REGISTRATION STATEMENT NO. 333-203340
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
(Amendment No. 8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
BARFRESH FOOD GROUP, INC.
(Name of small business issuer in its charter)
| Delaware | 27-1994406 | |||
(State or | (Primary Standard Industrial |
| ( | ||||
| incorporation or organization) | Classification Code Number) | Identification No.) |
8530 Wilshire Blvd., Suite 450
Beverly Hills, California 90211
Telephone: (310) 598-7113
(Name, addressAddress and telephone number of agent for service)
Copies to:
Mark Y. Abdou
Ruba Qashu
Libertas Law Group, Inc.
SEC File No. 333-168738225 Santa Monica Boulevard, 11th Floor
Santa Monica, CA 90401
Telephone: (310) 359-8742
Facsimile: (310) 356-1922
Approximate date of commencement of proposed sale to the public: As soon as practicable
From time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. x
If this Formform is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act Registration Statementregistration statement number of the earlier effective Registration Statementregistration statement for the same offering. o
If this Formform is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act Registration Statementregistration statement number of the earlier effective Registration Statementregistration statement for the same offering. o
If this Formform is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act Registration Statementregistration statement number of the earlier effective Registration Statementregistration statement for the same offering. o
If delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
Title of each class of securities to be registered | Amount to be registered | Proposed maximum offering price per unit | Proposed maximum aggregate offering price | Amount of registration fee [1] [2] | ||||||||||||
| Common Stock offered by the Selling Stockholders [3] | 2,000,000 | $ | .05 | $ | 100,000 | $ | 11.61 | |||||||||
| TOTAL | ||||||||||||||||
Large Accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X]
The registrantRegistrant hereby amends this registration statementRegistration Statement on such date or dates as may be necessary to delay ourits effective date until the registrantRegistrant shall file a further amendment which specifically states that this registration statementRegistration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statementRegistration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.
CALCULATION OF REGISTRATION FEE
| Title of each class of securities to be registered | Amount to be registered (1) | Proposed maximum offering price per share | Proposed maximum aggregate offering Price | Amount of registration fee (4) | ||||||||||||
| Common stock, par value $0.000001 per share | 10,300,000 | $ | 0.52 | (2) | $ | 5,356,000 | ||||||||||
Common stock, par value $0.000001 per share, issuable upon exercise of Series N Warrants and other Warrants | 1,093,333 | $ | 0.52 | (3) | $ | 568,533 | ||||||||||
| Common stock, par value $0.000001 per share, issuable upon exercise of Series G Warrants | 5,387,000 | $ | 0.6 | (3) | $ | 3,232,200 | ||||||||||
| Total | 16,780,333 | $ | 9,156,733 | $ | 1,064.61 | |||||||||||
(1) Pursuant to 2,000,000Rule 416 under the Securities Act of 1933, as amended (“Securities Act”), the shares of common stock.stock being registered hereunder include such indeterminate number of shares of common stock as may be issuable with respect to the shares of common stock being registered hereunder as a result of stock splits, stock dividends or similar transactions.
(2) Estimated solely for the purpose of calculating the registration fee under Rule 457(c) under the Securities Act.
(3) Estimated solely for the purpose of calculating the registration fee under Rule 457(g) under the Securities Act.
(4) Previously paid.
SUBJECT TO COMPLETION, DATED MAY 7, 2015
PROSPECTUS
16,780,333 Shares of Common Stock
This prospectus relates to 16,780,333 shares of our common stock, par value $0.000001 per share, of which 6,430,333 are issuable upon exercise of certain warrants, that may be sold from time to time by the selling shareholders listed under the caption “Selling Shareholders”. All of the shares, when sold, will be sold by these selling shareholders. The selling shareholders will offer theirmay sell these shares at $0.05 per share until our shares are quoted onfrom time to time in the OTC Bulletin Board and, assuming we secure this qualification, thereafteropen market at prevailing market prices or privatelyin individually negotiated prices.transactions through agents designated from time to time or through underwriters or dealers. We will not control or determine the price at which the selling shareholders decide to sell their shares. See “Plan of Distribution”. The selling shareholders may be deemed underwriters of the shares of common stock that they are offering. We will pay the expenses of registering these shares.
We are not selling any shares of common stock in this offering and therefore will not receive any proceeds from the sale of sharescommon stock hereunder. We will receive proceeds from any exercise of outstanding warrants by the selling shareholders.
Our common stock is not now listed on any national securities exchange, the NASDAQ stock market, or the OTC Bulletin Board. There is no guarantee that our securities will ever tradetraded on the OTC Bulletin Board or other exchange.
INVESTING IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISK. IN REVIEWING THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED UNDER THE HEADING “RISK FACTORS” BEGINNING ON PAGE 3.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The date of this prospectus is _________________
May 7, 2015
TABLE OF CONTENTS
This summary highlights selected information contained elsewhere in this prospectus. To understand this offering fully, you should read the entire prospectus carefully, read all information inincluding the prospectus, including“Risk Factors” section, the financial statements and their explanatorythe notes underto the Financial Statements priorfinancial statements. Unless the context otherwise requires, references contained in this prospectus to making an investment decision.
BARFRESH FOOD GROUP INC.
Our Company
Barfresh is a leader in the lawscreation of, manufacturing and distributing ready to blend beverages. The current portfolio of products is made up of smoothies, shakes and frappes. All of the State of Delaware, as a development stage company.
Domestic and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the products. In November 2011, the Company acquired the patent rights in Moving Box Entertainment, LLC,the United States and Canada. The Canadian patent has been granted and the United States patent is “patent pending”. On October 15, 2013, the Company acquired all of the related international patent rights, which were filed pursuant to the Patent Cooperation Treaty and have been granted in 13 jurisdictions. The patents are pending in the remainder of the jurisdictions that have signed the treaty. In addition, on October 15, 2013, the Company purchased all of the trademarks related to the patented products.
Product development and new flavor creation is a critical element of the business. The leadership team has been developing flavor profiles for each beverage category that will appeal to tastes in the United States. The Company has been in discussions with a number of companies including both large and small quick service restaurant (“QSR”) chains and full service restaurant chains (“FSR”). Additionally, there are also discussions with national food service companies that serve alternative venues such as stadiums, arenas and universities with national footprints in the United States. Preliminary agreements with three potential customers have been reached and testing in these venues will begin in the near future. There are also other ongoing negotiations taking place with several of national foodservice companies.
In addition to the large fast food, fast casual and full service restaurant chains, the Company will sell to food distributors that supply products to the food services market place. Effective July 2, 2014, the Company entered into an agreement with Sysco Merchandising and Supply Chain Services, Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s ready-to-blend smoothies, shakes and frappes. All Barfresh products will be included in Sysco’s national core selection of beverage items, making Barfresh its exclusive single-serve, pre-portioned beverage provider. The agreement is mutually exclusive; provided however, the products are supplied to other foodservice distributors, but only to the extent required for such foodservice distributors to service multi-unit chain operators with at least 20 units and where Sysco is not such multi-unit chain operators nominated distributor for our products. The Company has started shipping to Sysco under this agreement and anticipates a national rollout to approximately 74 distribution centers over the next 18 months.
Finally, the Company intends to monetize the international patents outside of the current area of operations, North Carolina limited liability company,America, by expanding contract manufacturing to other countries and selling either through selling agents or internal sales personnel. The Company will also consider entering into some form of license or royalty agreements with third parties.
Most recently, as part of the Company’s expansion due to the acquisition of the international patents, a leading regional Australian food ingredient supply and product developer has been engaged as the wholesaler and distributor for Barfresh. The first order to Australia shipped in exchange for assumptionJanuary 2014.
Our corporate and sales office is located at 8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211. Our telephone number is (310) 598-7113 and our websites arewww.barfresh.com/us andwww.smoothieinc.com.
| The Offering | Up to 16,780,333 shares of our common stock, par value $0.000001 per share, of which 958,333 are issuable upon exercise of Series N Warrants, 5,387,000 are issuable upon exercise of Series G Warrants and 135,000 are issuable upon exercise of certain other Warrants. Series N Warrants may be exercised by the payment of the exercise price of $0.45 per share for a term of five years, in cash or via cashless exercise, subject to the registration rights agreement governing those rights. Series G Warrants may be exercised by the payment of the exercise price of $0.60 per share for a term of five years, in cash, subject to the registration rights agreement governing those rights. | |
The other Warrants may be exercised by the payment of the exercise price of $0.50 per share for a term of three years, in cash or via cashless exercise. | ||
| Trading Market | OTCQB under the symbol “BRFH” | |
| Offering Period | We are registering the selling shareholders’ shares to allow the selling shareholders the opportunity to sell their shares pursuant to a registration rights agreement between the Company and these shareholders. The shares of common stock being registered include such indeterminate number of shares of common stock as may be issuable with respect to the shares of common stock being registered hereunder as a result of stock splits, stock dividends or similar transactions. The shares of common stock being registered do not include additional shares of common stock issuable as a result of changes in market price of the common stock, issuance by us of shares of equity securities below a certain price or other anti-dilutive adjustments or variables not covered by Rule 416 (“Rule 416”) under the Securities Act of 1933, as amended (“Securities Act”). | |
| Risk Factors | The shares being offered are speculative and involve very high risks, including those listed in “Risk Factors”. | |
| Net Proceeds | We will not receive any proceeds from the sale of any shares by selling shareholders. However, we may receive up to an aggregate of $3,730,950 from the exercise by selling shareholders of warrants to purchase the common stock we are registering under this registration statement. | |
| Use of Proceeds | We expect to use any cash proceeds we receive from the exercise of warrants by selling shareholders for general working capital purposes. |
An investment in the Company’s securities involves significant risks, including the risks described below. You should carefully consider the risks described below before purchasing the shares. The risks highlighted here are not the only ones that the Company faces. For example, additional risks presently unknown to us or that we currently consider immaterial or unlikely to occur could also impair our operations. If any of their debtsthe risks or uncertainties described below or any such additional risks and obligations. The inception date is January 1, 2010, because the prior entity, Moving Box Entertainment, LLC, was under common control.
Risks Related to Our Business
We have a principal office at 222 E . Jones Ave, Wake Forest NC 27587history of operating losses and telephone number is 919.649.3587.
We have a history of operating losses and may not identifiedachieve or sustain profitability. These operating losses have been generated while we market to potential customers. We cannot guarantee that we will become profitable. Even if we achieve profitability, given the competitive and have no contracts, agreementsevolving nature of the industry in which we operate, we may be unable to sustain or commitmentsincrease profitability and our failure to acquire other movie opportunities.
A worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business plan:
Period Ended March 31, 2010 | Year Ended March 31, 2011 | |||||||
| Income Statement Data: | ||||||||
| Revenue | $ | - | $ | - | ||||
| Total operating expenses | (11,777 | ) | ( 290,893 | ) | ||||
| Net loss | ( 11,777 | ) | ( 290,893 | ) | ||||
| Balance Sheet Data (at end of period): | ||||||||
| Total assets | $ | 25,823 | $ | 9,771 | ||||
| Total current liabilities | 37,600 | 272,441 | ||||||
| Total stockholders' equity (deficit) | (11,777 | ) | ( 262,670 | ) | ||||
Our success depends to a significant extent on our ability to distribute or otherwise generate income from our current Movie under production as well as our ability to acquire future movie projects or generate revenue from any future movie projects we may acquire. Our industry is subject to discretionary consumer spending, which is influenced by general economic conditions consumer confidence and the availability of discretionary income. ChangesWhile there are signs that conditions may be improving, there is no certainty that this trend will continue or that credit and financial markets and confidence in economic conditions affecting potential distributorswill not deteriorate again. Accordingly, we may experience continuing declines in revenue during economic turmoil or viewersduring periods of our Movie such as those occurringuncertainty. Any material decline in the U.S. currently could reduce our abilityamount of discretionary spending, leading cost-conscious consumers to generate income from our Movie and also inhibit our ability to acquire and generate revenues from additional movie projects, whichbe more selective in restaurants visited, could have a material adverse effect on theirour revenue, results of operations, business and financial condition.
The challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins.
We compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product offered, customer service, atmosphere, location and overall guest experience. Our success depends, in part, upon the popularity of our products and our ability to develop new menu items that appeal to consumers across all four day parts. Shifts in consumer preferences away from our products, our inability to develop new menu items that appeal to consumers across all day parts, or changes in our menu that eliminate items popular with some consumers could harm our business. We compete with other smoothie and juice bar retailers, specialty coffee retailers, yogurt and ice cream shops, bagel shops, fast-food restaurants, delicatessens, cafés, take-out food service companies, supermarkets and convenience stores. Our competitors change with each of the four day parts, ranging from coffee bars and bakery cafés to casual dining chains. Many of our competitors or potential competitors have substantially greater financial and other resources than we do, which may allow them to react to changes in the market quicker than we can. In addition, aggressive pricing by our competitors or the entrance of new competitors into our markets, as evidenced by McDonald’s Corporation’s inclusion of fruit smoothies on their menu, could reduce our revenue and operating margins. We also compete with other employers in our markets for hourly workers and may become subject to higher labor costs as a result of such competition.
