Sundance Strategies, Inc. - Quarter Report: 2013 September (Form 10-Q)

NAME REFERENCES

In this Quarterly Report, references to “Sundance Strategies,” the “Company,” “we,” “our,” “us” and words of similar import, refer to “Sundance Strategies, Inc.,” the Registrant,  and where applicable, include the current and intended business operations of ANEW LIFE, INC., a Utah corporation and our wholly-owned subsidiary (“ANEW LIFE”), our acquisition of which, by merger, occurred on March 29, 2013.  

FORWARD-LOOKING STATEMENTS

In this Quarterly Report on Form 10-Q, references to “Sundance,” the “Company,” “we,” “us,” “our” and words of similar import refer to Sundance Strategies, Inc., a Nevada corporation and its subsidiary, ANEW LIFE, INC., a Utah corporation (“ANEW LIFE”), unless the context requires otherwise.

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).  In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include, among others: These factors include, but are not limited to, economic conditions generally in the United States and internationally, and in the industry and markets in which we have and may participate in the future, competition within our chosen industry, our current and intended business, our assets and plans, the effect of applicable United States and foreign laws, rules and regulations and our failure to successfully develop, compete in and finance our current and intended business operations.

You should read any other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should read this Quarterly Report completely, and it should be considered in light of all other information contained in the reports or registration statement that we file with the Securities and Exchange Commission (the “SEC”), including all risk factors outlined therein. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

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JUMPSTART OUR BUSINESS STARTUPS ACT DISCLOSURE

We qualify as an “emerging growth company,” as defined in Section 2(a)(19) of the Securities Act by the Jumpstart Our Business Startups Act (the “JOBS Act”). An issuer qualifies as an “emerging growth company” if it has total annual gross revenues of less than $1.0 billion during its most recently completed fiscal year, and will continue to be deemed an emerging growth company until the earliest of:

As an emerging growth company, we are exempt from various reporting requirements. Specifically, we are exempt from the following provisions:

Under the JOBS Act, emerging growth companies may delay adopting new or revised accounting standards that have different effective dates for public and private companies until such time as those standards apply to private companies.  We have irrevocably elected not to avail ourselves of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

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PART I

Item 1.  Financial Statements

The Financial Statements of the Registrant required to be filed with this 10-Q Quarterly Report were prepared by management and commence below, together with related notes. In the opinion of management, the Financial Statements fairly present the financial condition of the Registrant and include all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation of the Registrant’s Financial Statements. The results from operations for the six month period ended September 30, 2013, are not necessarily indicative of the results that may be expected for the year ended March 31, 2014. The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the March 31, 2013, Financial Statements and footnotes thereto included in the Registrant’s Form 10-K Annual Report for the fiscal year ended March 31, 2013, which was filed with the SEC on July 16, 2013.

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SUNDANCE STRATEGIES, INC. AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

INDEX TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(UNAUDITED)

                                                                                                                                                                                         Page(s)

Condensed Consolidated Balance Sheets as of September 30, 2013 and March 31,

2013

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Condensed Consolidated Statements of Operations for the Three and Six Months Ended 

September 30, 2013 and the period from inception (January 31, 2013) through September 30, 2013                       7

Condensed Consolidated Statements of Cash Flows for the Six Months Ended

September 30, 2013 and the period from inception (January 31, 2013) through September 30, 2013

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Notes to the Condensed Consolidated Financial Statements

           9-15

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SUNDANCE STRATEGIES, INC.  AND SUBSIDIARY

(A DEVELOPMENT STAGE COMPANY)

Condensed Consolidated Balance Sheets

(Unaudited)

The Company recognized the full $139,251 as stock issuance costs during the six months ended September 30, 2013.

(10) STOCK TRANSACTIONS

Preferred Stock

The Company has authorized 10,000,000 shares of its preferred stock at a par value of $0.001 per share. As of September 30, 2013 there were no preferred shares issued and outstanding.

Common Stock

As of September 30, 2013, the Company has 500,000,000 shares of common stock authorized with a par value of $0.001 per share and 42,261,441 shares of common stock issued and outstanding.

