UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended: December 31, 2014
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 333-186068
EF Hutton America, Inc.
formerly EFH Group, Inc.
(Exact name of the registrant in its charter)
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Colorado | | 20-8594615 |
(State or other jurisdiction of incorporation or organization) | | (I.R.S. Employer Identification) |
77 Water Street, 7th Floor, New York, NY 10005
(Address of principal executive offices, including zip code)
Registrant's Telephone number, including area code: 212-742-5000
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock, $0.001 par value
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes [ ] No [x]
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Exchange Act. Yes [ ] No [x]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (section 232.406 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [x]
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for at least the part 90 days. Yes [x] No[ ]
Indicate by check mark if disclosure of delinquent filers in response to Item 405 of Regulation S-K is not contained hereof, and will not be contained, to will be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
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Large accelerated filer [ ] | | Accelerated filer [ ] |
Non-accelerated filer [ ] | | Smaller Reporting registrant [x] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [x]
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrants most recently completed second fiscal quarter. The market value of the registrants voting $0.001 par value common stock held by non-affiliates of the registrant was approximately $680,662.
Indicate the number of shares outstanding of each of the registrants classes of common stock, as of the latest practicable date. As of March 2, 2016, the registrants authorized capitalization consisted of 90,000,000 common shares, par value $0.001, of which 53,709,673 common shares were issued and outstanding, and 10,000,000 Class B common shares, par value $0.001 of which 5,797,000 Class B common shares were issued and outstanding.
No documents are incorporated into the text by reference.
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EXPLANATORY NOTE
This amendment to the Form 10-K for the year ended December 31, 2014, as originally filed on April 15, 2015 and subsequently amended, is being filed solely to restate the carrying value of the assets acquired on November 25, 2014 to reflect the sellers carrying value because the transaction is deemed an affiliate transaction.
Except as described above, and in prior amendments, no other changes have been made to the original filing and subsequent amendments. This amendment continues to speak as of the date of the original filing, and we have not updated the disclosures contained therein to reflect any events that occurred at a date subsequent to the filing of the original filing. Accordingly, this amendment should be read in conjunction with the original Form 10-K and the registrants other filings with the SEC subsequent to filing of the original Form 10-K.
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EF Hutton America, Inc.
Form 10-K/A
For the Fiscal Year Ended December 31, 2014
Table of Contents
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| | Page |
Part I | | |
Item 1. Business | | 5 |
Item 1A. Risk Factors | | 10 |
Item 1B. Unresolved Staff Comments | | 10 |
Item 2. Properties | | 10 |
Item 3. Legal Proceedings | | 10 |
Item 4. Mine Safety Disclosures | | 10 |
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Part II | | |
Item 5. Market for Registrant's Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities | | 11 |
Item 6. Selected Financial Data | | 12 |
Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations | | 12 |
Item 7A. Quantitative and Qualitative Disclosures about Market Risk | | 17 |
Item 8. Financial Statements and Supplementary Data | | 18 |
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | | 32 |
Item 9A. Controls and Procedures | | 33 |
Item 9B. Other Information | | 35 |
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Part III | | |
Item 10. Directors, Executive Officers and Corporate Governance | | 36 |
Item 11. Executive Compensation | | 39 |
Item 12. Securities Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | | 41 |
Item 13. Certain Relationships and Related Transactions, and Director Independence | | 42 |
Item 14. Principal Accounting Fees and Services | | 42 |
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Part IV | | |
Item 15. Exhibits and Financial Statement Schedules | | 43 |
Signatures | | 45 |
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PART I
ITEM 1. BUSINESS
Business Overview
EF Hutton Financial Corp., a wholly owned subsidiary of the registrant, operates an internet marketplace that connects consumers with a network of financial providers across a range of financial products and services, including, but not limited to insurance, tax, real estate and financial planning. The marketplace, Gateway, connects consumers with a wide range of financial providers and solutions. Gateway makes independent providers a viable choice for consumers by eliminating barriers that impede consumers from using independent providers, primarily through marketing to raise awareness of the independent sector and by standardizing and streamlining the process of selecting and engaging independent financial professionals. Financial providers who register with Gateway benefit by generating new client relationships. In addition to operating Gateway, our subsidiary intends to offer specialty financial services through its institutional division.