Fluctuations in various food and supply costs, particularly fruit and dairy, could adversely affect our operating results.
Supplies and prices of the various ingredients that we are going to use to can be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics and economics in the producing countries.
These factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In addition, the prices of fruit and dairy, which are the main ingredients in our products, can be highly volatile. The fruit of the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. An increase in pricing of any fruit that we are going to use in our products could have a significant adverse effect on our profitability. We cannot assure you that we will be able to secure our fruit supply.
Our business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may be severely disrupted if we lose their services.
Our future success heavily depends on the continued service of our senior management and other key employees. If one or more of our senior executives is unable or unwilling to continue to work for us in his present position, we may have to spend a considerable amount of time and resources searching, recruiting, and integrating a replacement into our operations, which would substantially divert management’s attention from our business and severely disrupt our business. This may also adversely affect our ability to execute our business strategy. In addition, of any of our senior executives joins a competitor or forms a competing company, we may lose customers, suppliers, know-how and key employees.
Our senior management’s limited experience managing a publicly traded company may divert management’s attention from operations and harm our business.
With the exception of our Chief Financial Officer, our senior management team has relatively limited experience managing a publicly traded company and complying with federal securities laws, including compliance with recently adopted disclosure requirements on a timely basis. Our management will be required to design and implement appropriate programs and policies in responding to increased legal, regulatory compliance and reporting requirements, and any failure to do so could lead to the imposition of fines and penalties and harm our business.
We may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation of our business plan.
Our success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. As we become a more mature company in the future, we may find recruiting and retention efforts more challenging. If we do not succeed in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to grow effectively. The loss of any key employee, including members of our senior management team, and our inability to attract highly skilled personnel with sufficient experience in our industries could harm our business.
Product liability exposure may expose us to significant liability.
We may face an inherent business risk of exposure to product liability andother claims and lawsuits in the event that the development or use of ourtechnology or prospective products is alleged to have resulted in adverseeffects. We may not be able to avoid significant liability exposure. Although we believe our insurance coverage to be adequate, we may not havesufficient insurance coverage, and we may not be able to obtain sufficientcoverage at a reasonable cost. An inability to obtain product liabilityinsurance at acceptable cost or to otherwise protect against potential productliability claims could prevent or inhibit the commercialization of our products.A product liability claim could hurt our financial performance. Even if we avoidliability exposure, significant costs could be incurred that could hurt our financial performance and condition.
Our inability to protect our intellectual property rights may force us to incur unanticipated costs.
Our success will depend, in part, on our ability to obtain and maintainprotection in the United States and internationally for certain intellectualproperty incorporated into our products. Our intellectual properties may be challenged, narrowed, invalidated orcircumvented, which could limit our ability to prevent competitors frommarketing similar solutions that limit the effectiveness of our patentprotection and force us to incur unanticipated costs. In addition, existing lawsof some countries in which we may provide services or solutions may offer onlylimited protection of our intellectual property rights.
Our products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights, either of which may result in lawsuits, distraction of management and the impairment of our business.
As the number of patents, copyrights, trademarks and other intellectualproperty rights in our industry increases, products based on our technology mayincreasingly become the subject of infringement claims. Third parties couldassert infringement claims against us in the future. Infringement claims with orwithout merit could be time consuming, result in costly litigation, causeproduct shipment delays or require us to enter into royalty or licensingagreements. Royalty or licensing agreements, if required, might not be availableon terms acceptable to us, or at all. We may initiate claims or litigation against thirdparties for infringement of our proprietary rights or to establish the validityof our proprietary rights. Litigation to determine the validity of any claims,whether or not the litigation is resolved in our favor, could result insignificant expense to us and divert the efforts of our technical and managementpersonnel from productive tasks. If there is an adverse ruling against us in anylitigation, we may be required to pay substantial damages, discontinue the useand sale of infringing products and expend significant resources to developnon-infringing technology or obtain licenses to infringing technology. Ourfailure to develop or license a substitute technology could prevent us from selling our products.
If securities or industry analysts do not continue to publish research, or publish inaccurate or unfavorable research, about our business, our share price and trading volume could decline.
The trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts publish about our business or us. There can be no assurance that analysts will cover us, continue to cover us or provide favorable coverage. If one or more analysts downgrade our stock or change their opinion of our stock, our share price may decline. In addition, if one or more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the financial markets, which could cause our share price or trading volume to decline.
We will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote substantial time to compliance initiatives and corporate governance practices.
As a public company, we will continue to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002, the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations impose various requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate governance practices. Our management and other personnel will need to continue to devote a substantial amount of time to these compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and make some activities more time-consuming and costly.
We cannot predict or estimate the amount of additional costs we may incur to continue to operate as a public company, nor can we predict the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies which could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.
We have identified material weaknesses in our internal control over financial reporting. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Pursuant to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by our management on our internal control over financial reporting. As such, our management has conducted this evaluation and, as of March 31, 2014, identified the following material weaknesses in the Company’s internal control over financial reporting:
| ● | We do not have an audit committee: While we are not currently obligated to have an audit committee, including a member who is an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations or listing standards; however, it is management’s view that such a committee is an important internal control over financial reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls and procedures. |
| ● | We do not have a majority of independent directors on our board of directors, which may result in ineffective oversight in the establishment and monitoring of required internal controls and procedures. |
| ● | Inadequate Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures. |
Management believes that these material weaknesses have not had an effect our financial results and has concluded that disclosure controls and procedures remain effective. Nonetheless, effective internal control over financial reporting is necessary to provide reliable financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating results could be harmed. We will need to continue to dedicate internal resources, potentially engage outside consultants and adopt a detailed work plan to modify and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous reporting and improvement process for internal control over financial reporting. Continued identification of one or more material weaknesses in our internal control over financial reporting could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of our financial statements.
We are operating with less than a majority of independent directors.
We do not have a majority of independent directors. Riccardo Delle Coste, Steven Lang and Arnold Tinter beneficially own approximately 51% of the Company’s common stock, are members of the board of directors and Messrs. Delle Coste and Tinter both serve as officers of the Company. The Company is operated without the oversight of a majority of independent directors and material agreements and transactions, including those with related parties, are not approved with the oversight of a majority of independent directors.
Failure to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
As a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining business. Some foreign companies, including some that may compete with our Company, may not be subject to these prohibitions. Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which we conduct our business. However, our employees or other agents may engage in conduct for which we might be held responsible. If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences that may have a material adverse effect on our business, financial condition and results of operations.
Risks Related to Ownership of Our Common Stock
The shares registered hereunder represent 47.4% of our public float. If all or a substantial portion of these shares are issued and subsequently resold in the public market it could create a greater supply for our shares than demand and therefore have a negative impact on our stock price.
The 16,780,333 shares registered hereunder, if issued, would represent 21.3% of our shares outstanding and 47.4% of our public float as of April 29, 2015, including the 6,480,333 shares issuable upon conversion of outstanding warrants. If all or a substantial portion of these shares are issued and subsequently resold in the public market it could create a greater supply for our shares than demand and therefore have a negative impact on our stock price.
Riccardo Delle Coste, Steven Lang and Arnold Tinter have voting control over matters submitted to a vote of the shareholders, and they may take actions that conflict with the interests of our other shareholders and holders of our debt securities.
Riccardo Delle Coste, Steven Lang and Arnold Tinter, together, control more than 50% of the votes eligible to be cast by shareholders in the election of directors and generally. As a result, Messrs. Delle, Lang and Tinter have the power to control all matters requiring the approval of our shareholders, including the election of directors and the approval of mergers and other significant corporate transactions.
Our common stock is quoted on the OTCQB, which may have an unfavorable impact on our stock price and liquidity.
Our common stock is quoted on the OTCQB, which is a significantly more limited trading market than the New York Stock Exchange, NYSE MKT or the NASDAQ Stock Market. The quotation of the Company’s shares on the OTCQB may result in a less liquid market available for existing and potential shareholders to trade shares of our common stock, could depress the trading price of our common stock and could have a long-term adverse impact on our ability to raise capital in the future.
There is limited liquidity on the OTCQB, which may result in stock price volatility and inaccurate quote information.
When fewer shares of a security are being traded on the OTCQB, volatility of prices may increase and price movement may outpace the ability to deliver accurate quote information. Due to lower trading volumes in shares of our common stock, there may be a lower likelihood of one’s orders for shares of our common stock being executed, and current prices may differ significantly from the price one was quoted at the time of one’s order entry.
If we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with the SEC.
Compliance with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external, resources and represents a significant cost for us. If we are unable to continue to devote adequate funding and the resources needed to maintain such compliance, while continuing our operations, we could be forced to deregister with the SEC. After the deregistration process, our common stock would only be tradable on the “Pink Sheets” and could suffer a decrease in or absence of liquidity.
Because we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms.
Additional risks may exist since we became public through a “reverse merger”. Securities analysts of major brokerage firms may not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. We cannot assure you that brokerage firms will want to conduct any secondary offerings on behalf of our Company in the future.
Future sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds in future securities offerings.
Future sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur, could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds in the future through a public offering of our securities.
Our common stock is thinly traded, so you may be unable to sell at or near asking prices or at all if you need to sell your shares to raise money or otherwise desire to liquidate your shares.
Currently, the Company’s common stock is quoted in the OTCQB and future trading volume may be limited which could adversely impactby the fact that many major institutional investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTCQB stocks and certain major brokerage firms restrict their brokers from recommending OTCQB stocks because they are considered speculative, volatile and thinly traded. The OTCQB market is an inter-dealer market much less regulated than the major exchanges and our businesscommon stock is subject to abuses, volatility and reduce our revenues.
The trading volume of our outstanding common stock beneficially own approximately 69.23% of our outstanding common stock.has been and may continue to be limited and sporadic. As a result they effectively control all matters requiring directorof such trading activity, the quoted price for the Company’s common stock on the OTCQB may not necessarily be a reliable indicator of its fair market value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our common stock or to obtain accurate quotations as to the market value of the Company’s common stock and stockholder approval,as a result, the market value of our common stock likely would decline.
Our common stock is subject to price volatility unrelated to our operations.
The market price of our common stock could fluctuate substantially due to a variety of factors, including the electionmarket perception of directors, the approval of significant corporate transactions, such as mergers and related party transactions. These insiders also have theour ability to delayachieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or perhaps even block,other developments affecting the Company’s competitors or the Company itself. In addition, the OTCQB is subject to extreme price and volume fluctuations in general. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their ownership of our stock, an unsolicited tender offer. This concentration of ownershipoperating performance and could have the same effect of delaying, deterring or preventing a change in control ofon our company that you might view favorably.
We have no written employment agreements with Andreas Wilcken, Jr. and Jonathan Seelbinder. They have orally agreed to take no compensation unless and until we achieve significant profitable operations for a period of at least 12 consecutive months, meaning profits of at least $100,000 per year on an annualized basis, and then only if, in the exercise of their fiduciary duty to stockholders, the believe taking compensation will not adversely affect our ability to continue to successfully implement our business plan at that time.
Our common stock is currently quoted on the OTCQB. Our common stock is subject to the requirements of Rule 15(g)-9, promulgated under the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The SEC has adopted regulations which generally define so-called “penny stocks” to be anSecurities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on a national exchange that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. Our commonshare. The required penny stock is a “penny stock”, we will become subject to Rule 15g-9 underdisclosures include the Exchange Act, or the “Penny Stock Rule”. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transactiondelivery, prior to sale. Asany transaction, of a result, this rule may affectdisclosure schedule explaining the abilitypenny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of broker-dealers to sell ourthe securities and may affect the ability of purchasers to sell any of ourtheir securities in the secondary market.
Because we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in value.
We have never declared or paid any cash dividends on our preferred stock or common stock. For the foreseeable future, it is expected that earnings, if any, transaction involvinggenerated from our operations will be used to finance the growth of our business, and that no dividends will be paid to holders of the Company’s common stock. As a penny stock, unless exempt,result, the rules require delivery, prior to any transactionsuccess of an investment in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.
The price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.
The trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as:
| ● | actual or anticipated variations in our operating results; | |
| ● | announcements of developments by us or our competitors; | |
| ● | announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; | |
| ● | adoption of new accounting standards affecting the our industry; | |
| ● | additions or departures of key personnel; | |
| ● | introduction of new products by us or our competitors; | |
| ● | sales of the our common stock or other securities in the open market; and | |
| ● | other events or factors, many of which are beyond our control. |
The stock market is subject to Section 15(b)(6)significant price and volume fluctuations. In the past, following periods of the Exchange Act, which gives the SEC the authority to restrict any person from participatingvolatility in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest.
