You are being provided with this Information Statement pursuant to Section 14C of the Exchange Act and Regulation 14C and Schedule 14C thereunder, and, in accordance therewith, the Amendment will not be filed with the Secretary of State of the State of Nevada or become
effective until at least 21 calendar days after the mailing of this Information Statement.
This Information Statement is being mailed on or about March
__
, 2010 to all Stockholders of record as of the Record Date.
NO VOTE OR OTHER CONSENT OF OUR STOCKHOLDERS IS SOLICITED IN CONNECTION WITH THIS INFORMATION STATEMENT. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO SEND US A PROXY.
History and Recent Events
We were
incorporated in Colorado on September 19, 1983, under the name Bugs, Inc., for the purpose of using microbial and other agents, including metallurgy, to enhance oil and natural gas production and to facilitate the recovery of
certain metals. For the past several years, we have had no revenue and have been a shell company.
On January 26, 2010, we consummated the merger with Milwaukee Iron Professional Arena Football, LLC and Wisconsin Professional Arena Football Investment LLC (collectively, the “
Milwaukee Iron
” or
“
Iron
”) pursuant to which the Iron merged with and into our wholly-owned subsidiary, Genesis Capital Acquisition Corp. (“
Genesis Sub
”), as previously disclosed in our Current Report on Form 8-K filed on February 2, 2010, as subsequently amended on February 16 and February 18, 2010 (the “
Merger
”).
After the Merger, our business operations consist of those of the Iron. Prior to the consummation of the Merger, we were a non-operating shell company with no revenue and minimal assets. As a result of the Merger, we are no longer considered a shell company.
The Milwaukee Iron are a member team of the Arena Football One (“
AF1
” or the “
League
”), a professional arena football league. The Iron play their home games at
the Bradley Center, a sports and entertainment venue in downtown Milwaukee. Arena football is played in an indoor arena on a padded 50 yard long football field using eight players on the field for each team. Most of the game rules are similar to college or other professional football game rules with certain exceptions intended to make the game faster and more exciting.
Also in connection with the Merger, we agreed, in part, to redeem (subject to the effectiveness of a Registration Statement on Form S-1 which we have filed contemporaneously herewith) all of our currently outstanding Series A and Series B Preferred Stock (the
“
Preferred Stock
”) in exchange for $350,000 cash and 870,000 shares of our common stock (the “
Redemption
”). At the closing of the Merger, we issued the 870,000 shares of our common stock. However, on March __, 2010, we entered into a Stock Purchase Agreement with Andrew Vallozzi III pursuant to which we have agreed to sell to Mr. Vallozzi 1 million shares of
Series B Preferred Stock in exchange for $35,000, payable $1000 per month for 35 months pursuant to a promissory note (the “
Stock Purchase
”). The sale is contingent on the closing of the Redemption.
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Purpose and Effect of Increasing the Authorized Shares of Common Stock
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The Company has approved an increase in its authorized common stock from 500,000,000 to 1,000,000,000. The Company currently has 500,000,000 common shares authorized, 5,000,000 shares of Series A and 5,000,000 shares of Series B Preferred shares issued that may be converted into 125,000,000
and 1,250,000,000 shares of common stock, respectively. Upon effectiveness of the forward 1000:1 Stock Split, the amount of common stock to which the Series A and B Preferred Stock may be converted shall be increased to 125,000,000,000 and 1,250,000,000,000, respectively.
Although the Company currently has insufficient available common stock to satisfy the conversion of the Series A and B Preferred Stock into common stock, it is unlikely that all of the Preferred Stock will be converted because of the Company’s obligation to redeem the Preferred Stock
pursuant to the Redemption (subject to the Stock Purchase). After the closing of the Redemption and the Stock Purchase, the only remaining outstanding Preferred Stock shall be 1 million shares of Series B Preferred Stock, the conversion of which shall require the issuance of 250 million shares of common stock, which common stock shall be authorized for issuance.
However, in the event that the Redemption does not occur, an increase in the authorized common stock to amount which would satisfy the unlikely conversion would result in an excessive amount of authorized common stock. In the event that such a conversion does occur, the Company will then
amend its articles of incorporation to accommodate the conversion, which amendment will require stockholder consent. Stockholder consent in such a case will not be an impediment to this action because such consent will only require consent of the Preferred stockholders (ie, the beneficiary of the action).