History
The registrant was incorporated under the laws of the State of Colorado in March 2007 under the name Twentyfour/seven Ventures, Inc. On October 27, 2014, the registrant incorporated EFH Financial Corp. as a wholly owned subsidiary. On November 20, 2014, the name of the registrant was changed to EFH Group, Inc. On March 11, 2015, the name of EFH Financial Corp. was changed to EF Hutton Financial Corp.
The registrant incorporated Liberty Ventures, Inc. in the State of Colorado on November 16, 2014 as its wholly owned subsidiary. Liberty operates a specialty insurance agency that provides surety bonds underwritten by Bankers Insurance of Florida. On November 23, 2014, the assets and liabilities of the registrant were contributed at book value to Liberty and the registrant approved a spin-off of its shares in this subsidiary to its shareholders. The common shares of EF Hutton Financial Corp. were not included in the spin-off. The spin-off was approved in contemplation of asset purchase described below and the subsequent change of control of the registrant. The spin-off common shares are being held in escrow with J.M. Walker & Associates, Attorneys At Law until all state and federal requirements have been met by Liberty.
On November 25, 2014, the registrant purchased certain assets of EFH Group, Inc., a Wyoming corporation. The assets consist of various trademarks and license rights, rights to computer programming code and other intellectual property. The registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.
We have never declared bankruptcy, have never been in receivership, and have never been involved in any legal action or proceedings. We are not a blank check company as that term is defined in Rule 419(a) (2) of Regulation C of the Securities Act of 1933,
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because we have a specific business plan and purpose. The registrant has had informal exploratory discussions with some acquisition candidates, but does not have any present plans, proposals, arrangements or understandings with any representatives of the owners of any business or company regarding the possibility of an acquisition or merger.
Operations
Through EF Hutton Financial Corp., its subsidiary, the registrant is sponsoring and developing an internet service that connects consumers with independent financial services providers. The service is called Gateway and was launched in the first quarter of 2015. Gateway is a B2C marketplace for financial services. Operationally, Gateway is a two-sided market network that connects consumers with independent financial service providers. The service will provide consumers with one website that they can use to identify and locate providers for all their financial needs. Consumers can engage providers for insurance, tax, real estate, lending, financial planning and other services.
The service is free to consumers and provides the convenience of accessing information on providers for all services from one single website. Consumers can choose a provider whose qualifications have been verified by the registrant. Verification of qualifications applies to all service levels except for the Basic Service and is conducted by our staff and contractors we may engage to assist in verification. The verification process involves checking regulatory status and provider credentials. The providers of services include: retirement, insurance, financial planning, tax, trusts and estates, real estate, and other financial services, including additional categories of service that will be added in future, see www.efhutton.com for specific set of service categories. Clients can book appointments with providers of their choice without leaving the website. The registrant provides a reward program that gives points to consumers that use service providers in the registrants network. Gateway receives a portion of service revenues and qualifies the service providers on the network.
Service providers benefit from a source of new clients, because registrant does the marketing. Management estimates that it typically costs more than $250 for financial service providers to acquire a new client.1
Financial Services Industry
In 2010, the financial services industry, excluding banks, accounted for $1.758 trillion, 12.1% of total GDP in the United States, according to the US Department of Commerce, Bureau of Economic Analysis. Independent providers of financial services direct to consumers are a segment of the total financial services market. Based on in-house research, management estimates that independent financial providers account for approximately 18% of the financial services market by revenue or $316 billion of annual GDP.
1Based on a 170-page report from the McKinsey Global Institute, The Social Economy: Unlocking and Productivity Through Social Technologies which stated that client acquisition costs for banks are generally $70
to $300 in financial services.
