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Questions for correct structuring of Live Right Wellness Centers™ (LRWC)
On 5/21/12 LRWC incorporated to an S-Corp. We used form 2553 and on Part I (number of stock owned/%ownership) we designated 5,000 each to two principles of LRWC.
On 5/21/12 we also used form ARTS-GS Articles of Incorporation of General Stock. On box # XXXXX we designated the total # XXXXX shares which the corporation is authorized to issue as 10,000.
Then on 7/13/12 we filled out The Unanimous Written Consent in Lieu of First Meeting of the Board of Directors. The # XXXXX shares was set at 5,000 @$100 for each principle. A .001 value.
Then on 7/18/12 we filled out The Unanimous Written Consent in Lieu of First Meeting of the Board of Directors as an addendum to the above. The # XXXXX shares was set at 5,000,000 @$25,000 for each principle
Then on 7/21/12 we filled out a Certificate of Amendment of the Articles of Incorporation changing the number of shares to 10,000,00.
We then sold 200,000 shares at $1 per share to20 investors at 10,000 shares each.
The following was the agreement:
CONFIDENTIAL PRIVATE PLACEMENT MEMORANDUM ONE
Up to 1,000,000 Shares of Common Stock at $1.00 per share
Maximum Offering - 200,000 Shares
Minimum Offering - 10,000 Shares
Minimum Purchase Per Investor- 10,000 Shares at a $1.00 per Share
This Confidential Private Placement Memorandum (the "Memorandum") has been prepared in connection with an offering (the "Offering") of up to 1,000,000 shares of Common Stock, $1.00 par value (the "Shares") of Live Right Wellness Centers (the "Company"). The minimum offering amount is 10,000 ("Minimum Offering Amount"), and the maximum offering amount is 200,000 ("Maximum Offering Amount"). The minimum purchase per investor is 10,000 shares, or $10,000.00. Officers and directors of the Company will make offers and sales of the Shares; however, the Company retains the right to utilize any broker-dealers registered with the National Association of Securities Dealers, Inc. ("NASD") and applicable state securities authorities to sell all or any portion of the Shares. If the Company so elects, it may pay such broker-dealers a commission in the amount of up to 10% and a non-accountable expense allowance of up to 3% of the proceeds they have sold.
The following table sets forth certain information, as of September 7, 2012 and as adjusted to give effect to the Offering, regarding the beneficial ownership of the Common Stock by (i) each beneficial owner of more than 5% of the outstanding shares of Common Stock, (ii) each director of the Company, and each executive officer of the Company, and (iii) by all executive officers, directors of the Company as a group.
Principle 1: 5,000,000
Principle 2: 5,000,000
We now have 9 million 800 thousand shares left.
Here are our question in regards XXXXX XXXXX above.
- The shares sold off were for capitalization of the business only. It was not for principal gain. Does a certain amount of shares need to be designated for the sale of stock in the corporate business minutes or anywhere else like the state or IRS?
- What should be done with the remaining 9 million 800 thousand shares that has a 50/50% ownership of the LRWC and its principals? Does the corporate minutes need to reflect any value or authorization of remaining stock?
- What is the best way to limit any tax liability of stock sold and remaining stock?
- Is the stock sold to investors taxable?
- When additional stock is sold off does that represent a % ownership in the corporation or only the value of the stock?
- Is the value of the stock prior to being sold a reflection of the corporate minutes, the stock offering agreement, or both? How is the value of the stock determined once it is sold?