On April 8, 2013, the Company approved a private offering of up to 3,000,000 common shares of restricted stock to investors at $5.00 per share. The purpose of the offering is to acquire additional NIBs. As of the September 30, 2013, the Company has collected $8,072,500, for 1,614,500 common shares of restricted stock of which 1,464,000 shares were issued for cash of $7,320,000 and 150,500 shares are to be issued for cash of $752,500; paid $545,000 of the $585,000 due

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in introduction fees; and agreed to issue two year warrants to acquire 70,000 shares of the Company’s common stock at an exercise price of $5.00 per share.

(11) GOING CONCERN

The Company’s financial statements have been presented on the basis that it is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business. At September 30, 2013, the Company had an accumulated deficit of $1,510,086 and a working capital deficit of $2,170,462. In addition, the Company is a development stage entity and has not generated any revenues and has negative operating cash flows from inception through September 30, 2013. These factors raise substantial doubt about the Company’s ability to continue as a going concern. The financial statements do not include any adjustment that might result from the outcome of this uncertainty.

The Company’s continued existence is dependent on its ability to generate sufficient cash flow to cover operating expenses and to invest in future operations. Management is actively pursuing opportunities to expand existing operations. The Company will look to debt and or equity transactions to fund continuing operations until the Company is able to generate sufficient operating cash flows. If management is unsuccessful in these efforts, discontinuance of operations is possible.

(12) SUBSEQUENT EVENTS

On October 3, 2013, the Company made additional payments of costs and expenses as required in the Del Mar ATA, totaling $1,717,022, to release the liens on all of the assets acquired by the Company under the Del Mar ATA.

On October 11, 2013, the Company issued 400,000 stock options to an employee, with 10% of the options vesting six months after the date of issuance and the remaining options to vest monthly over the next 36 months subject to continuing employment with the Company. The options have an exercise price of $5 per share and a contractual term of 5 years.

On October 29, 2013, the Company and Europa, with the agreement of Del Mar, amended the Europa Agreement and the Del Mar ATA to acknowledge that the Total Up Front Cash Payment due from the Company under the Del Mar ATA and Europa Agreement shall not exceed $12,000,000; that the Company would receive a credit on a dollar for dollar basis of the Cash Payment and all costs and expenses paid under the Del Mar ATA over $8,000,000, against all fees due Europa under the Europa Agreement or the Del Mar ATA; and acknowledged receipt of $8,241,319 having been paid by the Company in such Cash Payment and costs and expenses.

On October 29, 2013, the Company also entered into an Exclusivity Agreement with the consultant to Europa under the Europa Agreement under which the Company advanced $25,000 to such consultant for services related to the purchase of Qualified NIBs associated with the $400,000,000 in life insurance policies under the Del Mar ATA.

On November 5, 2013, the Company entered into an Amended and Restated Promissory Note (the “Amended Note”) that amended the $2,999,999 secured note reference in Note 7 above regarding its initial purchase of NIBs as follows: (i) the Amended Note was payable to Del Mar rather than its initial payee (ii) the due date of the Amended Note was extended from December 31, 2013, to April 11, 2015; (iii) the Amended Note provided that in the event that $400,000,000 of Qualified NIBs have been acquired by the Company in accordance with the Del Mar ATA or otherwise were accepted by the Company, even though not meeting the precise definition of “Qualified NIBs” in the Del Mar ATA, and the Company issues a bond prior to April 11, 2014, the then outstanding principal balance of the Amended Note shall be reduced to $2,000,000 (if the then outstanding principal balance exceeds $2,000,000 at the time); (iv) at any time after April 11, 2014, until the Maturity Date, the Company shall have the option, in its sole discretion and without qualification, and on five days notice to holder, to decrease the then outstanding principal balance of the Amended Note to $1,500,000; provided, further, that upon the exercise of such option, the Collateral described in the Pledge Agreement regarding such notes shall be reduced from 50% to 40% of the Company’s NIBs; and (v) the Amended Note may be prepaid, in whole or in part, by the Company at any time without penalty.  Any net death benefit or bond proceeds paid to maker or the Company in connection with the assets purchased under the PCH NIBs Transfer Agreement dated March 11, 2013, shall be used to prepay the Amended Note; provided, however, no such death benefits or bond proceeds paid to the maker or the Company shall be accounted for in any manner that would cause the Company to not receive the full benefit of the reductions of the principal balance of the Amended Note outlined in items (iii) and (iv), above, without qualification, except the conditions outlined in items (iii) and (iv), above.  The Amended Note also provided that notwithstanding