Investors may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock.
We intend to continue to seek financing through the issuance of equity or convertible securities to fund our operations. In the future, we may also issue additional equity securities resulting in the dilution of the ownership interests of our present shareholders. We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common stock in connection with hiring or retaining employees, future acquisitions or for other business purposes. The future issuance of any such additional shares of common stock will result in dilution to our shareholders and may fall and purchaserscreate downward pressure on the trading price of our sharescommon stock.
Provisions in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be unablebeneficial to resell them.
Provisions in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This prospectus, includes 2,000,000 shares being offered by existing stockholders. Toincluding the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking statements. We may, in some cases, use words such as “anticipate”, “believe”, “could”, “estimate”, “expect”, “intend”, “may”, “plan”, “potential”, “predict”, “project”, “should”, “will”, “would” or the negative of those terms, and similar expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements in this prospectus include, but are not limited to, statements about:
| ● | the success, cost and timing of our sales and licensing activities; | |
| ● | our ability to attract collaborators with development, marketing and commercialization expertise; | |
| ● | the size and growth potential of the markets for our products, and our ability to serve those markets; | |
| ● | the performance of our third-party suppliers and manufacturers; | |
| ● | our ability to attract and retain key management personnel; | |
| ● | the accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and | |
| ● | our expectations regarding our ability to maintain and protect intellectual property protection for our products. |
These forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates and assumptions as of the date of this prospectus and are subject to risks and uncertainties. We discuss many of these risks in greater detail under “Risk Factors”. In addition, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance on these forward-looking statements.
You should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements. Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of new information, future events or otherwise.
We will not receive any of the proceeds from the sale of the shares of common stock offered under this prospectus by the selling shareholders. Rather, the selling shareholders will receive those proceeds directly.
However, we may receive up to an aggregate of $3,730,950 from the exercise by selling shareholders of warrants to purchase the common stock we are registering under this registration statement. We expect to use any cash proceeds from the exercise of warrants for general working capital purposes.
We are registering 16,780,333 shares of our common stock, par value $0.000001 per share, of which 958,333 are issuable upon exercise of Series N Warrants and 5,387,000 are issuable upon exercise of Series G Warrants and 135,000 are issuable upon exercise of other Warrants. The shares of common stock being registered include such indeterminate number of shares of common stock as may be issuable with respect to the shares of common stock being registered hereunder only as a result of stock splits, stock dividends or similar transactions. The shares of common stock being registered do not include additional shares of common stock issuable as a result of changes in market price of the common stock, issuance by us of equity securities below a certain price or other anti-dilutive adjustments or variables not covered by Rule 416. All shares that may be issued will be restricted securities as that term is defined in Rule 144 under the Securities Act, and will remain restricted unless and until such shares are sold into the market for ourpursuant to this prospectus, or otherwise are sold in compliance with Rule 144.
No shareholder may offer or sell shares if developed, there may be an oversupply of shares and an undersupply of purchasers. If this occurs the market price for our shares may decline significantly and investors may be unable to sell their shares at a profit, or at all.
The following table sets forth as of April 10, 2015, information regarding the current ownership of our common stock by the persons identified, based on information provided to us by them, which we have not independently verified. We have assumed for purposes of the table that the selling shareholders will sell all of which are restrictedthe shares offered by this prospectus. The selling shareholders may, from time to time, offer all or some of their shares under this prospectus or in another manner. No assurance can be given as per Rule 144to the actual number of shares that will be resold by the selling shareholders (or any of them). In addition, a selling shareholder may have already sold or otherwise disposed of shares in transactions exempt from the registration requirements of the Securities Act of 1933 definesAct. The selling shareholders are not making any representation that the shares covered by this prospectus will be offered for sale. Except as restricted securities, none of which are being registered hereunder. All shares being registered hereunder are available for resaleset forth below, no selling shareholder has held any position nor had any material relationship with our affiliates or us during the past three years. Except as set forth below, each of the dateselling shareholders has advised the Company that it is not a registered broker-dealer or an affiliate of effectivenessa registered broker-dealer.
| Name of Selling Shareholder | Number of Shares Owned Before Offering | Number of Shares Being Offered | Number of Shares Owned After Offering | Percent of Shares Owned After Offering | ||||||||||||
| Lazarus Investment Partners LLLP1 | 18,673,192 | 2 | 833,333 | 17,839,859 | 20.2 | % | ||||||||||
| Michael Donnelly | 83,333 | 3 | 83,333 | 0 | 0 | |||||||||||
| J. Scott Liolios | 371,667 | 4 | 41,667 | 330,000 | * | |||||||||||
| Algonquin Capital Management, LLC5 | 600,000 | 6 | 600,000 | 0 | 0 | |||||||||||
| Dillon Hill Capital LLC7 | 3,000,000 | 8 | 3,000,000 | 0 | 0 | |||||||||||
| Dillon Hill Investment Company LLC9 | 1,500,000 | 10 | 1,500,000 | 0 | 0 | |||||||||||
| Elliot-Herbst, LP11 | 160,000 | 12 | 130,000 | 30,000 | * | |||||||||||
| J&V Schimmelpfennig Family Trust13 | 90,000 | 14 | 90,000 | 0 | 0 | |||||||||||
| SC Investing, LLC15 | 60,000 | 16 | 60,000 | 0 | 0 | |||||||||||
| Libertas Law Group, Inc.17 | 155,000 | 18 | 90,000 | 65,000 | * | |||||||||||
| Marathon Micro Fund, LP19 | 750,000 | 20 | 750,000 | 0 | 0 | |||||||||||
| Marc Nuccitelli | 300,000 | 21 | 300,000 | 0 | 0 | |||||||||||
| Schwary Family Trust22 | 115,000 | 23 | 45,000 | 70,000 | * | |||||||||||
| Squidblues & Co.24 | 900,000 | 25 | 900,000 | 0 | 0 | |||||||||||
| Steven P. Cugine | 300,000 | 26 | 300,000 | 0 | * | |||||||||||
| The Daniel and Lauren Friedman Living Trust27 | 15,000 | 28 | 15,000 | 0 | 0 | |||||||||||
| The Debs Family Trust August 9729 | 45,000 | 30 | 45,000 | 0 | 0 | |||||||||||
| Abalos Family Trust dated February 17, 199731 | 4,000 | 32 | 2,000 | 2,000 | * | |||||||||||
| Baron Discovery Fund33 | 900,000 | 34 | 900,000 | 0 | 0 | |||||||||||
| Richard Olicker | 600,000 | 35 | 600,000 | 0 | 0 | |||||||||||
| Wolverine Asset Management, LLC36 | 6,000,000 | 6,000,000 | 0 | 0 | ||||||||||||
| London Family Trust37 | 1,056,000 | 300,000 | 756,000 | * | ||||||||||||
| Beachform ATF the Crichton Superannuation Fund38 | 20,000 | 20,000 | 0 | 0 | ||||||||||||
| Marathon Micro Fund, LP39 | 750,000 | 750,000 | 0 | 0 | ||||||||||||
| Daniel and Sarah Grover Living Trust40 | 45,000 | 45,000 | 0 | 0 | ||||||||||||
| Jeffrey M. Ng41 | 60,000 | 60,000 | 0 | 0 | ||||||||||||
| Kensington Partners LP42 | 750,000 | 750,000 | 0 | 0 | ||||||||||||
| Dylide PTY Limited43 | 60,000 | 20,000 | 40,000 | * | ||||||||||||
| Pensel PTY Limited as Trustee for the Selig Superannuation Fund44 | 220,000 | 20,000 | 200,000 | * | ||||||||||||
| AMLM Pty Ltd. ATF The Mitchell Family Trust45 | 25,000 | 25,000 | 0 | 0 | ||||||||||||
| Greenridge Global, LLC46 | 300,000 | 135,000 | 165,000 | * | ||||||||||||
| Phascolomis Nominees Pty Ltd47 | 120,000 | 20,000 | 100,000 | * | ||||||||||||
* Less than 1%
1Lazarus Management Company LLC, a Colorado limited liability company (“Lazarus Management”), is the investment adviser and general partner of this registration statement. OfLazarus Investment Partners LLLP (“Lazarus Partners”), and consequently may be deemed to have voting control and investment discretion over securities owned by Lazarus Partners. Justin B. Borus is the managing member of Lazarus Management. As a result, Mr. Borus may be deemed to be the beneficial owner of any shares deemed to be beneficially owned by Lazarus Management. The foregoing should not be construed in and of itself as an admission by Lazarus Management or Mr. Borus as to beneficial ownership of the shares not being registered hereunder, allowned by Lazarus Partners. Each of Lazarus Management and Mr. Borus disclaims beneficial ownership of the restricted securities, held by affiliates, subjectexcept to the limitations on amountsextent of its or his pecuniary interests therein.
2Includes 10,613,320 shares underlying exercisable warrants.
3Includes 83,333 shares underlying exercisable warrants.
4Includes 271,667 shares underlying exercisable warrants.
5Michael David Lockwood, President, exercises voting and mannerinvestment control over all shares beneficially owned.
6Includes 200,000 shares underlying exercisable warrants.
7Bruce Grossman, Chief Executive Officer and Managing Partner, exercises voting and investment control over all shares beneficially owned.
8Includes 1,000,000 shares underlying exercisable warrants.
9Bruce Grossman, President, exercises voting and investment control over all shares beneficially owned.
10Includes 500,000 shares underlying exercisable warrants.
11Alice Elliot exercises voting and investment control over all shares beneficially owned.
12Includes 130,000 shares underlying exercisable warrants.
13Joe Schimmelpfennig exercises voting and investment control over all shares beneficially owned.
14Includes 30,000 shares underlying exercisable warrants.
15George H. Schwary and Martha Schwary each exercise voting and investment control over all shares beneficially owned.
16Includes 20,000 shares underlying exercisable warrants.
17Mark Abdou exercises voting and investment control over all shares beneficially owned.
18Includes 30,000 shares underlying exercisable warrants.
19James G. Kennedy exercises voting and investment control over all shares beneficially owned.
20Includes 250,000 shares underlying exercisable warrants.
21Includes 100,000 shares underlying exercisable warrants.
22George H. Schwary and Martha Schwary each exercise voting and investment control over all shares beneficially owned.
23Includes 15,000 shares underlying exercisable warrants.
24Ronald Baron exercises voting and investment control over all shares beneficially owned.
25Includes 300,000 shares underlying exercisable warrants.
26Includes 100,000 shares underlying exercisable warrants.
27Daniel Friedman, Trustee, exercises voting and investment control over all shares beneficially owned.
28Includes 5,000 shares underlying exercisable warrants.
29John Frederick Debs, Trustee, exercises voting and investment control over all shares beneficially owned.
30Includes 15,000 shares underlying exercisable warrants.
31Alfonso Abalos and Janette Dye, Trustees, exercise voting and investment control over all shares beneficially owned.
32Includes 2,000 shares underlying exercisable warrants.
33Ronald Baron exercises voting and investment control over all shares beneficially owned.
34Includes 300,000 shares underlying exercisable warrants.
35Includes 200,000 shares underlying exercisable warrants.
36The sole member and manager of sale in Rule 144, couldWolverine Asset Management, LLC (“WAM”) is Wolverine Holdings, L.P. (“Wolverine Holdings”). Robert R. Bellick and Christopher L. Gust may be available for sale in a public market, if developed, beginning 90 daysdeemed to control Wolverine Trading Partners, Inc., the general partner of Wolverine Holdings. Each of Mr. Bellick and Mr. Gust disclaim beneficial ownership of these securities.
37Includes 300,000 shares underlying exercisable warrants. Shares being offered include 200,000 shares underlying exercisable warrants. Robert S. London, trustee, exercises voting and investment control over all shares beneficially owned.
38Consists of 20,000 shares underlying exercisable warrants.
39Includes 250,000 shares underlying exercisable warrants. James G. Kennedy exercises voting and investment control over all shares beneficially owned.
40Includes 15,000 shares underlying exercisable warrants. Daniel Jonathan Grover and Sarah Ann Goldsmith-Grover exercise voting and investment control over all shares beneficially owned.
41Includes 20,000 shares underlying exercisable warrants.
42Includes 250,000 shares underlying exercisable warrants. Richard Keim exercises voting and investment control over all shares beneficially owned.
43Includes 20,000 shares underlying exercisable warrants. Shares offered consist of 20,000 shares underlying exercisable warrants. Shahen Mekertichian exercises voting and investment control over all shares beneficially owned.
44Includes 100,000 shares underlying exercisable warrants. Shares offered consist of 20,000 shares underlying exercisable warrants. David Paul Selig exercises voting and investment control over all shares beneficially owned.
45Consists of 20,000 shares underlying exercisable warrants. Luke Mitchell exercises voting and investment control over all shares beneficially owned.
46Consists of 300,000 shares underlying exercisable warrants. William Robert Gregozeski exercises voting and investment control over all shares beneficially owned.
