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 FISCAL YEAR ENDED: August 31, 2012
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ___________ to ___________
Commission file number: 333-85072
RTG VENTURES, INC.
(Name of small business issuer in its charter)
c/o David Price, Esq.
1915 I Street NW, 5th FL
Washington, DC 20006
(Address of principal executive offices)
(917) 488-6473
(Issuer's telephone number)
Securities registered under Section 12(b) of the Exchange Act:
Securities registered under Section 12(g) of the Exchange Act:
(Title of class)
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 Act. 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 of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [x] No [ ]
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K(§229.405 of this chapter) is not contained herein, and will not be contained, to the best of the Registrant’s 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. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
The aggregate market value of the issuer’s Common Stock, held by non-affiliates was approximately $2,099,000 based on the average closing bid and ask price for the Common Stock on February 29, 2012 of $0.0043 per share.
State the number of shares outstanding of each of the issuer's classes of common equity, as of the latest practicable date:
DOCUMENTS INCORPORATED BY REFERENCE
None.
Explanatory Note:
The purpose of this Amendment No. 1 to our Annual Report on Form 10-K for the fiscal year ended August 31, 2012 (the “Form 10K”), originally filed with the U.S. Securities and Exchange Commission on December 17, 2012, is to furnish Exhibit 101 to the Form 10-K within the 30 day grace period provided for the initial detail tagged submission of interactive data files, as required by Rule 405 of Regulation S-T.
No other changes have been made to the Form 10-K. This Form 10-K/A speaks as of the original filing date of the Form 10-K, does not reflect events that may have occurred subsequent to the original filing date, and does not modify or update in any way disclosures made in the Form 10-K.
PART I
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
This Annual Report contains forward-looking statements. These forward-looking statements are based largely on our expectations and are subject to a number of risks and uncertainties, many of which are beyond our control. Actual results could differ materially from these forward-looking statements as a result of, among other factors, risks related to the large amount of our outstanding term loan; history of net losses and accumulated deficits; reliance on third parties to market, sell and distribute our products; future capital requirements; competition and technical advances; dependence on the oil services market for pipe and well cleaners; ability to protect our patents and proprietary rights; reliance on a small number of customers for a significant percentage of our revenues; and other risks. In light of these risks and uncertainties, there can be no assurance that the forward-looking information contained in this Annual Report will in fact occur.
Item 1.Description of Business
General
RTG Ventures, Inc. is an OTC:QB listed company. The Company was organized under the laws of the State of Florida on September 29, 1998.
In 2006, the Company identified a business in digital technology, social media marketing and online global payment systems in the UK which lent itself to both organic growth and growth by acquisition. From that time, we have been evolving the Business Plan to maximize the opportunities and minimize the risks inherent in a challenging economic environment. Initially, all of these efforts were conducted under the contractual requirements of a Share Exchange Agreement. On March 20, 2007, we entered into a Share Exchange Agreement (the "Agreement") with Atlantic Network Holdings Limited, New Media Television (Europe) Limited ("NMTV"), and Certain Outside Stockholders Listed on Exhibit A thereto to acquire all of the outstanding shares of NMTV. Atlantic Network Holdings Limited is a Guernsey company limited by shares and NMTV is a United Kingdom private company limited by shares. The transaction was subject to the fulfillment of certain conditions, including the filing by the Company of all reports required to be filed by it under the Exchange Act and the satisfactory completion of the audit of NMTV's financial statements for each of its past three fiscal years. The conditions of closing were not met by ANHL and the agreement was rescinded via 8-K/A on March 30, 2010.
RTG Ventures, Inc. entered into a Share Exchange Agreement (the “Exchange Agreement”), on March 31, 2010, with Cloud Channel Limited which was subsequently re-named as RTG Ventures (Europe) Limited in July 2010 (“RTG Ventures (Europe)”). Pursuant to the Exchange Agreement, the Company acquired 100% of the outstanding capital stock of RTG Ventures (Europe) from its stockholders for consideration consisting of Convertible Preferred Shares of RTG Ventures, Inc. according to the derivative valuation methodologies outlined in the Share Exchange Agreement of Stylar Limited, a/k/a Digital Clarity. RTG Ventures (Europe) has been valued 12 months forward “notionally” one year hence. An 8-K/A was filed in September 2010 containing audited financials of the acquisition of Stylar Limited which completed the transaction. Shareholders will be able to convert the preferred shares into common stock using the average share price of the 30 days preceding September 3, 2011 which provides a share price of $0.016083. The methodology provides for a valuation of 4X net profit. All preferred stock was held by RTGV's transfer agent for the 12 month period ending September 3, 2011. All voting shares are held by management.
In August, 2009, RTGV signed a Letter of Intent with International Financial Systems Ltd. (IFS) a private company, to include iPayu, another dimension in the payment systems division of our Business Plan. The Letter of Intent became a joint venture with RTG Ventures (Europe) Ltd in April, 2010.