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The financial services industry is highly fragmented and the independent sector is even more so. Approximately 2,320,000 professionals are employed in the sectors where most independents work. The number of professionals in each sector illustrates the size of the market. According to the IRS, there are over 1,130,000 employed for tax advice and preparation. According to US Bureau of Labor Statistics, there are over 440,000 insurance independent insurance agents. According to the National Association of Realtors there are over 420,000 independent real estate agents. According to the SEC, in 2011, there were over 275,000 investment advisor representatives.
Snapshot of the Independent Financial Provider Segment:
Estimated Number of Firms
44,000
Tax Prep and Advice1
87,577
Independent Real Estate Brokerages2
38,500
Independent Insurance Agencies3
9,581
Independent RIAs - employing 50 or fewer professionals4
179,658
Total
According to McKinsey5, a thought-leader in financial services, retail financial
products are intangible and often complex; consumers find it difficult to make comparisons across offerings, even within the same category. Consumers do not always have full transparency into products or a clear understanding of how they work. So, rather than doing their own research and evaluation, consumers often place their trust in an advisor (either a professional or a knowledgeable relative or friend) or a brand.
According the McKinsey report, the largest opportunities in the value chain for consumer-facing financial institutions are in customer insights and sales and marketing. Value creation in these areas could amount to approximately $133 billion to $218 billion per year globally.
Operating Strategy
The registrant intends to expand its business by internal growth and by acquisition.
The registrant also intends to acquire related businesses that will complement the current financial technology business that can expand the range of services it offers. Prospective acquisition targets include existing financial firms, technology providers and marketing
1According to mynacc.org. See http://mynacc.org/6154/owntaxbusiness.html
2According to National Assn of Realtors 2008 study and the Inman 2015 Special Report Shift to Independent Brokerages
3According to 2012 Agency Universe Study by Future One and sponsored by Independent Insurance Agents & Brokers of America
4According to a 2014 report A Profile of the Investment Advisor Profession by Investment Advisor Association
5McKinsey Global Institute November 2012 How Social Technologies Create Value in Consumer Financial Services by Michael Chui, Et Al.
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companies. The registrant is presently evaluating several such businesses as potential merger or acquisition candidates, and anticipates expanding the scope of possible candidates.
The successful acquisition of related, complimentary businesses is expected to increase profits by providing a broader range of services in vertical markets which are consolidated under one parent, thus reducing overhead costs by streamlining operations and eliminating duplicitous efforts.
The registrant will seek out and evaluate related, complimentary businesses for acquisition. The integrity and reputation of any potential acquisition candidate will first be thoroughly reviewed to ensure that it meets with managements standards. Once a company has been targeted as a potential acquisition candidate, the registrant will enter into negotiations with the potential candidate and commence due diligence evaluation of each business, including its financial statements, cash flow, debt, personnel, and services.
Marketing Strategy
The registrant, through its subsidiary, uses a range of marketing strategies and techniques, including but not limited to: direct marketing via phone and mail, internet marketing, social media such as Twitter, Facebook and Linkedin, public relations, traditional media advertising. Marketing activities are enhanced by general consumer awareness of the EF Hutton brand.
Gateway
Gateway is an internet marketplace that connects consumers with independent financial providers. We believe independent providers generally offer a high lever of customers care and a better overall value for consumers in each of their respective specialty service areas than many of the larger branded firms. However, the benefits of selecting independent providers are not widely known to consumers. Until Gateway, there has been no one nationally-branded firm that markets the independent segment as a choice for consumers. Additionally, until Gateway, there were barriers to consumers choice in this segment because the independent provider segment is diverse and fragmented. In the independent segment, there is no central source for information, standardization, service level standards or quality assessment resulting in extra effort by consumers to locate, evaluate and engage an independent provider.
We believe Gateway adds value by promoting the independent financial segment as a choice for consumers. As a two-sided market, Gateway must add value to both providers and consumers. For consumers, it removes barriers to consumer choice by streamlining the search and selection process and making independent providers a viable choice for a wide range of their financial needs. For providers, Gateway reduces the cost of customer acquisition by providing efficient scale economies in marketing and related operations that no provider could gain alone
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Institutional Business
The registrant is developing an institutional business to provide products and services to institutions such as banks, insurance companies and asset management companies. To conduct this business, we expect the institutional division will be required to register as a broker-dealer and as an investment adviser and may acquire broker-dealers and investment advisers. The institutional division is expected to commence operations in the third quarter of 2015.
