capital stock of the Company are acquired by a person or group (as such terms are used in Section 13(d) of the Securities Exchange Act of 1934, as amended), which person or group includes neither the Executive nor the holders of the majority of the outstanding shares of the voting capital stock of the Company on the date hereof; provided, however, that the Executive shall not be permitted to terminate his employment under this subsection unless he notifies the Company in writing that he does not approve of the directors selected to serve on the Board after the merger or similar transaction described herein;

 

(4) The Company defaults in making any of the payments required under this Agreement and said default continues for a one hundred eighty (180) day period after the Executive has given the Company written notice of the payment default.

.

If the Executive elects to terminate his employment hereunder pursuant to this Section 7(d), then (1) the Company shall continue to pay to the Executive his salary as provided in Section 3(a) hereof through the end of the current Term; (2) the Company shall continue to provide to the Executive the benefits provided in Section 6 hereof through the end of the current Term; and (3) all of the options granted to the Executive hereunder to purchase shares of the common stock of the Company shall vest immediately and the term of the option shall continue for the period specified in the option had the employment of the Executive not been so terminated.

 

(e)           Resignation . If the Executive voluntarily resigns during the Term of this Agreement or any Renewal Term other than pursuant to Section 7(d) hereof, then all payments and benefits shall cease on the effective date of resignation, provided that under this Agreement the Executive shall be entitled to receive through the date of such resignation (1) his base salary as defined in Section 3(a) hereof and (2) the benefits provided in Section 6 hereof including all accrued but unpaid vacation.

 

(f)           Recoupment of Initial Shares . If Executive’s employment is terminated (i) by the Company for Cause, (ii) by Executive breaching this Agreement for any reason whatsoever, or (iii) by Executive without Good Reason, then the following percentages of Initial Shares shall be subject to immediate recoupment by the Company:

 

Termination Date   Percentage of Initial Shares Subject to Recoupment
From Effective Date through June 30, 2014   90%
July 1, 2014 through June 30, 2015   66%
July 1, 2015 through June 30, 2016   33%

 

 
 

 

For the avoidance of doubt, if Executive is employed under this Agreement on July 1, 2016, this Section 7(f) shall no longer be in effect and Executive’s Initial Shares shall not be subject to recoupment by the Company. In addition, this Section 7(f) shall not subject any other compensation given to the Executive under Section 3(a) or 3(b) hereof to recoupment by the Company.

 

8.           CONFIDENTIALITY; RESTRICTIVE COVENANTS; NON COMPETITION

 

(a)           Non-Disclosure of Information .

 

(1) The Executive recognizes and acknowledges that by virtue of his position as a key executive, he will have access to the lists of the Company's referral sources, suppliers, advertisers and customers, financial records and business procedures, sales force and personnel, programs, software, selling practices, plans, special methods and processes for electronic data processing, special techniques for testing commercial and sales materials and products, custom research services in product development, marketing strategy, product manufacturing techniques and formulas, and other unique business information and records (collectively “Proprietary Information”), as same may exist from time to time, and that they are valuable, special and unique assets of the Company's business. The Executive also may develop on behalf of the Company a personal acquaintance with the present and potential future clients and customers of the Company, and the Executive’s acquaintance may constitute the Company’s sole contact with such clients and customers.

 

(2)         The Executive will not, without the prior written consent of the Company, during the Term of his employment or any time thereafter, except as may be required by competent legal authority or as required by the Company to be disclosed in the course of performing Executive’s duties under this Agreement, disclose trade secrets or other confidential information about the Company, including but not limited to Proprietary Information, to any person, firm, corporation, association or other entity for any reason or any purpose whatsoever or utilize such Proprietary Information for his own benefit or the benefit of any third party; .provided, however, that nothing contained herein shall prohibit the Executive from using his personal acquaintance with any clients or customers of the Company at any time in a manner that is not inconsistent with their remaining as clients or customers of the Company.

 

(3)         All equipment, records, files, memoranda, computer print-outs and data, reports, correspondence and the like, relating to the business of the Company which Executive shall use or prepare or come into contact with shall remain the sole property of the Company. The Executive shall immediately turn over to the Company all such material in Executive's possession, custody or control at such time as this Agreement is terminated.

 

(4)         “Proprietary Information” shall not include information that was a matter of public knowledge on the date of this Agreement or subsequently becomes public knowledge other than as a result of having been revealed, disclosed or disseminated by Executive, directly or indirectly, in violation of this Agreement.

 

 
 

 

(b)           Non-Solicitation . The Executive covenants and agrees that during the term of his employment, and for a two (2) year period immediately following the end of the Term of or earlier termination of this Agreement, regardless of the reason therefor, the Executive shall not solicit, induce, aid or suggest to: (1) any employee to leave such employ, (2) any contractor, consultant or other service provider to terminate such relationship, or (3) any customer, agency, vendor, or supplier of the Company to cease doing business with the Company.

 

(c)           Non-Competition . For purposes of this Section 8(c) the parties agree that the “business of the Company” shall be defined to include the development, manufacture, packaging, advertising, marketing, distribution and sale of turf or turf related products.

 

The Executive covenants and agrees that during the Term, Executive shall not engage in any activity or render service in any capacity, directly or indirectly, (whether as principal, director, officer, investor, employee, consultant or otherwise) for or on behalf of any person or persons or entity in the United States or anywhere else in the world if such activity or service directly or indirectly involves or relates to any (1) business which is in competition with the business of the Company or (2) other business acquired or begun by the Company during the period of the Executive’s employment hereunder but in the latter event only if the Executive was directly involved in the operation of such other business. It is understood and agreed that nothing herein contained shall prevent the Executive from engaging in discussions concerning business arrangements to become effective upon the expiration of the term of this covenant not to compete.

 

(d)           Enforcement . In view of the foregoing, the Executive acknowledges and agrees that it is reasonable and necessary for the protection of the good will, business, trade secrets, confidential information and Proprietary Information of the Company that he makes the covenants in this Section 8 and that the Company will suffer irreparable injury if the Executive engages in the conduct prohibited by Section 8 (a), (b) or (c) of this Agreement. The Executive agrees that upon a breach, threatened breach or violation by him of any of the foregoing provisions of this Section 8, the Company, in addition to all other remedies it may have including an action at law for damages, shall be entitled as a matter of right to injunctive relief, specific performance or any other form of equitable relief in any court of competent jurisdiction without being required to post bond or other security and without having to prove the inadequacy of the available remedies at law, to enjoin and restrain the Executive and each and every other person, partnership, association, corporation or organization acting in concert with the Executive, from the continuance of any action constituting such breach. The Company shall also be entitled to recover from the Executive all of its reasonable costs incurred in the enforcement of this Section 8 including its reasonable legal fees. The Executive acknowledges that the terms of Section 8(a), (b) and (c) are reasonable and enforceable and that , should there be a violation or attempted or threatened violation by the Executive of any of the provisions contained in these subsections, the Company shall be entitled to relief by way of injunction, specific performance or other form of equitable relief. In the event that any of the foregoing covenants in Sections 8 (a), (b) or (c) shall be deemed by any court of competent jurisdiction, in any proceedings in which the Company shall be a party, to be unenforceable because of its duration, scope, or area, it shall be deemed to be and shall be amended to conform to the scope, period of time and geographical area which would permit it to be enforced.

 

 
 

 

(e)           Independent Covenants. The Company and the Executive agree that the covenants contained in this Section 8 shall each be construed as a separate agreement independent of any of the other terms and conditions of this Agreement, and the existence of any claim by the Executive against the Company, whether predicated on this Agreement or otherwise, shall not constitute a defense by the Executive to the Company’s enforcement of any of the covenants of this Section 8.

 

9.           DISCLOSURE AND ASSIGNMENT OF RIGHTS.

 

(a)           Disclosure. The Executive agrees that he will promptly assign to the Company or its nominee(s) all right, title and interest of the Executive in and to any and all ideas, inventions, discoveries, secret processes, and methods and improvements, together with any and all patents or other forms of intellectual property protection that may be obtainable in connection therewith or that may be issued thereon, such as trademarks, service marks and copyrights, in the United States and in all foreign countries, which the Executive may invent, develop, or improve or cause to be invented developed or improved, on behalf of the Company while engaged in Company related decisions, during the Term or within six (6) months after the Term or earlier termination of this Agreement, which are or were related to the scope of the Company’s business or any work carried on by the Company or to any problems and projects specifically assigned to the Executive. All works and writings which relate to the Company’s business are works for hire under the Copyright Act, and any and all copyrights therefor shall be placed in the name of and inure to the benefit of the Company.

 

(b)           Assignment of Interest. The Executive agrees to disclose immediately to duly authorized representatives of the Company any ideas, inventions, discoveries, processes, methods and improvements covered by the terms of this Section 9 and to execute, at the Company’s expense, all documents reasonably required in connection with the Company’s application for appropriate protection and registration under the federal and foreign patent, trademark, and copyright law and the assignment thereof to the Company’s nominee (s). The Executive hereby appoints the Company’s Chairman as true and lawful attorney in fact with full powers of substitution and delegation to execute acknowledge and deliver any such instruments and assignments, which the Executive shall fail or refuse to execute or deliver.

