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SUNDANCE STRATEGIES, INC. FILES (8-K/A) Disclosing Entry into a Material Definitive Agreement, Changes in Registrant’s Certifying Accountant, Changes in Control or Registrant, Change in Directors or Principal Officers, Financial Statements and Exhibits
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Item 1.01 Entry into Material Definitive Agreement.
DESCRIPTION OF THE MERGER IntroductionJava Express, Inc. was organized under the laws of theState of Nevada onDecember 14, 2001 , for the purpose of selling coffee and other related items to the general public from retail coffee shop locations. T hese endeavors ceased in 2006, and it had no material business operations from 2006 , until its acquisition of ANEW LIFE, INC. that is discussed below under the heading "Merger." Merger Transaction Documents The summaries of the Merger Transaction Documents and the other agreements, documents and instruments related to the Transaction Documents or otherwise described herein and filed as Exhibits to this Current Report and which are incorporated herein by reference are believed to be complete in every material respect; however, such reference d Transaction Documents, agreements, documents and instruments that are summarized may be read in their entirety as filed "Exhibits" to our initial Current Report filed with theSecurities and Exchange Commission (the "SEC") onApril 5, 2013 . Capitalized terms not otherwise defined herein shall have the meanings ascribed to them under the Merger Agreement or other instrument referenced; and in some instances, for clarity, certain Exhibits to the Merger Agreement or other instruments that are filed herewith as Exhibits are named and defined otherwise than in the Transaction Documents or in those instruments. See Item 9.01
Merger
OnMarch 29, 2013 ,Sundance Strategies , Inc., aNevada corporation ("Sundance Strategies "), its newly formed and wholly-owned subsidiary,Anew Acquisition Corp. , aUtah corporation ("Merger Subsidiary"), and ANEW LIFE, INC., aUtah corporation ("ANEW LIFE"), executed and delivered an Agreement and Plan of Merger (the "Merger Agreement") and all required or necessary documentation to complete the merger (collectively, the "Transaction Documents"), whereby Merger Subsidiary merged with and into ANEW LIFE, and ANEW LIFE was the surviving company under the merger and became a wholly-owned subsidiary ofSundance Strategies on the closing of the merger (the "Merger"). EffectiveMarch 29, 2013 , the respective Boards of Directors ofSundance Strategies and ANEW LIFE, along withSundance Strategies , as the sole stockholder of Merger Subsidiary, and ANEW LIFE's 2
-------------------------------------------------------------------------------- founding stockholders owning 33,275,000 shares of the outstanding voting securities of ANEW LIFE or approximately 89.8% of ANEW LIFE's outstanding shares, approved the Merger by written consent, and the Articles of Merger were filed with theDepartment of Commerce of the State of Utah on such date, which was the effective date of the Merger (the "Effective Date"). Under the Merger Agreement, the holders of the remaining 3,762,369 shares of ANEW LIFE were provided with notice of their respective rights to exercise dissenters' rights under the Utah Revised Business Corporation Act (respectively, "Dissenters' Rights" and the "Utah General Corporations Act") on or aboutApril 8, 2013 .
All
executed and delivered written consents adopting the Merger and waiving dissenters' rights. Accordingly,Sundance Strategies will issue 37,037,369 shares of its common stock in exchange for all of the outstanding shares of common stock of ANEW LIFE, on a one share for one share basis. ANEW LIFE had no other outstanding stock options, warrants, preferred stock or securities on the closing of the Merger. T here will then be 40,797,441 outstanding shares ofSundance Strategies common stock. CurrentSundance Strategies stockholders will own 3,760,072 of these shares or approximately 9.2% of the outstanding voting securities ofSundance Strategies ; and ANEW LIFE stockholders will own approximately 37,037,369 of these shares or approximately 90.7% of these outstanding voting securities ofSundance Strategies , approximately 81.5% of which will be owned by ANEW LIFE founders. The founding stockholders of ANEW . . .
