April 21, 2014 |
Date of Report (Date of earliest event reported) |
Synergy Strips Corp. |
(Exact Name of Registrant as Specified in Charter) |
Nevada | 333-185103 | 99-0379440 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||
2105 Burton Branch Road |
Algood, TN 38506 |
(Address of Principal Executive Offices) |
(855) 659-4643 |
(Registrant’s telephone number, including area code) |
Oro Capital Corporation |
23 Dassan Island Drive |
Plettenberg Bay, 6600 |
South Africa |
(Former Name or Former Address, if Changed Since Last Report.) |
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
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- 2 - |
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Former shareholders of Synergy hold 16,000,000 shares of the Company’s common stock, or approximately 23.84% of the Company;
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Holders of common stock of the Company prior to the Merger will continue to hold 44,100,000 shares of the Company’s common stock, or approximately 65.72% of the Company; and
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Investors under the private placement offering conducted in connection with the Merger will hold 2,000,000 shares of the Company’s common stock, or approximately 2.98% of the Company.
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1.
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Energy strip available in spearmint and cinnamon which releases 40mg of caffeine per strip via dissolving on a consumer’s tongue.
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1. | Sleep strips which aid in the deprivation of sleep |
2. | Cough Strips which aid an individual from coughing and has similar effects to a cough drop |
3. | Nicotine strips which release nicotine and aids in the prevention of smoking |
4. | Multi vitamin strips which release a blend of multivitamins necessary for optimal health |
5. | Weight loss strips which prevent over eating by individuals thereby curbing appetite and weight |
6. | Dog vitamin strips which help dogs have optimal health |
7. | Immunity strips with release antioxidants to support optimal health |
Synergy currently outsources it research and development to a third party experienced in the development of such technologies, which is led by a group of experienced scientists.
The Company will rely on legal and operational compliance programs, as well as local counsel, to guide its businesses in complying with applicable laws and regulations of the jurisdictions in which they do business.
The Company does not anticipate, at this time, that the cost of compliance with U.S. and foreign laws will have a material financial impact on its operations, business or financial condition. There are however no guarantees that new regulatory and tariff legislation may not have a material negative effect on its business in the future.
Synergy has no full or part time employees. The Company intends to grow its employee base based on the demands and requirements of the business.
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maintain and improve our products and technology;
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expand our product offerings and maintain the high quality of products offered;
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manage our expanding operations, including the integration of any future acquisitions;
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obtain sufficient working capital to support our expansion and to fill customers’ orders on time;
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maintain adequate control of our expenses;
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implement our product development, marketing, sales, and acquisition strategies and adapt and modify them as needed; and
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anticipate and adapt to changing conditions in the markets in which we operate as well as the impact of any changes in government regulation, mergers and acquisitions involving our competitors, technological developments, and other significant competitive and market dynamics.
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obtain the clearance of the FDA and international agencies before we can market and sell our products;
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satisfy these agencies’ content requirements for all of our labeling, sales and promotional materials; and
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undergo rigorous inspections by these agencies.
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laws and policies affecting trade, investment and taxes, including laws and policies relating to the repatriation of funds and withholding taxes, and changes in these laws;
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changes in local regulatory requirements, including restrictions on conversions;
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differing cultural tastes and attitudes;
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differing degrees of protection for intellectual property;
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financial instability;
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instability of foreign economies and governments; and
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war and acts of terrorism.
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1.
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We have insufficient quantity of dedicated resources and experienced personnel involved in reviewing and designing internal controls. As a result, a material misstatement of the interim and annual financial statements could occur and not be prevented or detected on a timely basis.
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2.
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We have not achieved the optimal level of segregation of duties relative to key financial reporting functions.
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We do not have a formal audit committee with a financial expert, and thus we lack the board oversight role within the financial reporting process
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Results of Operations for the Fiscal Year Ended December 31, 2013
For the fiscal year ended December 31, 2013, our cost of revenue was $6,323. This was primarily due to securing the U.S. military via a distributor in the U.S.
Operating Expenses
For the fiscal year ended December 31, 2013, our operating expenses were $54,753. This was primarily due to promoting the Synergy brand throughout North America.
Net income (loss)
For the fiscal year ended December 31, 2013, our net loss was $(50,293). This was primarily due to increased spending on developing the Synergy brand and securing penetration in the U.S. market.
For the fiscal year ended December 31, 2013, we used net cash of $42,293 in operating activities.
Net cash provided by financing activities
For the fiscal year ended December 31, 2013, financing activities provided $42,293 from a related party.