 

10.           INDEMNIFICATION .

 

The Company shall indemnify the Executive to the maximum extent permitted under the Nevada Revised Statutes, or any successor thereto, and shall promptly advance any expenses incurred by the Executive prior to the final disposition of the proceeding to which such indemnity relates upon receipt from the Executive of a written undertaking to repay the amount so advanced if it shall be determined ultimately that the Executive is not entitled to indemnity under the standards set forth in the Nevada Revised Statutes or its successor. The Employer shall use commercially reasonable efforts to obtain and maintain throughout the Term of the employment of the Executive hereunder directors’ and officers’ liability insurance for the benefit of the Executive. The indemnification obligations of the Company under this Section 10 shall survive the termination of the Term or of this Agreement for any reason whatsoever unless the Agreement is terminated for cause.

 

 
 

 

11.          NOTICES.

 

(a)          Any and all notices or other communications given under this Agreement shall be in writing and shall be deemed to have been duly given on (1) the date of delivery, if delivered in person to the addressee, (2) the next business day if sent by overnight courier, or (3) three (3) days after mailing, if mailed within the continental United States, postage prepaid, by certified or registered mail, return receipt requested, to the party entitled to receive same, at his or its address set forth below.

 

The Company:

Sports Field Holdings, Inc.

1106 Carroll Street

Pawnee, IL 62558

 

If to the Executive:

 

Executive’s address specified above.

 

(b)          The parties may designate by notice to each other any new address for the purposes of this Agreement as provided in this Section 11.

 

12.          MISCELLANEOUS PROVISIONS

 

(a)          This agreement represents the entire Agreement between the parties and supersedes any prior agreement or understanding between them with respect to the subject matter hereof. No provision hereof may be amended, modified, terminated, or revoked except by a writing signed by all parties hereto.

 

(b)          This Agreement shall be binding upon parties and their respective heirs, legal representatives, and successors. Subject to the provisions of Section 7(d) hereof, the rights and interests of Company hereunder may be assigned to (1) a subsidiary or affiliate of the Company or (2) a successor business or successor business entity that is not a subsidiary or affiliate of the Company without the Executive's prior written consent; provided, however, that in either case the assignee continues the same business of the Company. The rights, interests and obligations of Executive are non-assignable.

 

(c)          No waiver of any breach or default hereunder shall be considered valid unless in writing and signed by the party against whom the waiver is asserted, and no such waiver shall be deemed the waiver of any subsequent breach or default of the same or similar nature.

 

(d)          If any provision of this Agreement shall be held invalid or unenforceable, such invalidity or unenforceability shall affect only such provision and shall not in any manner affect or render invalid or unenforceable any other severable provision of this Agreement, and this Agreement shall be carried out as if any such invalid or unenforceable provision were not contained herein.

 

 
 

 

(e)          The captions and headings contained in this Agreement are for convenience only and shall not be construed as a part of this Agreement.

 

(f)          Wherever it appears appropriate from the context, each term stated in this the singular or the plural shall include the singular and the plural.

 

(g)          The parties hereto agree that they will take such action and execute and deliver such documents as may be reasonably necessary to fulfill the terms of this Agreement.

 

(h)          The agreements and covenants set forth in Section 8 above shall survive termination or expiration of this Agreement.

 

(i)          The Executive represents and warrants that he is not subject to any prohibition or restriction, oral or written, preventing him from entering into this Agreement and undertaking his duties hereunder.

 

(j)          The Executive acknowledges that he has consulted with counsel and been advised of his rights in connection with the negotiation, execution and delivery of this Agreement including in particular Section 8 of this Agreement.

 

13.          Governing Law. The Agreement shall be construed in accordance with the laws of the State of New Jersey and any dispute under this Agreement will only be brought in the state and federal courts located in the State of New Jersey.

 

14.          Waiver of Jury Trail. THE EXECUTIVE HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LITIGATION BASED ON THIS AGREEMENT, OR ARISING OUT OF, UNDER OR IN CONNECTION WITH, THIS AGREEMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF OR BETWEEN ANY PARTY HERETO . THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE COMPANY ENTERING INTO THIS AGREEMENT. THE COMPANY’S REASONABLE RELIANCE UPON SUCH INDUCEMENT IS HEREBY ACKNOWLEDGED.

 

 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Employment Agreement on the date first above written.

 

  SPORTS FIELD HOLDINGS, INC.
     
  By: /s/ Joseph DiGeronimo
    Name: Joseph DiGeronimo
    Title: Chief Executive Officer
     
  EXECUTIVE
     
  /s/ Daniel Daluise
  Daniel Daluise

 

 

 

 

 

 

 

 

 

 

 

 

 

June 16, 2014

 

To the Members of the Board of

Anglesea Enterprises, Inc.

 

Dear Gentlemen of the Board:

 

This letter shall serve as notice that effective June 9, 2014, I hereby resign from my position as director of Anglesea Enterprises, Inc. (the “Company”), and all other positions to which I have been assigned, regardless of whether I served in such capacity, of the Company. The resignation is not the result of any disagreement with the Company on any matter relating to the Company’s operations, policies or practices.

 

Sincerely,

 

/s/ Leslie Toups

 

Leslie Toups

 

 

 

 

SPORTS FIELD HOLDINGS, INC

 

CONSOLIDATED FINANCIAL STATEMENTS

 

December 31, 2013 and 2012

 

 
 

 

SPORTS FIELD HOLDINGS, INC.

 

Report of Independent Registered Public Accounting Firm F-2
   
Consolidated balance sheets as of December 31, 2013 and 2012 F-3
   
Consolidated statements of operations for the years ended December 31, 2013 and 2012 F-4
   
Consolidated statements of stockholders’ (deficit) equity for the years ended December 31, 2013 and 2012 F-5
   
Consolidated statements of cash flows for the years ended December 31, 2013 and 2012 F-6
   
Notes to consolidated financial statements F-7 – F-16

 

F- 1
 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors and

Stockholders of Sports Field Holdings, Inc.

 

We have audited the accompanying consolidated balance sheets of Sports Field Holdings, Inc. as of December 31, 2013 and 2012, and the related consolidated statements of operations, stockholders’ (deficit) equity, and cash flows for the years ended December 31, 2013 and 2012. Sports Field Holdings, Inc.’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Sports Field Holdings, Inc. as of as of December 31, 2013 and 2012, and the results of its operations and its cash flows for the years ended December 31, 2013 and 2012 in conformity with accounting principles generally accepted in the United States of America.

 

/s/ Rosenberg Rich Baker Berman & Company

 

Somerset, New Jersey

June 17, 2014

 

 

F- 2
 

 

SPORTS FIELD HOLDINGS, INC.

CONSOLIDATED BALANCE SHEETS

 

    December 31     December 31,  
    2013     2012  
             
ASSETS                
Current assets                
Cash   $ 475     $ -  
Accounts receivable, net     14,874       233,544  
Costs and estimated earnings in excess of billings     8,115       -  
Inventory     65,942       -  
Prepaid expenses and other current assets     20,400       8,750  
Total current assets     109,806       242,294  
                 
Property, plant and equipment, net     366,604       155,852  
                 
Loans receivable, related party     56,385          
Deposits     15,000       -  
                 
Total assets   $ 547,795     $ 398,146  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
Current liabilities                
Cash overdraft   $ 6,727     $ 9,387  
Accounts payable and accrued expenses     968,834       206,949  
Billings in excess of costs and estimated earnings     39,843       7,613  
Loans payable, related party     26,927       45,782  
Promissory notes payable     650,000       -  
Notes payable, short term portion     48,050       21,433  
Total current liabilities     1,740,381       291,164  
                 
Notes payable, long term portion     165,721       92,455  
Total liabilities     1,906,102       383,619  
                 
Stockholders' (deficit) equity                
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding     -       -  
Common stock, $0.001 par value; 100,000,000 shares authorized, 8,885,000 and 7,475,000 issued and outstanding as of December 31, 2013 and 2012, respectively     8,885       7,475  
Additional paid in capital     1,735,813       123,750  
Common stock subscription receivable     (4,500 )     95,000  
Accumulated deficit     (3,098,505 )     (211,698 )
Total stockholders' (deficit) equity     (1,358,307 )     14,527  
                 
Total liabilities and stockholders' (deficit) equity   $ 547,795     $ 398,146  

 

See the accompanying notes to these consolidated financial statements

 

F- 3
 

 

SPORTS FIELD HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

 

    Years Ended December 31,  
    2013     2012  
Revenue                
Contract revenue   $ 1,260,391     $ 1,405,867  
Service revenue     -       55,823  
Total revenue     1,260,391       1,461,690  
                 
Cost of sales                
Contract cost of sales     1,118,204       1,072,601  
Service cost of sales     -       55,529  
Total cost of sales     1,118,204       1,128,130  
                 
Gross profit     142,187       333,560  
                 
Operating expenses                
Selling, general and administrative     2,599,336       509,760  
Depreciation     77,341       9,000  
Total operating expenses     2,676,677       518,760  
                 
Net loss from operations     (2,534,490 )     (185,200 )
                 
Other income (expense)                
Interest, net     (77,357 )     -  
Gain on trade in of proprty, plant and equipment     7,180       -  
Forfeit on deposit of land     (75,000 )        
Separation expense     (207,140 )     -  
                 
Net loss before income taxes     (2,886,807 )     (185,200 )
                 
Provision for income taxes (benefit)     -       -  
                 
Net loss   $ (2,886,807 )   $ (185,200 )
                 
Loss per common share, basic and diluted   $ (0.32 )   $ (0.03 )
                 
Weighted average common shares outstanding, basic and diluted     9,000,134       6,617,760  

 

See the accompanying notes to these consolidated financial statements

 

F- 4
 

 

SPORTS FIELD HOLDINGS, INC.

CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY

Years Ended December 31, 2013 and 2012

 

                            Additional     Common              
    Preferred stock     Common stock     Paid in     Stock     Accumulated        
    Shares     Amount     Shares     Amount     Capital     Subscription     Deficit     Total  
Balance, December 31, 2011     -       -       6,225,000       6,225       -       -       (26,498 )     (20,273 )
Shares issued for services     -       -       1,250,000       1,250       123,750       -       -       125,000  
Proceeds from common stock subscription     -       -       -       -       -       95,000       -       95,000  
Net loss     -       -       -       -       -       -       (185,200 )     (185,200 )
Balance, December 31, 2012     -     $ -       7,475,000     $ 7,475     $ 123,750     $ 95,000     $ (211,698 )   $ 14,527  
Shares issued for services     -       -       1,983,000       1,983       1,261,017       -       -       1,263,000  
Capital contributed by shareholder     -       -       -       -       18,973       -       -       18,973  
Cancellation of founders' shares             -       (2,079,000 )     (2,079 )     2,079       -       -       -  
Settlement agreement     -       -       201,000       201       200,799               -       201,000  
Proceeds from common stock subscriptions     -       -       -       -       -       31,000       -       31,000  
Shares issued for common stock subscriptions     -       -       1,305,000       1,305       129,195       (130,500 )     -       -  
Net loss     -       -       -       -       -       -       (2,886,807 )     (2,886,807 )
Balance, December 31, 2013     -     $ -       8,885,000     $ 8,885     $ 1,735,813     $ (4,500 )   $ (3,098,505 )   $ (1,358,307 )

 

See the accompanying notes to these consolidated financial statements

 

F- 5
 

 

SPORTS FIELD HOLDINGS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

    Years ended December 31,  
    2013     2012  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net loss   $ (2,886,807 )   $ (185,200 )
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:                
Depreciation     77,341       9,000  
Gain on sale of equipment     (7,180 )     -  
Forfeit on deposit of land option     75,000       -  
Common stock issued for services rendered     1,263,000       125,000  
Common stock issued for settlement agreement     201,000       -  
Changes in operating assets and liabilities:                
Cash overdraft     (2,660 )     9,387  
(Increase) decrease in accounts receivable     218,670       (2,544 )
Increase in prepaid expenses     (11,650 )     (8,750 )
(Increase) in inventory     (65,942 )     -  
Increase (decrease) in accounts payable     761,885       (123,866 )
Decrease in costs and estimated earnings in excess of billings     24,115       58,895  
Net cash used in operating activities     (353,228 )     (118,078 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Loans Issued     (56,385 )     -  
Deposit on land option     (75,000 )     -  
Deposit on acquisition candidate     (15,000 )     -  
Purchase of equipment     (135,769 )     (25,285 )
Net cash used in investing activities     (282,154 )     (25,285 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Proceeds from promissory notes     650,000       -  
Proceeds from common stock subscriptions     31,000       95,000  
Repayments of notes payable     (26,288 )        
Proceeds (repayments) of related party advances     (18,855 )     45,782  
Net cash provided by financing activities     635,857       140,782  
                 
Increase (decrease) in cash     475       (2,581 )
Cash, beginning of period     -       2,581  
                 
Cash, end of period   $ 475     $ -  
                 
Supplemental disclosures of cash flow information:                
Cash paid during the period for:                
Interest   $ 77,357     $ -  
Taxes   $ -     $ -  
                 
Non cash investing and financing activities:                
Cancellation of founder shares   $ 2,079     $ -  
Common stock issued for subscriptions   $ 130,500     $ -  
Trade-in of property, plant and equipment   $ 50,489       -  
Property, plant and equipment acquired under notes payable and contributed capital   $ 56,430     $ 113,888  

 

See the accompanying notes to these consolidated financial statements

 

F- 6
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

NOTE 1 –DESCRIPTION OF BUSINESS

 

Sports Field Holdings, Inc. (“the Company”, “Sports Field Holdings”, “we”, “our”, or “us”) is a Nevada corporation formed September 7, 2012. Effective September 7, 2012, the Company acquired all of the membership interests and operations of Sports Field Contractors, LLC, an Illinois limited liability company formed July 7, 2011 in exchange for 6,225,000 shares of the Company’s common stock. The former members of Sports Field Contractors, LLC owned all the Company’s common stock after the acquisition. All equity accounts have been retrospectively recast as a result of the acquisition. Sports Field Contractors, LLC is referred to as our predecessor in these financial statements. The historical financial statements of the Company are those of the LLC.

 

The Company, through its wholly owned subsidiary, Sports Field Contractors, LLC, is a product development, engineering, manufacturing and construction company that designs, engineers and builds athletic facilities, as well as supplies its own proprietary technologically advanced, patent-pending synthetic turf products to the industry. The Company is headquartered in Pawnee, Illinois.

 

Our consolidated financial statements include the accounts of Sports Field Holdings, Inc. and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Revenues and Cost Recognition

 

Revenues from construction contracts are included in contract revenue in the consolidated statements of operations and are recognized under the percentage-of-completion accounting method. The percent complete is measured by the cost incurred to date compared to the estimated total cost of each project. This method is used as management considers expended cost to be the best available measure of progress on these contracts, the majority of which are completed within one year, but may occasionally extend beyond one year. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts.

 

Contract costs include all direct material and labor costs and those indirect costs related to contract performance and completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. General and administrative costs are charged to expense as incurred.

 

Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. An amount equal to contract costs incurred that are attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated.

 

Costs and estimated earnings in excess of billings are comprised principally of revenue recognized on contracts (on the percentage-of-completion method) for which billings had not been presented to customers because the amount were not billable under the contract terms at the balance sheet date. In accordance with the contract terms, any unbilled receivables at period end will be billed subsequently. Amounts are billed based on contractual terms. Billings in excess of costs and estimated earnings represent billings in excess of revenues recognized.

 

Service Revenues are recorded when the service is provided and when collection can be reasonably assured.

 

Use of Estimates

 

The preparation of financial statements in accordance 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 disclosures of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the useful life of fixed assets and assumptions used in the fair value of stock-based compensation.

 

F- 7
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Cash and Cash Equivalents

 

The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents.

 

Property, Plant and Equipment

 

Property, plant and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets, which generally range from 3 to 5 years. Gains and losses from the retirement or disposition of property and equipment are included in operations in the period incurred. Maintenance and repairs are expensed as incurred.

 

Inventory

Inventory consists entirely of raw materials value at the lower of cost (first-in, first out) or market.

 

Income Taxes

 

The Company recognizes income on its construction contracts for income tax purposes using the cash basis method, whereas for financial statement purposes the Company uses the percentage-of-completion method. Under the cash basis method revenues are recognized when received rather than when earned, and costs are recognized when cash is disbursed rather than when the obligation is incurred.

 

Deferred income tax assets and liabilities are determined based on the estimated future tax effects of net operating loss and credit carry-forwards and temporary differences between the tax basis of assets and liabilities and their respective financial reporting amounts measured at the current enacted tax rates. The differences relate primarily to net operating loss carryforward from date of acquisition and to the use of the cash basis of accounting for income tax purposes. The Company records an estimated valuation allowance on its deferred income tax assets if it is more likely than not that these deferred income tax assets will not be realized.

 

The Company recognizes a tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The tax benefits recognized in the consolidated financial statements from such a position are measured based on the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement. The Company has not recorded any unrecognized tax benefits.

 

Prior to the acquisition, Sports Field Contractors, LLC was a limited liability company. As a result, the Company’s income for federal and state income tax purposes was reportable on the tax returns of the individual partners. Accordingly, no recognition has been made for federal or state income taxes in the accompanying financial statements of the predecessor Company.

 

Stock-Based Compensation

 

All stock-based payments to employees and to nonemployee directors for their services as directors, including any grants of restricted stock and stock options, are measured at fair value on the grant date and recognized in the statements of operations as compensation or other expense over the relevant service period. Stock-based payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable the measurement date is the date the award is issued.