Item 4.01 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
(a)(1) Previous independent registered public accounting firm:
(i) OnOctober 15, 2012 , we formally informedMadsen & Associates CPAs, Inc. ("Madsen & Associates ") of their dismissal as our independent registered public accounting firm. (ii) The reports ofMadsen & Associates on our financial statements as of and for the fiscal years endedMarch 31, 2012 , and 2011, contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principles, except to indicate that there was substantial doubt about our ability to continue as a going concern.
(iii) Our Board of Directors participated in and approved the decision to change our independent registered public accounting firm.
(iv) During the fiscal years endedMarch 31, 2012 , and 2011, and throughOctober 15, 2012 , there were no disagreements withMadsen & Associates on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction ofMadsen & Associates , would have caused them to make reference to them in connection with their reports on our financial statements for such years.
(v) We requested that
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(a)(2) New (now former [see below]) independent registered public accounting firm:
(1) OnOctober 15, 2012 , we engagedSadler, Gibb & Associates, L.L.C. ("Sadler Gibb") as our new independent registered public accounting firm. During the fiscal years endedMarch 31, 2012 , and 2011, and throughOctober 15, 2012 , we had not consulted withSadler Gibb regarding any of the following:
(i) The application of accounting principles to a specific transaction, either completed or proposed;
(ii) The type of audit opinion that might be rendered on our consolidated financial statements, and none of the following was provided to us: (a) a written report, or (b) oral advice thatSadler Gibb concluded was an important factor considered by us in reaching a decision as to accounting, auditing or financial reporting issue; or
(iii) Any matter that was the subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K.
See our 8-K Current Report datedOctober 15, 2012 , and filed with theSEC onOctober 17, 2012 , which is incorporated herein by reference, for additional information regarding this change in our independent registered public accounting firm, and for a copy of the letter ofMadsen & Associates addressed to theSEC regarding their dismissal and agreement with the information contained in such 8-K Current Report, which is also referenced above.
(a)(1) Previous independent registered public accounting firm:
Dismissal of
(i) On
(ii) The review ofSadler Gibb of our financial statements as of and for the fiscal quarters endedSeptember 30, 2012 , and 2011, andDecember 31, 2012 , and 2011, contained no adverse opinion or disclaimer of opinion and was not qualified or modified as to uncertainty, audit scope or accounting principles.
(iii) Our Board of Directors participated in and approved the decision to change our independent registered public accounting firm.
(iv) During the period commencing on the engagement ofSadler Gibb , orOctober 15, 2012 , and through the date of their dismissal,March 29, 2013 , there were no disagreements withSadler Gibb on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction ofSadler Gibb , would have caused them to make reference to them in connection with their review of our financial statements for such quarters or any subsequent report.
(v) We requested that
See Item 9.01
(a)(2) New independent registered public accounting firm:
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(1) OnMarch 29, 2013 , we engagedMantyla McReynolds, LLC ("Mantyla McReynolds") as our new independent registered public accounting firm. During the fiscal years endedMarch 31, 2012 , and 2011, and throughMarch 29, 2013 , we . . .
