PROSPECTUS SUMMARY
This summary highlights certain information contained elsewhere in this prospectus. You should read the
following summary together with the more detailed information regarding Avalon Development Enterprises,
Inc. ("Avalon", "the Corporation", or “the Company”) and our financial statements and the related notes
appearing elsewhere in this prospectus.
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The Corporation
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Our Business:
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We are in the business of real estate acquisition and development and additionally we
offer property cleaning and maintenance services to both retail and commercial
properties. Our target market is commercial buildings in the 2,500-3,000 square foot
size that are located in high traffic areas that cater to professionals.
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Our State of
Organization:
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We were incorporated in Florida on March 29, 1999, as Avalon Development
Enterprises Inc.
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The Offering
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Number of Shares
Being Offered:
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We are offering 4,000,000 shares of our common stock at $0.50 per share. The
selling security holders want to sell up to 1,494,000 shares of common stock at $0.50
per share. Issuance of these shares to the selling security holders was exempt from the
registration and prospectus delivery requirements of the Securities Act of 1933, as
amended.
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Number of Shares
Outstanding After
the Offering:
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1,494,000 shares of our common stock are issued and outstanding. We have no other
securities issued. If we sell all of the 4,000,000 additional shares we are registering,
we will have 5,494,000 shares of our common stock issued and outstanding after the
offering.
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Selected Financial Data
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As of November 30, 2005 (Reviewed)
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Balance Sheet
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Total Assets
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$982.91
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Total Liabilities
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$16,153.33
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Stockholders Equity
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($15,170.42)
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Statement of Income
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Revenue
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$20,561.84
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Total Expense
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$24,698.35
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Net Income (Loss)
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($4,136.51)
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1
RISK FACTORS
Before you invest in our common stock, you should be aware that there are risks, as described below. You
should carefully consider these risk factors together with all of the other information included in this prospectus
before you decide to purchase shares of our common stock. Any of the following risks could adversely affect
our business, financial condition and results of operations. We have incurred substantial losses from inception
while realizing limited revenues and we may never generate substantial revenues or be profitable in the future.
Risks Related To the Company
(1)
Our Failure to Raise Additional Capital Will Significantly Limit Our Ability to Conduct Property
Acquisitions.
We must raise capital to be able to acquire small commercial properties. Our current working capital of
$6,019.60 will not be sufficient to sustain our operations. Capital will be needed to fund the cost of acquiring
the commercial buildings we have targeted as our market segment.
(2)
We May Not Be Able to Fully Implement Our Business Plan Due to Our Lack of Experience in Building
Maintenance and Cleaning.
Our experience in building maintenance and cleaning is limited. This lack of experience could hamper our
efforts to offer these services and maintain them as a profitable part of our business.
(3)
We Have Generated Minimal Profits Since Inception and We May Never Generate Substantial Revenues
or Be Profitable in the Future.
Since inception, we have generated minimal profits. We can provide no assurances that our method of
operations will generate substantial revenues or be profitable in the future.
(4)
We Are Dependent on Key Personnel with No Assurance That They Will Remain with Us: Losing Key
Personnel Could Mean Losing Key Business Relationships Necessary to Our Success.
Our success will depend to a great extent on retaining the continued services of our President/Director, Charles
Godels, C.P.A., as well as hiring and maintaining additional key employees. There is no assurance that Mr.
Godels will remain with the corporation due to the lack of an employment contract. If we lose our key
personnel, our business may suffer. We depend substantially on the continued services and performance of Mr.
Godels and, in particular, his contacts and relationships, especially within the real estate industry.
(5)
Our Competitors Have Greater Financial Resources than We Do and If We Are Unable to Compete
Effectively with Our Competitors, We Will Not Be Able to Increase Revenues or Generate Profits.
The market for owning and leasing commercial office space is intensely competitive. While we have experience
in owning and leasing commercial office space, we have limited operating history as a subcontractor of building
cleaning and maintenance services. Our minimal experience to date has showed the difficulty of penetrating the
Tampa Bay area for market share. Gaining customers will be difficult due to our competitor’s size and
resources.
Our ability to increase revenues and generate profits is directly related to our ability to compete with our
competitors. We face competition from competing companies in this same market that have greater financial
resources than we have. These greater resources could permit our competitors to implement extensive
advertising programs which we may not be able to match. We can provide no assurances that we will be able to
compete successfully in the future.
(6)
There Are Critical Relationships Within the Commercial Property Acquisitions Industry That must Be
Developed, and Any Interruption in These Relationships Could Have a Significant Effect on Our Ability to
Compete Effectively
.
2
Our president, Charles P. Godels has operated our Company since inception. His contacts in the finance and
accounting industries are critical to our future success. We are reliant upon his contacts as a source of future
customers. Should he fail to maintain these relationships further or if there is any disruption in these critical
business relationships, we would have difficulty generating new contacts and thereby, difficulty competing
effectively.
Risks Related To This Offering
(7)
There Is No Public Market for Our Shares, and There Is No Assurance That One Will Develop.
Purchasers of these shares are at risk of no liquidity for their investment. Prior to this offering, there has been
no established trading market for our securities, and there is no assurance that a regular trading market for the
securities will develop after completion of this offering. We will be offering shares for sale in a company that
has a very limited offering of services. Due to the limited services we offer, we anticipate that demand for our
shares will not be very high. If a trading market does develop for the securities offered hereby, there is no
assurance that it will be sustained. We plan to list the common stock for trading on the over-the-counter
(“OTC”) Electronic Bulletin Board. Such application will be filed with the National Association of Securities
Dealers (“NASD”). We can provide no assurance that such listing will be obtained or that an established market
for our common stock will be developed.
(8)
Since We Are Selling up to 4,000,000 Shares of Our Common Stock on a Self-underwritten Basis,
Purchasers, If Any, Will Not Have the Benefit of an Underwriter's Due Diligence.
We are selling up to a maximum of 4,000,000 shares of our common stock on a self-underwritten basis. As a
result, purchasers of our common stock will not have the benefit of an underwriter's due diligence, whose task
is, among others, to confirm the accuracy of the disclosures made in the prospectus.
We are less likely to sell the shares we are offering on a self-underwritten basis than if we were selling the
shares through an underwriter.
By selling our stock on a self-underwritten basis, we will not be able to utilize the services of an underwriter to
offer or sell our securities for us in connection with this offering. We will undertake on our own to market and
sell the securities to the public. We have not set a minimum with respect to the amount of our securities that we
intend to sell. Even if a purchaser buys shares of our common stock, we may not be able to sell any other
additional shares proposed for sale pursuant to this offering. If we do not raise a sufficient amount of funds
through this offering, we may not be able to adequately contribute proceeds to the research and development of
our business, and we may not be able to successfully proceed with our plan of operations. This may cause
significant losses and our stockholders may lose all or a substantial portion of their investment.
(9)
Because it May Be Difficult to Effect a Change in Control of Avalon Development Enterprises, Inc.
Without Current Management Consent, Management May Be Entrenched Even Though Stockholders May
Believe Other Management May Be Better and a Potential Suitor Who May Be Willing to Pay a Premium to
Acquire Us May Not Attempt to Do So.
Charles P. Godels, President and Director, currently holds approximately 62.95% of our outstanding voting
stock. If only a minimal quantity of our stock is sold during this offering and if Mr. Godels chooses to keep all
of his stock (that is, he sells none of his stock during this offering), Mr. Godels could retain his status as a
controlling security holder. Such concentration of ownership may have the effect of delaying, deferring or
preventing a change in control of us and entrenching current management even though stockholders may
believe other management may be better. Potential suitors who otherwise might be willing to pay a premium to
acquire us may decide not to acquire us because it may be difficult to effect a change in control of us without
current management's consent. Mr. Godels has the ability to control the outcome on all matters requiring
stockholder approval, including the election and removal of directors and any merger, consolidation or sale of
all or substantially all of our assets, and the ability to control our management and affairs.
3
(10)
The Possible Sales of Shares of Common Stock by Our Selling Security Holders May Have a Significant
Adverse Effect on the Market Price of Our Common Stock Should a Market Develop.
The 1,494,000 shares of common stock owned by the selling security holders will be registered with the U.S.
Securities Exchange Commission. The security holders may sell some or all of their shares immediately after
they are registered. In the event that the security holders sell some or all of their shares, the price of our
common stock could decrease significantly.
Our ability to raise additional capital through the sale of our stock may be harmed by these competing re-sales
of our common stock by the selling security holders. Potential investors may not be interested in purchasing
shares of our common stock if the selling security holders are selling their shares of common stock. The selling
of stock by the security holders could be interpreted by potential investors as a lack of confidence in us and our
ability to develop a stable market for our stock. The price of our common stock could fall if the selling security
holders sell substantial amounts of our common stock. These sales may make it more difficult for us to sell
equity or equity-related securities in this offering or in the future at a time and price that we deem appropriate
because the selling security holders may offer to sell their shares of common stock to potential investors for less
than we do.
A NOTE CONCERNING FORWARD-LOOKING STATEMENTS
You should not rely on forward-looking statements in this prospectus. This prospectus contains
forward-looking statements that involve risks and uncertainties. We use words such as "anticipates," "believes,"
"plans," "expects," "future," "intends," and similar expressions to identify these forward-looking statements.
Prospective investors should not place undue reliance on these forward-looking statements, which apply only as
of the date of this prospectus. Our actual results could differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by Avalon Development Enterprises,
Inc. described in "Risk Factors" and elsewhere in this prospectus. For example, a few of the uncertainties that
could affect the accuracy of forward-looking statements include:
(a) an abrupt economic change resulting in an unexpected downturn in demand;
(b) governmental restrictions or excessive taxes on our products;
(c) over-abundance of companies supplying printing products and services;
(d) economic resources to support the retail promotion of new products and services;
(e) expansion plans, access to potential customers, and advances in technology; and
(f) lack of working capital that could hinder the promotion and distribution of products and services to a
broader based business and retail population.
USE OF PROCEEDS
Upon registration with the U.S. Securities Exchange Commission, 1,494,000 of our outstanding shares of
common stock will be eligible for resale under the Securities Act. There is no minimum amount of shares that
must be sold during this offering. We do not know the specific amount that will be raised by this offering. All
funds raised will go directly to our current bank account. While we will bear the expenses of the registration of
the shares, we will not realize any proceeds from any actual resale of the shares of the selling shareholders that
might occur in the future. The selling shareholders will receive all proceeds from their resale. We, however,
will realize the proceeds from the sale of the registration of 4,000,000 shares to be sold on a self-underwritten
basis at $0.50 per share. We estimate that the net proceeds from our sale of 4,000,000 shares of our common
stock will be $2,000,000.
4
In the event we raise only a nominal amount from the sale of our securities, $500,000 or less, the purchasers of
the shares will not have the option of the shares being purchased back to treasury. We will use the proceeds to
pay for printing, for any legal and accounting costs that may exist, and to pay secured creditors if any there
may be. Any remaining funds will be used towards implementation of our business plan.
We expect to use all of the net proceeds for general corporate purposes, including the costs of this registration,
property acquisition, personnel wages, and working capital. The amounts we actually expend for working
capital and other purposes may vary and will depend on a number of factors including, but not limited to, the
actual net proceeds received, the amount of our future revenues and other factors described under "Risk
Factors." Accordingly, our management will retain broad discretion in the allocation of the net process. A
portion of the net proceeds may also be used to purchase complimentary businesses assets. We have no current
plans or agreements or commitments with respect to any of these transactions, and we are not currently engaged
in any negotiations with respect to any of these transactions.
Expansion of sales and marketing activities, strategic alliances or joint ventures, and corporate partnering
arrangements will be considered as alternatives for management’s discretion. Potential strategic alliances and
joint ventures have been determined to be those in the cleaning and building maintenance services market
segment. Smaller companies that have been local cleaning and maintenance operations would be ideally suited
for a business relationship with us.
Presently management is anticipating funds being used for the lease or purchase of desktop and laptop
computers, software, copiers, a postage meter, cellular telephones for sales and management personnel;
miscellaneous office supplies, furniture and equipment necessary to support the office; and employee wages.
Table 1.0 shows anticipated use based on raising varying amounts of capital with Table 2.0 providing a further
breakdown of the Working Capital expenditures.
Table 1.0 Capital Allocation
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Amount of
Capital
Raised
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Offering
Expenses
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Equipment
Purchases
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Property
Acquisition
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Employee
Wages
|
Working
Capital
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$500,000
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$41,100
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$20,000
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$337,500
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$75,000
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$26,400
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$1,000,000
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$41,100
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$25,000
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$832,500
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$75,000
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$26,400
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$1,500,000
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$41,100
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$30,000
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$1,327,500
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$75,000
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$26,400
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$2,000,000
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$41,100
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$40,000
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$1,817,500
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$75,000
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$26,400
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Table 2.0 Breakdown of Working Capital
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Amount of
Capital
Raised
|
Working
Capital
|
Allowance
for Tax
Deposits
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Workers
Compensation Insurance
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Advertising and
Marketing
Expenses
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Travel and
Presentation Expenses
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$500,000
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$26,400
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$7,500
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$3,000
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$13,000
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$2,900
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$1,000,000
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$26,400
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$7,500
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$3,000
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$13,000
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$2,900
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$1,500,000
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$26,400
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$7,500
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$3,000
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$13,000
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$2,900
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$2,000,000
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$26,400
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$7,500
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$3,000
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$13,000
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$2,900
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5
The above tables refer to the use of proceeds being used exclusively for our current operations in Florida and
does not include any immediate facility expansion plans. Our use of proceeds does not vary. The President of the Company Charles Godels, C.P.A. has extensive
financial experience and his ability to calculate working capital needs is highly developed. Thus management
has kept its decision making in the use of working capital limited while exercising good judgment in applying
management principles to the use of funds.
DETERMINATION OF OFFERING PRICE
The price of the shares we are offering was arbitrarily determined in order for us to raise capital. The offering
price bears no relationship whatsoever to our assets or earnings. Among factors considered were:
(a) Our lack of operating history,
(b) The proceeds to be raised by the offering,
(c) The amount of capital to be contributed by purchasers in this offering in proportion to the amount of stock to
be retained by our existing shareholders,
(d) Our relative cash requirements, and
(e) Our management expertise.
DILUTION
The issuance of further shares and the eligibility of further issued shares for resale will dilute our common stock
and may lower the price of our common stock. If you invest in our common stock, your interest will be diluted
to the extent of the difference between the price per share you pay for the common stock and the pro forma as
adjusted net tangible book value per share of our common stock at the time of sale. We calculate net tangible
book value per share by calculating the total assets less intangible assets and total liabilities, and dividing it by
the number of outstanding shares of common stock.
The net tangible book value of our common stock as of November 30, 2005, was a negative $15,170.42 or
approximately ($45.70) per share. On December 5, 2005, the board of directors authorized and ratified a
forward stock split of 4,500 to 1, increasing the number of shares outstanding from 332 to 1,494,000. As a
result, the net tangible book value of our common stock as of December 6, 2005 was ($0.01) per share.
Upon the sale of the 4,000,000 shares of our common stock being registered via this registration statement at a
price of $0.50 per share, net tangible book value as adjusted would be $1,984,829.58 or $0.36 per share. The
result would be an immediate increase in net tangible book value per share of $0.35 to existing stockholders and
an immediate dilution to new investors of $0.15 per share. "Dilution" is determined by subtracting net tangible
book value per share after the offering from the offering price to investors. The following table shows dilution
per share based on raising varying amounts of capital from the offering:
Table 3.0 Dilution Per Share
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Amount of Shares Sold
|
Dollar Amount Raised
|
Dilution Per Share
|
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1,000,000
|
$500,000
|
$0.316
|
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2,000,000
|
$1,000,000
|
$0.228
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|
3,000,000
|
$1,500,000
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$0.180
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4,000,000
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$2,000,000
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$0.149
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6
The following table provides information on the amount paid per share for existing shareholders and the
percentages of stock held and the percentage they will hold in the event this entire offering is sold.