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit

 

F- 8
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable, net of the allowance for doubtful accounts. As of December 31, 2013 and 2012, the Company’s accounts receivable balance was $14,874 and $233,544, respectively, and the allowance for doubtful accounts is $0 in each period.

 

Warranty Costs

 

The Company generally provides a warranty on the products installed for up to 8 years with certain limitations and exclusions based upon the manufacturer’s product warranty; therefore the Company does not believe a warranty reserve is required as of December 31, 2013 and, 2012.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification subtopic 825-10, Financial Instruments (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.  All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

 

Net Income (Loss) Per Common Share

 

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, Earnings Per Share (“ASC 260-10”). Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.  Diluted net income (loss) per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period. As of December 31, 2013, the Company had 1,300,000 common stock equivalent shares outstanding, resulting from convertible debt.

 

Significant Customers

 

At December 31, 2013, the Company had four customers representing 11%, 24%, 47% and 18% of the total accounts receivable balance. At December 31, 2012, the Company had one customer representing 83% of total accounts receivable.

 

For the twelve months ended December 31, 2013, the company had two customers that represented 46% and 25% of the total revenue and for the twelve months ended December 31, 2012, the Company had three customers that represented 27%, 29% and 39% of the Company’s total revenues.

 

F- 9
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers . Amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011-230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014-09. The amendments in this Update are effectively for the Company for annual reporting periods beginning after 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014-09 on the consolidated financial statements.

 

Note 3 – Liquidity

 

At December 31, 2013, the Company had a cash balance of approximately $475 and a working capital deficiency of approximately $1,630,575. In 2013, the Company had a net loss of $2,886,807. Although the Company had a net loss for the year ended December 31, 2013, in the first quarter of 2014, the Company raised common stock resulting in gross proceeds of $5,000,000. As of March 31, 2014, the Company’s cash balance was $2,854,537. The Company expects to operate at a burn rate of approximately $80,000 per month for the remainder of 2014. The Company believes it has sufficient cash on hand to meet its operating needs throughout the remainder of 2014.

 

NOTE 4 – COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROCESS

 

Following is a summary of costs, billings, and estimated earnings on contracts in process as December 31, 2013 and, 2012:

 

December 31,   2013     2012  
Costs incurred on contracts in progress   $ 558,092     $ -  
Estimated earnings     57,688       -  
      615,780       -  
Less billings to date     (647,508 )     (7,613 )
    $ (31,728 )   $ (7,613 )

 

The above accounts are shown in the accompanying consolidated balance sheet under these captions at December 31, 2013 and 2012:

 

December 31,   2013     2012  
Costs and estimated earnings in excess of billings   $ 8,115     $ -  
Billings in excess of costs and estimated earnings     (39,843 )     (7,613 )
    $ (31,728 )   $ (7,613 )

 

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

 

Property and equipment consist of the following:

 

December 31,   2013     2012  
Vehicles   $ 214,560     $ 147,131  
Furniture and equipment     220,063       18,155  
Total     434,623       165,586  
Less:  accumulated depreciation     (68,019 )     (9,734 )
    $ 366,604     $ 155,282  

 

F- 10
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Depreciation expense for the years ended December 31, 2013 and 2012 was $77,341 and $9,000, respectively.

 

NOTE 6 – DEPOSITS

 

Deposits at December 31, 2013 are comprised of a $15,000 deposit on an acquisition candidate.

 

In May 2013, the Company entered into a contract to purchase property in Springfield, Illinois. The purchase price was $1,050,000, and was payable in several installments. The Company paid the first three installments totaling $75,000. Prior to the closing date, the Company defaulted under the contract by failing to pay the fourth installment payment. In accordance with the contract, the seller terminated the contract and the Company forfeited the $75,000 in payments made under the contract. The forfeiture is classified as forfeit on deposit of land in the statement of operations.

 

NOTE 7 – PROMISSORY NOTES PAYABLE

 

During the year ended December 31, 2013, the Company issued an aggregate of $650,000 convertible promissory notes due six months from the issuance date, subsequently extended to January 31, 2014, with 15% per annum interest commencing on the date the Company receives funding, as defined. The convertible promissory notes are convertible into the Company’s common stock at $0.50 per share on or after the funding date, as defined. Accrued interest at December 31, 2013 was $66,523.

 

The Company did not record an embedded beneficial conversion feature in the note since the fair value of the common stock did not exceed the conversion rate at the date of issuance.

 

NOTE 8 – NOTES PAYABLE

 

In December of 2012, the Company entered into two note agreements to fund fixed asset purchases. The notes mature on December 20, 2017 and bear interest at .84% and 0% per annum, respectively; with aggregate monthly payments of $2,046. The Company has imputed an interest rate of 3% on the loans.

 

On August 28, 2013, the Company entered into a note agreement to fund a fixed asset purchase. The note matures on August 28, 2018, and bears interest at 0.83% per annum with monthly payments of $1,396.

 

On September 13, 2013, the Company entered into a note agreement to fund the purchase of a vehicle. The note matures on September 13, 2015 and bears interest at 5.09% per annum with monthly payments of $709.

 

On December 3, 2013, the Company traded in one of the two fixed assets purchased in December of 2012 for a new fixed asset. The value of the trade-in was $50,489, resulting in a gain of $7,180 as reported in the statement of operations. The note on the new fixed assets matures on December 3, 2017 and bears interest at 0% per annual with monthly payments of $1,361.

 

Future maturities for long-term debt as of December 31, 2013 are as follows:

 

Year ended December 31,   Amount  
2014   $ 48,050  
2015     47,844  
2016     49,457  
2017     51,129  
2018     17,291  
    $ 213,771  

 

F- 11
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

NOTE 9- STOCKHOLDERS EQUITY (DEFICIT)

 

There is not a viable market for the Company’s common stock to determine its fair value, therefore management is required to estimate the fair value to be utilized in the determining stock-based compensation costs. In estimating the fair value, management considers recent sales of its common stock to independent qualified investors and other factors. Considerable management judgment is necessary to estimate the fair value.  Accordingly, actual results could vary significantly from management’s estimates.

 

Preferred Stock

 

The Company has authorized 10,000,000 shares of preferred stock, with a par value of $0.001 per share. As of December 31, 2013 and 2012, the Company has -0- shares of preferred stock issued and outstanding.

 

Common Stock

 

The Company has authorized 100,000,000 shares of common stock, with a par value of $0.001 per share. As of December 31, 2013 and December 31, 2012, the Company has 8,885,000 and 7,475,000 shares of common stock issued and outstanding, respectively.

 

During the year ended December 31, 2012, the Company issued 1,250,000 shares of its common stock for services rendered. The common stock was valued at $0.10 per share at the time of the issuance.

 

During the year ended December 31, 2013, the Company issued 1,983,000 shares of its common stock for services rendered. The common stock was valued at $0.10 per share at the time of the issuance for 800,000 shares and the common stock was valued at $1.00 per share at the time of issuance for the other 1,183,000 shares.

 

During the year ended December 31, 2013, the Company issued 1,305,000 shares of its common stock for common stock subscriptions received at $0.10 per share.

 

During the year ended December 31, 2013, 201,000 shares of common stock were issued as part of a settlement agreement. The common stock was valued at $1.00 per share.

 

During the year ended December 31, 2013, 2,079,000 shares of common stock form from one of the founding members of the Company were cancelled.

 

NOTE 10 – NET INCOME (LOSS) PER SHARE

 

Net losses are divided by the weighted average number of common shares outstanding during the year to calculate basic net loss per common share. Diluted net income (loss) per common share is calculated to give effect of any common stock equivalents, such as stock options, warrants or convertible debt. For the year ended December 31, 2013, 1,300,000 potentially outstanding shares of common stock from embedded conversion features in the promissory notes were excluded from the diluted net income (loss) per share calculation as they were anti-dilutive. For the year ended December 31, 2012, the Company did not have any common stock equivalents.

 

The following table sets forth the computation of basic and diluted (loss) income per share:

 

Years ended December 31,   2013     2012  
Numerator                
Net (loss)   $ (2,886,807 )     (185,200 )
                 
Denominator     9,000,134       6,617,760  
Basic and diluted net loss per share   $ (0.32 )   $ (0.03 )

 

F- 12
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

NOTE 11 - RELATED PARTY TRANSACTIONS

 

The Company has advanced funds to the Company’s officers and stockholders of a company under common control for travel related and working capital purposes. The loans are due on demand and bear no interest. As of December 31, 2013 and 2012, there were $56,385 and $0 in advances receivable, respectively, and were reported as loans receivable, related party on the balance sheet.

 

During the years ended December 31, 2013 and 2012, the Company utilized All Synthetics Group, a company under the control of Jeremy Strawn, one of the Company’s former officers and directors, to acquire products and services where vendor purchase lines had been previously established. For the years ended December, 2013 and 2012, the Company purchased an aggregate of $27,818 and $262,282 through All Synthetics Group. As of December 31, 2013 and 2012, the Company had $26,927 and $45,782 in advances payable, respectively, and were reported as loans payable, related party on the balance sheet.

