Form 8-K/A for SURGLINE INTERNATIONAL, INC.
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24-Feb-2012
Entry into a Material Definitive Agreement, Completion of Acquisit
ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
The disclosures set forth in Item 2.01 are hereby incorporated by reference to this Item 1.01.
ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS.
(A) SHARE EXCHANGE TRANSACTION WITH SURGLINE, INC.
On September 1, 2011, the Registrant entered into and consummated the First Amendment to the Agreement Concerning that Exchange of Securities (the "Share Exchange Agreement") with SurgLine, Inc., a Nevada corporation ("SurgLine") and the shareholders of SurgLine. Upon consummation of the transactions set forth in the Agreement (the "Closing"), the Registrant adopted the business plan of SurgLine.
Pursuant to the Agreement, the Registrant agreed to acquire all of the outstanding capital stock of SurgLine in exchange (the "Share Exchange") for the original issuance of an aggregate of 857,143 shares (the "Exchange Shares") of the Registrant's Series B Preferred Stock, par value $0.001 per share (the "Series B Preferred Stock"). The Exchange Shares will be issued on a pro rata basis, on the basis of the shares held by such security holders of SurgLine at the time of the Exchange. Further in accordance with the Agreement, and following an amendment of the Registrant's Articles of Incorporation, the Exchange Shares will be converted into 3,817,554,433 shares of the Registrant's common stock, par value $0.001 per share (the "Common Stock") equal to 70% of the issued and outstanding Common Stock of the Registrant. Additionally, pursuant to the provisions of the Share Exchange Agreement, the Company issued 163,609,476 newly issued shares of Common Stock to the SurgLine shareholders, in satisfaction of the anti dilution provisions in the Share Exchange Agreement.
As a result of the Share Exchange, the Registrant issued a total of 3,981,163,909 shares of its common stock to the SurgLine shareholders and SurgLine became a wholly-owned subsidiary of the Registrant. The parties have taken the actions necessary to provide that the Exchange is treated as a "tax free exchange" under Section 368 of the Internal Revenue Code of 1986, as amended. The Agreement contains customary representations, warranties and covenants of the Registrant and SurgLine for like transactions. The Share Exchange was effective upon the completed filing of Articles of Exchange with the Secretary of State of Nevada. The foregoing descriptions of the above referenced agreements do not purport to be complete. For an understanding of their terms and provisions, reference should be made to the Agreement attached as Exhibits 10.1 to this Current Report on Form 8-K. A copy of the press release dated September 6, 2011 announcing the completion of the documents relating to the Share Exchange is attached to this Form 8-K as Exhibit 99.1 and incorporated herein by reference.
On September 1, 2011, as a covenant to the Agreement, holders of a majority of the Registrant's outstanding Common Stock voted to amend the Registrant's Articles of Incorporation to increase the number of its authorized shares of capital stock from 1,500,000,000 shares to 6,500,000,000 par value $0.001 shares (the "Amendment") of which (a) 6,475,000,000 shares were designated as Common Stock and (b) 25,000,000 shares were designated as blank check preferred stock.
At the effective time of the Exchange, our board of directors and officers was reconstituted by the resignation of Henry Fong as President and Chief Executive Officer of the Registrant and the appointment of Thomas G. Toland as a member of the Registrant's Board of Directors, President and Chief Executive Officer and Richard Dutch as Secretary and Chief Operating Officer of the Registrant.
Additionally, the Registrant has agreed to issue 142,857 shares of its Series B Preferred Stock to Abod Partners, LLC. ("Abod"). Abod has acted as a consultant to the Registrant in facilitating the Agreement by and among the Registrant and SurgLine. Upon the effectiveness of the increase in the authorized shares of capital stock of the Registrant, the 142,857 shares of Series B Preferred Stock . . .
Results of Operations and Financial Condition.
Management's Discussion and Analysis or Plan of Operation
This discussion should be read in conjunction with the other sections of this Current Report, including "Risk Factors," "Description of the Company" and the Financial Statements attached hereto as Exhibits 99.1 and 99.2 and the related exhibits. The various sections of this discussion contain a number of forward-looking statements, all of which are based on our current expectations and could be affected by the uncertainties and risk factors described throughout this Current Report. See "Cautionary Statement Regarding Forward-Looking Statements." Our actual results may differ materially.
Background
SurgLine, Inc. (the "Company") was incorporated in the state of Nevada on March 15, 2011. The Company is a development stage company that will focus on providing their customers with high quality surgical products at the lowest possible cost by eliminating the "historical brand premium" typically associated with these types of products.
Factors Affecting Our Results of Operations - Generally
We believe the most significant factors that directly or indirectly affect our revenues and net income are:
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Our ability to source quality medical and surgical products
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Selling our brand for approximately 35% less than existing suppliers, as we lack the historical brand premium that many of our competitors carry.
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Allowing our distributors to make additional margin than they currently make from other suppliers, due to pricing pressures from suppliers and end users.