Payments due by Period
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Contractual Obligations
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Less than
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One to
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Three to
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More Than
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At December 31, 2013
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One Year
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Three Years
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Five Years
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Five Years
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Total
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Operating Lease Obligations
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$
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-
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$
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$
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-
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$
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-
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$
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Long-Term Debt Obligations
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$
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-
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$
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-
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$
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$
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$
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Capital Lease Obligations
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$
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-
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$
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$
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-
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$
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$
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Purchase Obligations
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$
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$
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$
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$
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$
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Other Long-Term Liabilities
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$
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$
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$
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$
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$
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- 21 - |
Use of Estimates. The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates. Significant estimates include, but are not limited to, the collectability of accounts receivable and the estimates used when evaluating long-lived assets for impairment. Estimates are used for, but are not limited to, determining the following: allowance for doubtful accounts and inventory valuation reserves, recoverability of long-lived assets, and useful lives used in depreciation and amortization.
Cash and cash equivalents. The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and 2012, the Company had no cash equivalents.
Income taxes. The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Fair Value of Financial Instruments. We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Level 1 instruments include cash, account receivable, prepaid expenses, inventory and account payable and accrued liabilities. The carrying values are assumed to approximate the fair value due to the short term nature of the instrument.
The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:
o | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe our carrying value of level 1 instruments approximate their fair value at December 31, 2013 and 2012 due to their short term nature. |
o | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
o | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including NYMEX price quotations and contract terms. |
Advertising. The Company expenses advertising costs as incurred. The Company’s advertising expenses totaled $235, and $0 for the year ended December 31, 2013 and for the period from January 24, 2012 (inception) to December 31, 2013, respectively.
Earnings (Loss) Per Share. Net earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Recent accounting pronouncements. There are no recent accounting pronouncements that have had a material impact on our financial statements. Year-end The Company has adopted December 31, as its fiscal year end .
- 22 - |
Name and Address of Beneficial Owner (1) |
Shares Beneficially Owned | Percentage Beneficially Owned (2) |
Directors and Executive Officers | ||
Danny Aaron, President, Chief Executive Officer, Chief Financial Officer, Secretary and Treasurer and Director 23 Dassan Island Drive Plettenberg Bay, 6600, South Africa |
14,100,000 | 31.97% |
All Officers and Directors as a Group | 14,100,000 | 31.97% |
5% Shareholders | ||
Danny Aaron 23 Dassan Island Drive Plettenberg Bay, 6600, South Africa |
14,100,000 | 31.97% |
Redfern Investors Ltd. Suite E-2, Union Court Building Elizabeth Ave. & Shirley St. Nassau, Bahamas |
2,812,500 | 6.38% |
(1) | Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table. |
(2) | Based on 44,100,000 shares of our common stock outstanding as of April 21, 2014, prior to the Closing of the Merger and the Offering. |
Security Ownership After the Merger
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Name and Address of
Beneficial
Owner (1)
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Shares Beneficially Owned
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Percentage
Beneficially Owned (2)
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Directors and Executive Officers
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Mark Suponitsky, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
2105 Burton Branch Road, Algood, TN 38506
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0
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0%
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Jordin Mendelsohn, Director
2105 Burton Branch Road, Algood, TN 38506
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0
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0%
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All Officers and Directors as a Group
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0
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0%
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5% Shareholders
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Danny Aaron
23 Dassan Island Drive
Plettenberg Bay, 6600, South Africa
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14,100,000
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21.01%
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(1)
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Beneficial ownership has been determined in accordance with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding for the purpose of computing the percentage ownership of any other person shown in the table.
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(2)
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Based on 67,100,000 shares of our common stock outstanding as of April 21, 2014, after giving effect to the Closing of the Merger and the issuance of the Offering Shares.
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Name
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Age
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Position
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Mark Suponitsky
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58
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Mark Suponitsky, President, Chief Executive Officer, Chief Financial Officer, Secretary, Treasurer and Director
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Jordin Mendelsohn
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64
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Director
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In carrying out its responsibilities, the Board will consider candidates suggested by shareholders. If a shareholder wishes to formally place a candidate’s name in nomination, however, he or she must do so in accordance with the provisions of the Company’s Bylaws. Suggestions for candidates to be evaluated by the proposed directors must be sent to the Board of Directors, c/o Synergy Strips Corp., 2105 Burton Branch Road, Algood, TN 38506.
Although our common stock is currently quoted on the OTCQB marketplace operated by the OTC Markets Group, Inc., there has been minimal trading with respect to our common stock on the OTCQB.
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(a)
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is not liable pursuant to Nevada Revised Statute 78.138, or
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(b)
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acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
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(a)
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is not liable pursuant to Nevada Revised Statute 78.138; or
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(b)
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acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.
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(a)
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the creation of a trust fund;
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(b)
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the establishment of a program of self-insurance;
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(c)
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the securing of its obligation of indemnification by granting a security interest or other lien on any assets of the corporation; and
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(d)
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the establishment of a letter of credit, guaranty or surety
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(a)
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by the shareholders;
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(b)
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by the board of directors by majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding;
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(c)
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if a majority vote of a quorum consisting of directors who were not parties to the action, suit or proceeding so orders, by independent legal counsel in a written opinion, or
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(d)
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if a quorum consisting of directors who were not parties to the action, suit or proceeding cannot be obtained, by independent legal counsel in a written opinion.
