NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
NOTE 1 - GENERAL ORGANIZATION AND BUSINESS
Game Face Gaming, Inc. (f/k/a Intake Communications, Inc.) the Company is a development stage company, incorporated in the State of Florida on December 24, 2009 to provide software to companies to help them market and sell their music and entertainment content to consumers.
Thereafter, the Company engaged in developing the internet’s first Reality Gaming Social Network. The Company seeks to penetrate the market in the business of operating a non-wagering Internet gaming company. The Internet Gaming platform incorporates proprietary technologies that will provide users with streaming video, audio and messaging capabilities enhancing both the users experience and the gaming experience.
Game Face Gaming’s proprietary platform will be used in creating a vast global gaming network consisting of games from every region of the globe, supporting native languages as well as cross language functionality. Once these games make their way onto our platform they will be accessible on almost all devices currently used to access the internet. In addition to popular and well known games that are already being played on line by tens of millions of people around the world, Game Face will be launching its own in- house developed games.
NOTE 2 - SUMMARIES OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company is currently a development stage enterprise reporting under the provisions of FASB ASC 915, Development Stage Entity. The financial statements have been prepared on the accrual basis of accounting in conformity accounting principles generally accepted in the United States of America.
Cash and Cash Equivalents
For purposes of the cash flow statements, the company considers all highly liquid investments with original maturities of three months or less at the time of purchase to be cash equivalents. At December 31, 2011 the company did not have any balances that exceeded FDIC insurance limits.
Property and Equipment
Property and equipment is stated at cost. Depreciation and amortization expense is computed using principally accelerated methods over the estimated useful life of the related assets ranging from 3 to 7 years. When assets are sold or retired, their costs and accumulated depreciation are eliminated from the accounts and any gain or loss resulting from their disposal is included in the statement of operations.
The Company recognizes an impairment loss on property and equipment when evidence, such as the sum of expected future cash flows (undiscounted and without interest charges), indicates that future operations will not produce sufficient revenue to cover the related future costs, including depreciation, and when the carrying amount of the asset cannot be realized through sale. Measurement of the impairment loss is based on the fair value of the assets.
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
Long-Lived Assets
Long-lived assets such as intangible assets other than goodwill, furniture, equipment and leasehold improvements are evaluated for impairment when events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. Recoverability of asset groups to be held and used is measured by a comparison of the carrying amount of an asset group to estimated undiscounted future cash flows expected to be generated by the asset group. If the carrying amount exceeds its estimated future cash flows, an impairment charge is recognized by the amount by which the carrying amount of an asset group exceeds the fair value of the asset group. The Company evaluated its long-lived assets and no impairment charges were recorded for any of the periods presented.
Earnings (Loss) per Share
The Company adopted FASB ASC 260, Earnings per Share. Basic earnings (loss) per share is calculated by dividing the Company's net income available to common shareholders by the weighted average number of common shares outstanding during the year. Diluted earnings (loss) per share is calculated by dividing the Company's net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There were no diluted or potentially diluted shares outstanding for all periods presented.
Software Development Costs
The Company accounts for costs incurred to develop computer software for internal use in accordance with FASB ASC 350-40 “Internal-Use Software”. As required by ASC 350-40, the Company capitalizes the costs incurred during the application development stage, which include costs to design the software configuration and interfaces, coding, installation, and testing. Costs incurred during the preliminary project along with post-implementation stages of internal use computer software are expensed as incurred. Capitalized development costs are amortized over a period of one to three years. Costs incurred to maintain existing product offerings are expensed as incurred. The capitalization and ongoing assessment of recoverability of development costs requires considerable judgment by management with respect to certain external factors, including, but not limited to, technological and economic feasibility, and estimated economic life.
Dividends
The Company has not adopted a policy regarding payments of dividends. No dividends have been paid during the period presented and no payments are foreseen in the near future.
Income Taxes
The Company adopted FASB ASC 740, Income Taxes, at its inception. 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, including tax loss and credit carry forwards, 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. 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. Deferred income tax expense represents the change during the period in the deferred tax assets and deferred tax liabilities. The components of the deferred tax assets and liabilities are individually classified as current and non-current based on their characteristics. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. No deferred tax assets or liabilities were recognized as of December 31, 2011.