Table 4.0 Dilution Comparison of Current Versus New Shareholders
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Amount
of
Securities
Sold
|
Price per
Share Paid
By Current
Shareholders
|
Percent of
Consideration
Paid By
Current
Shareholders
|
Percent of
Securities
They Will
Own After
This
Offering
|
Percent of
Consideration
Paid By New
Shareholders
|
Percent of
Securities
Owned By
New
Shareholders
|
|
$ 500,000
|
$0.00015
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0.066%
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59.904%
|
99.934%
|
40.096%
|
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$1,000,000
|
$0.00015
|
0.033%
|
42.759%
|
99.970%
|
57.241%
|
|
$1,500,000
|
$0.00015
|
0.022%
|
33.244%
|
99.978%
|
66.756%
|
|
$2,000,000
|
$0.00015
|
0.016%
|
27.193%
|
99.984%
|
72.807%
|
In the future, we may issue additional shares, options and warrants, and we may grant additional stock options
to our employees, officers, directors, and consultants under our stock option plan, all of which may further
dilute our net tangible book value.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is not quoted or traded on any quotation medium at this time. We intend to apply to have
our common stock included for quotation on the NASD OTC Bulletin Board. There can be no assurance that an
active trading market for our stock will develop. If our stock is included for quotation on the NASD OTC
Bulletin Board, price quotations will reflect inter-dealer prices, without retail mark-up, mark-down or
commission, and may not represent actual transactions.
Should a market develop for our shares, the trading price of the common stock is likely to be highly volatile and
could be subject to wide fluctuations in response to factors such as actual or anticipated variations in quarterly
operating results, announcements of technological innovations, new sales formats, or new services by us or our
competitors, changes in financial estimates by securities analysts, conditions or trends in Internet or traditional
retail markets, changes in the market valuations of other equipment and furniture leasing service providers or
accounting related business services, announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures, capital commitments, additions or departures of key personnel, sales of
common stock and other events or factors, many of which are beyond our control. In addition, the stock market
in general, and the market for business services in particular, has experienced extreme price and volume
fluctuations that have often been unrelated or disproportionate to the operating performance of such companies.
These broad market and industry factors may materially adversely affect the market price of the common stock,
regardless of our operating performance.
Consequently, future announcements concerning us or our competitors, litigation, or public concerns as to the
commercial value of one or more of our products or services may cause the market price of our common stock
to fluctuate substantially for reasons which may be unrelated to operating results. These fluctuations, as well as
general economic, political and market conditions, may have a material adverse effect on the market price of
our common stock.
At the present time we have no outstanding options or warrants to purchase securities convertible into common
stock.
7
There are 1,494,000 shares of common stock that could be sold by the selling shareholders according to Rule
144 that we have agreed to register. A brief description of Rule 144 follows:
Rule 144 can only be used with respect to securities of companies which are reporting companies or securities
of companies which make appropriate disclosure information generally available to market makers and
shareholders. Shares to be sold must generally be held for a period of at least one (1) year for non-affiliates and
two years (2) for affiliates. The definition of an "Affiliate" is critical to the operation of Rule 144. An affiliate is
a person that directly or indirectly through one or more intermediaries, controls, or is controlled by, or is under
common control of the issuer. This rule provides for restrictions on the amount of securities that can be sold by
an affiliate during a given period of time.
Cash dividends have been paid during the last three (3) years. In the near future, we intend to retain any
earnings to finance the development and expansion of our business. We do not anticipate paying any cash
dividends on our common stock in the foreseeable future. The declaration and payment of cash dividends by us
are subject to the discretion of our board of directors. Any future determination to pay cash dividends will
depend on our results of operations, financial condition, capital requirements, contractual restrictions and other
factors deemed relevant at the time by the board of directors. We are not currently subject to any contractual
arrangements which restricts our ability to pay cash dividends.
We have forty-six (46) stockholders of record of our common stock as of November 30, 2005. The CUSIP
number for our common stock is 05343X 10 2.
IMPACT OF THE "PENNY STOCK" RULES ON BUYING OR SELLING OUR COMMON STOCK
The SEC has adopted penny stock regulations which apply to securities traded over-the- counter. These
regulations generally define penny stock to be any equity security that has a market price of less than $5.00 per
share or an equity security of an issuer with net tangible assets of less than $5,000,000 as indicated in audited
financial statements, if the corporation has been in continuous operations for less than three years. Subject to
certain limited exceptions, the rules for any transaction involving a penny stock require the delivery, prior to the
transaction, of a risk disclosure document prepared by the SEC that contains certain information describing the
nature and level of risk associated with investments in the penny stock market. The broker-dealer also must
disclose the commissions payable to both the broker-dealer and the registered representative and current
quotations for the securities. Monthly account statements must be sent by the broker-dealer disclosing the
estimated market value of each penny stock held in the account or indicating that the estimated market value
cannot be determined because of the unavailability of firm quotes. In addition, the rules impose additional sales
practice requirements on broker-dealers who sell such securities to persons other than established customers
and institutional accredited investors (generally institutions with assets in excess of $5,000,000). These
practices require that, prior to the purchase, the broker-dealer determined that transactions in penny stocks were
suitable for the purchaser and obtained the purchaser's written consent to the transaction. If a market for our
common stock does develop and our shares trade below $5.00 per share, it will be a penny stock. Consequently,
the penny stock rules will likely restrict the ability of broker-dealers to sell our shares and will likely affect the
ability of purchasers in the offering to sell our shares in the secondary market.
Trading in our common stock will be subject to the "penny stock" rules.
8
SELLING SECURITY HOLDERS
This prospectus will also be used for the offering of shares of our common stock owned by selling security
holders. The selling security holders may offer for sale up to 1,494,000 of the 1,494,000 shares of our common
stock issued to them at $0.50 per share. Affiliates may sell their shares at $0.50 per share during the duration of
this offering. Non-affiliates may sell their shares at $0.50 until our securities become quoted on a securities
exchange and thereafter at market prices or in negotiated private transactions. We will not receive any proceeds
from such sales. The resale of the securities by the selling security holder is subject to the prospectus delivery
and other requirements of the Securities Act. All expenses of this offering are being paid for by us on behalf of
selling security holders. The following table sets forth information on our selling security shareholders.
9
Table 5.0 Selling Security Holders
|
Name of security
holder
|
Shares
beneficially owned
prior to
registration (1)
|
Maximum
number of shares
to be sold
pursuant to this
prospectus
|
Percent owned
after primary
offering is
complete
(2)
|
Position, office or
other material
relationship to the
Company (if any)
within last three
years
|
|
Charles P. Godels
|
450,000
|
450,000
|
30.12%
|
President, Director
|
|
Marguerite Godels
|
450,000
|
450,000
|
30.12%
|
Wife of President
|
|
Laura Larsen
|
13,500
|
13,500
|
0.01%
|
Secretary/Director
|
|
Madanna Yovino
|
13,500
|
13,500
|
0.01%
|
Treasurer/Director
Sister of President
|
|
David E. Dunn
|
13,500
|
13,500
|
0.01%
|
Director
|
|
Michael T. Jones
|
13,500
|
13,500
|
0.01%
|
Director
|
|
Michael B. Cranfill
|
13,500
|
13,500
|
0.01%
|
|
|
Barbara S. Cranfill
|
13,500
|
13,500
|
0.01%
|
|
|
Theresa M. Foley
|
13,500
|
13,500
|
0.01%
|
|
|
Christine M. Foley
|
13,500
|
13,500
|
0.01%
|
|
|
Roger Spinelli
|
13,500
|
13,500
|
0.01%
|
Nephew of
President
|
|
Marianne Spinelli
|
13,500
|
13,500
|
0.01%
|
|
|
Virginia Valenote
|
13,500
|
13,500
|
0.01%
|
|
|
Kathryn D. Jones
|
13,500
|
13,500
|
0.01%
|
|
|
Karen Heiser
|
13,500
|
13,500
|
0.01%
|
|
|
George Schuster
|
13,500
|
13,500
|
0.01%
|
|
|
Eugene A. Cote
|
13,500
|
13,500
|
0.01%
|
|
|
Marie A. Cote
|
13,500
|
13,500
|
0.01%
|
|
|
Stephen P. Brakke
|
13,500
|
13,500
|
0.01%
|
|
|
Lynda L. Wood
|
13,500
|
13,500
|
0.01%
|
|
|
Joseph Yovino
|
13,500
|
13,500
|
0.01%
|
Husband of
Madanna Yovino,
Director
|
|
Celesta M. Godels
|
13,500
|
13,500
|
0.01%
|
Mother of President
|
|
James E. Eyers
|
13,500
|
13,500
|
0.01%
|
|
|
Salvatore N.
Gattuso
|
13,500
|
13,500
|
0.01%
|
|
|
Denise Gattuso
|
13,500
|
13,500
|
0.01%
|
|
|
Kelly N. Roberts
|
13,500
|
13,500
|
0.01%
|
|
|
Laura B. Adams
|
13,500
|
13,500
|
0.01%
|
|
|
John H. Adams
|
13,500
|
13,500
|
0.01%
|
|
|
Lawrence Larsen
|
13,500
|
13,500
|
0.01%
|
Husband of Laura
Larsen, Secretary
|
|
Brian Bell
|
13,500
|
13,500
|
0.01%
|
|
|
Michael J. Daniels
|
13,500
|
13,500
|
0.01%
|
|
|
Dave & Leta High
|
13,500
|
13,500
|
0.01%
|
|
|
George J. & Karen
Freed
|
13,500
|
13,500
|
0.01%
|
|
|
Nancy F. & Ronald
J. Carney
|
13,500
|
13,500
|
0.01%
|
|
|
Deborah K. Dunn
|
13,500
|
13,500
|
0.01%
|
Wife of David E.
Dunn, Director
|
|
Michael Spinelli
|
13,500
|
13,500
|
0.01%
|
Nephew of
President
|
|
Connie Lee
Spinelli
|
13,500
|
13,500
|
0.01%
|
|
|
Jeffrey L. Mestler
|
13,500
|
13,500
|
0.01%
|
|
|
Karen Mestler
|
13,500
|
13,500
|
0.01%
|
|
|
Staci C. Earl
|
13,500
|
13,500
|
0.01%
|
|
|
Joseph & Ruth
Scutero
|
13,500
|
13,500
|
0.01%
|
|
|
Monica Munoz
|
13,500
|
13,500
|
0.01%
|
|
|
Sanford H. Barber
|
13,500
|
13,500
|
0.01%
|
|
|
Carol B. Barber
|
13,500
|
13,500
|
0.01%
|
|
|
Michael J.
Valenote
|
13,500
|
13,500
|
0.01%
|
|
|
Carol A. Valenote
|
13,500
|
13,500
|
0.01%
|
|
|
(1) On December 5, 2005 the par value of the stock was changed from $1.00 to $0.01. Due to this change in par value, the number of shares
held by each shareholder increased. Furthermore, as a result of this change, a forward increase in the shares was executed for all the
shareholders.
|
|
(2) The percentage held in the event we sell all of the 4,000,000 shares in the Primary Offering and the Selling Security Holders sell none of
the 1,494,000 shares in the Resale Offering.
|
All of the shares offered by this prospectus may be offered for resale, from time to time, by the selling
shareholders, pursuant to this prospectus, in one or more private or negotiated transactions, in open market
transactions in the over-the-counter market, or otherwise, or by a combination of these methods, at fixed prices
that may be changed, at negotiated prices, or otherwise. The selling shareholders may effect these transactions
by selling their shares directly to one or more purchasers or to or through broker-dealers or agents. The
compensation to a particular broker-dealer or agent may be in excess of customary commissions. Each of the
selling shareholders may be deemed an "underwriter" within the meaning of the Securities Act in connection
with each sale of shares. The selling shareholders will pay all commissions, transfer taxes and other expenses
associated with their sales.
10
PLAN OF DISTRIBUTION
Primary Offering
We are registering 4,000,000 shares of our common stock, which will be offered and sold on a
"self-underwritten" basis by us, using our officers, directors, or, at our discretion, by participating
broker/dealers licensed by the National Association of Securities Dealers, Inc. We have executed no agreements
with any broker-dealers with the respect to the offering of these shares as of the date of this prospectus. In the
event we enter into any such agreement with a broker-dealer, we will file a post-effective amendment to
disclose any such arrangement. Additionally, the broker-dealer must obtain a no objection position on the terms
of the underwriting compensation from the NASD (National Association of Securities Dealers, Inc.) corporate
finance department prior to any participation by the broker-dealer. There is no minimum investment
requirement and funds received by us from this offering will not be placed into an escrow account. Our
common stock is not currently listed on or traded in any national quotation medium. The offering price of $0.50
per share is based upon the decision of the current management team. We reserve the right to reject any
subscription in whole or in part, for any reason or for no reason.
Our stock will be sold by Charles P. Godels, President/Director, on a self-underwritten basis. When our
Registration Statement is effective, we plan to distribute our prospectus to individuals who have inquired about
us and the availability of shares. We will be selling directly to individuals who have read fully our prospectus
and have had sufficient information and time to make a prudent investment decision. Shares will be sold on a
no minimum basis with the 4,000,000 shares offered in the primary offering being the maximum number of
shares to be sold. Our Officers and Directors will be prohibited from selling their shares until the primary
offering of 4,000,000 shares is sold.
There can be no assurance that we will sell any or all of the offered shares.
Resale Offering
The selling security holders, or their pledgees, donees, transferees, or any of their successors in interest selling
shares received from the selling security holders as a gift, partnership distribution or other non-sale-related
transfer after the date of this prospectus (all of whom may be selling security holders), may sell their shares of
common stock from time to time on any stock exchange or automated inter-dealer quotation system on which
our common stock may be listed, in the over-the-counter market, in privately negotiated transactions or
otherwise, at fixed prices that may be changed, at market prices prevailing at the time of sale, or at prices
otherwise negotiated. In a post-effective amendment to this registration we will disclose pledgees, donees and
other transferees of the selling security holders, if any, as selling security holders. The selling security holders
may sell their shares of common stock by one or more of the following methods, without limitation:
(a) block trades in which the broker or dealer so engaged will attempt to sell the shares as agent but may
position and resell a portion of the block as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by the broker or dealer for its own account pursuant
to this prospectus;
(c) ordinary brokerage transactions and transactions in which the broker solicits purchases;
(d) privately negotiated transactions;
(e) short sales;
(f) through the distribution of the shares by the selling security holder to its partners, members or stockholders;
(g) one or more underwritten offerings on a firm commitment or self-underwritten basis; and
(h) any combination of any of these methods of sale.
11
In the event any of our selling security holders agree to sell their shares to a broker-dealer as a principal and the
broker-dealer acts as an underwriter, we will file a post-effective amendment to our registration statement
disclosing the name of the broker-dealer, providing information on the plan of distribution, and reflecting any
other necessary changes. Any broker-dealer that will be involved must seek and obtain clearance of the
underwriting compensation and arrangements from the NASD (National Association of Securities Dealers)
Corporate Finance Department prior to the sale of any securities by the broker-dealer.
The selling security holders may also transfer their shares by gift.
We do not know of any arrangements by the selling security holders for the sale of any of their shares. The
selling security holders may engage brokers and dealers, and any brokers or dealers may arrange for other
brokers or dealers to participate in effecting sales of the shares. These brokers, dealers or underwriters may act
as principals, or as an agent of the selling security holders. Broker-dealers may agree with the selling security
holders to sell a specified number of the shares at a stipulated price per share. If a broker-dealer is unable to sell
shares acting as agent for the selling security holders, it may purchase as principal any unsold shares at the
stipulated price. Broker-dealers that acquire shares as principals may thereafter resell the shares from time to
time in transactions on any stock exchange or automated interdealer quotation system on which the shares are
then listed, at prices and on terms then prevailing at the time of sale, at prices related to the then-current market
price or in negotiated transactions. Broker-dealers may use block transactions and sales to and through
broker-dealers, including transactions of the nature described above.
The selling security holders may also sell their shares in accordance with Rule 144 under the Securities Act,
rather than pursuant to this prospectus, regardless of whether the shares are covered by this prospectus. From
time to time, the selling security holders may pledge, hypothecate, or grant a security interest in some or all of
the shares owned by them. The pledgees, secured parties, or persons to whom the shares have been
hypothecated will, upon foreclosure in the event of default, be deemed to be selling security holders. The
number of selling security holders' shares offered under this prospectus will decrease as and when they take
such action. The plan of distribution for the selling security holders' shares will otherwise remain unchanged. In
addition, a selling security holder may, from time to time, sell the shares short, and, in those instances, this
prospectus may be delivered in connection with the short sales and the shares offered under this prospectus may
be used to cover short sales.