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Name
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Age
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Position
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Mark Suponitsky
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58
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President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
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Jordin Mendelsohn
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64
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Director
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On April 28, 2014, upon receipt of approval from the Financial Industry Regulatory Authority (“FINRA”), the Registrant amended its Articles of Incorporation to change its name from “Oro Capital Corporation” to “Synergy Strips Corp” (the “Name Change”).
In connection with the Name Change described in Item 5.03 above, on April 28, 2014, FINRA assigned the Company a new stock symbol, “SNYL”.
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(a)
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Financial Statements of the Business Acquired
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(b)
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Unaudited Pro Forma
Financial Information
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(d)
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Exhibits
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Exhibit Number
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Description
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2.1
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Agreement and Plan of Merger dated April 21, 2014 (incorporated by reference to the Registrant’s Current Report on Form 8-K filed on April 9, 2014)
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3.1(a)
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Articles of Incorporation (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on November 21, 2012)
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3.1(b)
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Text
of Amendment to Articles of Incorporation *
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3.2
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Bylaws (incorporated by reference to the Registrant’s Registration Statement on Form S-1 filed on November 21, 2012)
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10.1
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Sales
and Marketing Consultant and Distribution Agreement, dated April 2, 2014, between Synergy Strips Corp. and Kenek Brands Inc.
*
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21
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List
of Subsidiaries – Synergy Strips Corp. *
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99.1
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Audited
Financial Statements of Synergy as of December 31, 2013 and 2012 *
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99.2
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Unaudited
Pro Forma Financial Statements*
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SYNERGY
STRIPS CORP.
a Nevada corporation
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Dated:
May 7, 2014
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By:
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/s/ Mark Suponitsky
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Name: Mark Suponitsky
Title: President and Chief Executive Officer
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Exhibit 3.1(b)
1. | Name of Corporation: Synergy Strips Corp. |
SALES AND MARKETING CONSULTANT AND DISTRIBUTION AGREEMENT
April 2, 2014
This will confirm the arrangement, terms and conditions pursuant to which Kenek Brands Inc (“Consultant”) has been retained to serve as a consultant and advisor to Synergy Strips Corp. (“the Company”). The undersigned hereby agree to the following terms and conditions:
1. | Duties of Consultant The Consultant will provide such consulting services and advice pertaining to the Company’s business affairs as the Company may from time to time reasonably request. Consulting and advisory services shall take place at the mutual convenience of the Company and the Consultant. Without limiting the generality of the foregoing, Consultant will primarily assist the Company in developing, expanding and managing an extensive network of Broker/Sales/Retailers groups and aid in the strategic direction of the Company’s sales and planning. |
2. | Term of the Agreement The effective date of this Agreement shall be as of April 2, 2014. The term of this Agreement shall be for a one (1) year period and will be self-renewing at the end of the one (1) year period for an additional term unless otherwise terminated as set forth in this agreement prior to. Termination (as in paragraph 12) of this Agreement shall not affect the Company’s agreement to not circumvent Consultant or to indemnify Consultant (as in paragraphs 9 and 10). |
3. | Available Time Consultant shall make available such time as, in its sole discretion, it shall deem appropriate for the performance of its obligations under this Agreement. The Company acknowledges and agrees that Consultant will perform consulting or other services for other companies, subject to confidentiality agreement herein (paragraph 8). |
4. | Compensation As compensation for Consultant’s services hereunder, the Company shall pay to the Consultant as follows: |
a. | Monthly Retainer Upon execution of the Agreement, the Company will advance the Consultant $9,000 USD on the 1 st of each month until this agreement is mutually terminated subject to paragraph 12 herein. |
b. | Sales Commission A two percent (2%) commission override will be paid on all product sales on products that Consultant or his sales agents or brokers introduce to the Company. |
c. | Agreement Termination The termination of this Agreement (as in paragraph 11), shall not affect the payment of success compensation to Consultant as well as the share options described below in subparagraph (e) herein. |
d. | Payment of Compensation At the end of each month, Consultant sales commission will be paid by the Company based on all sales generated as provided for in Section 4 (b). |
e. | Share Options The Consultant will receive one (1) Million share options of the Company at a strike price of $0.25/per share which will vest in full upon signing of this agreement |
5. | Expenses The Company will reimburse the Consultant for all out of pocket expenses incurred to perform the duties set out in this agreement, specifically but not limited to travel, meals and lodging as required. The Company will establish an expense policy which will include that the Company will be required to reimburse Consultant at a minimum on a monthly basis or within seven days of receiving the Consultant’s expenses, whichever is earlier. |
6. | Relationship Nothing herein shall constitute Consultant as an employee or agent of the Company. It is understood that Consultant will be an independent contractor. Except to such extent as may hereinafter be expressly agreed for a specific purpose, Consultant shall not have the authority to obligate or commit the Company in any manner whatsoever. All decisions relating to products sold remain the sole responsibility of the Company (ingredients, packaging, pricing, shipping, financial, promotion, etc.) |
7. | Information The Company acknowledges the Consultant will rely on information furnished by the Company concerning the Company’s business affairs without independent certification, and the Company represents that such information will be materially complete and correct. |
8. | Confidentiality Except in the course of the performance of duties hereunder, Consultant and the Company agree that both parties shall not disclose any trade secrets, know-how, or other proprietary information not in the public domain, learned as a result of this Agreement unless and until such information becomes generally known. |
a. Unless Consultant or the Company comes under direct subpoena to disclose this information to a court.