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anything herein or in any agreement referenced herein to the contrary, once accrued interest and $1,500,000 has been paid, the Amended Note shall be deemed to be paid in full, and all collateral shall be the sole and separate property of the Company, without exception.  The Company may set off any claim it has against holder in payment of the Amended Note, without qualification.”  

On November 5, 2013, the Amended Note was assigned by the Company to Del Mar; Del Mar assigned it to another party for $1,000,000 retaining a buyback option (the “Buyback Option”) for a period of 12 months from the date of the assignment of the Amended Note to buy back the Amended Note at a price equal to the $1,000,000,  plus an additional 2.0% for each month (whole or partial) that had elapsed from the date of the assignment to the date that the Buyback Option is exercised (the “Buyback Price”). Further, notwithstanding the foregoing, the Buyback Price shall in no circumstances be less than an amount equal to $1,120,000.00 (the “Minimum Buyback Price”).  The Company acquired this Buyback Option from Del Mar on the same date, with the provision that it would revert to Del Mar if it had delivered and the Company had accepted $400,000,000 of Qualified NIBs under the Del Mar ATA.  

Subsequent to the quarter ended September 30, 2013, the Company sold 1,384,000 common shares for aggregate gross proceeds of $6,920,000.  All subscriptions have been paid except three of the investors’ subscriptions are due, respectively, on November 18, 2013 ($2,000,000); November 30, 2013 ($3,000,000); and December 15, 2013 ($1,500,000).  The Company is obligated to pay introduction fees on these three investors’ funds, on receipt of these funds, equal to 8% of the gross proceeds thereof or $520,000.  It has paid $6,400 in introduction fees on two other subscriptions received and paid subsequent to September 30, 2013.  $100,000 was also received for 20,000 of the shares that were subscribed in the quarter ended September 30, 2013. These shares have not been issued; nor have 170,500 shares subscribed for during the quarter ended September 30, 2013.

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Item 2. Management’s Discussions and Analysis of Financial Condition and Results of Operations.

Forward-looking Statements

In this Quarterly Report on Form 10-Q, references to “Sundance,” the “Company,” “we,” “us,” “our” and words of similar import refer to Sundance Strategies, Inc., a Nevada corporation and its subsidiary, ANEW LIFE, INC., a Utah corporation (“ANEW LIFE”), unless the context requires otherwise.

This Quarterly Report contains forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the Exchange Act. In some cases, you can identify forward-looking statements by the following words: “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “will,” “would,” or the negative of these terms or other comparable terminology, although not all forward-looking statements contain these words. Forward-looking statements are not a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by, which such performance or results will be achieved. Forward-looking statements are based on information available at the time the statements are made and involve known and unknown risks, uncertainties and other factors that may cause our results, levels of activity, performance or achievements to be materially different from the information expressed or implied by the forward-looking statements in this report. These factors include, among others: These factors include, but are not limited to, economic conditions generally in the United States and internationally, and in the industry and markets in which we have and may participate in the future, competition within our chosen industry, our current and intended business, our assets and plans, the effect of applicable United States and foreign laws, rules and regulations and our failure to successfully develop, compete in and finance our current and intended business operations.