The selling security holders and any broker-dealers participating in the distributions of the shares may be
deemed to be "underwriters" within the meaning of Section 2(11) of the Securities Act. Any profit on the sale of
shares by the selling security holders and any commissions or discounts given to any such broker-dealer may be
deemed to be underwriting commissions or discounts. There can be no assurance that the selling security holders will sell any or all of the offered shares.
Under the Securities Exchange Act of 1934 and the regulations thereunder, any person engaged in a distribution
of the shares of our common stock offered by this prospectus may not simultaneously engage in market making
activities with respect to our common stock during the applicable "cooling off" periods prior to the
commencement of such distribution. Also, the selling security holders are subject to applicable provisions that
limit the timing of purchases and sales of our common stock by the selling security holders.
We have informed the selling security holders that, during such time as they may be engaged in a distribution of
any of the shares we are registering with the U.S. Securities Exchange Commission, they are required to
comply with Regulation M. In general, Regulation M precludes the selling security holders, any affiliated
purchasers, and any broker-dealer or other person who participates in a distribution from bidding for or
purchasing, or attempting to induce any person to bid for or purchase, any security which is the subject of the
distribution until the entire distribution is complete. Regulation M defines a "distribution" as an offering of
securities that is distinguished from ordinary trading activities by the magnitude of the offering and the
presence of special selling efforts and selling methods. Regulation M also defines a "distribution participant" as
an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is
participating in a distribution.
12
Regulation M prohibits any bids or purchases made in order to stabilize the price of a security in connection
with the distribution of that security, except as specifically permitted by Rule 104 of Regulation M. These
stabilizing transactions may cause the price of our common stock to be more than it would otherwise be in the
absence of these transactions. We have informed the selling security holders that stabilizing transactions
permitted by Regulation M allow bids to purchase our common stock if the stabilizing bids do not exceed a
specified maximum. Regulation M specifically prohibits stabilizing that is the result of fraudulent,
manipulative, or deceptive practices. The selling security holders and distribution participants are required to
consult with their own legal counsel to ensure compliance with Regulation M.
DESCRIPTION OF BUSINESS
Business Development
We were incorporated as Avalon Development Enterprises Inc. on March 29, 1999, under the laws of the State
of Florida. We amended our Articles of Incorporation on December 5, 2005 changing the par value of our stock
and increasing the total authorized capital stock. Since inception, we have engaged in the acquisition of
commercial property and have expanded into building cleaning, maintenance services, and equipment leasing
as supporting ancillary services and sources of revenue. We have not been involved in any bankruptcy,
receivership or similar proceeding nor have we been involved in a merger or consolidation. The purchase or
sale of any significant assets, if any, have been disclosed in our financial statements.
Our Business
(1) Principal Products or Services and Their Markets
Our primary focus is the acquisition of small commercial buildings that range in size from 2,500 square feet
to3,000 square feet. The buildings we seek are those located in high traffic and exposure areas that house, or
will house, professionals such as doctors, lawyers, real estate and accounting firms. Additionally we offer
building cleaning, maintenance services, and equipment leasing as ancillary services to increase our cash flow.
(2) Distribution Methods of the Services
The primary delivery of our services will be through our home office location in St. Petersburg, Florida. The
President of our Company Charles P. Godels, C.P.A. will have the primary responsibility of locating
appropriate acquisition targets.
(
3) Status of Any Publicly Announced New Product or Service.
We have not developed any new or unique products or services that would make us stand above our
competition. Instead, we have chosen to refine the services that fall within our capability. While the Internet has
provided a new tool for research, there has been no significant change in services we provide. We will be
utilizing the Internet as a mainstay of our future research on potential property acquisitions.
(4) Our Competition
In order to compete effectively in commercial property acquisitions, a company must understand the current
value of the property, its future appreciative value and be able to analyze the cash flow to be generated from the
leasing of office space. The commercial building space leasing market, as a whole, is characterized by intense
competition with a large number of companies offering or seeking to lease space that will compete with what
we offer. It is our belief, based upon our experience, that the failure rate of small businesses indicates that far
too many entrepreneurs begin operations prior to having the skills and knowledge necessary for the day-to-day
business operations as well as the necessary capital. As a result, we developed our individualized approach to
acquiring small commercial building and offering building cleaning, maintenance services, and equipment
leasing as ancillary services to increase our cash flow.
13
Many of our competitors have greater financial resources than we have, enabling them to finance acquisition
and development opportunities or develop and support their own operations. In addition, many of these
companies can offer bundled, value-added, or additional services not provided by us. Many may also have
greater name recognition. Our competitors may have the luxury of sacrificing profitability in order to capture a
greater portion of the market for business consulting activities. They may also be in a position to pay higher
prices than we would for the same expansion and development opportunities. Consequently, we may encounter
significant competition in our efforts to achieve our internal and external growth objectives.
Our competitors have methods of operation that have been proven over time to be successful. Our methods of
operation for our new business plan have not been proven to be successful.
(5) Sources and Availability of Raw Materials
We desire to expand and grow in the commercial real estate acquisition and leasing arena. In Florida, due to
the hurricane damage of the past two years, the costs and availability of raw materials and supplies have
increased materially. Potential dependence on these raw materials for renovations, which may be needed on
some commercial real estate acquisitions, may be a concern for the Company. Our President’s contacts with
contractors, due to his experience as a CPA and in the real estate arena, should assist in addressing this
challenge.
(6) Dependence on Limited Customers
We will not have to rely on any one or a limited number of customers for our business. We expect to increase
our customer base once our business plan is implemented. While our target markets are limited, we may have
to rely on just a few commercial buildings while we develop our markets.
(7) Patents, Trademarks, Licenses, Franchises, Concessions, Royalty Agreements or Labor Contracts
At the present time we do not own or have any domain names, patents, trademarks, licenses (other than the
usual business license), franchises, concessions, royalty agreements or labor contracts. However, in the future,
our success may depend in part upon our ability to preserve our trade secrets, obtain and maintain patent
protection for our technologies, products and processes, and operate without infringing upon the proprietary
rights of other parties. However, we may rely on certain proprietary technologies, trade secrets, and know-how
that are not patentable. Although we may take action to protect our unpatented trade secrets and our proprietary
information, in part, by the use of confidentiality agreements with our employees, consultants and certain of our
contractors, we cannot guaranty that:
(a) these agreements will not be breached;
(b) we would have adequate remedies for any breach; or
(c) our proprietary trade secrets and know-how will not otherwise become known or be independently
developed or discovered by competitors.
We cannot guaranty that our actions will be sufficient to prevent imitation or duplication of either our products
and services by others or prevent others from claiming violations of their trade secrets and proprietary rights.
(8) Need for Government Approval of Principal Products or Services
None of the services we offer require specific government approval. Local government rules may dictate the
usage of a specific building we may wish to acquire.
(9) Government Regulation
As a real estate acquisition company, we are subject to a limited variety of local, state, and federal regulations.
While we believe that our operations are in compliance with all applicable regulations, there can be no
assurances that from time to time unintentional violations of such regulations will not occur. We are subject to
federal, state and local laws and regulations applied to businesses, such as payroll taxes on the state and federal
levels. In general, our services and activities are subject to local business licensing requirements.
14
Internet access and online services are not subject to direct regulation in the United States. Changes in the laws
and regulations relating to the telecommunications and media industry, however, could impact our business. For
example, the Federal Communications Commission could begin to regulate the Internet and online services
industry, which could result in increased costs for us. The laws and regulations applicable to the Internet and to
our services are evolving and unclear and could damage our business. There are currently few laws or
regulations directly applicable to access to, or commerce on, the Internet. Due to the increasing popularity and
use of the Internet, it is possible that laws and regulations may be adopted, covering issues such as user privacy,
defamation, pricing, taxation, content regulation, quality of products and services, and intellectual property
ownership and infringement. Such legislation could expose us to substantial liability as well as dampen the
growth in use of the Internet, decrease the acceptance of the Internet as a communications and commercial
medium, or require us to incur significant expenses in complying with any new regulations.
(10) Research and Development During Last Two Fiscal Years
During the last two fiscal years no money was spent on research and development. We have, however, spent
minimal monies on Internet research and development.
(11) Cost and Effects of Compliance with Environmental Laws
We are not subject to any federal, state or local environmental laws. We may have tenants that in the future
could be impacted by these regulations and we will insure compliance to any tenant taking control of any space
in one of our buildings prior to move-in.
(12) Our Employees
As of November 30, 2005, we had two full time employees, Mr. Charles P. Godels and Madanna Yovino. As
our President, Mr. Godels is currently paid on an irregular basis. Mr. Godels currently provides the strategic
direction and the necessary labor to support the operation. In addition to her Treasurer responsibilities, Ms.
Yovino, with her background and experience, has headed up and developed our Company’s new cleaning
service division. Ms. Yovino will begin receiving a nominal salary by the end of the year.
We currently have no key employees, other than Charles P. Godels our President/Director and Madanna
Yovino, our Treasurer/Director. Mr. Godels is not receiving pay or other stock benefits for his performance.
There are also no key consulting contracts with any individuals or companies at this time. We do not believe that there is a critical need for a specific type of candidate we would use in our business. As
a result of the twenty-five years experience of our President, Charles P. Godels, his contacts for additional
potential employees is great. His ability to train employees to the specific needs of the Company will permit us
the ability to train candidates that may not come from our specific industry.
Reports to Security Holders
We will file reports and other information with the U.S. Securities and Exchange Commission (“SEC”). You
may read and copy any document that we file at the SEC's public reference facilities at 450 Fifth Street N.W.,
Room 1024, Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its
public reference facilities. Our SEC filings will be available to you free of charge at the SEC's web site at
www.sec.gov
We are not required by the Nevada Revised Statutes to provide annual reports. At the request of a shareholder,
we will send a copy of an annual report to include audited financial statements. In the event we become a
reporting company with the SEC, we will file all necessary quarterly and annual reports.
15
LEGAL PROCEEDINGS
We are not currently a party to any legal proceedings nor are any contemplated by us at this time.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
To the best of our knowledge there are no transactions involving any director, executive officer, any nominee
for election as a director or officer or any security holder who is a beneficial owner or any member of the
immediate family of the same other than the following:
-
Charles P. Godels
, is our President and a Director. He controls 30.12% of the stock in Avalon. He and his
wife Marguerite Godels, who also controls 30.12% of our stock, were involved in the sale of and the proceeds
from the sale of real property at 770 1st Avenue N., St. Petersburg, Florida. It was determined that the
Company’s then existing two (2) shareholders (Charles P. Godels, P.A. and Marguerite Godels), had taken the
business risk and provided the capital that resulted in the Company’s acquisition of this real estate and its
subsequent substantial appreciation. Accordingly, it was determined that the Company would transfer / spin
off, this real-estate holding to Bahia Shores Development Enterprises, Inc. (a related Company wholly owned
by Charles P. Godels and Marguerite Godels) in order that they realize the economic gain of this holding and
their related risks and efforts related to it. The familial relationships between and among the shareholders have
been disclosed in Table 5, Selling Security Holders above.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
The following plan of operation, management's discussion and analysis of financial condition, and results of
operations should be read in conjunction with our financial statements and notes thereto contained elsewhere in
this prospectus.
Plan of Operation
General
We currently derive all of our revenues and income pursuant to Avalon Development Enterprises, Inc.'s
operations, which are located in the Tampa Bay area of Florida at 770 First Avenue North, St. Petersburg,
Florida 33701. This is rented space in a commercial building located on a major artery. The building is
generally in good condition. While the current economic environment in the United States is somewhat
unstable, we believe that the economy will improve and our operations will improve accordingly. Should the
economic conditions not improve, we would likely have limited financial resources to continue operations
without raising additional capital. We do not anticipate revenues from our operations to increase significantly
until the fiscal year ending December 31, 2006. If for any reason (or for no reason) our operations do not
continue to grow, or business is less than anticipated, such result would have a material adverse effect on us.
We currently depend on the experience of our President Charles Godels, C.P.A., in the real estate and financial
industries. It is this strategic experience that we believe will allow us to fully develop our business. Presently,
the cash necessary to support our business plan implementation is being supplied by our own operations.
However, this is only enough to sustain the business in its current manner and is not sufficient for the full
implementation of the business plan, specifically, expanding the business statewide. We believe that further
cash will be needed to expand operations. We could need to raise as much as $2,000,000.00 to support
expansion operations over the next twelve months. (Please see the Use of Proceeds section above for a detailed
use of funds.)
16
Management has not determined the exact extent of the business opportunity in the Tampa Bay area due to the
lack of financial information procurable from our competitors. Our business has not increased in the year 2004.
Any unforeseen events such as happened on September 11, 2001 could also adversely affect our business. The
cost of equipment, technology, and labor could increase and directly affect our ability to be profitable. Tampa
Bay is an area highly dependent on tourism, an industry experiencing a down turn after September 11, 2001. In
our efforts to stay abreast of our changing business climate, we subscribe to publications that are general to the
business climate in Tampa Bay as well as industry specific publications.
Our Business
Presently our President, Charles P. Godels and Treasurer, Madanna Yovino, provide the necessary services of
our Company. Mr. Godels has been developing his skills since inception of his accounting practice (over
twenty-five years). He will provide leadership for the employees that will be hired when we have the necessary
capital.
We are in the business of acquiring commercial and/or retail office space that will target professionals in need
of space. We will limit our purchases to buildings located in the general Tampa Bay area initially. We will
expand our search statewide should we sell our offering completely. We will seek properties primarily for
income. Presently there is no restriction on the percentage of assets which may be invested in any one
investment, or type of investment. This policy may be changed without a vote of our security holders.
Due to our President’s extensive financial background and experience in property acquisitions and his contacts
with financial institutions, we will seek to purchase buildings using a combination of cash and first mortgages.
We will limit the number of mortgages on any one piece of property to one mortgage.
We anticipate that the funds from this offering, assuming that we sell all the offered shares, will provide us
sufficient capital for the next twelve months. We plan to raise additional funds either through subsequent
offerings of our shares or through other financing arrangements, such as borrowings. There is no guarantee that
we will be able to raise funds in addition to the funds we raise in this offering, if any. If we are not able to raise
additional funds, we will likely not be able to expand our operations.
We compete with other real estate development companies. There are some Internet-based competitors that
have greater financial and other resources, and more experience in research and development of commercial
real estate than we have. We anticipate that we will use a portion of the proceeds from this offering to develop
our website. However, as of the date of this prospectus, our website has not moved beyond the mere discussion
phase as we currently lack the necessary funds to begin development of our website. We do believe that it can
be fully operational within thirty days after securing funds. We will hire an employee who will design and
maintain our website and provide continual updates to our site with the most current information for our
potential customers. We hope to achieve such expansion by registering with major search engines with the goal
of placing our website at the top of search results. This typically requires pre-funding with certain search
engines. We do not currently have adequate financial resources to conduct such registration.
(i) How long can we satisfy our cash requirements and will we need to raise additional funds in the next 12
months?
Our Plan of Operation for the next twelve months is to implement our business plan. We anticipate that we will
use the funds raised in this offering and revenues generated to fund real estate purchases and office
improvement and for marketing activities to lease out our acquired space and working capital. Our failure to
market and promote our services will harm our business and future financial performance. If we are unable to
expand our operations within the next twelve months, we will likely fail to increase our revenues. We cannot
guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not
available, then we may not be able to expand our operations. If adequate funds are not available, we believe that
our officers and directors may contribute funds to pay for some of our expenses. However, we have not made
17
any arrangements or agreements with our officers and directors regarding such advancement of funds. We do
not know whether we will issue stock for the loans or whether we will merely prepare and sign promissory
notes. If we are forced to seek funds from our officers or directors, we will negotiate the specific terms and
conditions of such loan when made, if ever. None of our officers or directors is obligated to pay for our
expenses. Moreover, none of our officers or directors have specifically agreed to pay our expenses should we
need such assistance.
The implementation of our full business plan is estimated to take approximately 12 months. Once we are able to
secure funding, implementation will begin immediately. We anticipate 30 days to be in a stage of full
operational activity to begin the search for properties.
(ii) Summary of product research and development
We are not currently nor do we anticipate in the future to be conducting any research and development
activities, other than the development of our proposed website and looking into a possible new industry to
target for offering our services. However, we do plan to market ourselves aggressively.