Revenues
Gateway is free for consumers to use to search for and select financial providers. Each independent service provider sets their own prices for services rendered to consumers.
Financial service providers receive a free 30-day trial. After that trial period, they can select any of three different tiers of service. Registration fees range from $99 per year for basic service to $399 per year for premium service. Higher service levels enable providers to raise their ranking in search results and to enhance the profile description displayed on Gateway. In addition, there are variable fees for client introductions. Pricing is subject to change based on market factors.
Competition
We compete for attention of consumers and of providers of financial products and services. Competitors operate within the traditional, offline business as well as with online. Competition is on the basis of a number of factors, including breadth of service provider listings, quality of providers, depth and timeliness of information, quality and availability of e-commerce marketplace offerings and strength and recognition of our brand. We also compete for a share of service providers overall advertising budgets with traditional, offline media companies and other Internet marketing providers on the basis of a number of factors, including return on investment, effectiveness and relevance of our e-commerce initiatives, our pricing and monetization strategies and recognition of our brand. Our competitors include:
Traditional, offline competitors. We compete with a number of traditional, offline consumer financial service providers and information services, such as full service financial services companies and directories that list financial providers. Many of these competitors also provide consumer reviews and information about service providers online.
Online competitors. We compete with free to consumer online websites that provide networking and referral services, such as Angies List, Thumbtack, Inc. and Yelp, Inc.
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Intellectual Property
We use a variety of methods, such as trademarks, patents, copyrights and trade secrets, to protect our intellectual property. We also place appropriate restrictions on our proprietary information to control access and prevent unauthorized disclosures. Our brands are important assets, and we take steps to protect the value of these assets and our reputation.
We recently launched Gateway, and estimate that we will spend approximately five percent of revenues, in 2015 and 2016 promoting the service.
Employees
As a holding company, the registrant has no direct employees and it operates only through its subsidiary. The subsidiary employs six persons under various arrangements from contractors to employees. The subsidiary has outsourced certain functions to third-party service providers on an as needed basis. As such the subsidiary has access to dozens of staff when necessary in specialty areas such as administration, marketing and sales.
ITEM 1A. RISK FACTORS
Not applicable to a smaller reporting company.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM 2. PROPERTIES.
Our headquarters is located at 77 Water Street, New York, NY 10005. This space consists of approximately 10,000 square feet of shared office space that is available for our use on an as needed basis, at a nominal monthly rental rate plus costs for various office services, under a month-to-month arrangement. This is a temporary office arrangement and we are actively seeking to identify new office space.
ITEM 3. LEGAL PROCEEDINGS.
We are not aware of any litigation pending or threatened by or against the registrant.
ITEM 4. MINE SAFETY DISCLOSURES.
Not applicable
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PART II
ITEM 5. MARKET FOR REGISTRANTS COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
Item 5(a)
a) Market Information. The registrant began trading publicly on the OTCQB on January 30, 2014 under the symbol "TWYF". The registrants symbol was changed to HUTN on December 19, 2014.
The following table sets forth the range of high and low bid quotations for our common stock. The quotations represent inter-dealer prices without retail markup, markdown or commission, and may not necessarily represent actual transactions.
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Quarter Ended | | High Bid | | Low Bid |
3/31/14 | | 13.75 | | 3.125 |
6/30/14 | | 13.75 | | 4.625 |
9/30/14 | | 11.00 | | 1.00 |
12/31/14 | | 2.25 | | .70 |
b) Holders. At April 7, 2015, there were approximately 54 shareholders of the registrant.
c) Dividends. Holders of our common stock are entitled to receive such dividends as may be declared by our board of directors. No dividends on our common stock have ever been paid, and we do not anticipate that dividends will be paid on our common stock in the foreseeable future.
d) Securities authorized for issuance under equity compensation plans. No securities are authorized for issuance by the registrant under equity compensation plans.
e) Performance graph. Not applicable.
f) Sale of unregistered securities. On November 25, 2014, the registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase. These securities were issued to a sophisticated investor pursuant to an exemption from registration under Section 4(a)(2) of the Securities Act of 1933.