9. | Mutual Non-circumvention The Company and the Consultant agree to a mutual non-circumvention on all aspects of the business. The Company, its representatives, and other consultants agree not to approach parties introduced by Consultant, on behalf of other companies with which they may be involved, without permission and involvement of Consultant. The Company agrees that the list of contacts introduced by Consultant shall be deemed confidential, and shall not be disclosed in part or in whole by another party without Consultant’s express permission. The Consultant agrees to the exact same non-circumvention provisions as it pertains to anyone that the Company introduces to the Consultant and the Consultant is bound by the same non-circumvention provisions that the Company has agreed to as described in this paragraph. |
10. | Mutual Indemnification The Company and the Consultant agree to a mutual indemnification. The Consultant agrees to indemnify and hold harmless the Company, its partners, officers, directors, and employees, from the and against any losses, claims, damages, liabilities, and expenses whatsoever (including reasonable costs of investigation or defending any action) to which they or any of them may become subject under any applicable law arising out of Consultant’s performance under this Agreement. The Company agrees to indemnify the |
Consultant for all of the same issues and provisions described in this paragraph, which results in a mutual indemnification.
11. | Title The Consultant shall operate its duties as set out in this agreement with the title of “Global Business Development”. |
12. | Termination Upon the happening of any one or more of the following events, in addition to any other rights and remedies available, either party may cancel and terminate this Agreement by giving ninety (90) days prior written notice to the other party. |
a. Upon termination or non-renewal of this Agreement, the Company shall pay to the Consultant, during the first two (2) years only following termination; 50 percent(%) or (1%) of all sales commissions earned on all product sales from products that the Consultant or his sales agents or brokers introduce to the Company.
13. | Assignment This Agreement shall not be assignable without the written consent of the other party. Notwithstanding the foregoing, either party may assign this Agreement to an affiliated company or to a successor company by merger or sale. |
14. | Standard of Care Consultant shall at all times faithfully, industriously and to the best of Consultant’s abilities, experience and talents, provide Services that may be required pursuant to the express and implied terms and provisions of this Agreement. |
15. | Entire Agreement This Agreement sets forth the entire agreement of the parties hereto with regard of the subject matter hereof and thereof and supersedes and replaces all prior or contemporaneous agreements, understandings and representations, oral or written, with regard to such matters. |
16. | Other Provisions |
(a) | Notices. All legal notices, consents or other communications shall be in writing and shall be delivered personally or by messenger, or mailed by registered or certified mail, return receipt requested, postage prepaid, or via an email, in all cases addressed to the party for whom intended at its address set forth below: |
If to the Company:
If to the Consultant: Kenek Brands Inc
275 Canterburry Lane
Fall River, Nova Scotia B2T 1A4
or such other address as a party has designated by notice in writing to the other party given in the manner provided by this section 8(a). Without limiting any other means by which a party may be able to prove that a notice has been received by the other party, a notice shall be deemed to be duly received (i) if sent by hand, overnight courier or telegram, the date when left at the address of the recipient; (ii) if sent by registered or certified mail, the date of the return receipt; or (iii) if sent by email, upon receipt by the sender of an acknowledgement or transmission report generated by the machine from which the email was sent indicating that the email was sent in its entirety to the recipient’s email address.
17. | Governing Law This Agreement shall be deemed to be a contract made under the laws of the State of California, and for all purposes shall be construed in accordance with the laws of said State. |
18. | Arbitration In the event of any dispute arising out of or related to this Agreement or any parties’ conduct or performance under this Agreement, each of the parties agrees to resolve any such dispute by confidential and binding arbitration before JAMS from its offices in Los Angeles, California and pursuant to the Comprehensive Arbitration Rules and Procedures. Judgment upon the award rendered by the arbitrator(s) must be entered and/or confirmed in state or federal courts located in the County of Los Angeles, State of California and Consultant and Company agree to submit to the exercise of jurisdiction over them by said state or federal courts in the County of Los Angeles, State of California. The prevailing party in such arbitration shall be entitled to recover costs and attorneys' fees incurred in arbitrating the dispute and in preparing for such arbitration. |
IN WITNESS WHEREOF , the parties have affixed their hands and seals the day and year provided below
Kenek Brands Inc.