Uncertain Tax Positions
The Company adopted the provisions of
Accounting for Uncertainty in Income Taxes (“Uncertain Tax Positions”)
of the ASC.
Uncertain Tax Positions
prescribes recognition thresholds that must be met before a tax position is recognized in the financial statements and provides guidance on de-recognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. Under
“Uncertain Tax Positions
”, an entity may only recognize or continue to recognize tax positions that meet a ““more-than-likely-than-not” threshold. All related interest and penalties would be expensed as incurred. The Company has evaluated its tax position for the period ended December 31, 2011 and such evaluation did not require a material adjustment to the financial statements.
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
Advertising
The Company expenses advertising as incurred. For the years ended December 31, 2011 and 2010, advertising expense totaled $52,368 and $0, respectively.
Stock Based Compensation
The Company accounts for all stock based payments in accordance with ASC Topic 718, which requires the Company to measure all employee stock-based compensation awards using a fair value method and record the related expense in the financial statements. The Company utilizes the Black-Scholes model to estimate the value of options granted.
Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America, requires management to make estimates and assumptions that could affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
The carrying amounts of the Company’s accounts payable, accrued expenses and notes payable approximate fair value due to the relatively short period to maturity for these instruments.
Concentration of Credit Risk
The Company’s financial instruments that are exposed to the concentrations of credit risk consist primarily of cash and cash equivalents. The Company’s places its cash with high quality institutions. At times, such investments may be in excess of the FDIC insurance limit. Cash and cash equivalents held in a bank may exceed federally insured limits at year end and at various points during the year.
The Company routinely assesses the financial strength of its customers and, as a consequence, believes that its trade accounts receivable credit risk exposure is limited.
Revenue Recognition
The company has adopted the following revenue recognition guidelines.
Sale of subscriptions
Revenue from sale of subscriptions is recognized when the following conditions are satisfied:
* The user properly registered with the website of the Company, and provided the Company with a valid proof of identity and address. Furthermore the Company had set up a valid user account for the user;
* The amount of revenue can be measured reliably;
* The costs incurred or to be incurred in respect of the transaction can be measured reliably.
Whitepaper Solution income
Revenue from sale of Whitepaper Solutions is recognized when the following conditions are met:
* The contract for the solutions clearly specifies the price and payment options with the transfer of ownership;
* The Company is reasonably expected to complete the project in the time frame that the contract sets forth;
* As the milestones set forth in the contract are met, the Company will recognize revenue as set forth in the contract;
* As set forth in the contract the amount of revenue can be measured reliably;
* There is a reasonable belief that buyer is expected to pay the whole amount as the milestones are met.
Effect of recently issued accounting standards
The company has adopted all recently issued accounting pronouncements. The Adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
NOTE 3 - INCOME TAXES:
Deferred tax attributes resulting from differences between financial accounting methods and tax basis of assets and liabilities at December 31, 2011 and December 31, 2010 are as follows (rounded to the nearest hundred):
|
|
December 31,
2011
|
|
|
December 31, 2010
|
|
Noncurrent Assets:
|
|
|
|
|
|
|
Net operating loss carry-forwards
|
|
$
|
247,600
|
|
|
$
|
9,600
|
|
Valuation Allowance
|
|
$
|
(247,600
|
)
|
|
$
|
(9,600
|
)
|
Net Deferred Tax Asset
|
|
$
|
0
|
|
|
$
|
0
|
|
At December 31, 2011, the Company had estimated net loss carry forwards of approximately $825,500 which expire between 2030 through 2031. Utilization of these net operating loss card forwards may be limited in accordance with IRC Section 382 in the event of certain shifts in ownership.