47Consists of 20,000 shares underlying exercisable warrants and 100,000 shares underlying convertible notes. Allan William Blaikie exercises voting and investment control over all shares beneficially owned.
We are registering the shares of common stock previously issued and the shares of common stock issuable upon exercise of the warrants to permit the resale of these shares of common stock by the holders of the common stock and warrants from time to time after the date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the shares of common stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The availabilityselling shareholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions. The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of substantial amountssale or at negotiated prices. These sales may be effected in transactions, which may involve crosses or block transactions, pursuant to one or more of the following methods:
| ● | on any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
| ● | in the over-the-counter market; |
| ● | in transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
| ● | through the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
| ● | ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
| ● | block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction; |
| ● | purchases by a broker-dealer as principal and resale by the broker-dealer for its account; |
| ● | an exchange distribution in accordance with the rules of the applicable exchange; |
| ● | privately negotiated transactions; |
| ● | short sales made after the date the Registration Statement is declared effective by the SEC; |
| ● | broker-dealers may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
| ● | a combination of any such methods of sale; and |
| ● | any other method permitted pursuant to applicable law. |
The selling shareholders may also sell shares of common stock under Rule 144 could reduce prevailing market prices for our securities.
| Selling Shareholder | Shares owned by Selling Stockholders prior to the Offering | Shares to offered by the Selling Shareholders | % owned before Offering | Amount owned after the offering, assuming all shares sold | % owned after the offering, assuming all shares sold | Any Transaction or Relationship in past 3 years |
| Siddharth Amin [1] | 60,151 | 60,151 | * | 0 | 0 | |
| Shradha Amin [1] | 60,151 | 60,151 | * | 0 | 0 | |
| Sophy Moroney [2] | 60,151 | 60,151 | * | 0 | 0 | |
| Rade Maric [6] | 60,151 | 60,151 | * | 0 | 0 | |
| Ljubica Maric [6] | 60,151 | 60,151 | * | 0 | 0 | |
| Pankaj Amin [1] | 60,151 | 60,151 | * | 0 | 0 | |
| Kim Mackins [3] | 60,151 | 60,151 | * | 0 | 0 | |
| Stacy Mackins [3] | 60,151 | 60,151 | * | 0 | 0 | |
| Richard Moroney [2] | 60,151 | 60,151 | * | 0 | 0 | |
| Charmian Reeve | 60,151 | 60,151 | * | 0 | 0 | |
| Douglas Scarlett [4] | 50,000 | 50,000 | * | 0 | 0 | |
| Lori Scarlett [4] | 50,000 | 50,000 | * | 0 | 0 |
| David Leeming [5] | 50,000 | 50,000 | * | 0 | 0 | |
| Amanda Leeming [5] | 50,000 | 50,000 | * | 0 | 0 | |
| Barbara Cruickshank | 50,000 | 50,000 | * | 0 | 0 | |
| Zoran Trajkovic [7] | 60,151 | 60,151 | * | 0 | 0 | |
| Pooja Amin [1] | 60,151 | 60,151 | * | 0 | 0 | |
| Supriya Amin [1] | 60,151 | 60,151 | * | 0 | 0 | |
| Jonathan Mark King | 60,151 | 60,151 | * | 0 | 0 | |
| Jamie Harding | 60,151 | 60,151 | * | 0 | 0 | |
| Ozlem Cinpolat | 60,151 | 60,151 | * | 0 | 0 | |
| Branka Trajkovic [7] | 60,151 | 60,151 | * | 0 | 0 | |
| Milos Drljacha-Indic [8] | 60,151 | 60,151 | * | 0 | 0 | |
| Emma Myrtle | 60,151 | 60,151 | * | 0 | 0 | |
| Mira Drjacha-Indic [8] | 60,151 | 60,151 | * | 0 | 0 | |
| Marko Drjacka-Indic [8] | 60,151 | 60,151 | * | 0 | 0 | |
| Cosmina Popa | 60,151 | 60,151 | * | 0 | 0 | |
| Robert Ward | 60,151 | 60,151 | * | 0 | 0 | |
| John Thompson | 60,151 | 60,151 | * | 0 | 0 | |
| Cliveston De Souza | 60,151 | 60,151 | * | 0 | 0 | |
| Rebecca McKinnon | 246,225 | 246,225 | 4.6 | 0 | 0 | |
| Total | 2,000,000 | 2,000,000 | 0 |
The selling shareholders may pledge all or grant a portionsecurity interest in some or all of the securitieswarrants or shares of common stock owned as collateral for margin accountsby them and, if they default in the performance of their secured obligations, the pledgees or in loan transactions,secured parties may offer and sell the securities may be resoldshares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the termsSecurities Act amending, if necessary, the list of such pledges, margin accounts or loan transactions. Upon default by such selling shareholders to include the pledgepledgee, transferee or other successors in such loan transaction would have the same rights of saleinterest as the selling shareholders under this prospectus. The selling shareholders also may also enter into exchange traded listed option transactions,transfer and donate the shares of common stock in other circumstances in which requirecase the deliverytransferees, donees, pledgees or other successors in interest will be the selling beneficial owners for purposes of the securities listed under this prospectus. After our securities are qualified for quotation on
To the OTC Bulletin Board,extent required by the Securities Act and the rules and regulations thereunder, the selling shareholders and any broker-dealer participating in the distribution of the shares of common stock may also transfer securities owned in other ways not involving market makersbe deemed to be “underwriters” within the meaning of the Securities Act, and any commission paid, or established trading markets, including directly by gift, distribution,any discounts or other transfer without consideration, and uponconcessions allowed to, any such transferbroker-dealer may be deemed to be underwriting commissions or discounts under the transferee would haveSecurities Act. At the same rightstime a particular offering of sale as such selling shareholders under this prospectus.
Under the securities by the selling shareholders or any such other person. We have instructed our selling shareholders that they many not purchase anylaws of our securities while they are selling shares under this registration statement. We have advised them that we will monitor our stock transfer records on a regular basis and will void any transaction they undertake in violation of this restriction.
There can be no assurance that any selling shareholder will sell any or all of the shares of common stock registered pursuant to the registration statement, of which this prospectus forms a part.
The selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the selling shareholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to the shares of common stock. All of the foregoing may affect the marketability of our securities. Pursuantthe shares of common stock and the ability of any person or entity to oral promises we madeengage in market-making activities with respect to the selling shareholders, weshares of common stock.
We will pay all the fees and expenses incident toof the registration of the securities.
Once sold under the registration statement, of which this prospectus forms a part, the shares of common stock will filebe freely tradable in the hands of persons other than our affiliates.
We are not party to any lawsuits or legal proceedings, the adverse outcome of which, in management’s opinion, individually or in the aggregate, would have a post-effective amendment disclosing such matters.
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
Directors and Executive Officers
The following sets forth information about our common stock before a trading symbol can be issued. We have engaged in preliminary discussions with a FINRA Market Maker, Glendale Securities, to file our application on Form 211 with FINRA, butdirectors and executive officers as of the date of this prospectus, no filingReport:
| Name | Age | Position | ||
| Riccardo Delle Coste | 36 | President, Chief Executive Officer and Chairman | ||
| Steven Lang | 62 | Director | ||
| Arnold Tinter | 69 | Chief Financial Officer, Secretary and Director | ||
| Joseph M. Cugine | 54 | Director | ||
| Alice Elliot | 58 | Director |
Riccardo Delle Coste has been made and no agreement has been entered into to make such filing. We have been advised inthe Chairman of our preliminary discussions with a FINRA Market Maker that it will take approximately 2 – 8 weeks for FINRA to issue a trading symbol if and when a FINRA market maker files our application on Form 211.
Qualifications: Mr. Delle Coste has 17 years of experience within retail, hospitality and dairy manufacturing.
Steven Lang was appointed as Director of the Company on January 10, 2012. He has also served as Secretary of Barfresh CO since its inception. Prior to joining Barfresh CO, from 2003 to 2007, Mr. Lang was a director of Vericap Finance Limited, a company that specializes in providing advice to and Director. August 2009investing in Australian companies with international growth potential. From 1990 to February 20101999, he served as a director of Babcock & Brown’s Australian operations where he was not employed. From June 2009 to August 2009, he was sales representative with Maryland Respitory Group, a medical device company. He was not employed From November 2008 to June 2009. From March 2007 to November 2008 he was General Manager/Bartenderresponsible for NU LLC DBA Ess Lounge, a nightclub. From April 2004 to March 2007, he was a bartender at Rush Lounge. In 2007, heinternational structured finance transactions. Mr. Lang received a BS Industrial EngineeringBachelor of Commerce and a Bachelor of Laws from North Carolina State University.the University of New South Wales in 1976 and a Master of Laws from the University of Sydney in 1984. He has been a member of the Institute of Chartered Accountants in Australia and was licensed to practice foreign law in New York.
Qualifications: Mr. Seelbinder brings hisLang has over 35 years of experience in business, accounting, law and finance and served as Chairman of an Australian public company.
Arnold Tinter was appointed as Director, Chief Financial Officer and Secretary of the North Carolina entertainment industry.
Company on January 10, 2012. Mr. Tinter founded Corporate Finance Group, Inc., a consulting firm located in Denver, Colorado, in 1992, and is its President. Corporate Finance Group, Inc., is involved in financial consulting in the areas of strategic planning, mergers and acquisitions and capital formation. He is the chief financial officer to two other public companies: LifeApps Digital Media Inc. and Arvana Inc. From 2006 to 2010 he was the chief financial officer of Spicy Pickle Franchising, Inc., a public company, where his responsibilities included oversight of all accounting functions, including SEC reporting, strategic planning and capital formation. From May 2001 to May 2003, he served as chief financial officer of Bayview Technology Group, LLC, a privately held company that manufactured and distributed energy-efficient products. From May 2003 to October 2004, he also served as that company’s chief executive officer. Prior to 1990, Mr. Tinter was chief executive officer of Source Venture Capital, a holding company with investments in the gaming, printing and retail industries. Mr. Tinter currently serves as a director of LifeApps Digital Media Inc., a public company. Mr. Tinter received a B.S. degree in Accounting in 1967 from C.W. Post College, Long Island University, and is licensed as a Certified Public Accountant in Colorado.
Qualifications:Mr. Tinter has over 40 years of experience as a Certified Public Accountant and a financial consultant. During his career he served as a director of numerous public companies.
Joseph M. Cugine was appointed as Director of the Company on July 29, 2014. Mr. Cugine is the owner and president of Cugine Foods and JC Restaurants, a franchisee of Taco Bell and Pizza Hut in New York. He is also president and owner of Restaurant Consulting Group LLC. Prior to owning and operating his own firms, Mr. Cugine held a series of leadership roles with PepsiCo, lastly as chief customer officer and senior vice president of PepsiCo’s Foodservice division. Mr. Cugine also serves on the board of directors of The Chef’s Warehouse, Inc., a publicly traded specialty food products distributor in the U.S., as well as Ridgefield Playhouse and R4 Technology. He received his B.S. degree from St. Joseph’s University in Philadelphia.
Qualifications: Mr. Cugine’s career in sales, marketing, operations and supply chain spans more than 25 years. He has extensive industry contacts and proven experience leading and advising numerous successful food distribution companies.
Alice Elliotwas appointed as Director of the Company on October 15, 2014. Ms. Elliot is the founder and chief executive of The Elliot Group, a global retained executive search firm specializing in the hospitality, foodservice, retail and service sectors. For more than 20 years, Ms. Elliot has hosted the exclusive invitation only ‘Elliot Leadership Conference.’ She was a co-founder of ‘The Elliot Leadership Institute,’ a nonprofit organization dedicated to leadership development and advancement in the foodservice industry, and is known for her philanthropic and educational endeavors and contributions. Throughout her career, Ms. Elliot has received various industry honors, including the Trailblazer Award from the Women’s Foodservice Forum and induction into the National Restaurant Association Educational Foundation’s College of Diplomates. She was also recently named to the Nation’s Restaurant News list of the 50 Most Powerful People in Foodservice.
Qualifications: Well recognized for the placement of senior-level executives at public and privately held restaurant organizations nationwide, Ms. Elliot is sought out for their intellectual and strategic thought leadership.
Employment Agreements
There are currently no employment agreements between the Company and its officers and directors.
Term of Office
Directors are appointed for a one-year term to hold office until the next annual general meeting of shareholders or until removed from office in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until the earlier of resignation or removal.
Director Independence
We use the definition of “independence” standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that an “independent director” is a person other than an officer or employee of the company or any other individual having a relationship, which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. We have determined that only one of our directors is independent, which constitutes less than a majority.
Board Committees
We do not have an audit, nominating or compensation committee. We intend, however, to establish an audit committee and a compensation committee of our board in the future. We envision that the audit committee will be primarily responsible for reviewing the services performed by our independent auditors and evaluating our accounting policies and our system of internal controls. The compensation committee will be primarily responsible for reviewing and approving our salary and benefits policies (including stock options) and other compensation of our executive officers.