 

The Company leased space for operations on a month to month basis with undefined payment terms from Jeremy Strawn, the Company’s former President and former member of the Board of Directors.  Rent expense for the years ended December 31, 2013 and 2012 was $23,465 and $2,840, respectively.

 

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company follows the provisions of ASC 825-10 “Financial Instruments.”  For financial assets and liabilities included within the scope of ASC 825-10, the Company was required to adopt the provisions of ASC 825-10 prospectively as of the beginning of Fiscal 2011.  The adoption of ASC 825-10 did not have a material impact on our consolidated financial position or results of operations.

 

There were no items required to be measured at fair value on a recurring basis in the consolidated financial statements as of December 31, 2013 and 2012.

 

NOTE 13 – COMMITMENTS AND CONTINGENCIES

 

Consulting Agreements

 

The Company has consulting agreements with outside contractors to provide marketing and financial advisory services. The agreements are generally for month to month terms from inception and renewable automatically unless either the Company or Consultant terminates such engagement by written notice.

 

Placement Agent and Finders Agreements

 

The Company entered into an exclusive Financial Advisory and Investment Banking Agreement with Spartan Capital Securities, LLC (“Spartan”) effective November 20, 2013 (the “Spartan Advisory Agreement”). Pursuant to the Spartan Advisory Agreement, Spartan will act as the Company’s exclusive financial advisor and placement agent to assist the Company in connection with a best efforts private placement (the “Financing”) of up to $5 million of the Company’s equity securities (the “Securities”) and a reverse merger.

 

The Company upon closing of the Financing shall pay consideration to Spartan, in cash, a fee in an amount equal to 10% of the aggregate gross proceeds raised in the Financing. The Company shall grant and deliver to Spartan at the closing of the Financing, for nominal consideration, five year warrants (the “Warrants”) to purchase a number of shares of the Company’s Common Stock equal to 10% of the number of shares of Common Stock (and/or shares of Common Stock issuable upon exercise of securities or upon conversion or exchange of convertible or exchangeable securities) sold at such closing. The Warrants shall be exercisable at any time during the five year period commencing on the closing to which they relate at an exercise price equal to the purchase price per share of Common Stock paid by investors in the Financing or, in the case of exercisable, convertible, or exchangeable securities, the exercise, conversion or exchange price thereof. If the Financing is consummated by means of more than one closing, Spartan shall be entitled to the fees provided herein with respect to each such closing.

 

Along with the above fees, the Company shall pay (i) a $10,000 engagement fees upon execution of the agreement, (ii) 3% of the gross proceeds raised for expenses incurred by Spartan in connection with this Financing, together with cost of background checks on the officers and directors of the Company and (iii) a monthly fee of $10,000 for 24 months contingent upon Spartan successfully raising $3.5 million under the Financing.

 

F- 13
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Litigation

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not party to any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

NOTE 14 -   INCOME TAXES

 

For the periods from inception, July 7, 2011 through the date of acquisition of September 7, 2012, the Company reported its income under Sports Field Contractors, LLC, a limited liability company. As a result, the Company’s income for federal and state income tax purposes were reportable on the tax returns of the individual partners. Accordingly, no recognition has been made for federal or state income taxes in the accompanying financial statements of the predecessor Company through the date of acquisition.

 

Per FASB ASC 740-10, disclosure is not required of an uncertain tax position unless it is considered probable that a claim will be asserted and there is a more-likely-than-not possibility that the outcome will be unfavorable. Using this guidance, as of December 31, 2013, the Company has no uncertain tax positions that qualify for either recognition or disclosure in the financial statements.  The Company's 2013, 2012 and 2011 Federal and State tax returns remain subject to examination by their respective taxing authorities. Neither of the Company's Federal or State tax returns are currently under examination.

 

Components of deferred tax assets are as follows:

 

    December 31,  
    2013     2012  
Net deferred tax assets – Non-current:                
                 
Expected income tax benefit from NOL carry-forwards   $ 678,921     $ 50,015  
Depreciation     (33,813 )     (23,828 )
Less valuation allowance     (645,108 )     (26,187 )
Deferred tax assets, net of valuation allowance   $ -     $ -  

 

Income Tax Provision in the Consolidated Statements of Operations

 

A reconciliation of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as follows:

 

    For the Year Ended  
    December 31,  
    2013     2012  
U.S. statutory federal tax rate     (34.0 )%     (34.0 )%
                 
State income taxes, net of federal tax benefit     (3.1 )%     (3.9 )%
                 
Shares issued for services     14.9 %     22.9 %
                 
Shares issued in a settlement agreement     2.4 %     0.0 %
                 
Other permanent differences     (1.5 )%     0.8 %
                 
Change in valuation allowance     21.4 %     14.1 %
                 
Effective income tax rate     0.0 %     0.0 %

 

F- 14
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to reverse. The effect on deferred tax assets and liabilities from a change in tax rates is recognized in the statement of operations in the period that includes the enactment date.

 

The Company has available at December 31, 2013 unused federal and state net operating loss carry forwards totaling approximately $3,001,000 that may be applied against future taxable income that expire through 2023. Management believes it is more likely than not that all of the deferred tax asset will not be realized.  A valuation allowance has been provided for the entire deferred tax asset.

 

NOTE 15 –   SUBSEQUENT EVENTS

 

Conversion of Promissory Notes

 

On January 31, 2014, the holders of the promissory notes exercised the option to convert principal of $267,344 and accrued interest of $66,344 to common stock of the Company. As a result of this conversion, the Company issued 667,375 shares of common stock and paid the note holders a total of $391,183.

 

Shares Issued for Services

 

In March 2014, 350,000 shares of common stock valued at $350,000 were issued to a law firm for legal services provided to the Company.

 

Private Placement

 

During the three months ended March 31, 2014, the Company sold 5,000,000 shares of common stock to investors in exchange for $5,000,000 in gross proceeds in connection with the private placement of the Company’s stock.

 

In connection with the private placement the Company incurred fees of $695,627. In addition, 500,000 five year warrants with an exercise price of $1.00 were issued to the placement agent. The Company valued the warrants at $204,759 on the commitment date using a Black-Scholes-Merton option pricing model. The value of the warrants was a direct cost of the private placement and has been recorded as a reduction in additional paid in capital.

 

In valuing the warrants issued, the Company used the following assumptions:

 

· The stock price was based upon the issuance price the in private placement, or $1.00 per share.

 

· The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The risk free rate had a range of 1.49%-1.64%.

 

· The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was $0.

 

· The warrant term is the life of the warrant, which was five years.

 

· The expected volatility was benchmarked against similar companies in a similar industry. The expected volatility used was 45%.

 

· The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

 

Operating Leases

 

On April 1, 2014, the Company entered into a new lease agreement for its office space in Massachusetts. The lease commenced on that date and expires on March 31, 2017. The lease has monthly payments of $2,115, $2,151 and $2,188 for year one, two and three, respectively. The Company was required to pay a security deposit to the lessor totaling $6,418.

 

F- 15
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 2013 AND 2012

 

Future minimum payments of the Company’s leases are as follows:

 

For the years ending March 31,
2015   $ 25,375  
2016     25,813  
2017     26,250  
    $ 77,438  

 

Litigation

 

On May 5, 2014, Sports Field was named as a defendant in a civil lawsuit in the Circuit Court of the Seventh Judicial Circuit in Sangamon County, Illinois. Sallenger Incorporated, as plaintiff, is making certain claims against the Company in connection with a mechanics lien and for unjust enrichment. The Company is currently evaluating the claims and is resolved to adamantly defend its rights.

 

New Subsidiaries

 

On May 13, 2014, The Board of Directors ratified the incorporation of Sports Field Engineering, Inc. and Athletic Construction Enterprises, Inc., which will become subsidiaries of the Company.

 

Employment Separation Agreement s

 

On May 13, 2014, the employment of William Michaels was terminated.

 

On May 22, 2014, the Company entered into a separation agreement (the “Agreement”) with Jeremy Strawn, the President of the Company. According to the Agreement, Mr. Strawn will resign his position as the President of the Company as well as all positions held on the Board of Directors and committees. Upon execution of the Agreement, Mr. Strawn retained 10% of the initial shares issued or 207,900 shares awarded according to the original employment agreement signed in November 2013. In addition to these shares, Mr. Strawn will be issued an additional 192,100 shares. Following the effective date of the Agreement, Mr. Strawn shall be retained as a selling partner for the Company’s Midwest Region and shall receive between 3% and 5% commission on all sales referred to the Company. In addition, Mr. Strawn will also be assigned title and ownership to various equipment held by the Company.

 

F- 16

 

SPORTS FIELD HOLDINGS, INC

 

CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

 

March 31, 2014 and 2013

 

 
 

 

SPORTS FIELD HOLDINGS, INC.