The reconciliation of federal statutory income tax rate to our effective income tax rate is as follows:
December 31, 2011
|
|
Amount
|
|
|
Percent
|
|
Book income at Federal Statutory Rate
|
|
$
|
(198,300
|
)
|
|
|
25
|
%
|
State Taxes, net of Federal Benefit
|
|
$
|
(39,700
|
)
|
|
|
5
|
%
|
Change in Valuation Allowances
|
|
$
|
238,000
|
|
|
|
(30
|
%)
|
|
|
$
|
0
|
|
|
|
0
|
%
|
NOTE 4 - STOCKHOLDERS' EQUITY
Common Stock
On December 24, 2009, the Company issued 117,000,000 of its $0.0001 par value common stock at $0.001 per share for $6,000 cash and $3,000 in a subscription receivable to the founder of the Company. The issuance of the shares was made to the sole officer and director of the Company and an individual who is a sophisticated and accredited investor, therefore, the issuance was exempt from registration of the Securities Act of 1933 by reason of Section 4 (2) of that Act.
On May 26, 2010 the Company issued 15,600,000 common shares to investors in accordance with Form S-1 for cash in the amount of $12,000.
On February 22, 2011 the Company issued 22,666,667 common shares at $0.0001 par value and $0.0044 face value to Lemberg Consulting for their intellectual property and pending patents in the amount of $100,000.
On June 23, 2011 the Company issued 5,075,000 common shares at $0.0001 par value and $0.0044 face value to various “founding fathers” of the company for services rendered to the company in lieu of cash.
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
On August 17, 2011 the Company issued 250,000 common shares at $0.0001 par value and $0.25 face value as an inducement for the $100,000 note payable issued on that date. The value of the 250,000 common shares issued totaled $62,500.
On October 31, 2011 the Company issued 250,000 common shares at $0.0001 par value and $0.30 face value as an inducement for the $100,000 note payable issued on that date. The value of the 250,000 common shares issued totaled $75,000.
On January 6, 2011, the Board of Directors and majority shareholder of the Company approved an amendment to the Company’s Articles of Incorporation (the “Amendment”) to (i) affect a 13 for 1 forward stock split of the Company’s issued and outstanding common stock in the form of a dividend. Accordingly there were 10,200,000 pre-split common shares and following the forward split there were 132,600,000 common shares issued and outstanding. All share amounts, including those stated above, have been adjusted to reflect the forward split. On February 10, 2011, Ron Warren, the principal shareholder and sole officer and director of the Company cancelled 104,666,667 of his own shares and on February 22, 2011 the Company issued an additional 22,666,667 shares in an intangible asset purchase.
There are 250,000,000 Common Shares at $0.0001 par value authorized with 56,175,000 shares issued and outstanding at December 31, 2011.
NOTE 5 – RELATED PARTY TRANSACTIONS
The officers and directors of the Company are involved in business activities outside of the company and may, in the future, become involved in other business opportunities that become available. They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.
NOTE 6 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. For the period December 24, 2009 (date of inception) through December 31, 2011 the Company has had a net loss of $998,188. As of December 31, 2011, the Company has not emerged from the development stage. In view of these matters, recoverability of any asset amounts shown in the accompanying financial statements is dependent upon the Company's ability to begin operations and to achieve a level of profitability. Since inception, the Company has financed its activities from the sale of equity securities, and obtaining loans. The Company intends on financing its future development activities and its working capital needs largely from notes, loans and the sale of public equity securities, until such time that funds provided by operations, if ever, are sufficient to fund working capital requirements.
NOTE 7 – PROPERTY AND EQUIPMENT
|
|
2011
|
|
|
2010
|
|
Computer hardware
|
|
$
|
9,427
|
|
|
$
|
-
|
|
Source code
|
|
|
28,000
|
|
|
|
-
|
|
|
|
|
37,427
|
|
|
|
-
|
|
Less accumulated depreciation and amortization
|
|
|
(2,357
|
)
|
|
|
-
|
|
Property and Equipment (net)
|
|
$
|
35,070
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization expense
|
|
$
|
2,357
|
|
|
$
|
-
|
|
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
During the year ended December 31, 2011 the company acquired $28,000 of source code for cash.
NOTE 8 - INTANGIBLE ASSETS
On February 22, 2011, the Company acquired from Lemberg Consulting an intangible asset worth $100,000 in a non-cash transaction for 22,666,667 shares of the Company. The company purchased future contracts and pending patents for a gaming system that incorporates voice and video into the gaming experience.