______________________________________Date: April 2, 2014
Per: Jack Ross
Synergy Strips Corp.
______________________________________Date: April 2, 2014
Per: Mark Suponitsky
TABLE OF CONTENTS
Page | |
Report of Independent Registered Public Accounting Firm | F-1 |
Balance Sheets | F-2 |
Statements of Operations | F-3 |
Statement of Stockholders' Deficit | F-4 |
Statements of Cash Flows | F-5 |
Notes to Financial Statements | F-6 |
Report of Independent Registered Public Accounting Firm
To the Board of Director and Shareholders of
Synergy Strip Corp.
We have audited the accompanying balance sheets of Synergy Strip Corp. as of December 31, 2013 and 2012 and the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2013 and the period from January 24, 2012 (Inception) to December 31, 2013. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatements. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Synergy Strip Corp. as of December 31, 2013 and 2012 and the results of its operations, stockholders’ deficit, and cash flows for the year then ended and the period from January 24, 2012 (Inception) to December 31, 2013 in conformity accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ L.L. Bradford &Company, LLC
Las Vegas, Nevada
April 10, 2014
Synergy Strips Corp. | ||||||||||||||||
(a Development Stage Company) | ||||||||||||||||
Balance Sheets | ||||||||||||||||
December 31, | ||||||||||||||||
2013 | 2012 | |||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Prepaid | $ | 5,000 | $ | — | ||||||||||||
Total current assets | 5,000 | — | ||||||||||||||
Total assets | $ | 5,000 | $ | — | ||||||||||||
Liabilities and Stockholders' deficit | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable and accrued liabilities | $ | 6,000 | $ | 3,000 | ||||||||||||
Advances from related party | 52,813 | 520 | ||||||||||||||
Total liabilities | 58,813 | 3,520 | ||||||||||||||
Stockholders' deficit | ||||||||||||||||
Common stock , $0.001 par value; 3,000 shares authorized, | ||||||||||||||||
3,000 shares issued and outstanding as of | 3 | 3 | ||||||||||||||
December 31, 2013 and 2012, respectively | ||||||||||||||||
Subscription receivable - related party | (3 | ) | (3 | ) | ||||||||||||
Additional paid in capital | — | — | ||||||||||||||
Deficit accumulated during the development stage | (53,813 | ) | (3,520 | ) | ||||||||||||
Total Stockholders' deficit | (53,813 | ) | (3,520 | ) | ||||||||||||
Total liabilities and stockholders' deficit | $ | 5,000 | $ | — |
For the | January 24, 2012 | |||||||
Year Ended | (Inception) to | |||||||
December 31, | December 31, | |||||||
2013 | 2013 | |||||||
Revenues: | ||||||||
Sales | $ | 10,783 | $ | 10,783 | ||||
Cost of goods sold | 6,323 | 6,323 | ||||||
Gross profit | 4,460 | 4,460 | ||||||
Operating expenses: | ||||||||
Promotional and marketing | 235 | 235 | ||||||
General and administrative | 21,490 | 22,010 | ||||||
Travel | 18,828 | 18,828 | ||||||
Professional fees | 3,000 | 6,000 | ||||||
Consulting fees | 11,200 | 11,200 | ||||||
Total operating expense | 54,753 | 58,273 | ||||||
Net operating (loss) | (50,293 | ) | (53,813 | ) | ||||
Net loss before provision for income taxes | (50,293 | ) | (53,813 | ) | ||||
Provision for income taxes | — | — | ||||||
Net (loss) | $ | (50,293 | ) | $ | (53,813 | ) | ||
Net income (loss) per share - basic and diluted | $ | (16.76 | ) | |||||
Weighted average number of shares outstanding | ||||||||
during the period - basic and diluted | 3,000 |
See the accompanying notes to the financial statements |
Synergy Strips Corp. | ||||||||||||||||||||||||
(A Development Stage Company) | ||||||||||||||||||||||||
Statements of Stockholders' Deficit | ||||||||||||||||||||||||
Deficit | ||||||||||||||||||||||||
accumulated | ||||||||||||||||||||||||
Additional | during the | Total | ||||||||||||||||||||||
Common stock | paid-in | Subscription | development | stockholders' | ||||||||||||||||||||
Shares | Amount | capital | receivable | stage | (deficit) | |||||||||||||||||||
Balance, January 24, 2012 (Inception) | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
Shares issued to for subscription receivable | 3,000 | 3 | — | (3 | ) | — | — | |||||||||||||||||
Net loss | — | — | — | — | (3,520 | ) | (3,520 | ) | ||||||||||||||||
Balance, December 31, 2012 | 3,000 | 3 | — | (3 | ) | (3,520 | ) | (3,520 | ) | |||||||||||||||
Net loss | — | — | — | — | (50,293 | ) | (50,293 | ) | ||||||||||||||||
Balance, December 31, 2013 | 3,000 | $ | 3 | $ | — | $ | (3 | ) | $ | (53,813 | ) | $ | (53,813 | ) |
F- 4 |
Synergy Strips Corp. | ||||||||||||
(a Development Stage Company) | ||||||||||||
Statements of Cash Flows | ||||||||||||
For the Year Ended December 31, 2013 | January 24, 2012 (Inception) to December 31, 2013 | |||||||||||
Operating activities: | ||||||||||||
Net (loss) | $ | (50,293 | ) | $ | (53,813 | ) | ||||||
Change in operating assets and liabilities- | ||||||||||||
Prepaids | 5,000 | 5,000 | ||||||||||
Accounts payable and accrued expenses | 3,000 | 6,000 | ||||||||||
Cash (used) in operating activities | (42,293 | ) | (42,813 | ) | ||||||||