Notwithstanding the issue related to the conversion of the Preferred Stock, our Board of Directors believes it is in our best interests and the best interests of our stockholders to increase the number of authorized shares of our common stock to provide us, in part, with more flexibility and
opportunities to conduct equity financings and acquisitions. In fact, we are currently obligated to file the Registration Statement in which we shall register certain of our securities
We believe that it is desirable to have additional authorized shares of common stock available for possible future financings, possible future acquisition transactions and other general corporate purposes. We believe that having such additional authorized shares of capital
stock available for issuance in the future should give it greater flexibility and may allow such shares to be issued without the expense and delay of a special shareholders’ meeting. Although such issuance of additional shares with respect to future financings and acquisitions would dilute existing shareholders, we believe that such transactions would increase our value to our shareholders.
The increase in the authorized number of shares of our common stock will permit our Board of Directors to issue additional shares of our common stock without further approval of our stockholders, and our Board of Directors does not intend to seek stockholder approval prior to any issuance of
the authorized capital stock unless stockholder approval is required by applicable law or stock market or exchange requirements. Our issuance of additional shares of common stock may result in substantial dilution to our existing stockholders, and such issuances may not require stockholder approval.
The issuance of additional shares of our common stock may have a dilutive effect on earnings per share and on the equity and voting power of existing security holders of our
common stock. It may also adversely affect the market price of our common stock. However, if additional shares are issued in transactions whereby favorable business opportunities are provided which allow us to pursue our business plans, the market price of our common stock may increase.
Purpose and Effect of the Stock Split
We anticipate that the increase in the number of outstanding shares of common stock resulting from the Stock Split would place the market price of our Common Stock in a range more attractive to the financial community and the investing public and may result in a broader market
for our common stock than that which currently exists. The decreased price level resulting from the Stock Split may encourage and facilitate trading in our Common Stock and possibly promote greater liquidity for our stockholders. The Stock Split would increase the number of issued and outstanding shares of our Common Stock by a factor of 1000. Following the Stock Split and based on the number of shares outstanding immediately prior to the Merger, the number of outstanding shares of our
Common Stock would increase from 10,048 to 10,048,000 shares. The Stock Split would not change the equity interests of our stockholders and would not affect the relative rights of any stockholder or result in a dilution or diminution of any stockholder's proportionate interest in us. The Common Stock will have a par value of $0.001 per share following the Stock Split, and the number of shares of Common Stock outstanding will be increased to 10,048,000. All securities issued in
connection with, and after, the Merger, shall not be affected by this Stock Split.
In deciding to implement the Stock Split, our Board of Directors considered among other things: (a) the market price of our Common Stock, (b) the number of shares of our Common Stock that will be outstanding after the Stock Split, (c) the stockholders’ equity, (d) the shares of Common
Stock available for issuance in the future, and (e) the nature of our operations. Upon implementation of the Stock Split, each share of our issued and outstanding Common Stock will be converted into 1000 shares of our Common Stock.
Potential Risks of the Stock Split
When the Stock Split becomes effective, there can be no assurance that any future bid price of the Common Stock will continue at a level in proportion to the increased number of outstanding shares resulting from the Stock Split.
Additionally, the liquidity of our Common Stock could be affected adversely by the increased number of shares outstanding after the Stock Split. Although we believe that a lower stock price may help generate investor interest, there can be no assurance that the stock split will result in a
per-share price that will attract institutional investors or investment funds or that such share price will satisfy the investing guidelines of institutional investors or investment funds. As a result, the increased liquidity that may result from having greater shares issued and outstanding may not be offset by increased investor interest in our Common Stock.
Principal Effects of the Stock Split
Common Stock. After the effective date of the Stock Split, each stockholder will own a greater number of shares of our Common Stock. However, the Stock Split will affect all of our
stockholders uniformly and will not affect any stockholder’s percentage ownership interests in us. Proportionate voting rights and other rights and preferences of the holders of our Common Stock will not be affected by the Stock Split. Further, the number of stockholders of record will not be affected by the Stock Split.
A Stock Split would not change the number of authorized shares of the Common Stock as designated by our Articles of Incorporation, as amended. Therefore, because the number of issued and outstanding shares of Common Stock would increase, the number of shares remaining available for issuance
under our authorized pool of Common Stock would decrease.
The reduction of the number of shares remaining available for issuance as a result of the Stock Split could potentially affect our ability to raise additional capital, acquire assets or other companies, or issue securities convertible into or exercisable for Common Stock. The reduction in the
number of shares remaining available for issuance may also limit our flexibility to meet business needs as they arise and could hamper our ability to take advantage of favorable opportunities. Further, such a reduction could create voting impediments or to frustrate persons seeking to effect a takeover or otherwise gain control of us. For example, with a limited number of shares available for issuance, the remaining authorized shares could be privately placed with purchasers who might
side with the Board of Directors in opposing a hostile takeover bid. Accordingly, in conjunction with the Stock Split we have approved the increase in the authorized shares of common stock as set forth in the Amendment.