NOTE 9 - CONVERTIBLE DEBT
As of December 31, 2011 the bridge notes payable totaled $656,000. The bridge notes payable were offered by the company during 2011. The bridge notes payable consist of $275,000 of convertible debt and $381,000 of demand notes bearing interest at rates varying from 5.00% to 6.50% per annum.
The convertible debt payable was issued by the Company as follows:
On February 22, 2011 the Company issued convertible debt totaling $175,000, bearing a rate of 8% simple interest per annum. On December 14, 2011, $100,000 was repaid plus accrued interest of $6,466.The remaining Convertible debt of $75,000 in addition to accrued unpaid interest shall be due and payable on January 15, 2012. The principal amount and all unpaid interest accrued on this debt maybe converted by the greater of $0.25 per share or 50% of the average closing bid price of the Common stock on the OTC Bulletin Board, for the 10 trading days ending 5 days before the conversion date. On January 14, 2012, the maturity date was extended to April 15, 2012.
On June 22, 2011 the Company issued a convertible debt totaling $20,000, bearing a rate of 8.0% simple interest per annum. During December 2011, the principle was repaid in the amount of $20,000 plus $758 of accrued interest.
On August 17, 2011, the Company issued a convertible debt in amount of $100,000. The convertible debt bears a rate of 6.5% simple interest per annum. The principal and accrued unpaid interest shall be due and payable on January 15, 2012. As further inducement for the lender to advance the loan, the company granted the convertible debt holder the amount of 250,000 shares Common Stock. The principal amount and all unpaid interest accrued on this debt maybe converted by the greater of $0.05 per share or 50% of the average closing bid price of the Common stock on the OTC Bulletin Board, for the 10 trading days ending 5 days before the conversion date. On January 14, 2012, the maturity date was extended to April 15, 2012.
On October 31, 2011, the Company issued a convertible debt in amount of $100,000. The convertible debt bears a rate of 6.5% simple interest per annum. The principal and accrued unpaid interest shall be due and payable on January 15, 2012. As further inducement for the lender to advance the loan, the company granted the convertible debt holder the amount of 250,000 shares Common Stock. The principal amount and all unpaid interest accrued on this debt maybe converted by the greater of $0.05 per share or 50% of the average closing bid price of the Common stock on the OTC Bulletin Board, for the 10 trading days ending 5 days before the conversion date. On January 14, 2012, the maturity date was extended to April 15, 2012.
GAME FACE GAMING, INC.
(F/K/A INTAKE COMMUNICATIONS, INC.)
(A Development Stage Company)
NOTES TO FINANCIAL STATEMENTS
(December 31, 2011)
The following table illustrates the carrying value of the demand notes payable and convertible debt:
|
|
December 31, 2011
|
|
|
December 31, 2010
|
|
Convertible Note
|
|
$
|
275,000
|
|
|
$
|
-
|
|
Demand Notes
|
|
|
381,000
|
|
|
|
-
|
|
Discount on Convertible Note
|
|
|
(0
|
)
|
|
|
-
|
|
Convertible Note, Net
|
|
|
656,000
|
|
|
|
-
|
|
Less: Current portion of convertible debt
|
|
|
(656,000
|
)
|
|
|
-
|
|
Long term portion of convertible debt
|
|
$
|
-
|
|
|
$
|
-
|
|
The following tables illustrate the fair value adjustments that were recorded related to the derivative financial instruments associated with the convertible debenture financings:
|
|
Year ended December 31, 2011
|
|
Derivative income (expense):
|
|
Inception
|
|
|
Fair Value Adjustments
|
|
|
Redemptions
|
|
|
Total
|
|
Convertible debt
|
|
$
|
-
|
|
|
$
|
(178,070
|
)
|
|
$
|
-
|
|
|
$
|
(178,070
|
)
|
|
|
$
|
-
|
|
|
$
|
(178,070
|
)
|
|
$
|
-
|
|
|
$
|
(178,070
|
)
|
The following table illustrates the components of derivative liabilities:
Balance at December 31, 2010
|
|
$
|
-
|
|
Change in fair value of derivative liability due to beneficial conversion feature
|
|
|
178,070
|
|
Debt redemption
|
|
|
-
|
|
Balance at December 31, 2011
|
|
$
|
178,070
|
|
NOTE 10 – SUBSEQUENT EVENTS
The Company has evaluated all subsequent events from the balance sheet through March 14, 2012, which represents the date these financial statements are available to be issued.