Family Relationships
There are no family relationships betweenamong any of our officers andor directors.
Legal Proceedings
To the best of our knowledge, none of our executive officers or persons nominated for such positions, promoterdirectors are parties to any material proceedings adverse to the Company, have any material interest adverse to the Company or significant employee has been involved inhave, during the lastpast ten years in any of the following:
| been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offenses); | ||
| ● | had any bankruptcy petition filed by or against him/her or any business of which |
| been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting |
| ● | been found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or |
| ● | been subject to, or party to, any |
Code of Ethics
The Company has not yet adopted a code of ethics.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following tables settable sets forth the ownership,certain information regarding our shares of common stock beneficially owned as of the date of this prospectus, of our common stock byApril 29, 2015 for (i) each personshareholder known by us to be the beneficial owner of 5% or more than 5% of our outstanding shares of common stock, our directors,(ii) each named executive officer and ourdirector, and (iii) all executive officers and directors as a group. To the best of our knowledge, the persons named have sole voting and investment power with respect to such shares, except as otherwise noted. There are not any pending or anticipated arrangements that may cause a change in control.
For purposes of this table, a person may beor group of persons is deemed to be a beneficial ownerhave “beneficial ownership” of the same securities. The percentageany shares of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to whichcommon stock that such person has the right to acquire voting or investment power within 60 days of April 29, 2015. For purposes of computing the percentage of outstanding shares of our common stock held by the sumeach person or group of the number ofpersons named above, any shares outstanding as of such date plus the number of shares as to whichthat such person or persons has the right to acquire voting or investment power within 60 days. Consequently,days of April 29, 2015 is deemed to be outstanding, but is not deemed to be outstanding for the denominator used for calculating suchpurpose of computing the percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial ownersownership of our common stockany other person. The inclusion herein of any shares listed below have sole voting and investment power with respect to the shares shown. The business address for these shareholders is 222 E . Jones Ave, Wake Forest NC 27587 .
| Name | Title | Number of Shares | % of Common Share | |||||||
| Andreas Wilcken, Jr. | President and Director | 4,500,00 | 69.23 | % | ||||||
| Jonathan Seelbinder | Secretary and Director | 0 | 0 | |||||||
| All officers and directors as a group [2 persons] | 4,500,00 | 69.23 | % | |||||||
| Name and address of beneficial owner(1) | Amount and nature of beneficial ownership | Percent of class o/s | ||||||
| Riccardo Delle Coste(2) (3) (4) (5) | 20,049,310 | 25.25 | % | |||||
| R.D. Capital Holdings Pty Ltd. | 18,966,664 | 24.09 | % | |||||
| Steven Lang(6) (7) (8) (9) | 20,249,310 | 25.37 | % | |||||
| Sidra Pty Limited | 19,249,310 | 24.37 | % | |||||
| Arnold Tinter(10) | 800,000 | 1.02 | % | |||||
| Joseph M. Cugine(11) (12) (13) | 1,714,100 | 2.18 | % | |||||
| Alice Elliot(14) (15) (16) | 490,000 | 0.62 | % | |||||
| All directors and officers as a group (5 persons) | 43,302,720 | 53.68 | % | |||||
| Lazarus Investment Partners LLLP 3200 Cherry Creek South Drive Suite 670 Denver, CO 80209(17) | 18,093,295 | 20.62 | % | |||||
| Wolverine Flagship Fund Trading Limited 175 West Jackson Blvd., Suite 340 Chicago, IL 60604(18) | 6,000,000 | 7.53 | % | |||||
Bruce Grossman(19) c/o Dillon Hill Capital LLC 200 Business Park Drive, Suite 306 Armonk, NY 10504 | 4,500,000 | 5.68 | % | |||||
| (1) | The address of all officers and directors listed is c/o Barfresh Food Group Inc.,8530 Wilshire Blvd,, Suite 450, Beverly Hills, CA 90211. |
| (2) | Mr. Delle Coste is the Chief Executive Officer, President and a Director of the Company. |
| (3) | Includes 18,966,664 shares owned by R.D. Capital Holdings PTY Ltd. and of which Riccardo Delle Coste is deemed to be a beneficial owner. |
| (4) | Includes 200,000 shares underlying convertible debt and 200,000 shares underlying warrants related to the convertible debt owned by the Delle Coste Family Trust. Mr. Delle Coste may be deemed to indirectly beneficially own these shares but disclaims beneficial ownership of these shares pursuant to Rule 13d-4 promulgated under the Securities Exchange Act of 1934, as amended. |
| (5) | Includes 282,646 shares underlying warrants issued in connection with a promissory note the holder of which is the Delle Coste Family Trust. Mr. Delle Coste may be deemed to indirectly beneficially own these shares but disclaims beneficial ownership of these shares pursuant to Rule 13d-4 promulgated under the Securities Exchange Act of 1934, as amended. |
| (6) | Mr. Lang is a Director of the Company. |
| (7) | Includes 18,966,664 shares owned by Sidra Pty Limited of which Steven Lang is deemed to be a beneficial owner. |
| (8) | Includes 800,000 shares underlying options granted. |
| (9) | Includes 282,6469 shares underlying warrants issued in connection with a promissory note the holder of which is Sidra PTY Limited. |
| (10) | Mr. Tinter is the Chief Financial Officer, Secretary and a Director of the Company. |
| (11) | Mr. Cugine is a Director of the Company. |
| (12) | Includes 500,000 shares owned by Restaurant Consulting Group LLC of which Joe Cugine is deemed to be a beneficial owner. |
| (13) | Includes 50,000 shares underlying warrants issued in connection with purchase of common stock. |
| (14) | Ms. Elliot is a Director of the Company. |
| (15) | Includes 160,000 shares owned by Elliot-Herbst LP of which Alice Elliot is deemed to be a beneficial owner. |
| (16) | Includes 30,000 shares underlying warrants issued in connection with purchase of common stock. |
| (17) | Includes 10,033,333 shares underlying warrants issued in connection with purchase of common stock. Lazarus Management Company LLC, a Colorado limited liability company (“Lazarus Management”), is the investment adviser and general partner of Lazarus Investment Partners LLLP (“Lazarus Partners”), and consequently may be deemed to have voting control and investment discretion over securities owned by Lazarus Partners. Justin B. Borus is the managing member of Lazarus Management. As a result, Mr. Borus may be deemed to be the beneficial owner of any shares deemed to be beneficially owned by Lazarus Management. The foregoing should not be construed in and of itself as an admission by Lazarus Management or Mr. Borus as to beneficial ownership of the shares owned by Lazarus Partners. Each of Lazarus Management and Mr. Borus disclaims beneficial ownership of the securities, except to the extent of its or his pecuniary interests therein. |
| (18) | Includes 2,000,000 shares underlying warrants issued in connection with purchase of common stock. Wolverine Asset Management, LLC (“WAM”) is the investment manager of Wolverine Flagship Fund Trading Limited and has voting and dispositive power over these securities. The sole member and manager of WAM is Wolverine Holdings, L.P. (“Wolverine Holdings”). Robert R. Bellick and Christopher L. Gust may be deemed to control Wolverine Trading Partners, Inc., the general partner of Wolverine Holdings. |
| (19) | Dillon Hill Capital, LLC, of which the Mr. Grossman is the sole member, directly owns 2,000,000 shares are common stock and warrants to purchase an additional 1,000,000 shares of common stock. Dillon Hill Investment Company, LLC, the sole member of which is a trust of which Mr. Grossman’s spouse is a co-trustee, directly owns 1,000,000 shares of common stock and warrants to purchase an additional 500,000 shares of common stock. By virtue of the relationships described above, the Mr. Grossman n may be deemed to have sole voting and dispositive power over the shares and warrants held by Dillon Hill Capital LLC and shared voting and dispositive power over the shares and warrants held by Dillon Hill Investment Company, LLC. |
Authorized Capital Stock
Our authorized share capital consists of the material terms of the provisions of our Articles of Incorporation and Bylaws. The Articles of Incorporation and Bylaws have been filed as exhibits to the registration statement of which this prospectus is a part.
Common Stock
Each share of our common stock entitles theits holder to one vote either in personthe election of each director and on all other matters voted on generally by our shareholders, other than any matter that (i) solely relates to the terms of any outstanding series of preferred stock or by proxy, at meetingsthe number of shareholders. The holders areshares of that series and (ii) does not permittedaffect the number of authorized shares of preferred stock or the powers, privileges and rights pertaining to vote their shares cumulatively. Accordingly, the shareholderscommon stock. No share of our common stock who hold, in the aggregate, more than fifty percent of the totalaffords any cumulative voting rights can elect all of our directors and, in such event, the holders of the remaining minority shares will not be able to elect any of such directors. The vote ofrights. This means that the holders of a majority of the issued and outstandingvoting power of the shares voting for the election of common stock entitleddirectors can elect all directors to vote thereon is sufficientbe elected if they choose to authorize, affirm, ratify or consent to such act or action, except as otherwise provided by law.
| ● | general business conditions; | |
| ● | industry practice; | |
| ● | our financial condition and performance; | |
| ● | our future prospects; | |
| ● | our cash needs and capital investment plans; | |
| ● | our obligations to holders of any preferred stock we may issue; | |
| ● | income tax consequences; and | |
| ● | the restrictions Delaware and other applicable laws and our credit arrangements then impose. |
If we liquidate or dissolve our business, the holders of our common stock will share ratably in the netall our assets legallythat are available for distribution to our shareholders after our creditors are paid in full and the paymentholders of all series of our debtsoutstanding preferred stock, if any, receive their liquidation preferences in full.
Our common stock has no preemptive rights and other liabilities. There areis not convertible or redeemable or entitled to the benefits of any provisions in our Articles of Incorporationsinking or our Bylaws that would prevent or delay change in our control.
Series G Warrants
Series G Warrants to issue 5,000,000purchase up to 5,275,000 shares of preferredcommon stock in series as fixed by the Directors with $0.000001 par valueare currently outstanding. The Series G Warrants are exercisable for a term of five-years at a per share. Asshare exercise price of $0.60 and are subject to customary protective provisions for price and certain events. The shares of common stock issuable upon exercise of the datewarrants are subject to mandatory registration rights. Holders of this Prospectus, there are no preferred shares outstanding.
Series N Warrants
Series N Warrants to purchase up to 1,291,667 shares common stock are currently outstanding. Series G Warrants are exercisable for a term of five- years at a per share exercise price of $0.45 or via cashless exercise, at the holder’s option. The Series G Warrants are subject to customary protective provisions for certain events. The shares of common stock issuable upon exercise of the warrants are subject to mandatory registration rights.
Other Warrants
Other Warrants registered hereunder to purchase up to 135,000 shares common stock are exercisable for a term of three years at a per share exercise price of $0.50 or via cashless exercise, at the holder’s option. The shares of common stock issuable upon exercise of the warrants are subject to piggyback registration rights.
The validity of the common stock to be sold under this prospectus will be passed upon for us by Libertas Law Group, Inc. Libertas Law Group holds 130,000 shares of common stock and a Series E warrant to purchase 25,000 shares.
Our financial statements, as of and for the yearyears ended March 31, 2010 included2013 and March 31, 2014 appearing in thisthe prospectus, have been audited by M&K CPAs, PLLC which areEide Bailly LLP, an independent certifiedregistered public accountants,accounting firm, to the extent and for the periods set forthindicated in ourtheir report appearing herein, which report expresses an unqualified opinion, and are incorporated hereinincluded in reliance upon such report givenand upon the authority of saidsuch firm as experts in auditingaccounting and accounting.
The Company’s directors and executive officers are indemnified as provided by the Delaware General Corporation Law and the Company’s Certificate of Incorporation. These provisions state that the Company’s directors may cause the Company to indemnify a director or former director against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment, actually and reasonably incurred by him as a result of him acting as a director. The indemnification of costs can include an amount paid to settle an action or satisfy a judgment. Such indemnification is at the discretion of the Company’s board of directors and is subject to the provisions of Delaware Law, contain provisions which allow the corporation to indemnify any person against liabilities and other expenses incurred as the result of defending or administering any pending or anticipated legal issue in connection with service to us if it is determined that person acted in good faith and in a manner which he reasonably believed was in the best interest of the corporation. SEC’s policy regarding indemnification.
Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to our directors, officers andor persons controlling persons, we havethe Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities and Exchange Commission,SEC, such indemnification is against public policy as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
In the lawsevent that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the Statesecurities being registered, we will, unless in the opinion of Delaware,its counsel the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such indemnification by it is against public policy as a development stage company.