Financing activities: | ||||||||||||
Proceeds from related party advances | 42,293 | 42,813 | ||||||||||
Cash provided by financing activities | 42,293 | 42,813 | ||||||||||
Increase (decrease) in cash | — | — | ||||||||||
Cash, beginning | — | — | ||||||||||
Cash, ending | $ | — | $ | — | ||||||||
Supplemental cash flow information: | ||||||||||||
Interest paid | $ | — | $ | — | ||||||||
Income taxes paid | $ | — | $ | — |
See the accompanying notes to the financial statements |
NOTE 1 - NATURE OF OPERATIONS
The Company was incorporated on January 24, 2012 in the State of Delaware as Synergy Strips Corp (the " Company") for the purpose of marketing and distributing orally dissolving film strips under the Synergy brand. Currently, the Company has marketed and distributed an energy strip which is a caffeine infused, orally dissolving film, which enables users to obtain their "energy" without any calories, fat, carbohydrates or sugars.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of presentation
The accompanying financial statements have been prepared on the accrual basis of accounting in accordance with accounting principles generally accepted in the United States of America (GAAP).
Use of Estimates
The preparation of the financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ from those estimates.
Significant estimates include, but are not limited to, the collectability of accounts receivable and the estimates used when evaluating long-lived assets for impairment. Estimates are used for, but are not limited to, determining the following: allowance for doubtful accounts and inventory valuation reserves, recoverability of long-lived assets, and useful lives used in depreciation and amortization.
Cash and cash equivalents
The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2013 and 2012, the Company had no cash equivalents.
Revenue recognition
Revenue is recognized in accordance with Staff Accounting Bulletin (“SAB”) No. 101, Revenue Recognition in Financial Statements, as revised by SAB No. 104. We recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or determinable and collectability is reasonably assured. Ownership and title of our products pass to customers upon delivery of the products to customers. Certain of our distributors may also perform a separate function as a co-packer on our behalf. In such cases, ownership of and title to our products that are co-packed on our behalf by those co-packers who are also distributors, passes to such distributors when we are notified by them that they have taken transfer or possession of the relevant portion of our finished goods.
Income taxes
The Company accounts for income taxes under FASB Codification Topic 740-10-25 (“ASC 740-10-25”) Income Taxes. Under ASC 740-10-25, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under ASC 740-10-25, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.
Fair Value of Financial Instruments
We hold certain financial assets, which are required to be measured at fair value on a recurring basis in accordance with the Statement of Financial Accounting Standard No. 157, “Fair Value Measurements” (“ASC Topic 820-10”). ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement
F- 6 |
SYNERGY STRIPS CORP. (A Development Stage Company) Notes to the Financial Statements |
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Fair Value of Financial Instruments, continued
date. Level 1 instruments include cash, account receivable, prepaid expenses, inventory and account payable and accrued liabilities. The carrying values are assumed to approximate the fair value due to the short term nature of the instrument.
The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:
☐ | Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access. We believe our carrying value of level 1 instruments approximate their fair value at December 31, 2013 and 2012 due to their short term nature. |
☐ | Level 2 - Valuations based on quoted prices for similar assets or liabilities, quoted prices for identical assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities. |
☐ | Level 3 - Valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. We consider depleting assets, asset retirement obligations and net profit interest liability to be Level 3. We determine the fair value of Level 3 assets and liabilities utilizing various inputs, including NYMEX price quotations and contract terms. |
Advertising
The Company expenses advertising costs as incurred. The Company’s advertising expenses totaled $235, and $0 for the year ended December 31, 2013 and for the period from January 24, 2012 (inception) to December 31, 2013, respectively.
Earnings (Loss) Per Share
Net earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock outstanding during each period. Diluted earnings (loss) per share is computed by dividing net income (loss) less preferred dividends for the period by the weighted average number of common stock, common stock equivalents and potentially dilutive securities outstanding during each period.