 

Condensed consolidated balance sheets as of March 31, 2014 (unaudited) and December 31, 2013 F-1
   
Condensed consolidated statements of operations for the three months ended March 31, 2014 and 2013 (unaudited) F-2
   
Condensed consolidated statements of cash flows for the three months ended March 31, 2014 and 2013 (unaudited) F-3
   
Notes to consolidated financial statements F-4 - F-11

 

 
 

 

SPORTS FIELD HOLDINGS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

 

    March 31,     December 31,  
    2014     2013  
    (unaudited)        
ASSETS                
Current assets                
Cash   $ 2,854,537     $ 475  
Accounts receivable, net     56,544       14,874  
Costs and estimated earnings in excess of billings     -       8,115  
Inventory     65,942       65,942  
Prepaid expenses and other current assets     6,462       20,400  
Total current assets     2,983,485       109,806  
                 
Property, plant and equipment, net     347,683       366,604  
                 
Loans receivable, related party     56,709       56,385  
Deposits     15,000       15,000  
                 
Total assets   $ 3,402,877     $ 547,795  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)                
Current liabilities                
Cash overdraft   $ -     $ 6,727  
Accounts payable and accrued expenses     322,466       968,834  
Billings in excess of costs and estimated earnings     4,092       39,843  
Loans payable, related party     53,128       26,927  
Promissory notes payable     -       650,000  
Notes payable, short term portion     48,050       48,050  
Total current liabilities     427,736       1,740,381  
                 
Notes payable, long term portion     159,891       165,721  
Total liabilities     587,627       1,906,102  
                 
Stockholders' equity (deficit)                
Preferred stock, $0.001 par value; 10,000,000 shares authorized, none issued and outstanding     -       -  
Common stock, $0.001 par value; 100,000,000 shares authorized, 14,902,375 and 8,885,000 issued and outstanding as of March 31, 2014 and December 31, 2013, respectively     14,902       8,885  
Additional paid in capital     6,799,136       1,735,813  
Common stock subscription receivable     (4,500 )     (4,500 )
Accumulated deficit     (3,994,288 )     (3,098,505 )
Total stockholders' equity (deficit)     2,815,250       (1,358,307 )
                 
Total liabilities and stockholders' equity (deficit)   $ 3,402,877     $ 547,795  

 

See the accompanying notes to these condensed consolidated financial statements

 

F- 1
 

 

SPORTS FIELD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited)

 

    Three Months Ended March 31,  
    2014     2013  
Revenue                
Contract revenue   $ 118,633     $ 355,070  
Total revenue     118,633       355,070  
                 
Cost of sales                
Contract cost of sales     93,098       104,242  
Total cost of sales     93,098       104,242  
                 
Gross profit     25,535       250,828  
                 
Operating expenses                
Selling, general and administrative     858,670       116,983  
Depreciation     27,052       14,415  
Total operating expenses     885,722       131,398  
                 
Net income (loss) from operations     (860,187 )     119,430  
                 
Other income (expense)                
Interest, net     (10,596 )     (2,329 )
Forfeit on deposit of land     (25,000 )     -  
                 
Net income (loss) before income taxes     (895,783 )     117,101  
                 
Provision for income taxes (benefit)     -       -  
                 
Net income (loss)   $ (895,783 )   $ 117,101  
                 
Net income (loss) per common share, basic   $ (0.07 )   $ 0.01  
                 
Net income (loss) per common share, diluted   $ (0.07 )   $ 0.01  
                 
Weighted average common shares outstanding, basic     12,676,613       8,194,056  
                 
Weighted average common shares outstanding, diluted     12,676,613       8,294,056  

 

See the accompanying notes to these condensed consolidated financial statements

 

F- 2
 

 

SPORTS FIELD HOLDINGS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

 

    Three months ended March 31,  
    2014     2013  
CASH FLOWS FROM OPERATING ACTIVITIES:                
Net income (loss)   $ (895,783 )   $ 117,101  
Adjustments to reconcile net income (loss) to net cash (used in) provided by operating activities:                
Depreciation     27,052       14,415  
Forfeit on deposit of land option     25,000       -  
Common stock issued for services rendered     350,000       25,000  
Changes in operating assets and liabilities:                
Cash overdraft     (6,727 )     (9,387 )
Increase in accounts receivable     (41,670 )     (68,750 )
Decrease in prepaid expenses     13,938       7,555  
Decrease in accounts payable     (490,218 )     (111,699 )
                 
Decrease in costs and estimated earnings in excess of billings     8,115       -  
                 
Decrease in billings in excess of costs and estimated earnings     (35,751 )     (7,613 )
Decrease in due from related party     (324 )     -  
Net cash used in operating activities     (1,046,368 )     (33,378 )
                 
CASH FLOWS FROM INVESTING ACTIVITIES:                
Loans Issued     -       (16,785 )
Deposit on land option     (25,000 )     -  
Purchase of equipment     (8,131 )     (18,452 )
Net cash used in investing activities     (33,131 )     (35,237 )
                 
CASH FLOWS FROM FINANCING ACTIVITIES:                
Shareholder distributions     -       (47,265 )
Proceeds from promissory notes     -       380,000  
Reayments of promissory notes     (391,183 )     -  
Proceeds from common stock subscriptions     4,304,373       31,000  
Repayments of notes payable     (5,830 )     (6,002 )
Proceeds (repayments) of related party advances     26,201       (17,468 )
Net cash provided by financing activities     3,933,561       340,265  
                 
Increase in cash     2,854,062       271,650  
Cash, beginning of period     475       -  
                 
Cash, end of period   $ 2,854,537     $ 271,650  
                 
Supplemental disclosures of cash flow information:                
Cash paid during the period for:                
Interest   $ 10,596     $ 2,329  
Taxes   $ -     $ -  
                 
Non cash investing and financing activities:                
Conversion of notes and accrued interest into common stock   $ 333,688     $ -  
Forgiveness of officer accrued salaries   $ 81,279     $ -  
Stock issuance costs paid in the form of warrants   $ 204,759     $ -  

 

See the accompanying notes to these condensed consolidated financial statements

 

F- 3
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

NOTE 1 –DESCRIPTION OF BUSINESS

 

Sports Field Holdings, Inc. (“the Company”, “Sports Field Holdings”, “we”, “our”, or “us”) is a Nevada corporation formed September 7, 2012. Effective September 7, 2012, the Company acquired all of the membership interests and operations of Sports Field Contractors, LLC, an Illinois limited liability company formed July 7, 2011 in exchange for 6,225,000 shares of the Company’s common stock. The former members of Sports Field Contractors, LLC owned all the Company’s common stock after the acquisition. All equity accounts have been retrospectively recast as a result of the acquisition. Sports Field Contractors, LLC is referred to as our predecessor in these financial statements. The historical financial statements of the Company are those of the LLC.

 

The Company, through its wholly owned subsidiary, Sports Field Contractors, LLC, is a product development, engineering, manufacturing and construction company that designs, engineers and builds athletic facilities, as well as supplies its own proprietary technologically advanced, patent-pending synthetic turf products to the industry. The Company is headquartered at 176 East Main Street, Suite 7 Westborough, MA 01581.

 

Our condensed consolidated financial statements include the accounts of Sports Field Holdings, Inc. and its wholly-owned subsidiary. All significant intercompany accounts and transactions have been eliminated in consolidation.

 

NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES

 

Interim Financial Statements

 

The unaudited condensed consolidated interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial information and the instructions to Form 10-Q and Rule 8-03 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included.

 

The condensed consolidated balance sheet as of December 31, 2013 contained herein has been derived from audited financial statements.

 

Operating results for the three months ended March 31, 2014 are not necessarily indicative of results that may be expected for the year ending December 31, 2014. These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto for the year ended December 31, 2013.

 

Revenues and Cost Recognition

 

Revenues from construction contracts are included in contract revenue in the condensed consolidated statements of operations and are recognized under the percentage-of-completion accounting method. The percent complete is measured by the cost incurred to date compared to the estimated total cost of each project. This method is used as management considers expended cost to be the best available measure of progress on these contracts, the majority of which are completed within one year, but may occasionally extend beyond one year. Inherent uncertainties in estimating costs make it at least reasonably possible that the estimates used will change within the near term and over the life of the contracts.

 

Contract costs include all direct material and labor costs and those indirect costs related to contract performance and completion. Provisions for estimated losses on uncompleted contracts are made in the period in which such losses are determined. General and administrative costs are charged to expense as incurred.

 

Changes in job performance, job conditions and estimated profitability, including those arising from contract penalty provisions and final contract settlements, may result in revisions to costs and income. Such revisions are recognized in the period in which they are determined. An amount equal to contract costs incurred that are attributable to claims is included in revenue when realization is probable and the amount can be reliably estimated.

 

F- 4
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

Costs and estimated earnings in excess of billings and are comprised principally of revenue recognized on contracts (on the percentage-of-completion method) for which billings have not been presented to customers because the amounts were not billable under the contract terms at the balance sheet date. In accordance with the contract terms, any unbilled receivables at period end will be billed subsequently. Amounts are billed based on contractual terms. Billings in excess of costs and estimated earnings represent billings in excess of revenues recognized.