(a) Marketing Plan
Our current marketing plan involves positioning ourselves as a real estate development company targeting real
estate buildings that will be ideally suited for professional businesses such as legal and accounting. We do not
see a need for a major marketing plan due to the contacts of our President Charles P. Godels, C.P.A. in the State
of Florida. The extensive contacts in the real estate and financial industries provide us more than sufficient
availability of buildings for potential acquisition. We will provide company brochures and advertise our
building cleaning and maintenance services through select publications in the Tampa Bay area.
(b) Sales Strategies
Power Point Presentation
. We plan to create a flexible Power Point presentation that our marketing department
will use to deliver a professional sales presentation specifically tailored to the needs of our target markets. The
presentation will have a core section that is generic to all customer segments as well as specific customer
segment modules allowing modification of the presentation for the appropriate audience. Additionally, this
Power Point presentation will be the basis for brochures and print advertising layout to ensure we have a
consistent look through out all our marketing communications.
(c) Other Markets
During our years of operations we have fully developed our target markets. Upon completion of our offering we
do not expect to open any markets other than Florida.
(iii) Any expected purchase or sale of plant and significant equipment?
We do anticipate purchases of real estate should we raise sufficient funds to purchase such. In the event that we
expand our customer base, then we may need to hire additional employees or independent contractors.
Specifically, if we are able to raise sufficient capital to expand our services and service area and our revenue
levels justify such action, we plan on hiring two to three additional employees over the next 12 months or using
a Professional Employee company.
(iv) Employees
As of November 30, 2005 we had two full time employees, Charles P. Godels and Madanna Yovino. As our
President, Mr. Godels is currently paid on an irregular basis. Ms. Yovino, heading up our building cleaning and
maintenance services division, will be receiving a nominal salary by the end of the year. We anticipate that we
will not hire any additional employees in the next six months unless we generate significant revenues. From
time to time, we anticipate using the services of an outside firm for additional website design and development.
18
Results of Operations
General
During the year ended December 31, 2004, our assets consisted of cash and property and our revenues were
generated from rental income. The following table shows our revenues, expenditures and net income for the
years from 2003-2004.
Table 6.0 Revenues, Expenditures and Net Income
|
YEAR
|
REVENUE
|
EXPENSES
|
OTHER
INCOME
(LOSS)
|
PROVISION
FOR INCOME
TAXES
|
NET
INCOME
|
|
2004
|
$ 19,582.06
|
$ 16,198.80
|
($30,005.28)
|
$688.00
|
($27,310.02)
|
|
2003
|
$29,000.04
|
$21,738.96
|
$0.00
|
$0.00
|
$7,261.08
|
Although we are seeking to expand services to areas outside of the Tampa Bay area market, the uncertain
economy could have a material adverse effect on such plans. While we have seen limited improvement in the
Tampa Bay business economy, we cannot be assured that continued recovery will occur.
Results of Operations for the Period Ended November 30, 2005
During the first quarter of the Company’s 2005 year, Management and the Board decided to implement actions
previously discussed and considered in 2003 - 2004 in order to further facilitate the Company’s growth and
expansion. The Company decided to undertake the activity of provided ancillary cleaning/maintenance services
to potential tenants and other third parties in order to provide additional cash flows and cement relationships
with potential tenants; to further expand the Company’s “turn-key, one-stop shopping” model, so to speak. On
May 28, 2004, our Board authorized the sale of three (3) share lots of the Company’s stock at $1.00 per share to
a maximum of sixty (60) family and close friends of the Company’s officers and directors. The purpose of this
“friends and family” sale of stock was to gain additional funding and involvement for the Company’s expansion
and endeavors. As of the eleven months ended November 30, 2005, the Company had sold 6 additional shares
of its common stock pursuant to this authorization. During the second quarter of 2005, the Company’s
management and Board discussed and decided that, while the expansion of its business into additional lines
provided the benefits of diversification and support along with additional revenue streams, it was still not
providing sufficient cash flows to facilitate the Company’s principal objective of acquiring prime commercial
real estate holdings for appreciation and leasing revenues. Accordingly, the Company’s Board and
management decided to undertake the filing of an SB-2 Registration Statement with the Securities and
Exchange Commission with the intent of registering the Company’s shares of common stock for sale to the
general public in order to raise funds to pursue its business plan more effectively and efficiently. The Board
and management additionally decided to target an offering of $2,000,000.00 to provide sufficient cash resources
for the acquisition of two to three 2,500 – 3,000 square foot commercial properties and provide sufficient
working capital to fund operations and marketing to lease up the proposed properties to be acquired.
The Company’s operations during the eleven months ended November 30, 2005 reflected the results of the
above planning and actions. Revenue consisted of cleaning/maintenance revenue of $20,135.00, along with
equipment leasing revenue of $426.84. This revenue of $20,561.84, less operating expenses of $24,698.35,
resulted in net loss from operations of $4,136.51 and loss per share of $12.54.
The major use of cash was repayments of $5,477.50 of funds advanced by stockholders. This outlay was
financed principally by an additional infusion of $3,300.00 of funds by affiliates. For the eleven months ended
November 30, 2005 year, the above activities resulted in a net decrease in cash and cash equivalents of $375.30
and a balance of $115.31 of cash and cash equivalents at November 30, 2000.
19
At November 30, 2005, the Company had fixed assets (equipment and fixed assets (computers) for equipment
leasing activities) of $867.60 (net of accumulated depreciation of $13,421.69) on its balance sheet. The
balance of funds infused by affiliates and shareholders at November 30, 2005 were $4,500.00 and $5,518.36,
respectively.
In summary, the Board and management believe the Company’s expansion in its shareholder base and its
growth into related supporting additional services and revenue streams (equipment leasing and
cleaning/maintenance services) have strengthened and diversified the Company. Management and the Board
also believe the decision to file an SB-2 Registration Statement will provide the Company with the additional
funding needed to expedite its commitment to acquiring the commercial real estate holdings it desires in order
to become a leader in the local Tampa Bay area commercial real estate holding/leasing market. The Company
believes it has methodically built the intellectual capital/knowledge base and a unique, well-rounded supporting
infrastructure (i.e., providing the additional ancillary supporting services) that, once adequately capitalized, will
become a competitive and unique force in the existing and growing Tampa Bay commercial real estate
market.
Results of Operations for the Year Ended December 31, 2004
During the first half of the Company’s 2004 year, Management and the Board decided to implement actions
previously discussed and considered in 2003 in order to facilitate the Company’s growth and expansion.
Appreciation of prime commercial real estate (along with other real estate) in the Tampa Bay area on the west
coast of Florida continued strongly. Accordingly, the Company has decided to attempt expansion in the
commercial real estate holding and leasing arena. It was determined that the Company’s existing two (2)
shareholders (Charles P. Godels, P.A. and Marguerite Godels), had taken the business risk and provided the
capital that resulted in the Company’s acquisition of its real estate at 770 1st Avenue N., St. Petersburg, Florida
and its subsequent substantial appreciation. Accordingly, it was determined that the Company would transfer /
spin off, this real estate holding to Bahia Shores Development Enterprises, Inc. (a related Company wholly
owned by Charles P. Godels and Marguerite Godels) in order that they realize the economic gain of this holding
and their related risks and efforts related to it. It was further determined that, once this transaction was
accomplished, the Company would seek to bring in friends and family as additional shareholders / investors in
the Company in order to assist in funding the Company’s endeavors to expand holdings in the local commercial
real estate arena for appreciation and commercial leasing purposes. Furthermore, the Company decided to
undertake the activity of provided equipment leasing services to potential tenants in order to provide additional
cash flows and cement relationships with potential tenants; to provide a “turn-key, one-stop shopping” resource,
so to speak. Accordingly, the Company effected the following transactions: on August 2, 2004, the Company
effected the above-mentioned transfer of the 770 1st Avenue N. real estate to Bahia Shores Development
Enterprises, Inc.; on July 2, 2004, the Company executed its first equipment lease on four (4) computers (copy
of lease attached hereto in Exhibit 99.1); and on May 28, 2004 the Company’s Board authorized the sale of
three (3) share lots of the Company’s stock at $1.00 per share to a maximum of sixty (60) family and close
friends of the Company’s officers and directors in order to gain additional funding and involvement for the
Company’s expansion. As of its December 31, 2004 year end, the Company had sold 126 additional shares of
its common stock pursuant to this authorization.
The Company’s operations during 2004 reflected the beginning of the results of the above planning and actions.
Revenue consisted of rental income pursuant to its triple net lease (copies of the lease and the renewal are
attached hereto in Exhibits 99.2 and 99.3) with Godels, Solomon, Barber & Company, L.L.C., an entity related
to the Company via a common 50% owner in each entity of $19,333.36 (up to August 2, 2004, the date of the
Company’s above-described transfer of 770 1st Avenue N.), along with equipment leasing revenue of $248.70.
This revenue of $19,582.06, less operating expenses of $16,198.80, resulted in net income from operations of
$3,383.26. The Company also recognized a book loss of $31,556.38 on the transfer of the 770 1st Avenue N.
real estate (the balance of the mortgage less the undepreciated book value of the real estate assets at the date of
transfer) and miscellaneous income of $1,551.10, all resulting in a net loss for the year of $27,310.02 and a loss
per share of ($109.24).
20
Other major uses of cash were as follows: fixed asset acquisitions for equipment leasing activities of
$1,712.00, repayments of $7,910.22 of principal on the mortgage (prior to transfer), along with repayments of
$3,177.52 of funds advanced by affiliates. These cash outflows were financed by the above-mentioned
common stock offering along with an additional infusion of $2,493.77 of funds by shareholders. For the 2004
year, the above activities resulted in a net increase in cash and cash equivalents of $17.00 and a year end
balance of $490.61 of cash and cash equivalents at December 31, 2004.
At December 31, 2003, the Company had fixed assets (equipment and fixed assets (computers) for equipment
leasing activities) of $1,369.60 (net of accumulated depreciation of $12,919.69) on its balance sheet. The
mortgage secured by the Company’s commercial real estate was eliminated due to the transfer of the real estate.
The balance of funds infused by affiliates and shareholders at the December 31, 2004 year end was $1,200.00
and $10,995.86, respectively.
In summary, the Board and management was relatively pleased results of the implementation of its plan for
expansion: 42 new shareholders, the Company’s first equipment lease and ongoing exploration for
opportunities to acquire desirable commercial real estate holdings (although the Company’s first attempted real
estate acquisition for a 6,500 square foot commercial property at 2958 1
st
Avenue N., St. Petersburg, FL was
unsuccessful). Management and the Board believe the Company has made substantial strides towards
accomplishing its desired expansion. Management and the Board continue to discuss various alternatives for
generating additional cash resources, including expansion of related ancillary services (e.g., supporting cleaning
/ maintenance services) and will continue to explore avenues to accelerate its desired growth in 2005 and the
future.
We do not foresee any circumstances or events that will have an adverse impact on our operations. We do
anticipate an increase in our business based on our current business plan and the activities of our officers and
directors. Thus, we expect to satisfy our current cash requirements indefinitely. However, we will need
additional cash to implement the expansion strategy contained in our business plan, which includes expanding
the business development/consulting services.
Results of Operations for the Year Ended December 31, 2003
Revenue consisted of rental income pursuant to a triple net lease with Godels, Solomon, Barber & Company,
L.L.C., an entity related to the Company via a common 50% owner in each entity (copies of the lease and the
renewal are attached hereto in Exhibits 99.2 and 99.3). This revenue of $29,000.04, less operating expenses of
$21,738.96, resulted in net income of $7,261.08 and earnings per share of $36.31. The largest expense was
$12,152.40 of interest on the mortgage secured by the commercial real estate.
Other major uses of cash were as follows: additional fixed asset acquisitions of $337.05, repayments of
$10,657.90 of principal on the mortgage, along with repayments of $2,750.00 of funds advanced by affiliates.
These cash outflows were financed by the above-mentioned net income from operations along with an
additional infusion of $1,087.69 of funds by shareholders. For the 2003 year, the above activities resulted in a
net increase in cash and cash equivalents of $400.68 and a year end balance of $473.61 of cash and cash
equivalents at December 31, 2003.
At December 31, 2003, the Company had fixed assets (land, building and equipment) of $173,932.58 (net of
accumulated depreciation of $40,544.39) on its balance sheet. The balance of the mortgage secured by the
Company’s commercial real estate was $147,194.13, with $13,560.38 of that balance scheduled to be paid
within the next twelve (12) months. The balance of funds infused by affiliates and shareholders at the
December 31, 2003 year end was $4,377.52 and $8,502.09, respectively.
In summary, the Board and management was pleased with the appreciation being realized on the commercial
real estate (which tracked the overall trending in the Tampa Bay Area on the west coast of Florida).
Specifically, the value of commercial real estate in and around the “downtown area” of St. Petersburg, Florida
is trending up nicely as the City continues to experience substantial growth in development downtown.
21
Management and the Board continue to desire to pursue additional acquisitions of prime commercial real estate
for, both, appreciation and leasing opportunities, as commercial lease rates continue to trend up as growth
continues and vacancy rates continue to decline. The concern is the Company’s inability to generate enough
cash resources from its existing operations to fund this desired expansion. Management and the Board continue
to discuss various alternatives for generating additional cash resources, including expansion of related ancillary
services (e.g., supporting cleaning/maintenance services, facilitating equipment leasing opportunities for
tenants) and have decided to attempt to implement one or more of these alternatives in the upcoming 2004
year.
Liquidity and Capital Resources
During the first quarter of the Company's 2005 year, Management and the Board of Directors decided to
implement actions previously discussed and considered in 2003 - 2004 in order to further facilitate the
Company’s growth and expansion. The Company decided to undertake the activity of provided ancillary
cleaning/maintenance services to potential tenants and other third parties in order to provide additional cash
flows and cement relationships with potential tenants; to further expand the Company’s “turn-key, one-stop
shopping” model, so to speak. Pursuant to the May 28, 2004 Company’s Board of Directors authorization of
the sale of three (3) share lots of the Company’s stock at $1.00 per share to a maximum of sixty (60) family and
close friends of the Company’s officers and directors in order to gain additional funding and involvement for
the Company’s expansion, the Company continued to seek to bring in friends and family as additional
shareholders/investors in the Company in order to assist in funding the Company’s endeavors. As of the eleven
(11) months ended November 30, 2005, the Company had sold 6 additional shares of its common stock
pursuant to this authorization. During the second quarter of 2005, the Company’s management and Board
discussed and decided that, while the expansion of its business into additional lines provided the benefits of
diversification and support along with additional revenue streams, it was still not providing sufficient cash
flows to facilitate the Company’s principal objective of acquiring prime commercial real estate holdings for
appreciation and leasing revenues. Accordingly, the Company’s Board and management decided to undertake
the filing of an SB-2 Registration Statement with the Securities and Exchange Commission with the intent of
registering the Company’s shares of common stock for sale to the general public in order to raise funds to
pursue its business plan more effectively and efficiently. The Board and management additionally decided to
target an offering of $2,000,000.00 to provide sufficient cash resources for the acquisition of two to three 2,500
– 3,000 square foot commercial properties and provide sufficient working capital to fund operations and
marketing to lease up the proposed properties to be acquired.
During the eleven (11) months ended November 30, 2005, the Company’s operating activities generated
$1,796.20 of cash flows, reflecting the results of the above planning and actions. The Company’s net loss for
the eleven months of $4,136.51 was offset by addbacks for noncash depreciation expense of $502.00 and
increases in net liabilities of $5,430.71.
The Company’s financing activities for the eleven (11) months ended November 30, 2005 utilized net cash
flows of $2,171.50. Financing activity cash outflows consisted of repayments of $5,477.50 of funds advanced
by stockholders. This financing activity cash outflow was offset by financing activity cash inflows of an
additional $3,300.00 of loans from affiliates and $6.00 from the issuance of additional Company common
stock. For the eleven months ended November 30, 2005 year, the above activities resulted in a net decrease in cash
and cash equivalents of $375.30 and a balance of $115.31 of cash and cash equivalents at November 30, 2005.
In summary, the Board and management believe the Company’s expansion in its shareholder base and its
growth into related supporting additional services and revenue streams (equipment leasing and
cleaning/maintenance services) have strengthened and diversified the Company. Management and the Board
also believe the decision to file an SB-2 Registration Statement with SEC will provide the Company with the
additional funding needed to expedite its commitment to acquiring the commercial real estate holdings it
desires in order to become a leader in the local Tampa Bay area commercial real estate holding/leasing market.