Item 5(b) Use of Proceeds. Not applicable.
Item 5(c) Purchases of Equity Securities by the issuer and affiliated purchasers. None
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ITEM 6. SELECTED FINANCIAL DATA
Not applicable to a smaller reporting company.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
On November 23, 2014, the assets and liabilities of the registrant (not including the common shares of EF Hutton Financial Corp.) were contributed at book value to Liberty Ventures, Inc., its then wholly owned subsidiary and the registrant approved a spin-off of this subsidiary to its shareholders.
On November 25, 2014, the registrant purchased certain assets of EFH Wyoming. The assets consisted of various trademarks and license rights, rights to computer programming code and other intellectual property. The registrant issued a total of 52,173,000 restricted common shares and 5,797,000 restricted Class B common shares as consideration for the EFH Wyoming asset purchase.
The discussion below does not include the operations of the registrant prior to the spin-off.
Trends and Uncertainties:
Other than described below, there are no known trends, events or uncertainties that have or are reasonably likely to have a material impact on the registrants short term or long term liquidity. Sources of liquidity both internal and external will come from receipt of revenue from the registrants service network, advances from affiliates as well as through debt and equity financings.
Other than described below, there are no trends, events or uncertainties that have had or are reasonably expected to have a material impact on the net sales or revenues or income from continuing operations. There are no significant elements of income or loss that do not arise from the registrants continuing operations. There are no known causes for any material changes from period to period in one or more line items of the registrants financial statements.
Business Development Risk. The Company owns significant intangible assets, primarily intellectual property in the form of trademarks and other brand assets, that it seeks to develop. Development of such assets can take significant time and requires expertise to apply and use the assets in a business. Even with such expertise and skill there can be no assurance that the assets will be developed or developed to their full potential. Brand assets value and use in particular are sensitive to factors such as public awareness and
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attributes of the brand. Many factors impact successful development and a significant set of factors are beyond the control of the Company. Factors affecting development include, but are not limited to: general economic conditions; skilled personnel; industry specific trends and conditions.
The Company attempts to mitigate its development risk by exploring a range of internal and external development opportunities. Beyond development risk, management is faced with a number of other risk factors. The more significant ones include:
Financial Markets. Presently, the Company obtains the majority of its capital from sale of common stock and advances by certain directors. There can be no assurance that financing will be available to the Company in the amount required at any time or for any period or if available, that it can be obtained on terms satisfactory to the Company or at a time when it is needed by the Company. Smaller capitalized companies historically have greater challenges in funding than larger companies.
Cash Flows. Operations generate insufficient cash to satisfy operating expenses and the cash flow deficit has to be funded by financing activities. However, the Company has initiatives that are expected to improve. In addition, the company is exploring several external initiatives, such as acquisition opportunities. Certain of these external initiatives could provide immediate source of revenues that and can significantly impact the Companys liquidity position. The sources of funds currently available to the Company are the sale of its common stock and advances from related parties. The Companys financial resources are limited and therefore the Company focuses on those opportunities that are most likely to generate cashflow in the near term.
Credit Risk. Credit risk is the risk of an unexpected loss if a customer or third party to a financial instrument fails to meet its contractual obligations. The Companys cash and cash equivalents and amounts receivable are exposed to credit risk. The Company reduces its credit risk on cash and cash equivalent by placing these instruments with institutions of high credit worthiness. The majority of the Companys cash is held through large US financial institutions with a investment grade rating.
Liquidity. Liquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company manages its liquidity risk through the management of its cash and its capital structure and financial leverage. The company intends that accounts payable and accrued liabilities are due and paid within a reasonable time.