At present, there is an estimated $5,000 in remaining unpaid costs of going and an estimated $25,000 in on-going costs of staying public as described herein. We also anticipate our subsidiary MBE will need an additional $30,000 to be paid to non-affiliated third parties and not tono pending litigation or proceeding involving any of our Affiliates to finance the distribution of our Movie and related expensed during the next 12 months. As we do not intend to release our Movie until after this registration statement has been declared effective and we have secured a qualification for quotation for our securities on the OTC Bulletin Board, which we believe will facilitate our ability to secure additional financing, the anticipated $30,000 of costs associated with distribution of the Movie will not be incurred until such date. However, as noted below, Mr. Wilcken has agreed to fund these costs if necessary.
| Name and Address | Contribution | Royalty Percentage Interest | ||||||
| GARRETT,LLC 3505 Castlegate Court Lexington, Kentucky 40502 | $ | 25,000 | 16.23 | % | ||||
| Ian McKinnon #2302, 4801 Bonita Bay Boulevard Bonita Springs, Florida 34134 | $ | 104,000 | 67.53 | % | ||||
| Brad Miller PO Box 487 Hamilton, Indiana 47642 | $ | 25,000 | 16.23 | % | ||||
Business Overview
Barfresh is a leader in the future, that impact issues specificcreation of, manufacturing and distributing ready to our business.blend beverages. The current portfolio of products is made up of smoothies, shakes and frappes. All of the products are portion controlled and ready to blend beverage ingredient packs or “beverage packs”. The beverage packs contain all of the ingredients necessary to make the beverage, including the base (either sorbet, frozen yogurt or ice cream), fruit pieces, juices and ice.
Domestic and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the products. In our industry, environmental laws are anticipated to apply directlyNovember 2011, the Company acquired the patent rights in the United States and Canada. The Canadian patent has been granted and the United States patent is “patent pending”. On October 15, 2013, the Company acquired all of the related international patent rights, which were filed pursuant to the ownersPatent Cooperation Treaty and operators of companies. They do not apply to companies or individuals providing consulting services, unless they have been engagedgranted in 13 jurisdictions. The patents are pending in the remainder of the jurisdictions that have signed the treaty. In addition, on October 15, 2013, the Company purchased all of the trademarks related to consult on environmental matters. Wethe patented products.
Product development and new flavor creation is a critical element of the business. The leadership team has been developing flavor profiles for each beverage category that will appeal to tastes in the United States. The Company has been in discussions with a number of companies including both large and small quick service restaurant (“QSR”) chains and full service restaurant chains (“FSR”). Additionally, there are also discussions with national food service companies that serve alternative venues such as stadiums, arenas and universities with national footprints in the United States. Preliminary agreements with three potential customers have been reached and testing in these venues will begin in the near future. There are also other ongoing negotiations taking place with several of national foodservice companies.
In addition to the large fast food, fast casual and full service restaurant chains, the Company will sell to food distributors that supply products to the food services market place. Effective July 2, 2014, the Company entered into an agreement with Sysco Merchandising and Supply Chain Services, Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s ready-to-blend smoothies, shakes and frappes. All Barfresh products will be included in Sysco’s national core selection of beverage items, making Barfresh its exclusive single-serve, pre-portioned beverage provider. The agreement is mutually exclusive; provided however, the products are supplied to other foodservice distributors, but only to the extent required for such foodservice distributors to service multi-unit chain operators with at least 20 units and where Sysco is not planningsuch multi-unit chain operators nominated distributor for our products. The Company has started shipping to provide environmental consulting services.
Finally, the Company intends to monetize the international patents outside of our management works only part time.
Barfresh plans to utilize contract manufacturers to manufacture all of the products in conjunction with our financial statementsthe United States. Ice cream manufacturers are best suited to produce the products and the related notes,a second production line has been installed and other financial information includedcommissioned in this Form S-1.
Although there currently is not a contract in place with any suppliers for the raw materials needed to manufacture smoothie packs, there are a significant number of sources available and introduction; existing government regulationsthe company does not anticipate becoming dependent on any one supplier. As demand for the range of products grows, the plan will be to contract a level of raw material requirements to ensure continuity of supply.
There are five employees and changesone consultant selling our product. The process of obtaining orders from potential customers will likely follow the following process:
| ● | Meet with and introduce products to customer; | |
| ● | For larger accounts, develop custom flavor profiles for the specific customer; | |
| ● | Participate in test marketing of the product with the flavors developed for the customer; and | |
| ● | Agree to a roll out schedule for the customer. |
Although we have agreements with potential customers (representing approximately 10,000 outlets) to develop flavors, test a variety of the beverage offerings and develop new flavor profiles for others, there is no assurance that the products will be supplied to any chain. However, the products are currently shipping to a number of contracted customers and to a number of smaller customers.
Most recently, as part of the Company’s expansion due to the acquisition of the international patents, a leading regional Australian food ingredient supply and product developer has been engaged as the wholesaler and distributor for Barfresh. The first order to Australia shipped in or the failure to comply with, government regulations; adverse publicity; competition; the loss of significant customers or suppliers; fluctuationsJanuary 2014.
Corporate History and difficulty in forecasting operating results; change in business strategy or development plans; business disruptions; the ability to attract and retain qualified personnel; the ability to protect technology; the risk of foreign currency exchange rate; and other risks that might be detailed from time to time in our filing with the Securities and Exchange Commission.
The Company incorporated on facts and factors currently known by them. Consequently, and because forward-looking statements are inherently subject to risks and uncertainties, the actual results and outcomes may differ materially from the results and outcomes discussedFebruary 25, 2010 in the forward-looking statements. You are urged to carefully review and consider the various disclosures made by us in this report as we attempt to advise interested partiesstate of the risks and factors that may affect our business, financial condition, and results of operations and prospects.
Reorganization and polishingRecapitalization
During January, 2012, the Company entered into a series of transactions pursuant to which Barfresh Inc., a Colorado corporation (“Barfresh CO”), was acquired, spun-out prior operations to the former principal shareholder, completed a private offering of securities for an aggregate purchase price of approximately $999,998, conducted a four for one forward stock split and changed the name of the motion picture.Company. The Company competes onfollowing describes the basis of its ability to produce new products that are attractive to consumers, find niche audiences and produce high quality products at lower costs by being fiscally responsible, and creative with every dollar spent. However, we have no binding contracts, agreements or commitments for the distribution of the movie. The markets for Entertainment products are highly competitive. The Company faces competition from other production companies, entertainment companies and multimedia companies that seek to offer recorded film, video products, software, to the public. Many of these competitors, as well as a number of potential new competitors, have significantly longer operating histories, greter name recognition, larger customer bases and significantly greater financial, technical and marketing resources than the Uptone. This provides them with the ability to launch more new products, spend more on marketing those products, and pay more to actors, writers, directors and songwriters for new content development. Our ability to compete in this market depends largely on:
| Acquisition of Barfresh CO. We acquired all of the | ||
| Spinout of prior business. Immediately prior to the acquisition of Barfresh CO, we spun-out our previous business operations to a former officer, director and | ||
| ● | Financing transaction. Immediately following the acquisition of Barfresh, we sold an aggregate of 1,333,332 shares of our common stock and five-year warrants to purchase 1,333,332 shares of common stock at a per share exercise price of $1.50 in a private offering for gross proceeds of $999,998, less expenses of $26,895. | |
| ● | Change of name. Subsequent to the merger, we changed the name of the Company from Moving Box Inc. to Barfresh Food Group Inc. | |
| ● | Forward stock split. Subsequent to the merger, we conducted a four for one forward stock split of the Company’s |
Products
All of the products are portion controlled beverage ingredient packs, suitable for smoothies, shakes and frappes that can also be utilized for cocktails and mocktails. They contain all of the ingredients necessary to make a smoothie, shake or frappe, including the ice. Simply add water, empty the packet into a blender, blend and serve.
The following shows the product with the package opened:
The following flavors are available for sale as part of the standard line:
Smoothies:
Shakes:
Frappes:
In addition to the standard product range, the Company is currently working on customized flavor profiles for some key accounts.
Some of the key product benefits for operators include:
| Portion controlled | ||
| ● | Zero waste | |
| ● | Product consistency – every time a smoothie is made | |
| ● | Unitized inventory | |
| ● | Long shelf life (24 months) | |
| ● | Little to no capital investment necessary | |
| ● | Very quick to make (less than 60 seconds) | |
| ● | Ability to itemize the ingredients of the | |
| ● | Products require less retail space |
Some of the key benefits of the products for the end consumers that drink the products include:
| ● | From as little as 150 calories (per serving) | |
| ● | At least ¼ cup of real fruit per serving | |
| ● | Dairy free options | |
| ● | Kosher approved | |
| ● | Gluten Free |
Customer Marketing Material
A wide range of consumer marketing materials has been created to assist customers in selling blended beverages. Examples of our “SMOO” branded marketing materials are detailed below.
Research and Development
An incurrence of $47,035 and $103,293 in research and development expenses for the fiscal years ended March 31, 2014, and March 31, 2013, respectively.
Competition
There is significant competition in the smoothie market at both the consumer purchasing level and also the product level.
The competition at the consumer level is primarily between specialized juice bars (e.g. Jamba Juice) and major fast casual and fast food restaurant chains (such as McDonalds). Barfresh does not compete specifically at this level but intends to supply its product to customers that fall within these segments to enable them to compete for consumer demand.
There may also be new entrants to the smoothie market that may alter the current competitor landscape.
The existing competition from a product perspective can be separated into three categories:
| ● | Specialized juice bar products: The product is made in-store and each ingredient is added separately. | |
| ● | Syrup based products: The fruit puree is supplied in bulk and not portion controlled for each smoothie. These types of products still require the addition of juice, milk or water and/or yogurt and ice. While there are a number of competitors for this style of product, the two dominant competitors are Island Oasis and Minute Maid, which are both owned by Coca Cola. | |
| ● | Portion pack products: These products contain only the fruit and yogurt and require the addition of juice or milk and ice. The two dominant competitors are General Mills’ Yoplait Smoothies and Inventure Group’s Jamba Smoothies. |
The Company believes their ability to offer customer’s equipment packages with no upfront cost is a significant competitive advantage and will assist in gaining traction in the market and securing long-term agreements with customers. The Company also believes that the product’s attributes will make it more attractive to competitors. However, there are other factors that may influence the adoption of a particular product by customers, including their dependence on prior relationships with competition.
Intellectual Property
Barfresh owns the domestic and intellectual property rights to its products’ sealed pack of ingredients.
In November 2011, the Company acquired patent applications filed in the United States (Patent Application number 11/660415) and Canada (Patent Application number 2577163) from certain related parties. The United States patent was originally filed on December 4, 2007 and its current status is patent pending. The Canadian patent was originally filed on August 16, 2005 and it has been granted.
On October 15, 2013, the Company acquired all of the related international patent rights, which were filed pursuant to the Patent Cooperation Treaty, have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions that have signed the PCT. In addition, the Company purchased all of the trademarks related to the patented products.
Governmental Approval and Regulation
The Company is not aware of the need for any governmental approvals of its products.
Since the Company will initially utilize a contract manufacturer, regulations of the United States Food and Drug Administration, as they apply to the manufacturing, will be the responsibility of the contract manufacturers. Before entering into any manufacturing contract, the Company will determine that the manufacturer has met all government requirements.
The Company will be subject to certain labeling requirements as to the contents and nutritional information of our products.
Environmental Laws
The Company does not believe that it will be subject to any environmental laws, either state or federal. Any laws concerning manufacturing will be the responsibility of the contract manufacturer.
Employees
Currently, the Company has 10 full time employees. From time to time, we may hire additional workers on a contract basis as the need arises.
| 22 |
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of film and video productions. Each film or video recording, book or printed product is an individual artistic work. The commercial successevents could differ materially from those anticipated in these forward-looking statements as a result of a filmnumber of factors. Words such as “anticipate”, “estimate”, “plan”, “continuing”, “ongoing”, “expect”, “believe”, “intend”, “may”, “will”, “should”, “could” and similar expressions are used to identify forward-looking statements.
We caution you that these statements are not guarantees of future performance or video recording depends on consumer taste, the qualityevents and acceptanceare subject to a number of competing offerings released into the marketplace at or near the same time, the availability of alternative forms of entertainment and leisure time activities, general economic conditionsuncertainties, risks and other tangibleinfluences, many of which are beyond our control, which may influence the accuracy of the statements and intangiblethe projections upon which the statements are based. Factors that may affect our results include, but are not limited to, the risk factors set forth in this prospectus under the heading “Risk Factors”. Any one or more of these uncertainties, risks and other influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from new information, future events or otherwise.
We are engaged in the manufacturing and distribution of ready to blend beverages, particularly, smoothies, shakes and frappes. Our products are portion controlled ready to blend beverage ingredient packs or “beverage packs”. They contain all of which can change quickly.
We own the domestic and international patents and patents pending, as well as related trademarks for our products. In November 2011 we acquired the patent rights in the United States and Canada. The Canadian patent has been granted and the United States patent is “patent pending”. On October 15, 2013, we acquired all of the related international patent rights, which were filed pursuant to the Patent Cooperation Treaty, have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions that have signed the treaty. In addition, on October 15, 2013, we purchased all of the trademarks related to the patented products.