The action to authorize a forward stock split has been prompted solely by the business considerations discussed in the preceding paragraphs.
Preferred Stock. The number of shares of Common Stock subject to issuance upon conversion of the Series A and B Preferred Stock will be increased proportionately based upon the split ratio and the exercise price will be proportionately reduced.
Fractional Shares. No fractional shares of our Common Stock will be issued as a result of the proposed Stock Split.
Implementation and Exchange of Stock Certificates
As of the effective date of the Stock Split, each certificate representing shares of our Common Stock before the Stock Split would be deemed, for all corporate purposes, to evidence ownership of the increased number of shares of our Common Stock resulting from the Stock
Split.
As of the effective date of the stock split, our transfer agent is expected to act as the exchange agent for purposes of implementing the exchange of stock certificates. As soon as practicable after the effective date, stockholders and holders of securities exercisable for our
Common Stock would be notified of the effectiveness of the Stock Split. Stockholders of record would receive a letter of transmittal requesting them to surrender their old stock certificates for new stock certificates reflecting the adjusted number of shares as a result of the stock split. Persons who hold their shares in brokerage accounts or “street name” would not be required to
take any further actions to effect the exchange of their shares. No new certificates would be issued to a stockholder until such stockholder has surrendered any outstanding certificates together with the properly completed and executed letter of transmittal to the exchange agent. Until surrender, each certificate representing shares before the Stock Split would continue
to be valid and would represent the adjusted number of shares based on the ratio of the Stock Split. Stockholders should not destroy any stock certificate and should not submit any certificates until they receive a letter of transmittal.
Material U.S. Federal Income Tax Considerations
TO ENSURE COMPLIANCE WITH REQUIREMENTS IMPOSED BY THE U.S. INTERNAL REVENUE SERVICE, WE INFORM YOU THAT ANY FEDERAL TAX ADVICE CONTAINED IN THIS INFORMATION STATEMENT IS NOT INTENDED OR WRITTEN TO BE USED, AND CANNOT BE USED, FOR PURPOSES OF (I) AVOIDING PENALTIES UNDER THE CODE, OR (II) PROMOTING, MARKETING OR RECOMMENDING TO ANOTHER PARTY ANY TRANSACTION OR
TAX-RELATED MATTER ADDRESSED HEREIN. YOU ARE ENCOURAGED TO CONSULT YOUR TAX ADVISOR TO DETERMINE FOR YOURSELF THE TAX EFFECTS OF THE STOCK SPLIT, IF ANY, INCLUDING SUCH TAX EFFECTS UNDER STATE, LOCAL AND FOREIGN TAX LAWS.
The following discussion sets forth the anticipated material U.S. federal income tax consequences that management believes will apply to us and our stockholders who are U.S. holders at the effective time of the stock split, if any. This discussion does not address the tax consequences of
transactions effectuated prior to or after the stock split, including, without limitation, the tax consequences of the exercise of options or similar rights to purchase stock. Furthermore, no foreign, state or local tax considerations are addressed herein. For this purpose, a U.S. holder is a stockholder that is: (a) a citizen or resident of the United States, (b) a domestic corporation, (c) an estate whose income is subject to U.S. federal income tax regardless of its source, or (iv) a
trust if a U.S. court can exercise primary supervision over the trust’s administration and one or more U.S. persons are authorized to control all substantial decisions of the trust.
The following discussion is not binding on the Internal Revenue Service. The following discussion is based upon the Internal Revenue Code, laws, regulations, rulings and decisions in effect as of the date of this information statement, all of which are subject to change, possibly with
retroactive effect. Holders of shares of the Common Stock are strongly urged to consult their tax advisors as to the specific tax consequences to them of the Stock Split, including the applicability and effect of federal, state, local and foreign income and other tax laws in their particular circumstances.
No gain or loss should be recognized by a stockholder upon his or her exchange of pre-Stock Split shares for post-Stock Split shares. The aggregate tax basis of the post-Stock Split shares received in the Stock Split will be the same as the stockholder’s aggregate tax basis in the
pre-Stock Split shares exchanged therefor. The stockholder’s holding period for the post-Stock Split shares will include the period during which the stockholder held the pre-Stock Split shares surrendered in the Stock Split.
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We should not recognize any gain or loss as a result of the Stock Split.