On January 18, 2012 the Company secured additional financing through issuance of a 6% demand note payable in the amount of $85,000.
On February 27, 2012 the Company secured additional financing through the issuance of a Note Purchase Agreement, the total not to exceed $500,000. Each note will bear interest at 5% per annum and is payable within six months from the date of issuance or earlier from proceeds of a private offering or through a registration statement. As part of the agreement the Company granted the lender 1,000,000 shares of the Company’s common stock. On February 27, 2012, the Company borrowed $85,000 and has $415,000 available on this financing agreement.
Item 9A. Controls and Procedures
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the company’s principal executive and principal financial officers and effected by the company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
●
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
●
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and
|
●
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company's assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations.
Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of our disclosure controls and procedures, as such term is defined under Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended, as of December 31, 2011. Based on this evaluation, our principal executive officer and principal financial officer concluded that, based on the material weaknesses discussed below, our disclosure controls and procedures were not effective to ensure that information required to be disclosed by us in reports filed or submitted under the Securities Exchange Act were recorded, processed, summarized, and reported within the time periods specified in the Securities and Exchange Act Commission’s rules and forms and that our disclosure controls are not effectively designed to ensure that information required to be disclosed by us in the reports that we file or submit under the Securities Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
As of December 31, 2011 management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures were not effective to detect inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
The matters involving internal controls and procedures that our management considered to be material weaknesses under the standards of the Public Company Accounting Oversight Board were: (1) lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls and procedures; (2) inadequate segregation of duties consistent with control objectives; and (3) ineffective controls over period end financial disclosure and reporting processes. The aforementioned material weaknesses were identified by our Officers in connection with the review of our financial statements as of December 31, 2011.
Management believes any of the matters noted above could result in a material misstatement in our financial statements in future periods.
MANAGEMENT'S REMEDIATION INITIATIVES
In an effort to remediate the identified material weaknesses and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
We will create a position to segregate duties consistent with control objectives and will increase our personnel resources and technical accounting expertise within the accounting function when funds are available to us. And. we plan to appoint one or more outside directors to our board of directors who shall be appointed to an audit committee resulting in a full functioning audit committee who will undertake the oversight in the establishment and monitoring of required internal controls and procedures such as reviewing and approving estimates and assumptions made by management.
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We anticipate that these initiatives will be at least partially, if not fully, implemented with the next 12 months. Additionally, we plan to test our updated controls and remediate our deficiencies by November 30, 2012.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
PART III
Item 10. Directors, Executive Officers and Corporate Governance.
Directors and Executive Officers
Directors and Executive Officers
Set forth below are the names, ages and present principal occupations or employment, and material occupations, positions, offices or employments for the past five years of our current directors and executive officers.
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
Felix Elinson
|
|
43
|
|
President, Chief Executive Officer, CFO and Director
|
|
|
|
|
|
Irving Bader
|
|
72
|
|
Secretary and Director
|
Felix Elinson
has been our President and Chief Executive Officer and a director since February 11, 2011. Mr. Elinson brings to the Company a wide array of experience with marketing, on-line expertise, a proficiency in on-line games and had vast experiences that are helpful to the Company. Since February 2008, Mr. Elinson has served as a Strategic Partner in Mega M LLC, a registered merchant services, credit card processing company in New York. From August 2003 to January 2008, Mr. Elinson served as the Chief Executive Officer of Fresh Start Management Consulting Corp. where he was involved in various types of international commodity trading transactions. From August 2000 to July 2003, Mr. Elinson worked as an independent consultant. From May 1993 to July 2000, Mr. Elinson worked for futures and commodity firms as a Senior Sales Manager and trader such as Tran World Metals (cotton division, 1993-1997) and ICG (International Commodity Trading Group, Futures Division, 1998-2000).