The Company believes it has methodically built the intellectual capital/knowledge base and a unique, well-rounded supporting infrastructure (i.e., providing the additional ancillary supporting services) that, once
adequately capitalized, will become a competitive and unique force in the existing and growing Tampa Bay
commercial real estate market.
22
During the first half of the Company’s 2004 year, Management and the Board decided to implement actions
previously discussed and considered in 2003 in order to facilitate the Company’s growth and expansion cash
flow needs. Appreciation of prime commercial real estate (along with other real estate) in the Tampa Bay area
on the west coast of Florida continued strongly. Accordingly, the Company has decided to attempt expansion
in the commercial real estate holding and leasing arena. It was determined that the Company’s existing two (2)
shareholders (Charles P. Godels, P.A. and Marguerite Godels), had taken the business risk and provided the
capital that resulted in the Company’s acquisition of its real estate at 770 1st Avenue N., St. Petersburg, Florida and its subsequent substantial appreciation. Accordingly, it was determined that the Company would transfer /
spin off, this real estate holding to Bahia Shores Development Enterprises, Inc. (a related Company wholly
owned by Charles P. Godels and Marguerite Godels) in order that they realize the economic gain of this holding
and their related risks and efforts related to it. A by-product of this transaction will be to free up cash flows to
pursue new commercial real estate holdings for the Company and its new shareholder base.
It was further determined that, once this transaction was accomplished, the Company would seek to bring in
friends and family as additional shareholders/investors in the Company in order to assist in funding the
Company’s endeavors to expand holdings in the local commercial real estate arena for appreciation and
commercial leasing purposes. Furthermore, the Company decided to undertake the activity of providing
equipment leasing services to potential tenants in order to provide additional cash flows and cement
relationships with potential tenants; to provide a “turn-key, one-stop shopping” resource, so to speak.
Accordingly, the Company effected the following transactions: on August 2, 2004, the Company effected the
above-mentioned transfer of the 770 1st Avenue N. real estate to Bahia Shores Development Enterprises, Inc.,
on July 2, 2004, the Company executed its first equipment lease on four (4) computers (copy of lease attached
hereto in Exhibit 99.1), and on May 28, 2004 the Company’s Board authorized the sale of three (3) share lots of
the Company’s stock at $1.00 per share to a maximum of sixty (60) family and close friends of the Company’s
officers and directors in order to gain additional funding and involvement for the Company’s expansion. As of
its December 31, 2004 year end, the Company had sold 126 additional shares of its common stock pursuant to
this authorization.
During the year ended December 31, 2004, the Company’s operating activities generated $10,196.97 of positive
cash flows, reflecting the beginning of the results of the above planning and actions. Operating cash flows were
principally the result of the add-back of the noncash book loss of $31,556.38 recognized on the transfer of the
770 1st Avenue N. real estate (the balance of the mortgage less the undepreciated book value of the real estate
assets at the date of transfer) to the Company’s net loss of $27,310.02 for the 2004 year. Additional noncash
addbacks included depreciation and amortization expense of $3,434.69 and $1,230.00, respectively. Operating
cash flows were also provided by decreases in security deposits of $1,100.00 and net increases in liabilities of
$185.92.
The Company’s investing activities utilized cash flows for fixed asset acquisitions for equipment leasing
activities of $1,712.00.
The Company’s financing activities utilized net cash flows of $8,467.97 as follows: repayments of $7,910.22 of
principal on the mortgage (prior to transfer), along with repayments of $3,177.52 of funds advanced by
affiliates. These financing cash outflows were offset by the above-mentioned common stock offering
generating $126.00 of cash flows along with an additional infusion of $2,493.77 of funds by shareholders.
For the 2004 year, the above activities resulted in a net increase in cash and cash equivalents of $17.00 and a
year end balance of $490.61 of cash and cash equivalents at December 31, 2004.
In summary, the Board and management was relatively pleased results of the implementation of its plan for
expansion: 42 new shareholders, the Company’s first equipment lease and ongoing exploration for
opportunities to acquire desirable commercial real estate holdings (although the Company’s first attempted real
estate acquisition for a 6,500 square foot commercial property at 2958 1
st
Avenue N., St. Petersburg, FL was
unsuccessful). Management and the Board believe the Company has made substantial strides towards
accomplishing its desired expansion. Management and the Board continue to discuss various alternatives for
generating additional cash resources, including expansion of related ancillary services (e.g., supporting cleaning
/ maintenance services) and will continue to explore avenues to accelerate its desired growth in 2005 and the
future
23
During the year ended December 31, 2003, the Company experienced positive cash flows of $13,057.64
provided from its operating activities. Operating cash flows were provided principally from the Company’s net
income of $7,261.08 derived principally from rental income pursuant to a triple net lease with Godels,
Solomon, Barber & Company, L.L.C., an entity related to the Company via a common 50% owner in each
entity (copies of the lease and the renewal are attached hereto in Exhibits 99.2 and 99.3). This revenue of
$29,000.04, less operating expenses of $21,738.96, resulted in net income of $7,261.08 and earnings per share
of $37.61. The largest expense was $12,152.40 of interest on the mortgage secured by the commercial real
estate. The 2003 depreciation expense of $5,158.52 was also added back to increase income from operations as
it was a noncash deduction.
Investing activities utilized cash flows of $337.05 for the purchase of additional fixed asset. In addition,
financing activities utilized net cash flows of $12,320.21.Repayments of $10,657.90 of principal on the
mortgage, along with repayments of $2,750.00 of funds advanced by affiliates represented the financing
activities utilizing cash flows. These financing activity cash outflows were offset by an additional infusion of
$1,087.69 of funds by shareholders.
In total for the 2003 year, the above activities resulted in a net increase in cash and cash equivalents of $400.68
and a year end balance of $473.61 of cash and cash equivalents at December 31, 2003.
In summary, the Board and management was pleased with the appreciation being realized on the commercial
real estate (which tracked the overall trending in the Tampa Bay Area on the west coast of Florida).
Specifically, the value of commercial real estate in and around the “downtown area” of St. Petersburg, Florida
is trending up nicely as the City continues to experience substantial growth in development downtown.
Management and the Board continue to desire to pursue additional acquisitions of prime commercial real estate
for, both, appreciation and leasing opportunities, as commercial lease rates continue to trend up as growth
continues and vacancy rates continue to decline. The concern is the Company’s inability to generate enough
cash resources from its existing operations to fund this desired expansion. Management and the Board continue
to discuss various alternatives for generating additional cash resources, including expansion of related ancillary
services (e.g., supporting cleaning and maintenance services, facilitating equipment leasing opportunities for
tenants), and have decided to attempt to implement one or more of these alternatives in the upcoming 2004
year.
It is our belief that our cash flow is only sufficient to sustain our current level of minimal operations. While
operations could be sustained for a long time (over twelve months), there would be minimal to be distributed
for the efforts of the officers and directors. To begin expansion, funds will need to be brought into the Company
to permit us to move forward with our expansion. Without these funds, management believes it cannot sustain
expanding operations.
Although no assurances can be made, we believe that our expenses will increase proportionately to revenues
during the fiscal year ending December 31, 2006.
24
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
Directors and Executive Officers
The names and ages of our directors and executive officers are set forth below. Our By-Laws provide for not
less than one and not more than fifteen directors. All directors are elected annually by the stockholders to serve
until the next annual meeting of the stockholders and until their successors are duly elected and qualified.
Table 7.0 Directors and Executive Officers
|
Name
|
Age
|
Position
|
|
Charles P. Godels
|
49
|
President, Chairman of the Board of Directors (1)
|
|
Laura Larsen
|
30
|
Secretary/Director(2)
|
|
David E. Dunn
|
49
|
Director (1)
|
|
Michael T. Jones
|
41
|
Director (1)
|
|
Madanna Yovino
|
47
|
Treasurer/Director(1)
|
|
(1) Has not held this position in a reporting company.
|
|
(2) Ms. Larsen was Secretary for MCG Diversified, Inc., a company registered with the U.S. Securities Exchange Commission.
|
Background of Executive Officers and Directors
-
Charles P. Godels
has served as our President and Chairman of the Board of Directors since April 1, 2005.
Mr. Godels holds a B.A. degree from University of South Florida in Accounting. He sat and passed all four (4)
parts of C.P.A. Exam in November 1978. His current Memberships/Affiliations include the American Institute
of Certified Public Accountants and the Florida Institute of Certified Public Accountants. Since 09/93 when he
founded his own practice he has been in practice and took in partner to form Godels & Solomon, L.C., C.P.A.’s
From August 1999, he has continued as managing partner in Godels Solomon Barber & Company, LLC
(“GSBC”). His focus is “Traditional” (audit, accounting, & tax) and “nontraditional” (forecasts, projections,
start-up’s, obtaining business financing, cash flow management services) services and assists in structuring real
estate ventures / transactions (choice of entity, asset protection, 1031 exchange structuring, etc.). His emphasis
is on clients in the healthcare industry, dental industry, and resident owned mobile home park cooperatives for
whom he provides audit and ancillary services. However, he also provides these services, intermittently to
clients in real estate, franchised fast food restaurants, marketing/distribution, automotive industry, retail, and a
variety of other professional service businesses (law, architecture, mortuary services, etc.).
Laura Larsen -
has served as our Secretary/Director since April 1, 2005. Ms. Larsen holds an A.A. degree from
St. Peterburg Community College. She has worked in the accounting field since February 2001. She has been
responsible for daily office activities, computer liaison, customer contact, preparing monthly financial
statements, preparing sales tax returns, preparing payroll tax returns, processing various tax returns, training
clients in QuickBooks, firm banking/bill pay, firm accounts receivables. She began her career as an
administrative assistant for four (4) years with Raymond James & Associates. Through continuing education
and employment Ms. Larsen has developed both her accounting and business skills.
David E. Dunn
- has served as our Director since April 1, 2005. Mr. Dunn holds a B.S. degree in Business
Administration from Glassboro State College. Since 1998 Mr. Dunn has been employed by NCR Corporation.
He is a Solution Sales Specialist for east coast direct sales force. Responsibilities include product presentation
and kick off of the new NCR 7454 POS Workstation to major accounts within the Northeast and Southeast
Regions. He has acted as a product specialist to NCR’s direct sales force as well as NCR’s VAR, Partner and
dealer community. He has direct account responsibilities for selected accounts in the northeast including
Sbarro, Fuddruckers, Au Bon Pain, Reise, American Hospitality, and others. Specifically, he was the account
Manager responsible for the new NCR 7460 system roll out into the Fuddruckers Restaurant chain.
25
Michael T. Jones
- has served as a Director since April 1, 2005. Mr. Jones holds a B.S. degree from the
University of South Florida and a Masters in Business from Florida Metropolitan University (“F.M.U.”) For
the last eighteen years (18) years he has been employed by UPS. He is responsible for customers in Pinellas
County, Florida. He has extensive experience working with all types of businesses determining their shipping
needs and requirements.
Madanna Yovino
- has served as Treasurer/Director since April 1, 2005. Ms. Yovino holds an A.A. from St.
Peterburg Community College. Since 1989 she has had her own cleaning service. She has been responsible for
sales and marketing as well as work production. In January of 2005 she was appointed as head of the
Company’s corporate cleaning/maintenance division.
During the last five (5) years we know of no action in bankruptcy filed by or against any business of which such
person was a general partner or executive officer either at the time of the bankruptcy or within two (2) years
prior to that time. None of our officers and directors have been convicted in any criminal proceeding or being
subject to a pending criminal action. None of our officers and directors are subject to any order, judgment or
decree, not subsequently reversed, suspended or vacated, by any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting their involvement in any type of business,
securities or banking activities. None of our officers and directors have been found by a court of competent
jurisdiction in a civil action, the Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not been reversed, suspended or vacated.
AUDIT COMMITTEE
We do not have an audit committee that is comprised of any independent director. As a company with less than
$100,000 in revenue we rely on our President Charles P. Godels, C.P.A. for our audit committee financial
expert as defined in Item 401(e) of Regulation S-B promulgated under the Securities Act. Our Board of
Directors acts as our audit committee. The Board has determined that the relationship of Mr. Godels as both
our company President and our audit committee financial expert is not detrimental to the Company. Mr. Godels
has a complete understanding of GAAP and financial statements; the ability to assess the general application of
such principles in connection with the accounting for estimates, accruals and reserves in a fair and impartial
manner; has experience preparing, auditing, analyzing or evaluating financial statements that present a breadth
and level of complexity of accounting issues that are generally comparable to or exceed the breadth and
complexity of issues that can reasonably be expected to be raised by the small business issuer’s financial
statements, or experience actively supervising one or more persons engaged in such activities; an understanding
of internal control over financial reporting; and an understanding of audit committee functions. Mr. Godels has
gained this expertise through his formal education and experience as a certified public accountant with over
twenty-five years experience and his supervision of persons performing similar functions. He has specific
experience overseeing or assessing the performance of companies or public accountants with respect to the
preparation, auditing or evaluation of financial statements.
26
DISCLOSURE CONTROLS AND PROCEDURES
While we are not required to provide this information until July of 2006, we are providing the following
information. Our Board of Directors has determined that our Chairman/President, Charles P. Godels, C.P.A.
has developed disclosure controls and procedures that the full Board of Directors believes are in keeping with
the intent of the regulations. As a C.P.A. with over twenty (20) years auditing and financial statement
preparation experience Mr. Godels and the full Board of Directors find the Company’s disclosure controls and
procedures to meet or exceed those required.
INTERNAL CONTROL OVER FINANCIAL REPORTING
The Company believes that addressing this issue prior to July 2006 when the regulations formally require this
disclosure will give a truer picture of the controls the Company has developed. The Board of Directors has
established a regular three (3) month meeting to completely review the financial reporting of the Company.
Our Chairman/President, Charles P. Godels, C.P.A. will be providing a full financial reporting and accounting
of the Company according to the Generally Accepted Accounting Principles and guidelines established by the
American Institute of Certified Public Accountants. The Board of Directors has found no weakness in the
controls that have been established and believes that the quarterly monitoring by the full Board of Directors will
keep those who invest in our Company fully informed of the true financial status of the Company at all times.
Should there be a change in our internal control over financial reporting, this change or changes will be made
available in our reports due to the Securities and Exchange Commission.
EXECUTIVE COMPENSATION
The following table sets forth information concerning the annual and long-term compensation of our Chief
Executive Officer, and the most highly compensated employees and/or executive officers who served at the end
of the fiscal years December 31, 2003 and 2004, and whose salary and bonus exceeded $100,000 for the fiscal
years ended December 31, 2003 and 2004, for services rendered in all capacities to us. The listed individuals
shall be hereinafter referred to as the "Named Executive Officers."
27
Table
8.0 Summary Compensation
|
|
|
|
|
|
Long-Term Compensation
|
|
|
|
|
Annual Compensation
|
Awards
|
Payouts
|
|
|
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(I)
|
|
Name and
principal
position
|
Year
|
Salary
($)
|
Bonus
($)
|
Other
Annual
Compensation($)
|
Restricted
Stock
Award(s)($)
|
Securities
Under-lying
Options/SARs
(#)
|
LTIP
Payouts ($)
|
All
Other
Compensation($)
|
|
Charles P.
Godels (1),
President,
Chairman of
the Board of
Directors
|
2003
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
2004
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
Laura Larsen
(2),
Secretary,
Director
|
2003
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
2004
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
Madanna
Yovino (3),
Treasurer,
Director
|
2003
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
2004
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
Michael T.
Jones (4),
Director
|
2003
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
2004
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
David E.
Dunn (5),
Director
|
2003
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
2004
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
-0-
|
|
(1) There is no employment contract with Mr. Godels at this time. Nor are there any agreements for compensation in the future. A salary
and stock options and/or warrants program may be developed in the future.
|
|
(2) There is no employment contract with Laura Larsen at this time. Nor are there any agreements for compensation in the future. A salary
and stock options and/or warrants program may be developed in the future.
|
|
(3) There is no employment contract with Madanna Yovino at this time. Nor are there any agreements for compensation in the future. A
salary and stock options and/or warrants program may be developed in the future.
|
|
(4) There is no employment contract with Michael T. Jones at this time. Nor are there any agreements for compensation in the future. A
salary and stock options and/or warrants program may be developed in the future.
|
|
(5) There is no employment contract with David E. Dunn at this time. Nor are there any agreements for compensation in the future. A salary
and stock options and/or warrants program may be developed in the future.
|
28
Additional Compensation of Directors
All of our directors are unpaid. Compensation for the future will be determined when and if additional funding
is obtained.