Recent accounting pronouncements
There are no recent accounting pronouncements that have had a material impact on our financial statements.
Year-end
The Company has adopted December 31, as its fiscal year end.
NOTE 3 – GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business. Since its inception, the Company has been engaged substantially in financing activities and developing its business plan and marketing. As a result, the Company incurred accumulated net losses from inception (January
24, 2012) through the period ended December 31, 2013 of $53,813. In addition, the Company’s development activities since inception have been financially sustained through capital contributions from a note holder.
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock or through debt financing and, ultimately, the achievement of significant operating revenues. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.
F- 7 |
SYNERGY STRIPS CORP. (A Development Stage Company) Notes to the Financial Statements |
NOTE 4 – INCOME TAXES
The Company has incurred aggregate net operating losses of approximately $50,293 for income tax purposes for the year ended December 31, 2013. The net operating loss carries forward for United States income taxes, which may be available to reduce future years’ taxable income. These carry forwards will expire, if not utilized, through 2033. Management believes that the realization of the benefits from these losses appears not more than likely due to the Company’s limited operating history and continuing losses for United States income tax purposes. Accordingly, the Company has provided a 100% valuation allowance on the deferred tax asset to reduce the asset to zero. Management will review this valuation allowance periodically and make adjustments as warranted.
The effective tax rate on the net loss before income taxes differs from the U.S. statutory rate as follows:
December 31, | ||||||||
2013 | 2012 | |||||||
U.S. Statutory rate | 35 | % | 35 | % | ||||
Less: valuation allowance | (35 | %) | (35 | %) | ||||
Net deferred tax asset | 0 | % | 0 | % | ||||
The significant components of deferred tax assets and liabilities are as follows:
December 31, | ||||||||
2013 | 2012 | |||||||
Deferred tax assets: | ||||||||
Net operating loss carry forward | $ | 17,603 | $ | 1,232 | ||||
Total deferred tax assets | ||||||||
Less: valuation allowance | (17,603 | ) | (1,232 | ) | ||||
Net deferred tax asset | $ | — | $ | — | ||||
NOTE 5 – ADVANCES FROM RELATED PARTY
During the year ended December 31, 2013 and the period from January 24, 2012 (inception), the Company received $52,813 and $520, respectively from a related party for operational startup expenses.
NOTE 6 – STOCKHOLDERS’ EQUITY
The Company is authorized to issue up to 3,000 shares of $0.001 par value common stock.
During the year ended December 31, 2012, the Company sold 3,000 shares of common stock at its par value of $0.001 and has recorded subscriptions receivable in the amount of $3.
NOTE 7 - SUBSEQUENT EVENTS
The Company evaluates events that have occurred after the balance sheets date but before the financial statements are issued in accordance with ASC 855. The Company did not identify any subsequent events that would require adjustment or disclosure in the financial statements.
F- 8 |
PRO FORMA COMBINED BALANCE SHEET
On April 24, 2014, Oro Capital Corp. (the “Company”), a public reporting company without any business or operating activities, issued 16,000,000 unregistered shares of common stock in exchange for 100% equity interest in Synergy Strips Corp (“Synergy”), in connection with the merger of Synergy Merger Sub, Inc., a wholly-owned subsidiary of the Company, with an into Synergy, with Synergy as the surviving corporation. This merger transaction resulted in the shareholders of Synergy obtaining a minority voting interest in the Company. Accounting principles generally accepted in the United States of America require that the company whose shareholders retain the majority interest in a combined business be treated as the acquirer for accounting purposes, resulting in a reverse acquisition. Accordingly, the stock exchange transaction has been accounted for as the recapitalization of the Company.
The following Pro Forma Combined Balance Sheet gives effect to the aforementioned reverse acquisition based on the assumptions and adjustments set forth in notes thereto, which management believes are reasonable. The Pro Forma Combined Balance Sheet represents the combined financial position of the Company as of January 31, 2014, and of Synergy as of December 31, 2013, as if the reverse acquisition had occurred on January 31, 2014. This unaudited Pro Forma Combined Balance Sheet should be read in conjunction with the audited historical financial statements and related notes of Synergy that are included in this filing as Exhibit 99.1 and of the Company that are incorporated herein by reference to the Form 10-K filed April 24, 2014, for the fiscal year ended January 31, 2014.
The Unaudited Pro Forma Combined Balance Sheet is presented for illustrative purposes only and is not necessarily indicative of the position of the Company that would have been achieved if the reverse acquisition had been consummated as of the beginning of the period indicated, nor is it necessarily indicative of the Company’s future financial position.