Irving Bader
has been Secretary and a director of the Company since February 11, 2011. Mr. Bader brings many years of management, organizational and marketing skills to the Company. From 1973 to present, Mr. Bader has been the owner and a director of the Seneca Lake Camp, an organization engaged in providing summer outdoor sporting activities for children ages 7 to 18. From 2002 to present, Mr. Bader has been the director and anchor for the Jewish Sport Network and from 2005 to present he has been the director of Athletics and an Associate Professor of Physical Education at Touro College. Mr. Bader is also the author of “A Pre-School P.E. Curriculum-An Adaptive Approach and “Motor Education for Retarded and Other Handicapped Children".
There are no familial relationships among any of our officers or directors, except that Irving Bader is the father-in-law of Yitz Grossman, one of our consultants. None of our directors or officers has been affiliated with any company that has filed for bankruptcy within the last ten years. We are not aware of any proceedings to which any of our officers or directors, or any associate of any such officer or director, is a party adverse to us or any of our or has a material interest adverse to us or any of our subsidiaries.
Each director of the Company serves for a term of one year or until such director’s successor is duly elected and is qualified. Each officer serves, at the pleasure of the board of directors, for a term of one year and until such officer’s successor is duly elected and is qualified.
Code of Ethics; Financial Expert
We currently have a Code of Ethics applicable to our principal executive, financial and accounting officers. We currently do not have a “financial expert” on the board or an audit committee or nominating committee.
Potential Conflicts of Interest
Since we do not have an audit or compensation committee comprised of independent directors, the functions that would have been performed by such committees are performed by our directors. Thus, there is a potential conflict of interest in that our directors and officers have the authority to determine issues concerning management compensation and audit issues that may affect management decisions. We are not aware of any other conflicts of interest with any of our executives or directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires executive officers and directors of the Company and persons who own more than 10% of a registered class of the Company's equity securities to file reports of ownership and changes in their ownership with the Securities and Exchange Commission, and forward copies of such filings to the Company. Based solely on our review of copies of such reports and representations from our executive officers and directors, we believe that our executive officers and directors complied with all Section 16(a) filing requirements during the fiscal year ended December 31, 2011.
Involvement in Certain Legal Proceedings
There are no legal proceedings that have occurred within the past ten years concerning our directors, or control persons which involved a criminal conviction, a criminal proceeding, an administrative or civil proceeding limiting one's participation in the securities or banking industries, or a finding of securities or commodities law violations.
Item 11. Executive Compensation.
Summary Compensation
The table below sets forth information concerning compensation paid, earned or accrued by our chief executive officer and each of our executive officers ( each a “Named Executive Officer”) for the last two fiscal years. No other executive officer earned compensation in excess of $100,000 during our 2011 fiscal year.
SUMMARY COMPENSATION TABLE
Name and Principal Position
|
Fiscal
Year
|
|
Salary
($)
|
|
|
Bonus
($)
|
|
|
Stock
Awards($)
|
|
|
Option
Awards
($) (10) (11)
|
|
|
Non-Equity
Incentive Plan
Compensation ($)
|
|
|
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
|
All
Other
Compensation ($)
|
|
|
Total
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Felix Elinson
|
2011
|
|
|
53,063
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
-0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Irving Bader
|
2011
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
-0
|
|
|
|
0
|
|
|
|
0
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In connection with our asset acquisition on February 22, 2011, we entered into an employment agreement with Felix Elinson, pursuant to which Mr. Elinson became employed as our Chief Executive Officer. As Chief Executive Officer, Mr. Elinson is responsible for developing our business strategies, policies and operations, as well as such duties consistent with his position as the principal executive offer of the Company. In consideration for his services, Mr. Elinson is compensated with a monthly salary of $7,200, payable paid bi-monthly on the first and fifteenth business day of each month. Commencing upon the earlier to occur of the consummation of an equity financing of $1,000,000 or the first full month in which we have 15,000 paying subscribers, his compensation will increase to $12,000 per month. Mr. Elinson has agreed not to compete with the Company during the term of his employment and for a period of one and a half years thereafter. Mr. Elinson also agreed not to disclose confidential information. Although the agreement is on a month to month basis, we may terminate Mr. Elinson for cause at any time immediately upon written notice and should he be terminated, he is entitled to compensation accrued through the date of termination.