Item 5.01 Changes in Control of the Registrant
DOCUMENTS INCORPORATED HEREIN BY REFERENCE See Item 9.01. BUSINESS Description of Our Business We are 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, often referred to as the "life settlements market." It is our intent to acquire interests in life settlements in which the insured is 75 years or older. We have established initial guidelines for purchasing such interests that include: (a) all interests relate to universal life insurance policies; (b) all policies have qualified for financing that will cover at least four years of premiums following the date we acquire our interest; (c) all policies have qualified for MPIC (defined below); and (d) based upon the life expectancy reports from at least two industry respected life expectancy companies, upon the death of the underlying insured, the projected proceeds, payable on the related life insurance policy, will exceed the cost and other amounts required to repay all creditors secured by such life insurance policy. Until such time as we have hired an in-house pricing and analytics team, we rely on a combination of (a) the servicing and policy approval processes of the financing entities and MPIC Provider; (b) the services and diligence conducted by our policy service provider (["Servicer"] as discussed in more detail below) on behalf of the financing entities, MPIC Provider or Sundance; and (c) the legal review by our general counsel. As our experience and personnel grow, we will continue to bolster the guidelines and broaden the scope of our acquisitions. Our objective is to acquire interests in life insurance policies and products that will produce returns in excess of the costs to purchase, finance, service and insure those policies to their maturity. While we intend to hold a variety of life insurance based products, during our first six to 12 months of operation, we will be primarily focused on purchasing net insurance benefits comprising the net beneficial ownership of such life insurance policies or "NIBs," as described below. It is our intention to hold these life insurance policies and products to maturity. We are a development stage company and currently only own one insurance product, comprising 100% of the net beneficial ownership interest in a portfolio of life insurance policies, which is discussed below. From our inception onJanuary 31, 2013 , and as of the period endedMarch 18, 2013 , the date of our most recent financial statements, we had no revenues and incurred a net loss of$24,184 . Our current monthly expenses are estimated at approximately$75,000 , and we had approximately$228,000 in cash on hand atMay 17, 2013 . We believe that we will need to raise approximately$10,000,000 to$15,000,000 in additional funds through equity or debt financing to continue our business model and to effectively compete in the life settlement industry, though no assurance can be given that we will be successful in these efforts. 7
-------------------------------------------------------------------------------- NIBs represent an indirect or the beneficial ownership interest in a portfolio of individual universal life policies (the "Policies"), and with respect to these Policies, the net interest in the related death benefits payable on the Policies after the repayment of debt and other costs associated with the Policies. The NIBs are issued by one or more entities, each of which is organized as a Luxembourg société à responsabilité limitée, which is similar in organization to an LLC in that there is a "pass through" of revenues and expenses (the "Lux Sarls"). The Lux Sarls directly or indirectly own the general and limited partnership interests in one or more entities organized as limited partnerships in a state ofthe United States , which are the Policy holders or Policy owners (respectively, the "Policy Holder" or the "Policy Owner"). Through the NIBs structure, the risks associated with the uncertain timing of the maturity of the Policies is reduced by financing ongoing premiums for the Policies (the "Senior Loans") and purchasing mortality protection insurance coverage ("MPIC") to insure against the risk that the Policies do not mature on death according to the applicable life expectances. Through the Senior Loans, we are able to leverage our investment and purchase NIBs related to a much larger underlying pool of Policies. Through the MPIC, we are able to reduce the risk associated with lengthening life expectancies and provide liquidity for premiums after our loan commitments end. . . .
Item 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers.
See the heading "Changes in Control" of Item 1, and the caption "Directors and Executive Officers" of Item 5.01.
Item 9.01 Financial Statements and Exhibits.
(a)
Financial statements of businesses acquired.
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ANEW LIFE, INC. (A DEVELOPMENT STAGE COMPANY) INDEX TO AUDITED FINANCIAL STATEMENTS FROMJANUARY 31, 2013 (INCEPTION) TOMARCH 18, 2013 Page(s)
Report of Independent Registered Public Accounting Firm
47
Balance Sheet as of
48
Statement of Operations and Comprehensive Loss from