- 1 - |
ORO CAPITAL CORP. (CONSOLIDATED) | |
Unaudited Pro Forma Combined Balance Sheet | |
(Amounts expressed in US dollars) |
Synergy Strips Corp. | Oro Capital Corp. | Pro Forma | Consolidated | |||||||||||||
June 30, 2013 | July 31, 2013 | Adjustments | July 31, 2013 | |||||||||||||
Assets | ||||||||||||||||
Current Assets | ||||||||||||||||
Cash | $ | — | $ | 33,908 | $ | — | $ | 33,908 | ||||||||
Prepaid | — | — | — | — | ||||||||||||
Total current assets | — | 33,908 | — | 33,908 | ||||||||||||
Total Assets | $ | — | $ | 33,908 | $ | — | $ | 33,908 | ||||||||
Liabilities and Stokholders' Deficit | ||||||||||||||||
Current Liabilities | ||||||||||||||||
Accounts payable | $ | 4,276 | $ | 3,000 | $ | — | $ | 7,276 | ||||||||
Accounts payable – related party | — | — | — | — | ||||||||||||
Due to Directors | — | 20,691 | — | 20,691 | ||||||||||||
Total current liabilities | 4,276 | 23,691 | — | 27,967 | ||||||||||||
Stockholders’ Equity | ||||||||||||||||
Common Stock | 3 | 60 | (60 | )(a) | 3 | |||||||||||
Subscription receivable | (3 | ) | — | — | (3 | ) | ||||||||||
Additional paid-in capital | — | 58,405 | (58,405 | )(b) | — | |||||||||||
Accumulated deficit | (4,276 | ) | (48,248 | ) | 58,465 | (c) | 5,941 | |||||||||
Total stockholders' deficit | (4,276 | ) | 10,217 | — | 5,941 | |||||||||||
Total Liabilities and Stockholders’ Equity | $ | — | $ | 33,908 | $ | — | $ | 33,908 | ||||||||
(a) To eliminate common stock of Oro Capital Corp |
(b) To eliminate additional paid-in capital of Oro Capital Corp |
(c) To consolidate additional paid-in capital of Oro Capital Corp into Synergy Strips Corp |
- 2 - |
ORO CAPITAL CORP. (CONSOLIDATED) | |
Unaudited Pro Forma Combined Statement of Operations | |
(Amounts expressed in US dollars) |
Synergy Strips Corp | Oro Capital Corp. | Pro Forma | Oro Capital Corp. | Synergy Strips Corp | Oro Capital Corp. | Pro Forma | Oro Capital Corp. | |||||||||||||||||||||||||
Six Months Ended | Six Months Ended | Adjustments | Six Months Ended | Year Ended | Year Ended | Adjustments | Year Ended | |||||||||||||||||||||||||
December 31, 2013 | January 1, 2014 | January 1, 2014 | June 30, 2013 | July 31, 2013 | July 31, 2013 | |||||||||||||||||||||||||||
Revenue | ||||||||||||||||||||||||||||||||
Sales | $ | 10,783 | $ | — | $ | — | $ | 10,783 | $ | — | $ | — | — | — | ||||||||||||||||||
Cost of goods sold | 6,323 | — | — | 6,323 | — | — | — | — | ||||||||||||||||||||||||
Gross Profit | 4,460 | — | — | 4,460 | — | — | — | — | ||||||||||||||||||||||||
Operating Expenses | ||||||||||||||||||||||||||||||||
Promotional and marketing | 50 | — | — | 50 | 185 | — | — | 185 | ||||||||||||||||||||||||
General and administrative | 21,304 | 1,748 | — | 23,052 | 706 | 1,583 | — | 2,289 | ||||||||||||||||||||||||
Travel | 18,443 | — | — | 18,443 | 385 | — | — | 385 | ||||||||||||||||||||||||
Professional fees | 3,000 | 6,700 | — | 9,700 | 3,000 | 5,700 | — | 8,700 | ||||||||||||||||||||||||
Consulting fees | 11,200 | 14,000 | — | 25,200 | — | 3,000 | — | 3,000 | ||||||||||||||||||||||||
Exploration | — | 4,400 | — | 4,400 | — | 8,500 | — | 8,500 | ||||||||||||||||||||||||
Rent | — | 1,500 | — | 1,500 | — | 3,000 | — | 3,000 | ||||||||||||||||||||||||
Total operating expenses | 53,997 | 28,348 | — | 82,345 | 4,276 | 21,783 | — | 26,059 | ||||||||||||||||||||||||
Net operating (loss) | (49,537 | ) | (28,348 | ) | — | (77,885 | ) | (4,276 | ) | (21,783 | ) | — | (26,059 | ) | ||||||||||||||||||
Other expense | ||||||||||||||||||||||||||||||||
Imputed interest | — | 740 | 740 | — | 1,418 | 1,418 | ||||||||||||||||||||||||||
Net (Loss) | $ | (49,537 | ) | $ | (29,088 | ) | $ | — | $ | (78,625 | ) | $ | (4,276 | ) | $ | (23,201 | ) | — | (27,477 | ) |
- 3 - |