You should read any other cautionary statements made in this Quarterly Report as being applicable to all related forward-looking statements wherever they appear in this Quarterly Report. We cannot assure you that the forward-looking statements in this Quarterly Report will prove to be accurate, and therefore, prospective investors are encouraged not to place undue reliance on forward-looking statements. You should read this Quarterly Report completely, and it should be considered in light of all other information contained in the reports or registration statement that we file with the SEC, including all risk factors outlined therein. Other than as required by law, we undertake no obligation to update or revise these forward-looking statements, even though our situation may change in the future.

Plan of Operations

We are engaged in the business of purchasing or acquiring life insurance policies and residual interests in or financial products tied to life insurance policies, including notes, drafts, acceptances, open accounts receivable and other obligations representing part or all of the sales price of insurance, life settlements and related insurance contracts being traded in the secondary marketplace, often referred to as the “life settlements market.” These life insurance interests are anticipated to be held to maturity. Our plan of operation for the next 12 months is to continue the acquisition of these life insurance interests whereby we will acquire the interests in life insurance policies at a discount to their face value for investment purposes. We began purchasing the net insurance benefits in life insurance policies (“NIBs”) during our fiscal year ended March 31, 2013. This is not a market sector without competition, and at present, we are a minor competitor. We will need substantial funds to effectively compete in this industry, anticipated to be approximately $10,000,000 to $15,000,000 in total, and no assurance can be given that we will be able to adequately fund our current and intended operations, whether through revenues generated from our current interest in the NIBs we recently acquired in fiscal 2013 or through debt or equity financing. We may be required to expend not less than approximately $20,667,692 over premiums and servicing costs over the next five years.

We currently estimate proceeds of approximately $45,665,018 on the NIBs owned as of September 30, 2013. This amount is based on the estimated proceeds from polices of $129,038,933 plus the estimated increase on return of premium policies over the life expectancy of those individuals of $5,182,949 less the senior debt outstanding of $22,316,954, expected premium payments of $40,267,366 over the life expectancies, and estimated expenses and interest of $25,972,544 over the term of the senior debt. We anticipate that over the next 15 years that, during years 1-5, policies representing 11.9% of total death benefits will mature; during years 6-11, policies representing 72.6% of total death benefits will mature; and during the remaining years 12-15, policies representing 15.4% of the total death benefits will mature. These percentages all assume that the policies mature according to the life expectancy of the underlying insured as of the date they were originally underwritten, without any adjustments for change in health or mortality improvement factors.

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We used a “Deterministic” method to project the cash flows and returns as presented. The model required many assumptions, including, but not limited to the following: (i) 15 year projections; (ii) a distinct number of lives; (iii) a distinct number of policies; (iv) life expectancy tables and projections; (v) premiums; (vi) senior lending fees; (vii) MPIC fees; and (viii) insurance, servicing and custodial fees. While this method of modeling cash flows is helpful in informing us of our general expectation of potential returns that might be produced from our NIBs portfolio, it is by no means any guarantee of such results. The actual performance of these NIBs interests (as well as our future expectations as to what such performance might be) may differ substantially from our expectations, especially if any of the assumptions change or differ from Sundance’s initial assumptions. This portfolio contains only 22 policies, though insurance rating agencies have stated that at least 1,000 lives are required to achieve any actuarial stability. Many risk factors beyond these assumptions may result in our expectations being incorrect, as outlined under Part I, Item 1A Risk Factors, commencing on page 17 of our Annual Report on Form 10-K for the fiscal year ended March 31, 2013, which was filed with the SEC on July 12, 2013 (see Item 6); therefore, no assurance can be given that these estimated results will occur.

We advanced payments to purchase future additional life settlement products during the six months ended September 30, 2013, and if these life settlement products become “Qualified NIBs” as defined in the acquisition documents and as discussed in Part II, Item 5, below, we will also utilize the “Deterministic” method to estimate what our proceeds from these “Qualified NIBs” may be, all subject to the same assumptions, qualifications and risks referenced above. These life settlement products are not included in the estimates above because we have not been delivered the “Qualified NIBs” from which such calculations would be made.