Subsequent to the close of the fiscal year 2011 following substantial investment, the Company conducted a structural review of its total product and services offering. The review was carried out by the Board of Directors. The result was to bring technology development being outsourced directly into the Company to steward on a daily basis and any activities which were not revenue generating in the near term were eliminated. It was unanimously agreed that the company would adopt a lean approach that focused on the relationships and partnerships built up over the year in the music arena as
well as build on the early stage development of its CloudChannel product by bringing the technology in-house following product development disappointments of the technology being developed in the Ukraine. Within this shift, it was agreed that a new, more appropriate name be given to the services and technology offered by RTG that reflected the change and would allow the building of brand value in its own right. Pulse Station reflected that change.
Certain business lines were eliminated from the Business Plan immediately. In October, 2011 the joint venture with iPayu was mutually withdrawn and in December, 2011 the acquisition of Bitemark Ltd. was rescinded. The companies reverted to the same position each held prior to the contracts. The rescission of the Bitemark Ltd. share purchase agreement was included as an exhibit to the filing for the 2011 fiscal year even though it constituted a subsequent event at the time.
As a further result of the review, the Company also agreed to strategically focus on developing the business of its wholly owned and revenue generating online marketing services company, Digital Clarity. With deep DNA in its operating market, blending the services of an experienced workforce augmented to the technology offering would position the company in a strong, forward looking structure.
Digital Clarity is a trading brand for Stylar Limited, a wholly owned company of RTG Ventures, Inc., through its office in London, England. The Company operates in the growing area of digital marketing which helps companies make the most the digital economy focusing on areas such as Search Engine Marketing (Google, Yahoo! & Bing), Social Media (Twitter, Facebook & LinkedIn) and Internet Strategy Planning including Design, Analytics and Mobile Marketing.
Digital Clarity is a multi-service digital marketing agency which specializes in creating effective strategies and campaigns for clients across a range of vertical markets, working in three key areas:
§ SearchEngine Marketing – for search engines like Google, Yahoo etc
§ WebDesign – building sites for web, mobile and tablet devices
§ SocialMedia – planning and measuring social metrics digitally in order to diagnose strategy
RTG Ventures, Inc. offers Music & Entertainment Solutions and Digital Marketing Services. Harnessing the strength of its acquired online marketing agency Digital Clarity, the company has been developing a platform that fills the needs of artists, management and labels in a complex and ever increasing social economy. Using Digital Clarity’s application in the social and marketing arena, RTG Ventures offers a unique value proposition of intelligent, analytics based technology with the support and insight of an experienced digital marketing team.
The Company is rolling out the services of both the technology and marketing services offering of the business from its current base in London, England, and during 2012 into larger markets in the United States, namely Los Angeles and New York. The intent in fiscal year 2013 is to grow into many geographic areas through partnerships in order to develop multiple revenue streams following the model developed this year.
Fiscal year 2012 reflected the Company’s progress in making inroads into the United States by being awarded contracts for a number of clients in the search marketing sector. One of the contracts utilized the Company’s expertise in the web design arena by building a website with a media partner that it intends to expand globally and build upon in 2013 and beyond. This is an example of developing an ongoing relationship with a client which allows our Company to grow in tandem with a client company.
During the last quarter of fiscal 2012, RTG Ventures entered into an agreement with BrandEntertain. RTG Ventures, Inc. and Brand Entertain have agreed to restructure their agreement retroactively to June 11, 2012. BrandEntertainis a partnership and there were certain issues with partnership financials which suggested the business combination be construed as a collaboration/cooperative venture, rather than an acquisition. Both parties agreed that arrangement was mutually beneficial and agreed by RTG’s professional advisors. As such, RTG expects to benefit from BrandEntertain’s platforms in the pipeline since a valuation would have taken place in one year’s time in either arrangement.
Therefore, no financial information will be contained in the 10-K for fiscal year 2012 (See Exhibit 10.9 – Amendment to Agreement to Purchase LLC interest).
Sales and Marketing
Our sales team focuses on adding new advertisers to our business, while our business development and partnership initiatives focuses on adding new reseller partnerships, selectively adding new distribution partnerships and servicing existing partnerships. Our marketing department focuses on promoting our services through online customer acquisition, affiliate relationships, press coverage, strategic marketing campaigns and industry exposure. Advertising and promotion of our services is broken into four main categories: direct sales, reseller partnerships, online acquisition, and referral agreements.
Research and Development
The Company has a strong forward looking focus in building out a robust and lean platform that will provide revenue generation through the business model described.
There is a current need for investment in building out the development team and creating a proprietary infrastructure to scale and evolve the technology platform and to market to end users.
Employees
In fiscal 2012, the Company had five full-time employees.
Competition
There is strong competition in the digital marketing arena, though with the right level of investment and marketing, Digital Clarity has a confident outlook in using its experience to win new business in both local and international markets. RTG Ventures, Inc. has significant business relationships in place.
RTG Ventures Current Markets
· Music & Entertainment Technology Solutions
· Digital Marketing Services
RTG Ventures has two Music platforms audigist360 and pulse station.