Since our incorporation on December 24, 2009, no stock options or stock appreciation rights were granted to our directors or executive officers and our directors or executive officers have not exercised any stock options or stock appreciation rights, and do not hold any unexercised stock options. We have no long-term incentive plans.
Outstanding Equity Awards
Our directors or executive officers do not hold any unexercised options, stock that had not vested, or equity incentive plan awards.
Compensation of Directors
Since our incorporation on December 24, 2009, no compensation has been paid to our directors in consideration for their services rendered in their capacities as directors.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The following table lists, as of March 14, 2012, the number of shares of our common stock that are beneficially owned by (i) each person or entity known to us to be the beneficial owner of more than 5% of our common stock; (ii) each executive officer and director of our company; and (iii) all executive officers and directors as a group. Information relating to beneficial ownership of Common Stock by our principal shareholders and management is based upon information furnished by each person using “beneficial ownership” concepts under the rules of the Securities and Exchange Commission. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to vote or direct the voting of the security. The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days. Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest. Except as noted below, each person has sole voting and investment power.
The percentages below are calculated based on 57,175,000shares of our common stock issued and outstanding as of March 14, 2012. Unless otherwise indicated, the address of each person listed is c/o Game Face Gaming, Inc., 20 East Sunrise Highway, Valley Stream, NY 11581.
Name of Beneficial Owner
|
|
Amount and Nature of Beneficial Ownership
|
|
Percent of
Class
|
|
|
|
|
|
|
|
Felix Elinson (1)
2928 West 5th Street
Brooklyn, NY 11224
|
|
|
11,333,333
|
|
|
|
19.82
|
%
|
|
|
|
|
|
|
|
|
|
Irving Bader (2)
|
|
|
11,333,333
|
|
|
|
19.82
|
%
|
|
|
|
|
|
|
|
|
|
Punim Chadoshos, LLC
|
|
|
11,333,333
|
|
|
|
19.82
|
%
|
|
|
|
|
|
|
|
|
|
Elina Leonova (3)
319 East 24th Street
New York, NY 10010
|
|
|
11,333,334
|
|
|
|
19.82
|
%
|
|
|
|
|
|
|
|
|
|
Directors and officers as a group (2 persons)
|
|
|
22,666,666
|
|
|
|
39.6
|
%
|
____________
(1)
|
Mr. Elinson is President and Chief Executive Officer and a director of the Company.
|
(2)
|
Mr. Bader is Secretary and a director of the Company, and is the trustee of the CPT 2011 Trust which owns all of the membership interests of Punim Chadoshos, LLC, a New York limited liability company.
|
(3)
|
Mrs. Leonova is the wife of Alex Lemberg, a consultant to the Company.
|
Punim Chadoshos, LLC has granted a proxy to Alex Lemberg to vote its shares effective upon the Company paying in full and satisfying all its obligations pursuant to the $300,000 private placement offering.
Item 13. Certain Relationships and Related Transactions, and Director Independence.
On February 22, 2011 we issued 22,666,667 to Lemberg Consulting Inc. in consideration of the intellectual rights relating to operating multi-platform, multiplayer non-wagering, non-games of chance. On February 28, 2011, Lemberg Consulting transferred 11,333,334 of said shares to Elina Leonova, the wife of Alex Lemberg, a consultant to the Company, and 11,333,333 shares to Felix Elinson, our President and Chief Executive Officer and a director.
On February 22, 2011, Punim Chadoshos, LLC a shareholder holding 19.82% of our issued and outstanding stock, executed a non-competition/confidentiality agreement with the Company. Punim Chadoshos has granted a proxy to Alex Lemberg to vote its shares effective upon the Company paying in full and satisfying all its obligations pursuant to the $300,000 private placement offering.