We have been developing flavor profiles of our smoothies that we believe will be appealing to tastes in the United States. We have been in discussions with a number of companies including both large and small quick service restaurant (“QSR”) chains and national food services companies that serve alternative venues such as stadiums, arenas and universities with national footprints in the United States and have reached preliminary agreements with three potential customers to begin testing in the near future. We are in ongoing negotiations with a number of other companies. In addition to the large retail fast food and fast casual chains, we will sell to food distributors that supply products to the food services market place. Finally, we intend to monetize the international patents outside of our current area of operations, North America, by expanding contract manufacturing to other countries and selling either through selling agents or our own sales personnel or by entering into some form of license or royalty agreements with third parties. We began selling product to Australia during the final months of our fiscal year ended March 31, 2014.
To date, we have funded our operations through the sale of Royalty Rightsour equity securities, issuance of convertible debt, issuance of promissory notes and advances from related parties.
The acquisition of the international patents and trademarks on October 15, 2013 was funded through an advance of $672,157 from an affiliate of a director and significant shareholder. Two hundred thousand ($200,000) of the advance was satisfied through the participation in the Movie well asCompany’s December 20, 2013 private placement of notes and warrants by the affiliate of the aforementioned director and significant shareholder and also an affiliate of an officer and director and significant shareholder. The net proceeds to the Company from the private placement that closed on December 20, 2013, including the aforementioned $200,000, was $775,000. The $775,000 in notes bears interest at a loanrate of 2% per annum and is due and payable on December 20, 2014, with certain provisions for extension. Warrants to purchase 1,291,667 shares of the Company’s common stock were issued to these investors and the warrants have an exercise price of $0.45 per share. In addition to the related parties discussed above, a significant shareholder purchased $500,000 of notes. All of the related parties participated in the amountoffering upon the same terms offered to other investors. The balance of $110,200, representing multiple advances the last of which was July 13, 2010, from Andreas Wilcken, Jr., our president and director. We retained the services of Uptone Pictures, Inc., a related party, to be the production companyremaining loan for the production and post productionacquisition of the Moviepatents and agreedtrademarks, including interest, was paid in cash, in full by the Company.
Our plan is to pay them $264,200utilize contract manufacturers to manufacture our products. Ice cream manufacturers are best suited for their services, of which all $264,200our products. Our first production line has been paid,installed and commissioned in Salt Lake City and is currently producing products being sold to our customers as well as additional amounts as set forth below.
Although we do not have a related party, to be the production companycontract with any suppliers for the productionraw materials needed to manufacture smoothie packs we believe that there are a significant number of sources available and post production of the Movie and agreed to pay them $264,200 for their services, of which all $264,200 has been paid, as well as additional amounts as set forth below.
We currently have five sales people selling our product. The process of obtaining orders from potential customers will likely follow the following process:
| ● | Meeting with and introducing products to customer |
| ● | Developing flavor profiles for the specific customer |
| ● | Participating in test marketing of the product with the flavors developed for the customer |
| ● | Agreeing to a roll out schedule for the customer. |
Although we have agreements with potential customers representing approximately 10,000 outlets to develop flavors and test our products and have begun to develop flavor profiles for others, we have no assurance that we will supply any revenues from operationschain with our products. During the year ended March 31, 2014 we began shipping our products to one of the customers with whom we have contracts and to a number of smaller customers.
In addition to the large retail fast food and fast casual chains, we will sell to food distributors that supply products to the food services market place. Effective July 2, 2014 we entered into an agreement with Sysco Merchandising and Supply Chain Services, Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s ready-to-blend smoothies, shakes and frappes. Our products will be generatedincluded in Sysco’s national core selection of beverage items, making Barfresh its exclusive single-serve, pre-portioned beverage provider. The Agreement is mutually exclusive; provided however, we may supply our products to other foodservice distributors, but only to the extent required for such foodservice distributors to service multi-unit chain operators with at least 20 units and where Sysco is not such multi-unit chain operators nominated distributor for our products. We have begun shipping to Sysco under this agreement and anticipate a national rollout to approximately 74 distribution centers over the next 12 months.
There can be no assurance that we will not become dependent on one or a few major customers.
We intend to monetize the international patents outside of our current area of operations, North America, by expanding contract manufacturing to other countries and selling either through selling agents or our own sales personnel or by entering into some form of license or royalty agreements with third parties. Most recently, as part of our expansion due to the acquisition of the international patents, we engaged a leading regional Australian food ingredient supply and product developer as our wholesaler and distributor. Our first order was shipped to Australia in January 2014.
We are currently assessing our personnel needs in order to provide the best possible service and to maximize our sales potential in connection with our relationship with Sysco.
Critical Accounting Policies
The significant accounting policies set forth in Note 2 to our subsidiary MBEaudited consolidated financial statements included in our Annual Report on Form 10-K for the year ended March 31, 2014, as specified above except solely from revenues generatedupdated by Note 1 to the Movie Project “A BoxUnaudited Condensed Consolidated Financial Statements included herein, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our Annual Report on Form 10-K for Rob.”
Results of Operations
Results of Operation for Three Months Ended December 31, 2014 as Compared to the Three Months Ended December 31, 2013
(References to 2014 and 2013 are all related parties.
Revenue and cost of this Agreement, including related definitionsrevenue
Revenue for 2014 was $56,109 as compared to $7,541 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited number of termscustomers were testing our products.
Cost of revenue for 2014 was $36,353 as compared to $4,414 in 2013. Our gross profit was $19,756 (35%) and terms$3,127 (41%) for 2014 and 2013, respectively. There was no significant change in our selling prices. Sales in both 2014 and 2013 included sales of contributions, paymentsblenders and distributionsfreezers. We only make a nominal profit on these items as they are described in detailto accommodate our customers. We have no specific plan as to major sales of equipment to customers in the section entitled “Business,” above.
Operating expenses
Our operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles. We are currently evaluating our needs in regards to increased overhead as a result of the agreement with Sysco. We anticipate increases to selling costs mostly related to increasing our sales and marketing staff.
Our general and administrative expenses increased $140,099 as we generate operating revenues or receive other financing, all our costs, which we will incur irrespectivegrew the business and may not necessarily be indicative of the rate of future increases.
The following is a breakdown of our businessgeneral and administrative expenses for the three months ended December 31, 2014 and 2013:
| 2014 | 2013 | Difference | ||||||||||
| Personnel costs | $ | 237,952 | $ | 213,857 | $ | 24,095 | ||||||
| Stock based compensation/options | 24,903 | - | 24,903 | |||||||||
| Legal and professional fees | 84,255 | 61,191 | 23,064 | |||||||||
| Travel | 65,480 | 45,008 | 20,472 | |||||||||
| Rent | 34,574 | 22,257 | 12,317 | |||||||||
| Marketing and selling | 46,858 | 24,158 | 22,700 | |||||||||
| Director fees | 26,202 | - | 26,202 | |||||||||
| Investor and public relations | 23,036 | 9,000 | 14,036 | |||||||||
| Research and development | 19,949 | 31,866 | (11,917 | ) | ||||||||
| Consulting fees | 16,680 | 36,416 | (19,736 | ) | ||||||||
| Other expenses | 23,009 | 19,046 | 3,963 | |||||||||
| $ | 602,898 | $ | 462,799 | $ | 140,099 | |||||||
Personnel cost represents the cost of employees including salaries, employee benefits and employment taxes and continues to be our largest cost. Personnel cost increased $24,095 (11.3%) from $213,857 to $237,952. At December 31, 2014, we had seven full time employees. We anticipate personnel cost to increase in the future as we add more staff.
Stock based compensation is used as an incentive to attract new employees and to compensate existing employees. Stock based compensation, which includes stock issued and options granted to employees and non-employees. The amount in 2014 represents the amortization of stock grants and option grants to two directors. The fair value of the stock was based on the trading value of the shares on the date of grant and is being amortized over the vesting period. The fair value of the stock option was calculated using the Black-Sholes model using the following assumptions: expected life in years, 5; volatility, 91.82%; risk free rate of return, 1.45% and no annual dividends and are being amortized over the vesting period. We anticipate making additional grants in the future. We anticipate making additional grants in the future. No grants were made in 2013.
Legal and professional fees increased $23,064 (37.7%) from $61,191 in 2013 to $84,255 in 2014, as a result of increased activity. We anticipate legal fees related to ongoing Securities and Exchange Commission reporting to remain the same and additional legal fees to be related to the number of contracts we are negotiating.
Travel and entertainment expenses increased $20,472 (45.5%) from $45,008 in 2013 to $65,480 in 2014. The increase is due to increased travel related to selling and marketing activities. We anticipate that travel and entertainment cost will increase as we increase the number of customers that we are selling to.
Rent expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $7,000 per month. The lease on the office commenced in October 2012 and expires in October 2014. We have negotiated an extension to the lease, which now expires in November 2016. Our rent has increased to approximately $7,600 per month. Rent expense also includes monthly parking fees as well as the cost of an offsite storage facility
Marketing and selling expenses increased $22,700 (93.9%) from $24,158 in 2013 to $46,858 in 2014. The increase relates primarily to overall sales and marketing activities. We anticipate a continued increase in these costs.
We had no director fees in 2013. We will continue to incur director fees in the future. We approved a fee of $12,500 per quarter for all non-employee directors. We currently have three non-employee directors who will receive payments in the future.
Investor and public relation expenses increased by $14,036 (156%) from $9,000 in 2013 to $23,036 in 2014. The increase is primarily a result of engaging an IR/PR firm to increase awareness of the company as well as attendance a conferences.
Consulting fees decreased by $19,736 (54.2%) from $36,416 in 2013 to $16,680 in 2014. Our consulting fees vary based on needs. We engage consultants in the area of sales, operations and accounting. Future consulting fees will be variable depending on our needs
Research and development activities, including bank service feesexpenses decreased $11,917 (37.4%) from $31,866 in 2013 to $19,949 in 2014. Research and those costs associated with SEC requirements associated with goingdevelopment represents the cost of developing flavor profiles of our products and staying public,the development of future equipment. We anticipate cost continuing in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent on new formulations and new flavor profiles as our customer base increases.
Other expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. We anticipate increases in these expenses.
We had operating losses of $620,049 and $487,324 for 2014 and 2013, respectively.
Interest expense increased $98,239 (227%) from $43,284 in 2013 to $141,523 in 2014. Interest primarily relates to convertible debt that was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013. The stated interest rate on the convertible debt is 12%. After giving effect to the debt discount the effective rate of interest on the short-term debt is estimated to be less than $25,000 annually, will be funded as a loan from Mr. Wilcken, Jr., our presidentapproximately 53% and Director,approximately 74% on the same termsconvertible notes. Interest expense includes direct interest of $16,842 and $17,600 for 2014 and 2013, respectively, calculated based on the interest rates stated in our various debt instruments. In addition, interest expense includes non-cash amortization of the debt discount of $124,680 and $25,217 for 2014 and 2013, respectively
We had net losses of $761,572 and $530,608 for 2014 and 2013, respectively.
Results of Operation for Nine Months Ended December 31, 2014 as the Wilcken Note,Compared to the extent that fundsNine Months Ended December 31, 2013
(References to 2014 and 2013 are available to do so. In addition to amounts advanced under the Note, Wilcken has agreed: (i) to provide if and when needed all funding for the Moving Box’s going and staying public in the U.S., including but not limited to legal, accounting, EDGAR, filing, corporate and other fees and expenses, if and when needed, regardless of whether or not Moving Box’s registration statement has been declared effective or it has secured a qualification for quotation of our securities on the OTC Bulletin Board, and (ii) with respect to funding of Moving Box’s or MBE’s other operational costs and expenses, including costs associated with distribution of the Movie, Wilcken has agreed to provide all such funding if and when needed by Moving Box or MBE, under the Agreement dated March 21, 2011, as amended on May 17, 2011, as described in “Business,” above. If we fail to meet these requirements, we will be unable to secure a qualification for quotation of our securities on the over the counter bulletin board, or if we have secured a qualification, may lose the qualification and our securities would no longer trade on the over the counter bulletin board. Further, if we fail to meet these obligations and as a consequence we fail to satisfy our SEC reporting obligations, investors will now own stock in a company that does not provide the disclosure available in quarterly and annual reports filed with the SEC and investors may have increased difficulty in selling their stock as we will be non-reporting
Revenue and cost of revenue
Revenue for 2014 was $157,834 as compared to go$39,799 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited number of customers were testing our products.