Results of Operations

Revenue and Cost Recognition

The Company accounts for its investment in life settlement contracts under FASB ASC 325-30.  Under this guidance, the Company elects to account for the contracts using either the investment method or the fair value method on an instrument-by-instrument basis.  The Company has elected to account for its current investments in net insurance benefits under the investment method.  Under the investment method, the Company recognizes income upon final settlement of the underlying contract and once the requirements of Staff Accounting Bulletin No. 104, Revenue Recognition (“SAB 104) have been met, which entails recognizing revenues when an arrangement exists, the terms are fixed or determinable, and only at the time a settlement closes and collection is reasonably assured.  The Company recognizes income as the difference between the carrying amount of the underlying life settlement contract and the net proceeds received for the underlying policy.

Operating and General & Administrative Expenses

Operating Expenses

We had no material operations during the three and six months ended September 30, 2013, and we have no material operations as of the date of this Quarterly Report.  General and administrative expenses were $186,681 and $1,101,756 during the three and six months ended September 30, 2013, respectively.  General and administrative expenses are primarily comprised of stock based compensation, payroll and travel expenses, and policy servicing fees. We had professional fees totaling $124,128 and $242,918 during the three and six months ended September 30, 2013, respectively.  Most all of these expenses were legal and accounting fees related to the preparation and filing of reports with the SEC under the Exchange Act.

Other Expenses

Other expenses consist of interest accrued on the note payable of $2,999,000 used to purchase the investment in our NIBs. During the three and six months ended September 30, 2013, interest expenses have accrued in the amount of $30,709 and $60,782, respectively.

Income Taxes

At September 30, 2013, we had no taxable income.

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Liquidity and Capital Resources

We have cash assets at September 30, 2013, of $979,557.  We have $6,299,000 in investment in NIBs and have advanced $6,414,063 for investment in net insurance benefits.  We have only common stock as our capital resource.  We will be reliant upon stockholder loans or private placements of equity or debt to fund any future of operations.  We have secured no sources of loans.  There is no assurance that we will be able to raise any required debt or equity financing.

On April 8, 2013, our Board of Directors approved a private offering of up to 3,000,000 common shares of our common stock, also comprised of “restricted securities” under SEC Rule 144 to “accredited investors” only at $5.00 per share.  The purpose of the offering is to acquire additional NIBs or other life settlement products.  During the six months ended September 30, 2013, we had received $8,072,500 for 1,614,500 common shares at $5.00 per share of which 1,464,000 share were issued for cash of $7,320,000 and 150,500 shares are to be issued for cash of $752,500; paid $545,000 of the $585,000 due in introduction fees; and agreed to issue two year warrants to acquire 70,000 shares of our common stock at an exercise price of $5.00 per share.

For six months ended September 30, 2013, we had net cash used in operating activities of $7,145,135.  We used $6,414,063 as an advancement to purchase the investment in NIBs under the Del Mar ATA.  Net cash provided by financing activities totaled $7,579,275, which represents the funds we received from the private placement through September 30, 2013.

Long-Term Debt

At September 30, 2013, we had no long-term debt. We may borrow money in the future to finance our future operations. Any such borrowing will increase the risk of loss to the investor in the event we are unsuccessful in repaying such loans.

We may issue additional shares to finance our future operations, although we do not currently contemplate doing so. Any such issuance will reduce the control of previous investors and may result in substantial additional dilution to investors purchasing shares from this offering.

Item 3.  Quantitative and Qualitative Disclosures about Market Risk.

Not required.

Item 4.  Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our principal executive and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Annual Report.  Based on that evaluation, our President who is also deemed to be our acting CFO, concluded that our disclosure controls and procedures as of the end of the period covered by the Quarterly Report were not effective and that the information required to be disclosed by us in reports filed under the Exchange Act is not (i) recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our President and our acting CFO, as appropriate to allow timely decisions regarding disclosure.  A controls system cannot provide absolute assurance, however, that the objectives of the controls system are met, and no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected.