Board of Directors and Committees
Currently, our Board of Directors consists of Mr. Godels, Ms. Larsen, Ms. Yovino, Michael T. Jones and David
E. Dunn. We are not actively seeking additional board members. At present, the Board of Directors has not
established any committees.
Employment Agreements
Currently, we have no employment agreements with any of our Directors or Officers.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth information concerning the beneficial ownership of shares of our common stock
with respect to stockholders who were known by us to be beneficial owners of more than 5% of our common
stock as of November 30, 2005, and our officers and directors, individually and as a group. Unless otherwise
indicated, the beneficial owner has sole voting and investment power with respect to such shares of common
stock.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission
("SEC") and generally includes voting or investment power with respect to securities. In accordance with the
SEC rules, shares of our common stock which may be acquired upon exercise of stock options or warrants
which are currently exercisable or which become exercisable within 60 days of the date of the table are deemed
beneficially owned by the optionees, if applicable. Subject to community property laws, where applicable, the
persons or entities named in Table 5.0 (See "Selling Security Holders") have sole voting and investment power
with respect to all shares of our common stock indicated as beneficially owned by them.
29
Table
9.0 Beneficial Ownership
|
|
|
Amount and Nature of beneficial
Ownership
|
Percent of Class
(1)
|
|
Title of
Class
|
Name and
Address of
Beneficial owner
|
Before
Offering
|
After Offering
|
Before
Offering
|
After Offering
|
|
Common
Stock
|
Charles P. Godels,
President
|
450,000
|
450,000
|
30.12%
|
0.0819%
|
|
|
5950 Bikini Way
N.
|
|
|
|
|
|
|
St. Pete Bch, FL
33706
|
|
|
|
|
|
Common
Stock
|
Marguerite Godels
|
450,000
|
450,000
|
30.12%
|
0.0819%
|
|
|
5950 Bikini Way
N.
|
|
|
|
|
|
|
St. Pete Bch, FL
33706
|
|
|
|
|
|
Common
Stock
|
Laura Larsen
|
13,500
|
13,500
|
0.01%
|
0.0025%
|
|
|
5031 41st Street
South
|
|
|
|
|
|
|
St. Petersburg, FL
33711
|
|
|
|
|
|
Common
Stock
|
Madanna Yovino,
Treasurer
|
13,500
|
13,500
|
0.01%
|
0.0025%
|
|
|
6103 Zelma Rd.
|
|
|
|
|
|
|
Lutz, FL 35558
|
|
|
|
|
|
Common
Stock
|
David E. Dunn
|
13,500
|
13,500
|
0.01%
|
0.0025%
|
|
|
329 Allenview Dr.
|
|
|
|
|
|
|
Mechanicsburg, PA
17055
|
|
|
|
|
|
Common
Stock
|
Michael T. Jones
135 Laughing Gull
Lane
Palm Harbor, FL
34683
|
13,500
|
13,500
|
0.01%
|
0.0025%
|
|
|
|
|
|
|
|
|
|
Common
Stock
|
All Executive
Officers and
Directors as a
Group (1)
|
954,000
|
954,000
|
63.86%
|
17.36%
|
(1) The percentages are based on a Before-Offering total of 1,494,000 shares of common stock issued and outstanding as of the date of this
prospectus and assumes an After-Offering sale of all the additional 4,000,000 shares of common stock and none of the 1,494,000 shares of
our selling security holders' shares.
30
DESCRIPTION OF SECURITIES
General
The following description of our capital stock does not purport to be complete and is subject to and qualified in
its entirety by our Amended and Restated Articles of Incorporation, and By-Laws, which are included as
exhibits to the registration statement of which this prospectus forms a part, and by the applicable provisions of
Florida law.
We are authorized to issue up to 75,000,000 shares of common stock, $0.01 par value per share, of which
1,494,000 shares are issued and outstanding.
Common Stock
Subject to the rights of holders of preferred stock, if any, holders of shares of our common stock are entitled to
share equally on a per share basis in such dividends as may be declared by our Board of Directors out of funds
legally available therefor. There are presently no plans to pay dividends with respect to the shares of our
common stock. Upon our liquidation, dissolution or winding up, after payment of creditors and the holders of
any of our senior securities, including preferred stock, if any, our assets will be divided pro rata on a per share
basis among the holders of the shares of our common stock. The common stock is not subject to any liability for
further assessments. There are no conversion or redemption privileges or any sinking fund provisions with
respect to the common stock and the common stock is not subject to call. The holders of common stock do not
have any pre-emptive or other subscription rights.
Holders of shares of common stock are entitled to cast one vote for each share held at all stockholders' meetings
for all purposes, including the election of directors. The common stock does not have cumulative voting rights.
All of the issued and outstanding shares of common stock are fully paid, validly issued and non-assessable as
determined by our legal counsel, Diane J. Harrison, Esq. whose opinion appears elsewhere as an to this
prospectus.
Preferred Stock
We currently have no provisions to issue preferred stock.
Debt Securities
We currently have no provisions to issue debt securities.
Warrants
We currently have no provisions to issue warrants.
Dividend
We paid cash dividends on our common stock in the amounts of $0.00 and $0.00 to our President, Charles P.
Godels in the years 2004 and 2003 respectively. We anticipate that any earnings, in the foreseeable future, will
be retained for development and expansion of our business and we do not anticipate paying any further cash
dividends in the near future. Our Board of Directors has sole discretion to pay cash dividends with respect to
our common stock based on our financial condition, results of operations, capital requirements, contractual
obligations, and other relevant factors.
Shares Eligible for Future Resale
Upon the effectiveness of the registration statement, of which this prospectus forms a part, we will have
1,494,000 outstanding common shares registered for resale by the selling shareholders in accordance with the
Securities Act of 1933 and there will be 4,000,000 outstanding shares registered for sale by us in accordance
with the Securities Act of 1933.
31
Prior to this registration, no public trading market has existed for shares of our common stock. The sale, or
availability for sale, of substantial amounts of common stock in the public trading market could adversely affect
the market prices for our common stock.
Transfer Agent and Registrar
The transfer agent and registrar for our common stock is Holladay Stock Transfer, Inc., 2939 N. 67
th
Pl., Suite
C, Phoenix, Arizona .
INTEREST OF NAMED EXPERTS AND COUNSEL
Randall N. Drake, C.P.A., independent certified public accountant, whose reports appear elsewhere in this
registration statement, was paid in cash for services rendered. Therefore, he has no direct or indirect interest in
us. Mr. Drake's report is given based on his authority as an expert in accounting and auditing.
Diane J. Harrison, Esq., the counsel who has given an opinion on the validity of the securities being registered
which appears elsewhere in this registration statement, has no direct or indirect interest in us.
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
Our Articles of Incorporation do not include a provision automatically indemnifying a director, officer or
control person of the corporation or its stockholders for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as
such.
Our By-Laws, Article XIV, Section 4, do permit us to indemnify any Director, Officer, agent or employee as to
those liabilities and on those terms and conditions as appropriate and to purchase and maintain insurance on
behalf of any such persons whether or not the corporation would have the power to indemnify such person
against the liability insured against.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors,
officers, and controlling persons of Avalon Development Enterprises, Inc. pursuant to the foregoing provisions,
we have been informed that, in the opinion of the Securities and Exchange Commission, such indemnification
is against public policy as expressed in the Securities Act and is unenforceable.
LEGAL MATTERS
The validity of the common stock offered hereby will be passed upon for Avalon Development Enterprises, Inc.
by Diane J. Harrison, Esq., 6860 Gulfport Blvd. South, No. 162, South Pasadena, Florida 33707.
EXPERTS
Certain of the financial statements of Avalon Development Enterprises, Inc. included in this prospectus and
elsewhere in the registration statement, to the extent and for the periods indicated in their reports, have been
audited by Randall N. Drake, C.P.A., independent certified public accountant, whose reports thereon appear
elsewhere herein and in the registration statement.
32
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
On November 15, 2005, we engaged Randall N. Drake, C.P.A., ("Drake ") as our independent auditor. He is our
first auditor and we have had no disagreements with Drake on any matters of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, in connection with its reports.
WHERE YOU CAN FIND MORE INFORMATION
We will file reports and other information with the U.S. Securities and Exchange Commission. You may read
and copy any document that we file at the SEC's public reference facilities at 450 Fifth Street N.W., Room
1024, Washington, D.C. 20549. Please call the SEC at 1-800-732-0330 for more information about its public
reference facilities. Our SEC filings will be available to you free of charge at the SEC's web site at
<www.sec.gov>.
33
FINANCIAL STATEMENTS
CONTENTS
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Randall
N. Drake, C.P.A., P.A., as of November 30, 2005 (Unaudited)
|
F-2
|
|
Balance Sheet, November 30, 2005 (Unaudited)
|
F-3
|
|
Statement of Income, for the Period Ended November 30, 2005 (Unaudited)
|
F-4
|
|
Statement of Changes in Stockholders' Equity, for the Period Ended November 30, 2005
(Unaudited)
|
F-5
|
|
Statement of Cash Flows, for the Period Ended November 30, 2005 (Unaudited)
|
F-6
|
|
Notes to the Financial Statements, November 30, 2005 (Unaudited)
|
F-7
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Randall
N. Drake, C.P.A., P.A., as of November 30, 2005
|
F-9
|
|
Balance Sheet, for the Year Ended December 31, 2004
|
F-10
|
|
Statement of Income, for the Year Ended December 31, 2004
|
F-11
|
|
Statement of Changes in Stockholders' Equity, for the Year Ended December 31, 2004
|
F-12
|
|
Statement of Cash Flows, for the Year Ended December 31, 2004
|
F-13
|
|
Notes to the Financial Statements, December 31, 2004
|
F-14
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM Randall
N. Drake, C.P.A., P.A., as of December 31, 2003
|
F-16
|
|
Balance Sheet, December 31, 2003
|
F-17
|
|
Statement of Income, for the Year Ended December 31, 2003
|
F-18
|
|
Statement of Changes in Stockholders' Equity, for the Year Ended December 31, 2003
|
F-19
|
|
Statement of Cash Flows, for the Year Ended December 31, 2003
|
F-20
|
|
Notes to the Financial Statements, December 31, 2003
|
F-21
|
|
|
|
F-1
|
Randall N. Drake, C.P.A., P.A.
|
|
1981 Promenade Way
|
|
Clearwater, Florida 33760
|
|
Phone: (727) 536-4863
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
|
|
To the Board of Directors and
|
|
Stockholders of Avalon Development Enterprises, Inc.
|
We have reviewed the accompanying balance sheet of Avalon Development Enterprises, Inc. as of November 30,
2005, and the related statements of income, stockholders’ equity, and cash flows for the eleven months ended
November 30, 2005. These financial statements are the responsibility of the company’s management.
We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board
(United States). A review of financial information consists principally of applying analytical procedures and making
inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit
conducted in accordance with standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly,
we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should be made to the accompanying
financial statements for them to be in conformity with accounting principles generally accepted in the United States
of America.
|
|
|
|
|
/s/Randall N. Drake, CPA, PA
|
|
Randall N. Drake, CPA, PA
|
|
|
|
|
Clearwater, Florida
|
|
|
|
|
|
December 22, 2005
|
|
F-2
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Balance Sheet (Unaudited)
|
|
As of November 30, 2005
|
|
|
|
ASSETS
|
|
|
|
|
Current Assets:
|
|
|
|
Checking/Savings
|
|
|
|
SouthTrust Bank
|
$115.31
|
|
|
Total Checking/Savings
|
115.31
|
|
Total Current Assets
|
115.31
|
|
Fixed Assets:
|
|
|
|
Computer & Office Equipment
|
14,289.29
|
|
|
Accumulated Depreciation
|
(13,421.69)
|
|
|
|
|
|
|
|
Total Fixed Assets
|
867.60
|
|
TOTAL ASSETS
|
$982.91
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
Liabilities
|
|
|
|
Current Liabilities:
|
|
|
|
|
Other Current Liabilities
|
|
|
|
|
|
Income Taxes Payable
|
|
|
|
|
|
Accounts Payable
|
$4,800.00
|
|
|
|
|
Payroll Taxes Payable
|
1,316.00
|
|
|
|
|
Income Taxes Payable
|
|
|
|
|
|
Sales Tax Payable
|
18.97
|
|
|
|
Total Other Current Liabilities
|
6,134.97
|
|
|
Total Current Liabilities
|
6,134.97
|
|
|
Long Term Liabilities:
|
|
|
|
|
Due to Affiliates
|
4,500.00
|
|
|
|
Shareholder Loans - NOTE C
|
5,518.36
|
|
|
Total Long Term Liabilities
|
10,018.36
|
|
Total Liabilities
|
16,153.33
|
|
Stockholders' Equity:
|
|
|
|
Common Stock, $1.00 par value, 7,500 shares
|
|
|
|
|
authorized, 332 shares issued & outstanding
|
332.00
|
|
|
Retained Earnings
|
(15,502.42)
|
|
Total Stockholders' Equity
|
(15,170.42)
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
$982.91
|
|
|
|
|
|
|
|
See accompanying notes and accountant’s report.
|
F-3
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Income (Unaudited)
|
|
For the Eleven Months Ended November 30, 2005
|
|
|
|
Revenue:
|
|
|
|
Cleaning/Maintenance Revenue
|
$20,135.00
|
|
|
Equipment Lease Revenue
|
426.84
|
|
Total Revenue
|
20,561.84
|
|
|
|
20,561.84
|
|
Operating Expenses:
|
|
|
|
Audit Services
|
4,800.00
|
|
|
Auto Expense
|
2,895.00
|
|
|
Bank Service Charges
|
195.00
|
|
|
Contract Labor
|
4,400.00
|
|
|
Depreciation Expense
|
502.00
|
|
|
Insurance
|
100.00
|
|
|
Penalties
|
15.85
|
|
|
Rent - NOTE E
|
3,300.00
|
|
|
Salaries
|
7,000.00
|
|
|
Taxes
|
1,490.50
|
|
Total Operating Expenses
|
24,698.35
|
|
|
|
|
|
Net Income (Loss)
|
($4,136.51)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
Net income (loss) per share
|
($12.54)
|
|
|
|
|
|
See accompanying notes and accountant’s report.
|
F-4
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Changes in Stockholder’s Equity (Unaudited)
|
|
For the Eleven Months Ended November 30, 2005
|
|
|
|
|
|
Common Stock
|
Retained
|
|
|
|
|
Shares
|
Amount
|
Earnings
|
Total
|
|
Balances at January 1, 2005
|
326
|
$326.00
|
($11,365.91)
|
($11,039.91)
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(4,136.51)
|
(4,136.51)
|
|
|
|
|
|
|
|
|
May 29, 2005 Issuance of Common Stock
|
6
|
6.00
|
|
6.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at November 30, 2005
|
332
|
$332.00
|
($15,502.42)
|
($15,170.42)
|
|
|
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
|
|
F-5
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Cash Flows (Unaudited)
|
|
For the Eleven Months Ended November 30, 2005
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
Net Income
|
($4,136.51)
|
|
|
Adjustments to reconcile Net Income
|
|
|
|
to net cash provided by operations:
|
|
|
|
|
Depreciation Expense
|
502.00
|
|
|
|
|
|
|
|
Increase (Decrease) in:
|
|
|
|
|
Accounts Payable
|
4,800.00
|
|
|
|
Income Taxes Payable
|
(688.00)
|
|
|
|
Payroll Taxes Payable
|
1,316.00
|
|
|
|
Sales Tax Payable
|
2.71
|
|
Net cash provided (used) by Operating Activities
|
1,796.20
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
Shareholder Loans
|
(5,477.50)
|
|
|
Issuance of Common Stock
|
6.00
|
|
|
Increase in amounts Due to Afiliates
|
3,300.00
|
|
Net cash provided (used) by Financing Activities
|
(2,171.50)
|
|
|
|
|
Net decrease in cash & cash equivalents
|
(375.30)
|
|
|
|
|
Cash & cash equivalents at beginning of period
|
490.61
|
|
Cash & cash equivalents at end of period
|
$115.31
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
F-6
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements
|
|
November 30, 2005
|
NOTE A – ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated March 29, 1999 in the State of Florida. The Company is in the business of
acquiring and holding commercial real estate for appreciation and generating lease revenues. The Company
also provides ancillary property management products and services such as cleaning and maintenance support
services and facilitating equipment leasing.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of
three months or less to be cash equivalents.