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The Company has limited liquidity and will continue to have limited liquidity until it generates earnings or completes a funding transaction through. the company is actively seeking to improve its liquidity position. It will do that through sale of stock and borrowing funds. The Company has a valuable asset that can be utilized to generate liquidity through financing and the Company has had discussions with various parties about such a transaction. However, financial transactions involving intellectual property assets are highly specialized, take months to structure and may involve terms that are inferior to those involving other classes of assets.
The Company has no unused sources of liquid assets.
Interest Rate Risk. The Companys exposure to interest rate risk arises from the interest rate impact on its cash. There is minimal risk that the Company would recognize any loss as a result of a decrease in the fair value of any short-term investments included in cash due to the short term nature.
Market Volatility for Marketable Securities. The Companys marketable securities consist of shares of exploration companies that are historically very volatile. There is no assurance that the Company will be able to recover the current fair market value of those shares. The Company also may not be able to sell the shares it holds in other companies in an illiquid market.
Possible Dilution. The Companys plan of operation, in part, contemplates the financing of its business by the issuance of securities and possibly, incurring debt. Any transaction involving the issuance of previously authorized but unissued shares of common stock, or securities convertible into common stock, would result in dilution, possibly substantial, to present and prospective holders of common stock.
Trading Volume. The relatively low trading volume of the Companys shares reduces the liquidity of an investment in its shares. Trading volumes fluctuate with market conditions and seasons. Less liquid shares can limit the appeal of our shares to only those who have an ability to hold shares for a longer period and have no need for immediate liquidity.
Volatility of Share Price. Market prices for shares of companies at our stage are often volatile. Factors such as announcements of development milestones, acquisitions and other results, can have a significant effect on share price.
Competition. There is aggressive competition within the financial services industry. The Company competes with other developing companies in that industry, many of which have greater financial resources than the Company, for acquisitions as well as for the recruitment and retention of qualified employees and other personnel.
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Dependence on Management. The Company depends on the business expertise of its management. There is risk to the Companys ability to execute its business development plans if key members of the current management team were to suddenly leave the Company or become incapable of performing their individual and collective responsibilities.
Asset Related Risks. Although the Company has taken steps to maintain its assets there is a risk that the assets value can be damaged or impaired by actions and events, including those which may be outside the companys control.
Environmental. The Company knows of no environmental risks that could directly impact its business.
Laws and Regulations. The Companys business and development activities are subject to extensive federal, state and local laws and regulations governing financial services, taxes, labor standards, occupational health and safety, human resources and other matters in all the jurisdictions in which it operates. These laws and regulations are subject to change, can become more stringent and compliance can therefore become more costly. The Company applies the expertise of its management, advisors, employees and contractors to ensure compliance with current laws.
Capital and Source of Liquidity:
Investing activities. For the year ended December 31, 2014, we did not pursue any investing activities.
Financing Activities. For the year ended December 31, 2014, we received an advance from related party of $13,991 and had $(6,500) due from a shareholder. As a result, for the year ended December 31, 2014, we had net cash provided by financing activities of $7,491.
Results of Operations:
For the year ended December 31, 2014, we did not receive any revenues from continued operations. We incurred selling, general and administrative expenses from continued operations of $23,021. These expenses consisted of professional fees of $3,530, rent expense of $253 and other general and administrative expenses of $19,238. Additionally, for the year ended December 31, 2014, we had loss on discontinued operations (net of tax) of ($113,500). As a result, the registrant had net loss of $(136,521) for the year ended December 31, 2014.
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Critical Accounting Policies:
Use of Estimates
The preparation of financial statements in conformity with GAAP requires us to make estimates, assumptions and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of expenses during the periods presented.
We make our estimate of the ultimate outcome for these items based on historical trends and other information available when the financial statements are prepared. Changes in estimates are recognized in accordance with the accounting rules for the estimate, which is typically in the period when new information becomes available. We believe that our significant estimates, assumptions and judgments are reasonable, based upon information available at the time they were made. Actual results could differ from these estimates, making it possible that a change in these estimates could occur in the near term.
Cash and cash equivalents
The registrant considers all highly liquid investments with an original maturity of three months or less as cash equivalents.