Audigist360
Audigistis a beta music hosting service that allows artists and bands to sell their music direct to their fans.
Pulse Station is a unique social management platform that is at the very leading edge of music and entertainment. The platform allows artists, their management and label to ‘house’ all the artists’ audio, music & video in one easy step to manage their environment. The system also allows the ability to upload gigs into a calendar environment and track the effectives of their live performances, PR and social media status and reach.
The ability to manage all activity in one place and index this against data that is displayed in a rich reporting format, allows artists and their respective parties to make critical business decisions that were not always available before. No longer Social Media in isolation but Social Business for the new digital economy.
Pulse Station will also be used to understand and make sense of social activity that will help brands ‘engage’ rather than ‘push’ advertising to its clients and prospects.
Platforms Shape Payment Models
In PWC’s, ‘Global entertainment and media outlook: 2011-2015, it was noted that there were factors influencing what people buy via what payments model is the platform or device they are using. The explosive growth in mobile devices—smartphones, tablets and e-readers—is set to continue throughout the next five years. Some platforms impose a particular payment model, impacting both the consumer experience and the competitive environment.
For example, paid-for apps have taken off dramatically among smartphone and tablet users. But competing operating systems and handsets are now fragmenting the market, putting Apple’s market share under pressure from Android and Windows-based competitors. With no interoperability standards currently in place, app developers have to repurpose their offerings for multiple platforms.
The relationship between content providers and distributors may also influence payment methods. A deluge of data is putting communications operators’ bandwidth capacity under pressure, yet the returns on investing in network upgrades are uncertain. Telcos might favora payment model based on charging for the amount of bandwidth used, but the size of the data downloaded does not necessarily reflect its value to the consumer.
As such, Digital Clarity currently is charging for Pulse Station via a freemium model. This will provide a level penetration into the wider market and generate revenues through a monthly charging model that sits on top.
The Growth of Social Technology
McKinsey’s fifth annual survey on social tools and technologies shows that when integrated into the daily work of employees and adopted on a large scale throughout a new kind of business—the networked enterprise—they can improve operations, financial performance, and market share. These new platforms have already reached critical scale at the organizations in our survey: 72 percent of the respondents report that their companies use at least one, and upward of 40 percent specify that they’re using social networks and blogs.
These technologies are being deployed across sectors, at the high level of 86 percentof the respondents’ companies in high tech and telecommunications, but at 62 percentof companies even in the energy industry. Levels of reported benefits not only remain high when respondents’ organizations use social tools for internal purposes but have also increased among those that use them for communicating with customers or for integration with partners and suppliers.
Digital Clarity is a specialist Digital Marketing Agency that has been at the forefront of online marketing. The company is a multi-service digital marketing agency who specialize in creating effective strategies and campaigns for clients and agencies across a wide range of verticals.
Specializing in Search Engine Marketing, Web Design, Social Media including Digital Analysis, the company works with both major brands and medium sized companies to help leverage online brand presence and new customer acquisition strategy. Digital Clarity also delivers consultancy and strategy planning for both client companies and advertising agency partners.
The Company Profile:
· Revenue Generating Company
· Cash flow positive
· Experienced team
· Centersof Excellence Today – US & Europe
· Future Geographic Reach – Middle East, Asia and BRIC economies – there are current discussions under way regarding partnerships in the Middle East in order to support ongoingclient development
Services Offered by Digital Clarity are growing with client relationships. In conjunction with the Head of US Operations, Steve Baughman, the company has begun to leverage with an objective to potentially integrate his music and entertainment contacts to help build on its existing service offering.
Pay per Click Advertising (PPC)
Pay per click (PPC) (also called Cost per click) is an Internet advertising model used to direct traffic to websites, where advertisers pay the publisher (typically a website owner) when the ad is clicked. With search engines, advertisers typically bid on keyword phrases relevant to their target market. Content sites commonly charge a fixed price per click rather than use a bidding system. PPC "display" advertisements are shown on web sites with related content that have agreed to show ads.
Search Engine Optimization (SEO)
Search engine optimization (SEO) is the process of improving the visibility of a website or a web page in search engines via the "natural" or un-paid ("organic" or "algorithmic") search results. In general, the earlier (or higher ranked on the search results page), and more frequently a site appears in the search results list, the more visitors it will receive from the search engine's users. SEO may target different kinds of search, including image search, local search, video search, academic search, news search and industry-specific vertical search engines.
The measurement, collection, analysis and reporting of internet data for purposes of understanding and optimizing web usage.
Email Marketing
Description: Email marketing is a form of direct marketing which uses email as a means of communicating commercial or fund-raising messages to an audience. In its broadest sense, every email sent to a potential or current customer could be considered email marketing.
SMS Marketing
Users of an SMS service can exchange text messages either from mobile to mobile or through a specialist internet website to a handset about anything from promotional offers, to general information regarding a product or service. Messages are usually sent using a short code system. Short codes are around 5 or 6 digits in length and work by asking customers to text a certain keyword to a specific code. E.g. ‘Text WIN to 84841’.