Fixed Assets
Property and equipment are stated at cost. Depreciation is computed using straight-line and accelerated
methods over the estimated useful lives of the assets. Expenditures for major renewals and betterments that
extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
the corporation to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company generates revenue through a variety of commercial real estate services – property leases,
equipment leases and ancillary property management and cleaning / maintenance support services. The
Company provides these services and bills for them on a monthly basis. The Company recognizes its revenue
when its monthly services are completed and its customers are billed.
Income Taxes
Income taxes are provided for the tax effects of transactions reported in the financial statements and consist of
taxes currently due plus deferred taxes, if and when applicable, related primarily to differences between the
bases of certain assets and liabilities for financial and tax reporting. Any deferred taxes would represent the
future tax return consequences of those differences, which will either be taxable when the assets and liabilities
are recovered or settled.
NOTE C – SHAREHOLDER LOANS
Shareholder loans consist of amounts advanced to the Company to fund various working capital needs. These
amounts are non-interest bearing and payable on demand.
F-7
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements (
continued
)
|
|
November 30, 2005
|
NOTE D – RELATED PARTY TRANSACTIONS
The Company currently derives all of its revenue from a commercial lease to a related entity in which the
Company and the related entity have common stockholders. The commercial lease is considered to be at a
prevailing arm’s length market rate.
NOTE E – RENT
The Company sublets its principal business location at 770 First Avenue North, St. Petersburg, Florida on a
month-to-month basis from a customer that has common stockholders with the Company. The monthly rent of
$300.00 is fair market value for the space and usage being provided.
NOTE F – EARNINGS PER COMMON SHARE
Earnings (loss) per common share of ($12.54) were calculated based on a net income numerator of ($4,136.51)
divided by a denominator of 330 weighted-average shares of outstanding common stock. The denominator was
calculated based on the following issuances of common stock during the period ended November 30, 2005:
|
|
January 1, 2004 – 326 common shares outstanding
|
|
|
May 29, 2005 – Issuance of additional six common shares
|
NOTE G – SUBSEQUENT EVENT
On December 5, 2005 the Company’s Board ratified and authorized a 4,500:1 forward stock split that will result
in 1,494,000 issued and outstanding shares.
F-8
|
Randall N. Drake, C.P.A., P.A.
|
|
1981 Promenade Way
|
|
Clearwater, Florida 33760
|
|
Phone: (727) 536-4863
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
|
|
To the Board of Directors and
|
|
Stockholders of Avalon Development Enterprises, Inc.
|
We have audited the accompanying balance sheet of Avalon Development Enterprises, Inc. as of December 31,
2004 and the related statements of income, stockholders’ equity, and cash flows for the period ended December
31, 2004. These financial statements are the responsibility of the company’s management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Avalon Development Enterprises, Inc. as of December 31, 2004 and the results of its operations and
its cash flows for the year ended December 31, 2004 in conformity with accounting principles generally
accepted in the United States of America.
|
|
|
/s/Randall N. Drake, CPA, PA
Randall N. Drake, CPA, PA
|
|
|
|
|
Clearwater, Florida
|
|
|
|
|
|
December 22, 2005
|
|
F-9
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Balance Sheet
|
|
As of December 31, 2004
|
|
|
|
|
ASSETS
|
|
|
Current Assets:
|
|
|
|
SouthTrust Bank
|
$490.61
|
|
Total Current Assets
|
490.61
|
|
|
|
|
Fixed Assets:
|
|
|
|
Computer & Office Equipment
|
14,289.29
|
|
|
Accumulated Depreciation
|
(12,919.69)
|
|
Total Fixed Assets
|
1,369.60
|
|
|
|
|
TOTAL ASSETS
|
$1,860.21
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Sales Tax Payable
|
$16.26
|
|
|
|
Income Taxes Payable
|
688.00
|
|
|
Total Current Liabilities
|
704.26
|
|
|
|
|
|
|
Long Term Liabilities:
|
|
|
|
|
Due to Affiliate
|
1,200.00
|
|
|
|
Shareholder Loans - NOTE C
|
10,995.86
|
|
|
Total Long Term Liabilities
|
12,195.86
|
|
|
|
|
Total Liabilities
|
12,900.12
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
Common Stock, $1.00 par value, 7,500 shares
|
|
|
|
|
authorized, 326 shares issued & outstanding
|
326.00
|
|
|
Retained Earnings
|
(11,365.91)
|
|
Total Stockholders' Equity
|
(11,039.91)
|
|
|
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
$1,860.21
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
F-10
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Income
|
|
For the Year Ended December 31, 2004
|
|
|
|
Revenue:
|
|
|
|
Real Estate Lease Revenue
|
$19,333.36
|
|
|
Equipment Lease Revenue
|
248.70
|
|
Total Revenue
|
19,582.06
|
|
|
|
|
Operating Expenses:
|
|
|
|
Advertising
|
150.00
|
|
|
Amortization Expense
|
1,230.00
|
|
|
Bank Service Charges
|
156.00
|
|
|
Depreciation Expense
|
3,434.69
|
|
|
Interest Expense
|
7,217.89
|
|
|
Management Fees - NOTE D
|
320.00
|
|
|
Penalties
|
406.73
|
|
|
Rent - NOTE E
|
1,200.00
|
|
|
Taxes
|
150.00
|
|
|
Meals & Entertainment
|
855.18
|
|
|
Utilities
|
1,078.31
|
|
Total Operating Expenses
|
16,198.80
|
|
|
|
|
Income From Operations
|
3,383.26
|
|
|
|
|
Other Income:
|
|
|
|
Fixed Asset Dispositions
|
(31,556.38)
|
|
|
Miscellaneous
|
1,551.10
|
|
Total Other Income
|
(30,005.28)
|
|
|
|
|
Income Before Income Taxes
|
(26,622.02)
|
|
|
|
|
Provision for Income Taxes
|
688.00
|
|
|
|
|
Net Income (Loss)
|
($27,310.02)
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share
|
|
|
|
Net income (loss) per share
|
($109.24)
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
F-11
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Changes in Stockholder’s Equity
|
|
For the Year Ended December 31, 2004
|
|
|
|
|
|
Common Stock
|
Retained
|
|
|
|
|
Shares
|
Amount
|
Earnings
|
Total
|
|
Balances at January 1, 2004
|
200
|
$200.00
|
$15,944.11
|
$16,144.11
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
(27,310.02)
|
(27,310.02)
|
|
|
|
|
|
|
|
|
Issuance of Common Stock
|
126
|
126.00
|
|
126.00
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2004
|
326
|
$326.00
|
($11,365.91)
|
($11,039.91)
|
|
|
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
|
|
F-12
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Cash Flows
|
|
For the Year Ended December 31, 2004
|
|
|
|
OPERATING ACTIVITIES
|
|
|
|
Net Income (Loss)
|
($27,310.02)
|
|
|
Adjustments to reconcile Net Income
|
|
|
|
to net cash provided by operations:
|
|
|
|
|
Depreciation Expense
|
3,434.69
|
|
|
|
Amortization Expense
|
1,230.00
|
|
|
|
Loss on Fixed Asset Dispositions
|
31,556.38
|
|
|
|
|
|
|
|
Increase (Decrease) in:
|
|
|
|
|
Security Deposit
|
1,100.00
|
|
|
|
|
|
|
|
Increase (Decrease) in:
|
|
|
|
|
Accounts Payable
|
(180.00)
|
|
|
|
Income Taxes Payable
|
688.00
|
|
|
|
Sales Tax Payable
|
(322.08)
|
|
Net cash provided (used) by Operating Activities
|
10,196.97
|
|
|
|
|
INVESTING ACTIVITIES
|
|
|
|
Acquisition of Fixed Assets
|
(1,712.00)
|
|
Net cash provided (used) by Investing Activities
|
(1,712.00)
|
|
|
|
|
FINANCING ACTIVITIES
|
|
|
|
Repayments to Affiliate
|
(3,177.52)
|
|
|
Payments - Mortgage Payable - SouthTrust Bank
|
(7,910.22)
|
|
|
Shareholder Loans
|
2,493.77
|
|
|
Issuance of Common Stock
|
126.00
|
|
Net cash provided (used)by Financing Activities
|
(8,467.97)
|
|
|
|
|
Net increase in cash & cash equivalents
|
17.00
|
|
|
|
|
Cash & cash equivalents at beginning of year
|
473.61
|
|
Cash & cash equivalents at end of year
|
$490.61
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE:
|
|
|
|
Noncash Investing & Financing Activities:
|
|
|
|
|
Disposition of Fixed Assets
|
$201,899.68
|
|
|
|
Accumulated Depreciation on Disposition of
|
|
|
|
|
Fixed Assets
|
$31,059.39
|
|
|
|
Transfer of Mortgage Payable - SouthTrust
|
|
|
|
|
Bank related to disposition of Fixed Assets
|
$139,283.91
|
|
|
|
|
|
|
See accompanying notes and accountant’s report.
|
|
F-13
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements
|
|
December 31, 2004
|
NOTE A – ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated March 29, 1999 in the State of Florida. The Company is in the business of
acquiring and holding commercial real estate for appreciation and generating lease revenues. The Company
also provides ancillary property management products and services such as cleaning and maintenance support
services and facilitating equipment leasing.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of
three months or less to be cash equivalents.
Fixed Assets
Property and equipment are stated at cost. Depreciation is computed using straight-line and accelerated
methods over the estimated useful lives of the assets. Expenditures for major renewals and betterments that
extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
the corporation to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company generates revenue through a variety of commercial real estate services – property leases,
equipment leases and ancillary property management and cleaning / maintenance support services. The
Company provides these services and bills for them on a monthly basis. The Company recognizes its revenue
when its monthly services are completed and its customers are billed.
Income Taxes
The Company, due to the admission of a corporate shareholder, terminated its election under the Internal
Revenue Code to be an S corporation effective January 1, 2004. The Company is now taxed as a C corporation.
Accordingly, income taxes are provided for the tax effects of transactions reported in the financial statements
and consist of taxes currently due plus deferred taxes, if and when applicable, related primarily to differences
between the bases of certain assets and liabilities for financial and tax reporting. Any deferred taxes would
represent the future tax return consequences of those differences, which will either be taxable when the assets
and liabilities are recovered or settled.
NOTE C – SHAREHOLDER LOANS
Shareholder loans consist of amounts advanced to the Company to fund various working capital needs. These
amounts are non-interest bearing and payable on demand.
F-14
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements (
continued
)
|
|
December 31, 2004
|
NOTE D – RELATED PARTY TRANSACTIONS
The Company currently derives all of its revenue from a commercial lease to a related entity in which the
Company and the related entity have common stockholders. The commercial lease is considered to be at a
prevailing arm’s length market rate. The Company also paid management fees to another related entity for a
variety of supporting services.
NOTE E – RENT
The Company sublets its principal business location at 770 First Avenue North, St. Petersburg, Florida on a
month-to-month basis from a customer that has common stockholders with the Company. The monthly rent of
$300.00 is fair market value for the space and usage being provided.
NOTE F – EARNINGS PER COMMON SHARE
Earnings (loss) per common share of ($107.24) were calculated based on a net loss numerator of ($27,310.02)
divided by a denominator of 250 weighted-average shares of outstanding common stock. The denominator was
calculated based on the following issuances of common stock during the year ended December 31, 2004:
|
|
January 1, 2004 – 200 common shares outstanding
|
|
|
August 4, 2004 – 120 additional common shares issued
|
|
|
November 11, 2004 – 6 additional common shares issued
|
F-15
|
Randall N. Drake, C.P.A., P.A.
|
|
1981 Promenade Way
|
|
Clearwater, Florida 33760
|
|
Phone: (727) 536-4863
|
|
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
|
|
|
|
To the Board of Directors and
|
|
Stockholders of Avalon Development Enterprises, Inc.
|
We have audited the accompanying balance sheet of Avalon Development Enterprises, Inc. as of December 31,
2003 and the related statements of income, stockholders’ equity, and cash flows for the period ended December
31, 2003. These financial statements are the responsibility of the Company’s management. Our responsibility is
to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board
(United States). Those standards require that we plan and perform the audit to obtain reasonable assurance
about whether the financial statements are free of material misstatement. The Company is not required to have,
nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for
our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial
position of Avalon Development Enterprises, Inc. as of December 31, 2003 and the results of its operations and
its cash flows for the year ended December 31, 2003 in conformity with accounting principles generally
accepted in the United States of America.
|
|
|
/s/Randall N. Drake, CPA, PA
Randall N. Drake, CPA, PA
|
|
|
|
|
Clearwater, Florida
|
|
|
|
|
|
December 22, 2005
|
|
F-16
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Balance Sheet
|
|
As of December 31, 2003
|
|
ASSETS
|
|
|
Current Assets:
|
|
|
|
SouthTrust Bank
|
$473.61
|
|
Total Current Assets
|
473.61
|
|
|
|
|
Fixed Assets:
|
|
|
|
770 1st Ave. N. - Building
|
173,432.80
|
|
|
770 1st Ave. N. - Land
|
28,466.88
|
|
|
Computer & Office Equipment
|
12,577.29
|
|
|
Accumulated Depreciation
|
(40,544.39)
|
|
Total Fixed Assets
|
173,932.58
|
|
|
|
|
Other Assets:
|
|
|
|
Loan Origination Fee (less $570.00
|
|
|
|
|
accumulated amortization)
|
1,230.00
|
|
|
Security Deposit
|
1,100.00
|
|
Total Other Assets
|
2,330.00
|
|
|
|
|
TOTAL ASSETS
|
$176,736.19
|
|
|
|
|
LIABILITIES & STOCKHOLDERS' EQUITY
|
|
|
Liabilities:
|
|
|
|
|
Current Liabilities:
|
|
|
|
|
Accounts Payable
|
$180.00
|
|
|
|
Sales Tax Payable
|
338.34
|
|
|
|
Mortgage Payable - SouthTrust Bank -
|
|
|
|
|
|
Current Portion - NOTE C
|
13,560.38
|
|
|
Total Current Liabilities
|
14,078.72
|
|
|
|
|
|
|
Long Term Liabilities:
|
|
|
|
|
Due to Affiliate
|
4,377.52
|
|
|
|
Mortgage Payable - SouthTrust Bank - less
|
|
|
|
|
|
Current Portion above - NOTE C
|
133,633.75
|
|
|
|
Shareholder Loans - NOTE D
|
8,502.09
|
|
|
Total Long Term Liabilities
|
146,513.36
|
|
|
|
|
Total Liabilities
|
160,592.08
|
|
|
|
|
Stockholders' Equity:
|
|
|
|
Common Stock, $1.00 par value, 7,500 shares
|
|
|
|
|
authorized, 200 shares issued & outstanding
|
200.00
|
|
|
Retained Earnings
|
15,944.11
|
|
Total Equity
|
|
16,144.11
|
|
|
|
|
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY
|
$176,736.19
|
|
|
|
|
See accompanying notes and accountant’s report
|
|
F-17
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Income
|
|
For the Year Ended December 31, 2003
|
|
|
|
Revenue
|
$29,000.04
|
|
|
|
|
Operating Expenses:
|
|
|
|
Amortization Expense
|
$120.00
|
|
|
Bank Service Charges
|
150.00
|
|
|
Car/Truck Expense
|
1,407.23
|
|
|
Depreciation Expense
|
5,158.52
|
|
|
Interest Expense
|
12,152.40
|
|
|
Management Fees - NOTE E
|
2,050.00
|
|
|
Office Supplies
|
179.09
|
|
|
Taxes
|
150.00
|
|
|
Meals & Entertainment
|
371.72
|
|
Total Operating Expenses
|
21,738.96
|
|
|
|
|
Net Income
|
$7,261.08
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) per common share:
|
|
|
|
Net income (loss) per share
|
$36.31
|
|
|
|
|
|
See accompanying notes and accountant’s report
|
|
F-18
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Changes in Stockholder’s Equity
|
|
For the Year Ended December 31, 2003
|
|
|
|
|
|
Common Stock
|
Retained
|
|
|
|
|
Shares
|
Amount
|
Earnings
|
Total
|
|
Balances at January 1, 2003
|
200
|
$200.00
|
$8,683.03
|
$8,883.03
|
|
|
|
|
|
|
|
|
Net Income (Loss)
|
|
|
7,261.08
|
7,261.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balances at December 31, 2003
|
200
|
$200.00
|
$15,944.11
|
$16,144.11
|
|
|
|
|
|
|
|
See accompanying notes and accountant’s report
|
|
|
|
F-19
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Statement of Cash Flows
|
|
For the Year Ended December 31, 2003
|
|
|
|
OPERATING ACTIVITIES:
|
|
|
|
Net Income
|
$7,261.08
|
|
|
Adjustments to reconcile Net Income
|
|
|
|
to net cash provided by operations:
|
|
|
|
|
Depreciation Expense
|
5,158.52
|
|
|
|
Amortization Expense
|
120.00
|
|
|
|
|
|
|
|
Increase (decrease) in:
|
|
|
|
|
Accounts Payable
|
180.00
|
|
|
|
Sales Tax Payable
|
338.34
|
|
Net cash provided (used) by Operating Activities
|
13,057.94
|
|
|
|
|
INVESTING ACTIVITIES:
|
|
|
|
Fixed asset acquisitions
|
(337.05)
|
|
Net cash provided (used) by Investing Activities
|
(337.05)
|
|
|
|
|
FINANCING ACTIVITIES:
|
|
|
|
Repayments to Afiliate
|
(2,750.00)
|
|
|
Payments - Mortgage Payable - SouthTrust Bank
|
(10,657.90)
|
|
|
Additional Shareholder Loans
|
1,087.69
|
|
Net cash provided (used) by Financing Activities
|
(12,320.21)
|
|
|
|
|
Net increase in cash & cash equivalents
|
400.68
|
|
|
|
|
Cash & cash equivalents at beginning of year
|
72.93
|
|
Cash & cash equivalents at end of year
|
$473.61
|
|
|
|
|
See accompanying notes and accountant’s report
|
|
F-20
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements
|
|
December 31, 2003
|
NOTE A – ORGANIZATION AND NATURE OF BUSINESS
The Company was incorporated March 29, 1999 in the State of Florida. The Company is in the business of
acquiring and holding commercial real estate for appreciation and generating lease revenues. The Company
also provides ancillary property management products and services such as cleaning and maintenance support
services and facilitating equipment leasing.