Property and equipment
Property and equipment are recorded at cost and depreciated under straight line methods over each item's estimated useful life, generally seven years for furniture and fixtures and five years for office equipment.
Revenue recognition
The registrant recognizes revenue when upon receipt of the fees received for services rendered through its Gateway system.
Income tax
The registrant accounts for income taxes pursuant to ASC 740. Under ASC 740 deferred taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss carryforwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases.
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. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.
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Net income (loss) per share
The net income (loss) per share is computed by dividing the net income (loss) by the weighted average number of shares of common outstanding, including both the common shares and Class B common shares. Warrants, stock options, and common stock issuable upon the conversion of the registrant's preferred stock (if any), are not included in the computation if the effect would be anti-dilutive and would increase the earnings or decrease loss per share.
Financial Instruments
The carrying value of the registrant's financial instruments, as reported in the accompanying balance sheet, approximates fair value due to their short term maturities.
Long-Lived Assets
In accordance with ASC 350, the registrant regularly reviews the carrying value of intangible and other long-lived assets for the existence of facts or circumstances, both internally and externally, that suggest impairment. If impairment testing indicates a lack of recoverability, an impairment loss is recognized by the registrant if the carrying amount of a long-lived asset exceeds its fair value.
New Accounting Pronouncements:
The registrant 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 registrant.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable
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ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
EF Hutton America, Inc.
(formerly EFH Group, Inc.)
Index to the Financial Statements
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| | Page |
Report of Independent Registered Public Accounting Firm | | 19 |
Report of Independent Registered Public Accounting Firm | | 20 |
Consolidated Balance Sheet as of December 31, 2014 and 2013 | | 21 |
Consolidated Statement of Operations for the years ended December 31, 2014 and 2013 | | 22 |
Consolidated Statement of Changes in Stockholders' Equity for the years ended December 31, 2014 and 2013 | | 23 |
Consolidated Statement of Cash Flows for the years ended December 31, 2014 and 2013 | | 24 |
Notes to Consolidated Financial Statements | | 25 |
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of EF Hutton America, Inc.:
We have audited the accompanying consolidated balance sheet of EF Hutton America, Inc. as of December 31, 2014, and the related consolidated statement of operations, consolidated statement of changes in stockholders equity, and consolidated statement of cash flows for the year ended December 31, 2014. EF Hutton America, Inc.s management is responsible for these financial statements. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the companys internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of EF Hutton America, Inc. as of December 31, 2014 and the consolidated results of its operations and its consolidated cash flows for the year ended December 31, 2014, in conformity with accounting principles generally accepted in the United States of America.
As disclosed in Note 8 and Note 11 to these financial statements, the financial statements for the year ended December 31, 2014 have been retrospectively restated for the discontinuance of operations and the carrying value of the companys intangible asset.
/s/ Michael F. Albanese
Michael F. Albanese, CPA
Parsippany, New Jersey
August 14, 2015, except for the Discontinued Operations and Intangible Asset in Note 8 and Note 11 as to which the date is November 9, 2015 and except for Intangible Asset and Additional Paid-In-Capital in Notes 1, 6 and 11 as to which the date is February 17 and 26, 2016.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Board of Directors
Twentyfour/seven Ventures, Inc.
Denver, Colorado
We have audited the accompanying consolidated balance sheet of Twentyfour/seven Ventures, Inc. as of December 31, 2013, and the related consolidated statements of operations, stockholders' equity and cash flows for the year then ended. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Twentyfour/seven Ventures, Inc. as of December 31, 2013, and the consolidated results of its operations and its cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.
As disclosed in Note 8 to these financial statements, the financial statements for the year ended December 31, 2013 have been retrospectively restated for the subsequent discontinuance of operations.
CUTLER & CO., LLC
Arvada, Colorado
April 2, 2014, except for the Discontinued Operations in Note 8 as to which the date is November 9, 2015.
12191 W. 64th Avenue, Suite 205B, Arvada Colorado 80004 Phone: 303-968-3281 Fax: 303-456-7488 www.cutlercpas.com
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EF HUTTON AMERICA, INC.
CONSOLIDATED BALANCE SHEET