49
Statement of Changes in Stockholders' Equity from January
31, 2013 (Inception) to
50
Statement of Cash Flows from
toMarch 18, 2013 51 Notes to Financial Statements 52-57 49
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the members of the Board of Directors and Shareholders
ANEW LIFE, INC.:
We have audited the accompanying balance sheet ofANEW LIFE, Inc. [a development stage company] as ofMarch 18, 2013 , and the related statements of operations, stockholders' equity, and cash flows for the period from inception [January 31, 2013 ] throughMarch 18, 2013 . 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 thePublic 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 has determined that it 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 Company's internal control over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the 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 financial statements referred to above present fairly, in all material respects, the financial position of ANEW LIFE, INC. [a development stage company] as ofMarch 18, 2013 , and the results of its operations and cash flows for the period from inception [January 31, 2013 ] throughMarch 18, 2013 , in conformity with accounting principles generally accepted inthe United States of America . The accompanying financial statements have been prepared assuming that ANEW LIFE, INC. will continue as a going concern. As discussed in Note 11 to the financial statements, the Company has accumulated losses from operations and has a working capital deficit as ofMarch 18, 2013 . Management's plans in regard to these matters are also described in Note 11. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/Mantyla McReynolds, LLC Mantyla McReynolds, LLC Salt Lake City, Utah April 4, 2013 50
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ANEW LIFE, INC. (A DEVELOPMENT STAGE COMPANY) BALANCE SHEET March 18, 2013 ASSETS Current Assets Cash and Cash Equivalents $ 172,750 Total Current Assets 172,750 Other Assets Investment in Net Insurance Benefits 6,299,000 Total Other Assets 6,299,000 Total Assets$ 6,471,750 LIABILITIES AND STOCKHOLDERS' EQUITY Current Liabilities Accounts Payable and Accrued Expenses $ 20,518 Related party payables 3,441 Notes Payable 2,999,000 Total Current Liabilities 3,022,959 Total Liabilities 3,022,959 Stockholders' Equity
Common Stock, Authorized 50,000,000 Shares,
Par Value$0.001 ; 37,037,369 Shares Issued and Outstanding
37,038
Additional Paid In Capital
3,869,212
Receivable for Common Stock Subscribed
(433,275)
Deficit Accumulated During Development Stage (24,184) Total Stockholders' Equity 3,448,791 Total Liabilities and Stockholders' Equity $
6,471,750
The accompanying notes are an integral part of these financial statements.
51
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ANEW LIFE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF OPERATIONS From Inception [January 31, 2013] to March 18, 2013 INCOME $ - OPERATING EXPENSES General and Administrative Expenses 3,666 Professional Fees 18,217 Total Operating Expenses 21,883 Loss from Operations (21,883) Other Expense Interest Expense (2,301) Total Other Expense (2,301) Loss Before Income Taxes (24,184) Income Tax Provision (Benefit) - NET LOSS $ (24,184) Basic and Diluted Loss Per Share of Common Stock $
(0.01)
Weighted Average Number of Shares Outstanding
33,915,403
The accompanying notes are an integral part of these financial statements.
52
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ANEW LIFE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF STOCKHOLDERS' EQUITY Deficit Accumulated Receivable for During Total Additional Common Stock Paid In Common Stock Development Stockholders' Shares Amount Capital Subscribed Stage Equity Balance, January 31, 2013 - $ - $ - $ $ - $ - Common Stock issued to founders 33,275,000 33,275 - (33,275) - - Common Stock issued for cash 3,373,793 3,374 3,469,601 - - 3,472,975 Common Stock issued for a subscription receivable 388,576 389 399,611 (400,000) - - Net loss for the period ended March 18, 2013 - - - - (24,184) (24,184) Balance, March 18, 2013 37,037,369$ 37,038 $ 3,869,212$ (433,275) $ (24,184) $ 3,448,791
The accompanying notes are an integral part of these financial statements.
53
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ANEW LIFE, INC. (A DEVELOPMENT STAGE COMPANY) STATEMENT OF CASH FLOWS From Inception to March 18, 2013 OPERATING ACTIVITIES Net Loss $ (24,184) Changes in Operating Assets and Liabilities: Accounts payable and accrued expenses 23,959 Investment in net insurance benefits (3,300,000) Net Cash Used in Operating Activities (3,300,225)
FINANCING ACTIVITIES
Common Stock issued for cash 3,472,975 Net Cash Provided by Financing Activities 3,472,975 NET DECREASE IN CASH 172,750 CASH AT BEGINNING OF PERIOD - CASH AT END OF PERIOD $ 172,750
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
NON CASH FINANCING ACTIVITIES: Cash paid for interest $ - Cash paid for income taxes $ - Common stock issued for subscription receivable $ 433,275 Life insurance policies purchased with debt$ 2,999,000
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