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Providing the end user with same quality product while enabling them to increase their margins on our products
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The availability and required terms of funding for our working capital, since additional working capital is required to allow us to purchase more product and to support our administrative costs
Plan of Operations
We plan on sourcing from manufacturers those highest quality products, similar to the leading brands. Our brand does not carry the historical brand premium that our competitors do. We anticipate this may enable us to sell our product for approximately 35% less than the current average price, while maintaining gross margins in excess of 50%.
Principal products and services
Our philosophy is to deliver quality products at a lower price, in order to provide the healthcare industry "More Value for Your Healthcare Dollar." Substantially all of our products have been approved by the Food and Drug Administration ("FDA"). Our products include, but are not limited to the following:
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Surgical Instruments
Scissors, forceps, basket punchers and reamers
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Surgical sets and Specialties
Hand and foot
Hips
Small fragment sets
Spine hardware, plates, pedicle screws, cages and more
Trays, screws, instruments and implants
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Emergency removal kits
Broken screw removals and implant removals
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Full range of disposable products
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Full range of endoscope products
Sales and Marketing
Through the relationships our executive management team has developed in their combined years of industry experience, we plan on building a team of experienced, relationship driven sales personnel. This will include entering into stocking distributorship agreements, sales channel agreements, direct sales to end users, industry known and developed medical co-ops in the U.S. representing many stocking distributors throughout the U.S. and utilizing implant outsourcing organizations that serve more than 2,500 surgery centers and . . .
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES
As disclosed in Item 2.01, in connection with the Share Exchange, the Company issued an aggregate of 3,981,163,909 shares of its common stock to the former holders of SurgLine Common Stock.
On September 1, 2011 in conjunction with the Share Exchange Agreement, the Registrant issued 545,364,919 shares of its common stock to Abod Partners, LLC., its consultant in the transaction.
The Company relied on the exemption from federal registration under Section 4(2) of the Securities Act of 1933, as amended, and Rule 506 promulgated thereunder, based on its belief that the issuance of such securities did not involve a public offering, as there were fewer than 35 "non-accredited" investors, all of whom, either alone or through a purchaser representative, had such knowledge and experience in financial and business matters so that each was capable of evaluating the risks of the investment.
ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT.
1.
Previous Independent Registered Public Accounting Firm.
A. On December 9, 2011, the Company dismissed the independent registered public accounting firm of its wholly owned subsidiary, SurgLine, Inc. ("SurgLine"), GBH CPAs, PC ("GBH").
B. The Registrant has not dismissed or changed the independent registered public accounting firm of the reporting Registrant from R.R. Hawkins & Associates International, a PC ("Hawkins"). On December 9, 2011, the Board of Directors of the Registrant approved changing SurgLine's independent registered public accounting firm from GBH to Hawkins. The dismissal of GBH, as approved by the the Registrant's Board of Directors on December 8, 2011, was effective immediately.
C. GBH had been engaged as SurgLine's independent registered public accounting firm since July 13 2011 and had performed audits of SurgLine's financial statements included in the Registrant's report on Form 8-K for the period ended June 30, 2011. GBH's report of SurgLine's financial statements included in the Registrant's report did not contain an adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles other than going concern.
D. During SurgLine's most recent fiscal year and the interim period from July 1, 2011 through and including December 9, 2011, (i) there were no disagreements between the Registrant and GBH on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure which, if not resolved to the satisfaction of GBH would have caused GBH to make reference to the matter in its reports on the Registrant's financial statements; and (ii) there were no reportable events as the term described in Item 304(a)(1)(v) of Regulation S-K.
E. On December 9, 2011, the Registrant provided GBH. with a copy of the disclosures it is making in response to Item 4.01 on this Form 8-K, and has requested that GBH furnish it with a letter addressed to the Securities and Exchange Commission stating whether it agrees with the above statements. A copy of the letter is filed as Exhibit 16.1 to this Amended Current Report on Form 8-K/A2.
ITEM 5.02 DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS; APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF CERTAIN OFFICERS
The disclosures set forth in Item 2.01 are hereby incorporated by reference into this Item 5.01.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS
(a) The audited financial statements as of July 31, 2011 of SurgLine are attached as Exhibit 99.2 hereto pursuant to Item 2.01 of Form 8-K.
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(c) Exhibits
Ex. No. Description
2.1 Amended Agreement Concerning the Exchange of Securities by and among the
Registrant and SurgLine, Inc. dated September 1, 2011. (Incorporated by
reference to Company's Form 8-K/A filed on December 14, 2011).
3.1 Amended and Restated Articles of Incorporation of China Nuvo Solar
Energy, Inc. (Incorporated by reference to company's Form 8-K filed on
September 8, 2011).
4.1 Amended and Restated Certificate of Designation Series B Preferred Stock
of China Nuvo Solar Energy, Inc. (Incorporated by reference to company's
Form 8-K filed on September 8, 2011).
16.1 Letter from GBH CPAs, PC
99.1 Press Release dated September 6, 2011. (Incorporated by reference to
company's Form 8-K filed on September 8, 2011).
99.2 Audited financial statements as of July 31, 2011 SurgLine, Inc.
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