NOTE B – SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers all short-term securities with a maturity of
three months or less to be cash equivalents.
Fixed Assets
Property and equipment are stated at cost. Depreciation is computed using straight-line and accelerated
methods over the estimated useful lives of the assets. Expenditures for major renewals and betterments that
extend the useful lives of property and equipment are capitalized. Expenditures for maintenance and repairs are
charged to expense as incurred.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires
the corporation to make estimates and assumptions that affect certain reported amounts and disclosures.
Accordingly, actual results could differ from those estimates.
Revenue Recognition
The Company generates revenue through a variety of commercial real estate services – property leases,
equipment leases and ancillary property management and cleaning / maintenance support services. The
Company provides these services and bills for them on a monthly basis. The Company recognizes its revenue
when its monthly services are completed and its customers are billed.
Income Taxes
The Company, with the consent of its shareholders, has elected under the Internal Revenue Code to be an S
corporation. In lieu of corporation income taxes, the shareholders of an S corporation are taxed on their
proportional share of the Company’s taxable income. Therefore, no provision or liability for income taxes have
been included in these financial statements.
F-21
|
AVALON DEVELOPMENT ENTERPRISES, INC.
|
|
Notes to Financial Statements (
continued
)
|
|
December 31, 2003
|
NOTE C – MORTGAGE PAYABLE – SOUTHTRUST BANK
The Mortgage Payable to SouthTrust Bank, dated April 1, 1999 in the original amount of $188,000.00, is
payable over fifteen (15) years with adjustments to the interest rate every five (5) years based on an index of the
Weekly Average Yield on United States Treasury Securities plus 2.75%. For the initial five-year period the
interest rate is 8.40% requiring monthly payments of $1,854.11. The mortgage is secured by the real estate
located at 7701
st
Avenue North, St. Petersburg, Florida along with an undeveloped commercial lot located in
Pinellas Park, Florida.
Scheduled principal maturities of the mortgage over the next five years are as follows:
|
Year ending December 31,
|
|
|
2004
|
$ 9,665.12
|
|
2005
|
$ 10,508.98
|
|
2006
|
$ 11,426.55
|
|
2007
|
$ 12,424.22
|
|
2008
|
$ 13,508.98
|
|
Thereafter
|
$ 89,660.28
|
NOTE D – SHAREHOLDER LOANS
Shareholder loans consist of amounts advanced to the Company to fund various working capital needs. These
amounts are non-interest bearing and payable on demand.
NOTE E – RELATED PARTY TRANSACTIONS
The Company currently derives all of its revenue from a commercial lease to a related entity in which the
Company and the related entity have common stockholders. The commercial lease is considered to be at a
prevailing arm’s length market rate. The Company also paid management fees to another related entity for a
variety of supporting services.
NOTE F – EARNINGS PER COMMON SHARE
Earnings (loss) per common share of $36.31 were calculated based on a net profit numerator of $7,261.08
divided by a denominator of 200 weighted-average shares of outstanding common stock.
F-22
TABLE OF CONTENTS
PROSPECTUS SUMMARY
RISK FACTORS
A NOTE CONCERNING FORWARD-LOOKING STATEMENTS
USE OF PROCEEDS
DETERMINATION OF OFFERING PRICE
DILUTION
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
IMPACT OF THE "PENNY STOCK" RULES ON BUYING OR SELLING OUR COMMON STOCK
SELLING SECURITY HOLDERS
PLAN OF DISTRIBUTION
DESCRIPTION OF BUSINESS
LEGAL PROCEEDINGS
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF
OPERATIONS
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS
AUDIT COMMITTEE
DISCLOSURE CONTROLS AND PROCEDURES
INTERNAL CONTROL OVER FINANCIAL REPORTING
EXECUTIVE COMPENSATION
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
DESCRIPTION OF SECURITIES
INTEREST OF NAMED EXPERTS AND COUNSEL
DISCLOSURE OF COMMISSION POSITION ON INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES
LEGAL MATTERS
EXPERTS
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
WHERE YOU CAN FIND MORE INFORMATION
FINANCIAL STATEMENTS
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
SIGNATURES
PART II
INFORMATION NOT REQUIRED IN THE PROSPECTUS
Item 24. Indemnification of Directors and Officers
Title XXXVI, Chapter 607 of the Florida Statutes permits corporations to indemnify a director, officer or
control person of the corporation for any liability asserted against him and liability and expenses incurred by
him in his capacity as a director, officer, employee or agent, or arising out of his status as such, whether or not
the corporation has the authority to indemnify him against such liability and expense. Our Articles of
Incorporation and By-Laws do not include such a provision automatically indemnifying a director, officer or
control person of the corporation or its stockholders for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out of his status as
such.
Our By-Laws, Article XIV, Section 4, allow us to indemnify actions under our emergency by-laws regardless of
whether or not Florida law would permit indemnification.
We have been advised that it is the position of the Securities and Exchange Commission that insofar as the
foregoing provisions may be invoked to disclaim liability for damages arising under the Securities Act of 1933,
as amended, that such provisions are against public policy as expressed in the Securities Act and are therefore
unenforceable.
Item 25. Other Expenses of Issuance and Distribution
The following table sets forth the costs and expenses payable by Avalon Development Enterprises, Inc. in
connection with the sale of the securities being registered. All amounts are estimates except the Securities and
Exchange Commission registration fee and the Accounting Fees and Expenses:
|
Registration Fee
|
$100.00
|
|
Federal taxes, state taxes and fees
|
$0.00
|
|
Printing and Engraving Expenses
|
$2,000.00
|
|
Accounting Fees and Expenses
|
$10,000.00
|
|
Legal Fees and Expenses
|
$25,000.00
|
|
Transfer Agent's Fees and Expenses
|
$2,000.00
|
|
Miscellaneous
|
$2,000.00
|
|
Total
|
$41,100.00
|
We will bear all the costs and expenses associated with the preparation and filing of this registration statement
including the registration fees of the selling security holders.
II-1
Item 26. Recent Sales of Unregistered Securities
Set forth below is information regarding the issuance and sales of Avalon Development Enterprises, Inc.'s
common stock without registration during the last three years. No sales involved the use of an underwriter and
no commissions were paid in connection with the sale of any securities.
The following securities of Avalon Development Enterprises, Inc. were issued by Avalon within the past three
(3) years and were not registered under the Securities Act of 1933:
(a) Upon incorporation there were 100 shares of common stock issued pursuant to the exemption from
registration contained within Section 4(2) of the Securities Act of 1933. These shares were issued for paid-in-capital and were not a part of a public offering. The following individual received stock in this issuance:
|
Name of Stockholder
|
Shares Received
|
Method of Payment
|
|
Charles P. Godels,
President/Treasurer/Chairman
|
100
|
$100.00 Check
|
(b) On March 29, 1999 the following individual was issued shares from treasury for additional paid-in-capital.
These shares were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the shares
were not a part of a public offering. There was no distribution of a prospectus, private placement
memorandum, or business plan to the public. Shares were sold to the wife of the President, Charles P. Godels.
Marguerite Godels had specific knowledge of the Company’s operation that was given to her personally by the
President, Charles P. Godels. She is considered educated and informed concerning small investments, such as
the $100.00 investment in our Company.
|
Name of Stockholder
|
Shares Received
|
Consideration
|
|
Marguerite Godels
|
100
|
$100.00Check
|
(c) Additionally, on August 4, 2004 shares were issued from treasury for additional paid-in capital. These
shares were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the shares were
not a part of a public offering. There was no distribution of a prospectus, private placement memorandum, or
business plan to the public. Shares were sold to personal business acquaintances of the President, Charles P.
Godels. Each individual had specific knowledge of the Company’s operation that was given to them personally
by the President, Charles P. Godels. Each individual is considered educated and informed concerning small
investments, such as the $3.00 investment in our Company.
II-2
|
Name of Stockholder
|
Shares Received
|
Consideration
|
|
Michael B. Cranfill
|
3
|
$3.00 Check
|
|
Barbara S. Cranfill
|
3
|
$3.00 Check
|
|
Theresa M. Foley
|
3
|
$3.00 Check
|
|
Christine M. Foley
|
3
|
$3.00 Check
|
|
Roger Spinelli
|
3
|
$3.00 Check
|
|
Marianne Spinelli
|
3
|
$3.00 Check
|
|
Virginia Valenote
|
3
|
$3.00 Check
|
|
Michael T. Jones
|
3
|
$3.00 Check
|
|
Kathryn D. Jones
|
3
|
$3.00 Check
|
|
Karen Heiser
|
3
|
$3.00 Check
|
|
George Schuster
|
3
|
$3.00 Check
|
|
Eugene A. Cote
|
3
|
$3.00 Check
|
|
Marie A. Cote
|
3
|
$3.00 Check
|
|
Stephen P. Brakke
|
3
|
$3.00 Check
|
|
Lynda L. Wood
|
3
|
$3.00 Check
|
|
Joseph Yovino
|
3
|
$3.00 Check
|
|
Madanna Yovino
|
3
|
$3.00 Check
|
|
Celesta M. Godels
|
3
|
$3.00 Check
|
|
James E. Eyers
|
3
|
$3.00 Check
|
|
Salvatore N. Gattuso
|
3
|
$3.00 Check
|
|
Denise Gattuso
|
3
|
$3.00 Check
|
|
Kelly N. Roberts
|
3
|
$3.00 Check
|
|
Laura B. Adams
|
3
|
$3.00 Check
|
|
John H. Adams
|
3
|
$3.00 Check
|
|
Laura Larsen
|
3
|
$3.00 Check
|
|
Lawrence Larsen
|
3
|
$3.00 Check
|
|
Brian Bell
|
3
|
$3.00 Check
|
|
Michael J. Daniels
|
3
|
$3.00 M.O.
|
|
Dave & Leta High
|
3
|
$3.00 Check
|
|
George J. & Karen Freed
|
3
|
$3.00 Check
|
|
Nancy F. & Ronald J Carney
|
3
|
$3.00 Check
|
|
David E. Dunn
|
3
|
$3.00 Check
|
|
Deborah K. Dunn
|
3
|
$3.00 Check
|
|
Michael Spinelli
|
3
|
$3.00 Check
|
|
Connie Lee Spinelli
|
3
|
$3.00 Check
|
|
Jeffrey L. Mestler
|
3
|
$3.00 Check
|
|
Karen L. Mestler
|
3
|
$3.00 Check
|
|
Staci C. Earl
|
3
|
$3.00 Check
|
|
Joseph & Ruth Scutero
|
3
|
$3.00 Check
|
|
Monica Munoz
|
3
|
$3.00 Check
|
II-3
(d) Additionally, on November 11, 2004 shares were issued from treasury for additional paid-in capital. These
shares were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the shares were
not a part of a public offering. There was no distribution of a prospectus, private placement memorandum, or
business plan to the public. Shares were sold to personal business acquaintances of the President, Charles P.
Godels. Each individual had specific knowledge of the Company’s operation that was given to them personally
by the President, Charles P. Godels. Each individual is considered educated and informed concerning small
investments, such as the $3.00 investment in our Company.
|
Name of Stockholder
|
Shares Received
|
Consideration
|
|
Sanford H. Barber
|
3
|
$3.00 Check
|
|
Carol B. Barber
|
3
|
$3.00 Check
|
(e) Additionally, on February 15, 2005 shares were issued from treasury for additional paid-in capital. These
shares were exempt from registration pursuant to Section 4(2) of the Securities Act of 1933 as the shares were
not a part of a public offering. There was no distribution of a prospectus, private placement memorandum, or
business plan to the public. Shares were sold to personal business acquaintances of the President, Charles P.
Godels. Each individual had specific knowledge of the Company’s operation that was given to them personally
by the President, Charles P. Godels. Each individual is considered educated and informed concerning small
investments, such as the $3.00 investment in our Company.
|
Name of Stockholder
|
Shares Received
|
Consideration
|
|
Michael J. Valenote
|
3
|
$3.00 Check
|
|
Carol A. Valenote
|
3
|
$3.00 Check
|
Item 27. Index of Exhibits
The following Exhibits are filed as part of this Registration Statement, pursuant to Item 601 of Regulation S-B.
All Exhibits are attached hereto unless otherwise noted.
|
Exhibit
No.
|
Description
|
|
3(i)
|
Amended and Restated Articles of Incorporation
|
|
3(ii)
|
By-Laws
|
|
5
|
Opinion Regarding Legality and Consent of Counsel: by Diane J. Harrison, Esq.
|
|
14
|
Code of Ethics
|
|
23
|
Consent of Independent Registered Public Accounting Firm, Randall N. Drake,
C.P.A.
|
|
24
|
Power of Attorney
|
|
99.1
|
Net Lease
|
|
99.2
|
Extension to Net Lease
|
|
99.3
|
Equipment Rental Contract
|
II-4
Item 28. Undertakings
(1) The undersigned Registrant hereby undertakes to file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement:
(a) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933.
(b) To reflect in the prospectus any facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement; notwithstanding the foregoing,
any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of the estimated maximum
offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if,
in the aggregate, the changes in the volume and price represent no more than a twenty percent change in the
maximum aggregate offering price set forth in the "calculation of registration fee" table in the effective
registration statement.
(c) To include any material information with respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the registration statement.
(2) The undersigned Registrant hereby undertakes that, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(3) The undersigned Registrant hereby undertakes to remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the termination of the offering.
(4) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to
directors, officers and controlling persons of the undersigned Registrant according the foregoing provisions, or
otherwise, the undersigned Registrant has been advised that in the opinion of the SEC such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid
by a director, officer or controlling person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final adjudication of such issue.
II-5
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable
grounds to believe that it meets all of the requirements for filing on Form SB-2 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto duly
authorized by the Board of Directors at a Special Meeting of the Board of
Directors on December 22, 2005 (a copy of the certified meeting minutes are
attached hereto as Exhibit 24), in the City of St. Petersburg, State of Florida, on January 6, 2006.
|
(Registrant)
Avalon Development Enterprises, Inc.
|
|
By: /s/ Charles P. Godels
|
|
Charles P. Godels
|
|
President , Chairman of the Board of Directors
|