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Outstanding Securities and Voting Rights
Our authorized capital stock consists of 500,000,000 shares of Common Stock and 10,000,000 shares of preferred stock. As of March 10, 2010 there were 29,271,332 outstanding shares of Common Stock, 5,000,000 shares of Series A Convertible Preferred stock and 5,000,000 shares of
Series B Convertible Preferred Stock outstanding. However, in connection with the Merger, we agreed, in part, to redeem (subject to the effectiveness of the Registration Statement) all of our currently outstanding Series A and Series B Preferred Stock in exchange for $350,000 cash and 870,000 shares of our common stock (the “
Redemption
”).
Nevertheless, on March 10, 2010, we entered into a Stock Purchase Agreement with Andrew Vallozzi III pursuant to which we have agreed to sell to Mr. Vallozzi 1 million shares of Series B Preferred Stock in exchange for $35,000, payable $1000 per month for 35 months pursuant to
a promissory note. The sale is contingent on the closing of the Redemption.
Each holder of Common Stock is entitled to one vote for each share of Common Stock held on all matters submitted to a vote of Stockholders. Each holder of Series A Preferred Stock votes with the Common Stock and is entitled to twenty-five (25) votes for each share of Preferred
stock held on all matters submitted to a vote of stockholders. Each holder of Series B Preferred Stock votes with the Common Stock and is entitled to two hundred and fifty (250) votes for each share of Preferred stock held on all matters submitted to a vote of stockholders. Under Nevada law, any action that may be taken at any stockholders’ meeting may be taken by written consent of the requisite number of stockholders required to take such action. The Amendment and the Stock
Split requires the affirmative vote or written consent of the holders of a majority of the Company’s voting power.
By written consent dated February18, 2010, the stockholders owning a majority of the outstanding shares of the Common Stock and the Preferred Stock have approved the adoption and implementation of the Amendment and the Stock Split. Such action is sufficient to satisfy the applicable
requirements of Nevada law that stockholders approve such actions. Accordingly, stockholders will not be asked to take further action on the Amendment and the Stock Split at any future meeting and the Board of Directors does not intend to solicit any proxies or consents from any other stockholders in connection with the Amendment and the Stock Split.
The NRS provides in substance that unless the Company’s Articles of Incorporation provide otherwise, stockholders may take action without a meeting of stockholders and without prior notice if a consent or consents in writing, setting forth the action so taken, is signed
by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to take such action at a meeting at which all shares entitled to vote thereon were present. The Amendment and the Stock Split requires the affirmative vote or written consent of the holders of a majority of the Company’s voting power.
Stockholders' Rights
NRS 78.390 provides that every amendment to the Company's Articles of Incorporation shall first be adopted by the resolution of the Board of Directors and then be subject to the approval of stockholders entitled to vote on any such amendment. Under NRS 78.390 and the Company's
bylaws, an affirmative vote by stockholders holding shares entitling them to exercise at least a majority of the voting power is sufficient to amend the Company's Articles of Incorporation and the Stock Split. NRS 78.320 provides that, unless otherwise provided in the Company's Articles of Incorporation or the bylaws, any action required or permitted to be taken at a meeting of the stockholders may be taken without a meeting if, before or after the action, a written consent thereto is
signed by stockholders holding at least a majority of the voting power. In order to eliminate the costs and management time involved in holding a special meeting and in order to effect the amendment described herein as early as possible in order to accomplish the purposes as herein described, the Company's Board of Directors voted to utilize, and did in fact obtain, the written consent of the holders of a majority in the interest of the Company's Common Stock and Series A and B
Preferred Stock. NRS 78.320 provides that in no instance where action is authorized by written consent need a meeting of stockholders be called or notice given.
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth certain information, as of
March 9
, 2010 with respect to the beneficial ownership of the outstanding common stock by (i) any holder of more than five percent, (ii) each of our executive officers and directors, and (iii) our directors and executive officers as a group. The information
relating to the ownership interests of such shareholders is provided after giving effect to the Merger.
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Name and Address of Beneficial Owner
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Amount and Nature of
Beneficial Ownership
(1)
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Percent of Class
(1)
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Common stock
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Preferred Stock
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Common stock
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Preferred Stock
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Christopher Astrom
(2)
c/o Milwaukee Iron Arena Football, Inc.
11415 NW 123 Lane, Reddick, Florida 32686
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978,000
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10,000,000
(2)
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3%
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100%
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Richard Astrom
c/o Milwaukee Iron Arena Football, Inc.