Alex Lemberg, a consultant to the Company, is married to Elina Leonova, who holds 19.82% of our issued and outstanding stock. Punim Chadoshos has granted Mr. Lemberg a proxy to vote its shares effective upon the Company paying and satisfying in full all its obligations pursuant to its $300,000 convertible notes private placement offering.
On October 25, 2011, we issued a Demand Note in the principal amount of $25,000 to BSF, LLC. Lisa Grossman, wife of our consultant, Yitz Grossman, is a managing member k of BSF, LLC.
On each of November 30, 2011, December 12, 2011 and December 14, 2011, the Company issued a Demand Note in the principal amount of $25,000, $75,000 and $106,000, respectively, to each of Arevim, Inc., BFSF, LLC and BSF II, LLC respectively. The Demand Notes bear interest at 6% per annum and can be prepaid by the Company without penalty. If the Demand Notes and accrued interest thereon are not paid within 10 days of demand, the interest rate will increase to 12% retroactive to the date of issuance of the Demand Note. All principal and accrued interest on the Demand Notes are convertible into shares of the Company’s common stock at the election of the holder at a conversion price per share equal to the lower of (i) $0.10 and (ii) the closing bid price on the date of conversion. If the Company fails to timely pay the Demand Note and accrued interest, it will be required to issue to the holder 20,000 shares, (for the first 30 days), 50,000 shares (for day 31 through 60) and 1,000,000 shares thereafter of its common stock per day. Lisa Grossman, is a managing member of BFSF, LLC and BSF II, LLC. She is the wife of Yitz Grossman, a consultant to the Company, and president of Arevim and a managing member of BFSF, LLC.
On January 18, 2012, the Company issued the BSF II Note in the principal amount of $85,000 to BSF II LLC. The BSF II Note is payable upon demand at any time after February 15, 2012. The BSF II Note bears interest at 6% per annum and can be prepaid by the Company without premium or penalty. Lisa Grossman, is a managing member of BSF II, LLC. She is the wife of Yitz Grossman, a consultant to the Company.
On February 22, 2011, we entered into a Consulting Agreement with Yitz Grossman pursuant to which he was retained as a consultant to advise us on corporate development and introduce the Company to some of his contacts which may have an interest in investing in the Company. The term of the Agreement is for a period of three years and will automatically be extended for an additional three years should we raise at least $3,000,000 gross capital. We agreed to compensate Mr. Grossman with the monthly sum of $10,000 to be paid bi-monthly on the first and fifteenth business day of each month, said payments to commence upon the earlier of the consummation of an equity financing of $2,000,000 or the first full month in which we have 15,000 paying subscribers. Mr. Grossman has also agreed not to compete with the Company during the term of his consultancy and for a period of one and a half years thereafter. Mr. Grossman has also agreed to not to disclosed confidential information. We have the right to terminate him for cause at any time immediately upon written notice and should he be terminated, he is entitled to compensation accrued through the date of termination.
Director Independence
We are not subject to listing requirements of any national securities exchange or national securities association and, as a result, we are not at this time required to have our board comprised of a majority of “independent directors.” We do not believe that any of our directors currently meet the definition of “independent” as promulgated by the rules and regulations of the American Stock Exchange.
Item 14. Principal Accounting Fees and Services.
Our principal independent accountant is Lake and Associates CPAs. Their pre-approved fees billed to the Company are set forth below:
|
|
Fiscal Year Ended December 31, 2010
|
|
|
Fiscal Year Ended December 31, 2011
|
|
Audit Fees
|
|
$
|
4,450
|
|
|
$
|
16,250
|
|
Audit Related Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
Tax Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
All Other Fees
|
|
$
|
0
|
|
|
$
|
0
|
|
As of December 31, 2011, the Company did not have a formal documented pre-approval policy for the fees of the principal accountant. The Company does not have an audit committee. The percentage of hours expended on the principal accountant's engagement to audit our financial statements for the most recent fiscal year that were attributed to work performed by persons other than the principal accountant's full-time, permanent employees was 0%.