We are in the process of adopting specific internal control mechanisms with our Board of Directors’ and our officers’ collaboration to ensure effectiveness as we grow our business.  We are presently engaging an outside consultant to assist in adopting new measures to improve upon our internal controls.  Future controls, among other things, will include more checks and balances and communication strategies between management and all members of the Board of Directors to ensure efficient and effective oversight over company activities as well as more stringent accounting policies to track and update our financial reporting and disclosure of information.  We also plan to hire additional personnel, subject to available funding.

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Changes in Internal Control over Financial Reporting

With the exception of the matters discussed by us regarding our future controls to resolve our the present weaknesses in our controls and procedures, as discussed in the preceding section, there have been no changes in internal control over financial reporting.

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

None; not applicable.

Item 1A.  Risk Factors.

Not required; however, for information about risk factors affecting us, our business and our common stock, see our 10-K Annual Report for the fiscal year ended March 31, 2013, which was filed with the SEC on July 16, 2013.  See Part II, Item 6.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

On April 1, 2013 (Jini Suttner stock option grant), and on April 5, 2013, our Board of Directors  approved the issuance of the following five year options, exercisable at $0.77 per share, to be subject to a yet to be adopted stock option or similar plan:

We also privately offered and sold 1,614,500 shares of our common stock to “accredited investors” only during the six months ended September 30, 2013, along with 70,000 warrants that were issued as partial consideration for “introduction fees” related to the private placement, entitling the holders to purchase 70,000 shares of our common stock comprised of “restricted securities” at a price of $5.00 for a two year term commencing May 31, 2013.  

As of November 12, 2013, the Company completed its $15,000,000 private placement of shares of its common stock comprised of “restricted securities” as defined in Rule 144 of the SEC, to “accredited investors” only, selling 3,018,500 shares for aggregate gross proceeds of $15,092,500.

1,384,000 of these shares were sold subsequent to the quarter ended September 30, 2013, for aggregate gross proceeds of $6,920,000.  All subscriptions have been paid except three of the investors’ subscriptions are due, respectively, on November 18, 2013 ($2,000,000); November 30, 2013 ($3,000,000); and December 15, 2013 ($1,500,000).  The Company is obligated to pay introduction fees on these three investors’ funds, on receipt of these funds, equal to 8% of the gross proceeds thereof or $520,000.  It has paid $6,400 in introduction fees on two other subscriptions received and paid subsequent to September 30, 2013.

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Our common stock, stock options and our warrants were issued pursuant to exemptions from registration under Sections 4(a)(2) and 4(a)(5) of the Securities Act, and Rule 506(b) of Regulation D of the SEC, and, as applicable, Regulation S of the SEC.

Item 3. Defaults upon Senior Securities.

None; not applicable.

Item 4. Mine Safety Disclosures.

None; not applicable.

Item 5. Other Information.

On October 21, 2013, we appointed Matthew G. Pearson as Chief Operating Officer.  Mr. Pearson is 47 years of age. There are no family relationships between Mr. Pearson and any director or executive officer of the Company.  Mr. Pearson has 25 years experience in corporate finance, real estate brokerage and development.  He was a cofounding partner with EHI, LLC, which was established in August of 2009.  EHI, LLC is a Life Settlement Securitization Company.  During his tenure at the company, Mr. Pearson managed every aspect of the company’s business since inception, including transaction design and implementation, policy selection, ownership structure for the corporate entities to ensure appropriate tax treatment, to creation and consummation of agreements with 20 vendors required to structure and complete the bond offering tied to the securitization.   From July, 2011, to his employment as COO with the Company, he was also a partner in Evolution Capital Partners, a company in the business of providing loans to small cap publicly-traded companies.  See our 8-K Current Report dated October 21, 2013, which was filed with the on October 24, 2013.  See Item 6.

Other Agreements

For additional information regarding the matters set forth in Note 12 of our Condensed Consolidated Financial Statements that accompany this Quarterly Report, along with copies of the respective agreements discussed, as applicable, see our 8-KA-2 Current Report dated June 7, 2013, which was filed with the SEC on November 14, 2013.  See Part II, Item 6.

Item 6. Exhibits.

Exhibit No.                         Identification of Exhibit