11415 NW 123 Lane, Reddick, Florida 32686
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505,000
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0
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1.7%
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0
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Directors and Officers as a group (2 persons)
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1,483,000
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10,000,000
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(1)
Based on an aggregate of 29,271,332 common shares and 10,000,000 preferred shares outstanding as of March 9, 2010. Each share of series A convertible preferred stock entitles the holder thereof to 25 votes on
all matters, the right to convert each share into 25 shares of common stock and a liquidation preference of $500.00 per share. Each share of series B convertible preferred stock entitles the holder thereof to two hundred fifty (250) votes on all matters, the right to convert each share into two hundred fifty (250) shares of common stock and a liquidation preference of $500.00 per share. Upon effectiveness of the forward stock split described below, the voting preference shall increase
by a factor of 1000.
No Dissenters' Rights
The Nevada Revised Statutes, the Company's Articles of Incorporation and By-laws do not provide for dissenters’ rights of appraisal in connection with the actions proposed in this Information Statement.
Interest of Certain Persons in Matters to be Acted Upon
No director, executive officer, nominee for election as a director, associate of any director, executive officer or nominee for election as a director, or any other person has any substantial interest, direct or indirect, by security holdings or otherwise, in the proposed amendment to our
Articles of Incorporation which is not shared by all other stockholders.
Additional Information
The Company is subject to the informational requirements of the Securities Exchange Act of 1934, as amended, and in accordance therewith files reports, proxy statements and other information including annual and quarterly reports on Form 10-K and 10-Q with the Securities and Exchange
Commission. Reports and other information filed by the Company can be inspected and copied at the public reference facilities maintained at the Commission at Room 1580, 100 F Street, NE, Washington, DC 20549. Copies of such material can be obtained upon written request addressed to the Commission, Public Reference Section, 100 F Street, NE, Washington, D.C. 20549, at prescribed rates. The Commission maintains a web site on the Internet (http://www.sec.gov) that contains reports, proxy
and information statements and other information regarding issuers that file electronically with the Commission through the Electronic Data Gathering, Analysis and Retrieval System.
BY ORDER OF THE BOARD OF DIRECTORS
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By:
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Name:
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Richard Astrom
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Title:
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Chief Executive Officer, Chairman
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Date:
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, 2010
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Exhibit “A”
CERTIFICATE OF AMENDMENT TO ARTICLES OF INCORPORATION
OF
GENESIS CAPITAL CORPORATION OF NEVADA.
Pursuant to the provisions under the Nevada Revised Statutes 78.385 and 78.390, the undersigned hereby adopts the following Amendment to the Articles of Incorporation of Genesis Capital Corporation of Nevada:
1. Name of the Corporation is Genesis Capital Corporation of Nevada.
2. Article III of the Articles of Incorporation is amended and restated to read as follows:
ARTICLE III is hereby amended and to read as follows:
The total number of shares of capital stock to which the Corporation has the authority to issue is one billion and twenty million (1,020,000,000). The total number of shares of common stock to which the Corporation is authorized to issue is One Billion (1,000,000,000) having a par value of $0.001 each. The total number of shares of Preferred Stock
to which the Corporation is authorized to issue is twenty million (20,000,000). The Board of Directors of the Corporation shall have the authority, by resolution or resolutions, to: (1) divide the Preferred Stock into more than one class of stock or more than one series of any class, (2) establish and fix the distinguishing designation of each such series and the number of shares thereof, which number, by like action of the Board of Directors, from time to time thereafter, may be
increased, except when otherwise provided by the Board of Directors in creating such series, and (3) within the limitations of applicable law of the State of Nevada or as otherwise set forth in this Article, to fix and determine the relative voting powers, designations, preferences, limitations, restrictions and relative rights of the various classes or stock or series thereof and the qualifications, limitations or restrictions such rights of each series so established prior to the
issuance thereof. There shall be no cumulative voting by shareholders.
The Amended Certificate of Designation of Series A Preferred Stock filed with the State of Nevada on February 21, 2007 shall remain in full force and effect. The Certificate of Designation of Series B Preferred Stock filed with the State of Nevada on February 21, 2007 shall remain in full force and effect.
3. The vote by which the stockholders holding shares in the corporation entitling them to exercise at least a majority of the voting power, or such greater proportion of the voting power as may be required in the case of a vote by classes or series, or as may be required by the provision of the articles of incorporation that have voted for the amendment is _____________
shares representing ______% of the outstanding shares, which vote includes the consent of the holders of the currently outstanding Series A and Series B Preferred Stock.
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By:
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Name:
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Richard Astrom
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Title:
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Chief Executive Officer, Chairman
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Date:
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, 2010
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