 

Use of Estimates

 

The preparation of condensed consolidated financial statements in accordance 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 disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant estimates include the useful life of fixed assets and assumptions used in the fair value of stock-based compensation.

 

Cash and Cash Equivalents

 

The Company considers all short-term highly liquid investments with a remaining maturity at the date of purchase of three months or less to be cash equivalents.

 

Property, Plant and Equipment

 

Property, plant and equipment are carried at cost less accumulated depreciation and amortization. Depreciation and amortization are calculated using the straight-line method over the estimated useful lives of the assets, which generally range from 3 to 5 years. Gains and losses from the retirement or disposition of property and equipment are included in operations in the period incurred. Maintenance and repairs are expensed as incurred.

 

Income Taxes

 

Income tax provisions or benefits for interim periods are computed based on the Company’s estimated annual effective tax rate. Based on the Company's historical losses and its expectation of continuation of losses for the foreseeable future, the Company has determined that it is more likely than not that deferred tax assets will not be realized and, accordingly, has provided a full valuation allowance. As the Company anticipates or anticipated that its net deferred tax assets at December 31, 2014 and 2013 would be fully offset by a valuation allowance, there is no federal or state income tax benefit for the periods ended March 31, 2014 and 2013 related to losses incurred during such periods.

 

Prior to the acquisition, Sports Field Contractors, LLC was a limited liability company. As a result, the Company’s income for federal and state income tax purposes was reportable on the tax returns of the individual partners. Accordingly, no recognition has been made for federal or state income taxes in the accompanying condensed consolidated financial statements of the predecessor Company.

 

Stock-Based Compensation

 

All stock-based payments to employees and to nonemployee directors for their services as directors, including any grants of restricted stock and stock options, are measured at fair value on the grant date and recognized in the condensed consolidated statements of operations as compensation or other expense over the relevant service period. Stock-based payments to nonemployees are recognized as an expense over the period of performance. Such payments are measured at fair value at the earlier of the date a performance commitment is reached or the date performance is completed. In addition, for awards that vest immediately and are non-forfeitable the measurement date is the date the award is issued.

 

F- 5
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

Concentrations of Credit Risk

 

Financial instruments and related items, which potentially subject the Company to concentrations of credit risk, consist primarily of cash and cash equivalents. The Company places its cash and temporary cash investments with credit quality institutions. At times, such amounts may be in excess of the FDIC insurance limit.

 

Accounts Receivable and Allowance for Doubtful Accounts

 

Accounts receivable are stated at the amount management expects to collect from outstanding balances. The Company generally does not require collateral to support customer receivables. The Company provides an allowance for doubtful accounts based upon a review of the outstanding accounts receivable, historical collection information and existing economic conditions. The Company determines if receivables are past due based on days outstanding, and amounts are written off when determined to be uncollectible by management. The maximum accounting loss from the credit risk associated with accounts receivable is the amount of the receivable recorded, which is the face amount of the receivable, net of the allowance for doubtful accounts. As of March 31, 2014 and December 31, 2013, the Company’s accounts receivable balance was $56,544 and $14,874, respectively, and the allowance for doubtful accounts was $0 in each period.

 

Warranty Costs

 

The Company generally provides a warranty on the products installed for up to 8 years with certain limitations and exclusions based upon the manufacturer’s product warranty; therefore the Company does not believe a warranty reserve is required as of March 31, 2014 and December 31, 2013.

 

Fair Value of Financial Instruments

 

Accounting Standards Codification subtopic 825-10, “Financial Instruments” (“ASC 825-10”) requires disclosure of the fair value of certain financial instruments. The carrying value of cash and cash equivalents, accounts payable and accrued liabilities, and short-term borrowings, as reflected in the balance sheets, approximate fair value because of the short-term maturity of these instruments.  All other significant financial assets, financial liabilities and equity instruments of the Company are either recognized or disclosed in the financial statements together with other information relevant for making a reasonable assessment of future cash flows, interest rate risk and credit risk. Where practicable the fair values of financial assets and financial liabilities have been determined and disclosed; otherwise only available information pertinent to fair value has been disclosed.

 

Net Income (Loss) Per Common Share

 

The Company computes earnings (loss) per share under Accounting Standards Codification subtopic 260-10, “Earnings Per Share” (“ASC 260-10”). Net income (loss) per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding during the year.  Diluted net income (loss) per share is computed using the weighted average number of common and common stock equivalent shares outstanding during the period.

 

Significant Customers

 

At March 31, 2014, the Company had one customer representing 97% of the total accounts receivable balance.

 

At December 31, 2013, the Company had four customers representing 11%, 24%, 47% and 18% of the total accounts receivable balance.

 

For the three months ended March 31, 2014, the Company had three customers that represented 20%, 36% and 44% of the total revenue and for the three months ended March 31, 2013, the Company had three customers that represented 23%, 35% and 35% of the total revenue.

 

F- 6
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

Recent Accounting Pronouncements

 

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update 2014-09, Revenue from Contracts with Customers . Amendments in this Update create Topic 606, Revenue from Contracts with Customers, and supersede the revenue recognition requirements in Topic 605, Revenue Recognition, including most industry-specific revenue recognition guidance throughout the Industry Topics of the Codification. In addition, the amendments supersede the cost guidance in Subtopic 605-35, Revenue Recognition—Construction-Type and Production-Type Contracts, and create new Subtopic 340-40, Other Assets and Deferred Costs—Contracts with Customers. In summary, the core principle of Topic 606 is that an entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. This Accounting Standards Update is the final version of Proposed Accounting Standards Update 2011-230—Revenue Recognition (Topic 605) and Proposed Accounting Standards Update 2011–250—Revenue Recognition (Topic 605): Codification Amendments, both of which have been deleted. Accounting Standards Update 2014-09. The amendments in this Update are effectively for the Company for annual reporting periods beginning after 15, 2016, including interim periods within that reporting period. The Company is currently evaluating the effects of ASU 2014-09 on the consolidated financial statements.

 

Note 3 - Liquidity

 

At March 31, 2014, the Company had a cash balance of approximately $2,854,537 and a working capital deficiency of approximately $2,555,749. During the first quarter of 2014, the Company had a net loss of $895,783. Although the Company had a net loss for the quarter ended March 31, 2014, in the first quarter of 2014, the Company raised common stock resulting in gross proceeds of $5,000,000. The Company expects to operate at a burn rate of approximately $80,000 per month for the remainder of 2014. The Company believes it has sufficient cash on hand to meet its operating needs throughout the remainder of 2014.

 

NOTE 4 – COSTS AND ESTIMATED EARNINGS ON CONTRACTS IN PROCESS

 

Following is a summary of costs, billings, and estimated earnings on contracts in process as March 31, 2014 and December 31, 2013:

 

    March 31,     December 31,  
    2014     2013  
Costs incurred on contracts in progress   $ 690,434     $ 558,092  
Estimated earnings     76,767       57,688  
      767,201       615,780  
Less billings to date     (771,293 )     (647,508 )
    $ (4,092 )   $ (31,728 )

 

The above accounts are shown in the accompanying consolidated balance sheet under these captions at March 31, 2014 and December 31, 2013:

 

    March 31,     December 31,  
    2014     2013  
             
Costs and estimated earnings in excess of billings   $ -     $ 8,115  
Billings in excess of costs and estimated earnings     (4,092 )     (39,843 )
    $ (4,092 )   $ (31,728 )

 

F- 7
 

   

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

NOTE 5 – PROPERTY, PLANT AND EQUIPMENT

 

Property, plant and equipment consist of the following:

 

    March 31,
2014
    December 31,
2013
 
Vehicles   $ 214,560     $ 214,560  
Furniture and equipment     228,195       220,063  
Total     442,755       434,623  
Less:  accumulated depreciation     (95,072 )     (68,190 )
    $ 347,683     $ 366,604  

 

Depreciation expense for the three months ended March 31, 2014 and 2013 was $27,052 and $14,415, respectively.

 

NOTE 6 – DEPOSITS

 

Deposits at March 31, 2014 and December 31, 2013 are comprised of a $15,000 deposit on an acquisition candidate.

 

In May 2013, the Company entered into a contract to purchase property in Springfield, Illinois. The purchase price was $1,050,000, and was payable in several installments. The Company paid the first four installments totaling $100,000. Prior to the closing date, the Company defaulted under the contract by failing to pay the fourth installment payment. In accordance with the contract, the seller terminated the contract and the Company forfeited a total of $100,000 in payments made under the contract. During the three months ended March 31, 2014, the forfeitures totaled $25,000 and is classified as forfeit on deposit of land in the condensed consolidated statement of operations.

 

NOTE 7 – PROMISSORY NOTES PAYABLE

 

During the year ended December 31, 2013, the Company issued an aggregate of $650,000 convertible promissory notes due six months from the issuance date, subsequently extended to January 31, 2014, with 15% per annum interest commencing on the date the Company receives funding, as defined. The convertible promissory notes are convertible into the Company's common stock at $0.50 per share on or after the funding date, as defined.

 

The Company did not record an embedded beneficial conversion feature in the note since the fair value of the common stock did not exceed the conversion rate at the date of issuance.

 

As of January 31, 2014, the Company owed $650,000 in principal and $74,871 in accrued interest. On this date, the Company made a cash payment of $391,183 on outstanding principal and converted the remaining principal of $258,817 and accrued interest of $74,871 into 667,375 shares of common stock.

 

NOTE 8 – NOTES PAYABLE

 

In December of 2012, the Company entered into two note agreements to fund fixed asset purchases. The notes mature on December 20, 2017 and bear interest at .84% and 0% per annum, respectively; with aggregate monthly payments of $2,046. The Company has imputed an interest rate of 3% on the loans.

 

On August 28, 2013, the Company entered into a note agreement to fund a fixed asset purchase. The note matures on August 28, 2018, and bears interest at 0.83% per annum with monthly payments of $1,396.

 

On September 13, 2013, the Company entered into a note agreement to fund the purchase of a vehicle. The note matures on September 13, 2015 and bears interest at 5.09% per annum with monthly payments of $709.

 

On December 3, 2013, the Company traded in one of the two fixed assets purchased in December of 2012 for a new fixed asset. The note on the new fixed assets matures on December 3, 2017 and bears interest at 0% per annual with monthly payments of $1,361.

 

F- 8
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

Future maturities for long-term debt as of March 31, 2014 are as follows:

 

Year ended December 31,   Amount  
2014 (remainder of year)   $ 42,220  
2015     47,844  
2016     49,457  
2017     51,129  
2018     17,291  
    $ 207,941  

 

NOTE 9- STOCKHOLDERS EQUITY (DEFICIT)

 

There is not a viable market for the Company’s common stock to determine its fair value, therefore management is required to estimate the fair value to be utilized in the determining stock-based compensation costs. In estimating the fair value, management considers recent sales of its common stock to independent qualified investors and other factors. Considerable management judgment is necessary to estimate the fair value.  Accordingly, actual results could vary significantly from management’s estimates.

 

Common Stock

 

As discussed in Note 7, the holders of the promissory notes converted outstanding principal and accrued interest into 667,375 shares of common stock.

 

In March 2014, 350,000 shares of common stock valued at $350,000 were issued to a law firm for legal services provided to the Company.

 

During the three months ended March 31, 2014, the Company sold 5,000,000 shares of common stock to investors in exchange for $5,000,000 in gross proceeds in connection with the private placement of the Company’s stock.

 

In connection with the private placement the Company incurred fees of $695,627. In addition, 500,000 five year warrants with an exercise price of $1.00 were issued to the placement agent. The Company valued the warrants at $204,759 on the commitment date using a Black-Scholes-Merton option pricing model. The value of the warrants was a direct cost of the private placement and has been recorded as a reduction in additional paid in capital.

 

In valuing the warrants issued, the Company used the following assumptions:

 

· The stock price was based upon the issuance price the in private placement, or $1.00 per share.

 

· The risk-free interest rate assumption is based on the U.S. Treasury yield for a period consistent with the expected term of the option in effect at the time of the grant. The risk free rate had a range of 1.49%-1.64%.

 

· The Company has not paid any dividends on common stock since its inception and does not anticipate paying dividends on its common stock in the foreseeable future. Therefore, the expected dividend rate was $0.

 

· The warrant term is the life of the warrant, which was five years.

 

· The expected volatility was benchmarked against similar companies in a similar industry. The expected volatility used was 45%.

 

· The forfeiture rate is based on the historical forfeiture rate for the Company’s unvested warrants, which was 0%.

 

F- 9
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

NOTE 10 – NET INCOME (LOSS) PER SHARE

 

Net income (losses) are divided by the weighted average number of common shares outstanding during the year to calculate basic net loss per common share. Diluted net income (loss) per common share is calculated to give effect of any common stock equivalents, such as stock options, warrants or convertible debt. For the three months ended March 31, 2014, the Company had 500,000 potentially outstanding shares of common stock from warrants excluded from the diluted net income (loss) per share calculation because they were anti-dilutive. For the three months ended March 31, 2013, 100,000 potentially outstanding shares of common stock from embedded conversion features in the promissory were included in the denominator in the diluted net income (loss) per share calculation.

 

NOTE 11 - RELATED PARTY TRANSACTIONS

 

The Company has advanced funds to its officers and stockholders of a company under common control for travel related and working capital purposes. The loans are due on demand and bear no interest. As of March 31, 2014 and December 31, 2013, there were $56,709 and $56,385 in advances receivable, respectively, and were reported as loans receivable, related party on the balance sheet.

 

The Company utilized All Synthetics Group, a company under the control of Jeremy Strawn, one of the Company’s former officers and directors, to acquire producs and services where vendor purchase lines had been previously established. During the three months ended March 31, 2014 and 2013 December, 2013 and 2012, the Company purchased an aggregate of $25,015 and $17,468 through All Synthetics Group. As of March 31, 2014 and December 31, 2013, the Company had $53,128 and $26,927 in advances payable, respectively, and were reported as loans payable, related party on the balance sheet.

 

The Company leased space for operations on a month to month basis with undefined payment terms from Jeremy Strawn, the Company’s former President and former member of the Board of Directors.  Rent expense for the three months ended March 31, 2014 and 2013 was $4,665 and $0, respectively.

 

During the three months ended March 31, 2014, four of the Company’s officers agreed to forgive the accrued salaries due to them. The total accrued salaries that were forgiven by the officers totaled $81,279 and was accounted for an adjustment to additional paid in capital.

 

NOTE 12 - FAIR VALUE OF FINANCIAL INSTRUMENTS

 

The Company follows the provisions of ASC 825-10 “Financial Instruments”.  For financial assets and liabilities included within the scope of ASC 825-10, the Company was required to adopt the provisions of ASC 825-10 prospectively as of the beginning of 2011.  The adoption of ASC 825-10 did not have a material impact on our condensed consolidated financial position or results of operations.

 

There were no items required to be measured at fair value on a recurring basis in the condensed consolidated financial statements as of March 31, 2014 or December 31, 2013.

 

NOTE 13 – COMMITMENTS AND CONTINGENCIES

 

Consulting Agreements

 

The Company has consulting agreements with outside contractors to provide marketing and financial advisory services. The agreements are generally for month to month terms from inception and renewable automatically unless either the Company or Consultant terminates such engagement by written notice.

 

Litigation

 

From time to time, we may become involved in various lawsuits and legal proceedings which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm our business. We are currently not party to any such legal proceedings that we believe will have, individually or in the aggregate, a material adverse effect on our business, financial condition or operating results.

 

F- 10
 

 

SPORTS FIELD HOLDINGS, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

MARCH 31, 2014 AND 2013

 

NOTE 12 –   SUBSEQUENT EVENTS

 

Operating Leases

 

On April 1, 2014, the Company entered into a new lease agreement for its office space in Massachusetts. The lease commenced on that date and expires on March 31, 2017. The lease has monthly payments of $2,115, $2,151 and $2,188 for year one, two and three, respectively. The Company was required to pay a security deposit to the lessor totaling $6,418.

 

Future minimum payments of the Company’s leases are as follows:

 

For the years ending March 31,
2015   $ 25,375  
2016     25,813  
2017     26,250  
    $ 77,438  

 

Litigation

 

On May 5, 2014, Sports Field was named as a defendant in a civil lawsuit in the Circuit Court of the Seventh Judicial Circuit in Sangamon County, Illinois. Sallenger Incorporated, as plaintiff, is making certain claims against the Company in connection with a mechanics lien and for unjust enrichment. The Company is currently evaluating the claims and is resolved to adamantly defend its rights.

 

New Subsidiaries

 

On May 13, 2014, The Board of Directors ratified the incorporation of Sports Field Engineering, Inc. and Athletic Construction Enterprises, Inc., which will become subsidiaries of the Company.

 

Employment Separation Agreement s

 

On May 13, 2014, the employment of William Michaels was terminated.

 

On May 22, 2014, the Company entered into a separation agreement (the “Agreement”) with Jeremy Strawn, the President of the Company. According to the Agreement, Mr. Strawn will resign his position as the President of the Company as well as all positions held on the Board of Directors and committees. Upon execution of the Agreement, Mr. Strawn retained 10% of the initial shares issued or 207,900 shares awarded according to the original employment agreement signed in November 2013. In addition to these shares, Mr. Strawn will be issued an additional 192,100 shares. Following the effective date of the Agreement, Mr. Strawn shall be retained as a selling partner for the Company’s Midwest Region and shall receive between 3% and 5% commission on all sales referred to the Company. In addition, Mr. Strawn will also be assigned title and ownership to various equipment held by the Company.

 

 

F- 11