Cost of revenue for 2014 was $97,456 as compared to $25,733 in 2013. Our gross profit was $60,378 (38%) and stay public, which funds will be used$14,066 (35%) for business development2014 and 2013, respectively. There was no significant change in our selling prices. Sales in both periods included sales of blenders and marketing. However in orderfreezers. We only make a nominal profit on these items as they are to become profitable we may still needaccommodate our customers. We have no specific plan as to secure additional debt or equity funding. We hopesignificant sales of equipment to be able to raise additional funds from an offering of our stockcustomers in the future. However, this offeringWe anticipate that our gross profit percentage for the remainder of 2014 will approximate the current period.
Operating expenses
Our operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles. We are currently evaluating our needs in regards to increased overhead as a result of the agreement with Sysco.
Our general and administrative expenses increased $693,498 as we grew the business and may not occur, or if it occurs, may not raisenecessarily be indicative of the required funding. We do not have any plans or specific agreements for new sourcesrate of funding, exceptfuture increases.
The following is a breakdown of our general and administrative expenses for the anticipated loansnine months ended December 31, 2014 and 2013:
| 2014 | 2013 | Difference | ||||||||||
| Personnel costs | $ | 719,704 | $ | 669,777 | $ | 49,927 | ||||||
| Stock based compensation/options | 345,726 | (103,488 | ) | 449,214 | ||||||||
| Legal and professional fees | 218,561 | 133,889 | 84,672 | |||||||||
| Travel | 153,377 | 119,703 | 33,674 | |||||||||
| Consulting fees | 127,675 | 209,178 | (81,503 | ) | ||||||||
| Marketing and selling | 115,525 | 65,145 | 50,380 | |||||||||
| Rent | 93,734 | 62,209 | 31,525 | |||||||||
| Investor and public relations | 83,567 | 75,094 | 8,473 | |||||||||
| Director fees | 61,341 | 61,341 | ||||||||||
| Research and development | 53,526 | 40,305 | 13,221 | |||||||||
| Other expenses | 86,193 | 93,619 | (7,426 | ) | ||||||||
| $ | 2,058,929 | $ | 1,365,431 | $ | 693,498 | |||||||
Personnel costs represent the cost of employees including salaries, employee benefits and employment taxes and continue to be our largest cost. Personnel cost increased $49,927 (7.5%) from management as described below, or any planned material acquisitions.
Stock based compensation is used as an incentive to be approximately $2,500 per month, primarily for the maximum estimated $30,000 of costs, ofattract new employees and to compensate existing employees. Stock based compensation, which there isincludes stock issued and options granted to employees and non-employees. The amount in 2014 represents stock grants made to an estimated $5,000 in remaining unpaid costs of goingofficer/director, a director, two employees and an estimated $25,000 in on-going costsinternational consultant. The fair value of staying public as described herein. We also anticipate our subsidiary MBE will need an additional $30,000 to be paid to non-affiliated third parties and not to any of our Affiliates to finance the distribution of our Movie and related expensed during the next 12 months. As we do not intend to release our Movie until after this registration statement has been declared effective and we have secured a qualification for quotation for our securitiesstock was based on the OTC Bulletin Board, which we believe will facilitate our ability to secure additional financing, the anticipated $30,000 of costs associated with distributiontrading value of the Movie will not be incurred until such date. However, if we have not secured a qualification for quotation for our securitiesshares on the OTC Bulletin Board within 8 weeks after this registration statement is declared effective, we will commence activities related to distributing our Movie thereafter. Further, because we have not yet entered into any binding contracts, agreements or commitments with any distributors for the Movie, we cannot predict with any certainty the exact future release date of our Movie. As noted below, Mr. Wilcken has agreed to fund these costs if necessary.
Legal and professional fees increased $84,672 (63.2%) from $133,889 in 2013 to $218,561 in 2014, as a trading symbol and allow salesresult of our Common Stock under Rule 144.
Travel and entertainment expenses increased $33,674 (28.1%) from $119,703 in 2013 to $153,377 in 2014. The increase is due to increased travel related to selling and marketing activities. We anticipate that travel and entertainment cost will increase as we increase the number of customers that we are selling to.
Consulting fees decreased by non-affiliates, none$81,503 (39%) from $209,178 in 2013 to $127,675 in 2014. Our consulting fees vary based on needs. We engage consultants in the area of sales, operations and accounting. Future consulting fees will be variable depending on our needs.
Marketing and selling expenses increased $50,380 (77.3%) from $65,145 in 2013 to $115,525 in 2014. The increase relates primarily to overall sales and marketing activities. We anticipate a continued increase in these costs.
Rent expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $7,000 per month. The lease on the office commenced in October 2012 and expired in October 2014. We have negotiated an extension to the lease that now expires in November 2016. Our rent has increased to approximately $7,600 per month. Rent expense also includes monthly parking fees as well as an offsite storage facility.
We had no director fees in 2013. We will continue to incur director fees in the future. In 2014 we approved a fee of $12,500 per quarter for all non-employee directors. We currently have two non-employee directors who will receive payments in the future.
Research and development expenses increased $13,221 (32.8%) from $40,305 in 2013 to $53,526 in 2014. Research and development represents the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent on new formulations and new flavor profiles as our customer base increases.
Other expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. We anticipate increases in these expenses.
We had operating losses of $2,093,374 and $1,407,494 for 2014 and 2013, respectively.
Interest expense increased $183,966 (94.2%) from $195,313 in 2013 to $379,279 in 2014. Interest primarily relates to convertible debt that was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013. The stated interest rate on the convertible debt is 12%. After giving effect to the debt discount the effective rate of interest on the short-term debt is estimated to be approximate 53% and approximately 74% on the convertible notes. Interest expense includes direct interest of $49,884 and $48,741 for 2014 and 2013, respectively, calculated based on the interest rates stated in our various debt instruments. In addition, interest expense includes non-cash amortization of the debt discount of $329,395 and $146,839 for 2014 and 2013, respectively.
We had net losses of $2,472,653 and $1,602,807 for 2014 and 2013, respectively.
Liquidity and Capital Resources
As of December 31, 2014 we had negative working capital of $99,329.
During the nine months ended December 31, 2014 we used cash of $1,839,495 in operations, $235,023 for the purchase of equipment and $11,838 for patents and trademarks. We generated cash flow from the sale of equipment of $28,053
We generated $247,000 in financing activity from the sale of common stock during the nine months ended December 31, 2014.
Our operations to date have been heldfinanced by the sale of securities, the issuance of convertible debt and the issuance of short-term debt, including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised we will be required to raise additional funds either in the form of capital or debt. There are no assurances that we will be able to generate the necessary capital or debt to carry out our current plan of operations.
We lease office space under a non-cancelable operating lease, which expired October 31, 2014. We renewed the lease and it will now expire on November 7, 2016.
The aggregate minimum requirements under non-cancelable leases as of December 31, 2014 is as follows:
| Fiscal Years ending March 31, | |||||
| 2015 | 19,011 | ||||
| 2016 | 91,252 | ||||
| 2017 | 53,231 | ||||
| $ | 163,494 | ||||
Results of Operation for Year Ended March 31, 2014 as Compared to the Year Ended March 31, 2013
(References to 2014 and 2013 are to the year ended March 31, 2014 and 2012 respectively, unless otherwise specified.)
Revenue and cost of revenue
Revenue for 2014 was $110,085 as compared to $8,928 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited number of customers were testing our products.
Cost of revenue for 2014 was $48,534 as compared to $8,884 in 2013. Our gross profit was $61,551 (55.9%) and $44 for 2014 and 2013, respectively. The significant change in our cost and gross profit relates primarily to selling prices. Our selling prices to overseas customers yields higher gross profit. We anticipate that our gross profit percentage in 2014 is more indicative of our expected results going forward than the percentage in 2013.
Operating expenses
Our operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles.
Our general and administrative expenses increased $463,105 as we grew the business and are not necessarily indicative of the rate of future increases.
The following is a breakdown of our general and administrative expenses for the years ended March 31, 2014 and 2013:
| 2014 | 2013 | Difference | ||||||||||
| Personnel cost | $ | 877,646 | $ | 434,747 | $ | 442,899 | ||||||
| Stock based compensation/options | 291,631 | 103,488 | 188,143 | |||||||||
| Consulting fees | 259,346 | 569,514 | (310,168 | ) | ||||||||
| Legal and professional fees | 176,334 | 173,353 | 2,981 | |||||||||
| Travel | 166,621 | 156,921 | 9,700 | |||||||||
| Investor and public relations | 122,224 | 70,202 | 52,022 | |||||||||
| Marketing and selling | 109,104 | 82,817 | 26,287 | |||||||||
| Rent | 77,007 | 38,119 | 38,888 | |||||||||
| Research and development | 47,035 | 103,293 | (56,258 | ) | ||||||||
| Other expenses | 140,322 | 71,713 | 68,611 | |||||||||
| $ | 2,267,270 | $ | 1,804,167 | 463,105 | ||||||||
Personnel cost represents the cost of employees including salaries, employee benefits and employment taxes. Personnel cost increased $442,899 (102%) from 434,747 to 877,646. During 2014 we had more personnel than in 2013. In addition the average salary was high due to hiring more experienced personnel. One consultant in 2013 became an employee in 2014. We anticipate personnel cost to increase in the future.
Stock based compensation, which includes stock issued and warrants granted to employee, and non-employees increased $188,143 (189%) from $103,488 in 2013 to 291,631. The increase is due to grants made to an Officer and Director. Stock based compensation is used as an incentive to attract new employees and to compensate existing employees.
Consulting fees decreased by $310,168 (54.5%) from $569,514 in 2013 to $259,346 in 2014. During 2014 and 2013, we had from four to six consultants providing services to us. As of March 31, 2014 we have only two consultants providing services. Future consulting fees will be variable depending on our needs.
Legal and professional fees as well as travel cost did not vary significantly.
Investor and public relation expenses increased $52,022 (74.1%) from $70,202 in 2013 to $122,224 in 2014. We are currently using an outside firm to assist us with our investor and public relations needs. We incurred the cost associated with attending two investor conferences in 2014. We anticipate continuing the use of outside sources and attending conferences in the future.
Marketing and selling expenses increased $26,287 (31.7%), from $82,817 in 2013 to $109,104 in 2014. The increase relates primarily to sample expenses. We gave away more products in 2014 than in 2013.
Rent expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $6,700 per month. The lease on the office commenced in October 2012 and expires in October 2014. We are currently negotiating with our landlord to extend the lease.
Research and development expenses decreased by $56,258 (54.5%) from $103,293 in 2013 to $47,035 in 2014. Research and development represents the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent on new formulations and new flavor profiles as our customer base increases.
Other expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. These costs have increased as our business has grown. We anticipate additional increases in these expenses.
We had operating losses of $2,290,562 and $1,839,499 for 2014 and 2013, respectively.
Interest expense increased $96,399 (26.9%) from $196,489 in 2013 to $292,888 in 2014. Interest primarily relates to convertible debt that was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013.
Interest expense includes direct interest of $96,339 and $30,822 in 2014 and 2013, respectively, calculated based on the interest rate stated in our various debt instruments.
In addition, interest expense includes non-cash amortization of the debt discount of $228,165 and $165,689, for 2014 and 2013, respectively.
Interest expense also included various finance charges of $1,447 for the year ended March 31, 2014.
We had net losses of $2,583,450 and $2,035,988 for 2014 and 2013, respectively.
Liquidity and Capital Resources
As of March 31, 2014 we had working capital of $1,824,889.
During the year ended March 31, 2014 we used cash of $1,885,160 in operations, $699,561 for the purchase of patents and trademarks, $104,532 for investment in equipment.
We received $4,806,500 less expenses of $295,320 for a net amount of $4,511,180 for the sale of (i) 14,226,000 shares our common stock and (ii) warrants to purchase 14,739,000 shares of common stock, which have terms from three to five year and exercise prices between $0.25 and $0.60 per share.
We issued $775,000 in short-term notes payable, $500,000 of which was purchased by a significant shareholder, $100,000 was purchased by an affiliate of an Officer, Director and significant shareholder and $100,000 was purchased by an affiliate of a director and significant shareholder. The short-term notes are due and payable in one year but we have the right to a six-month extension. We also issued 1,291,667 warrants to the short-term note holders for the right to purchase shares of our common stock. Each warrant entitles the holder to purchase one share of our common stock at a price of $0.45 per share, may be exercised on a cashless basis and thusis exercisable for a period of five years. In addition we borrowed $485,132 and repaid $515,404 in advances from related parties. The advance from related parties was primarily used towards the acquisition of the patents and trademarks and the cash used to repay the advances came from the issuance of the short-term debt. We also repaid $40,000 and borrowed $20,000 of principal on our convertible debt.
Our operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term debt, including related party advances. If we are restricted,unable to generate sufficient cash flow from operations with the capital raised we will be required to raise additional funds either in the form of capital or debt. There are no assurances that we will be able to generate the necessary capital or debt to carry out our current plan of operations.
The aggregate minimum requirements under non-cancelable leases as of March 31, 2014 are as follows:
| Fiscal Years ending March 31, 2015 | $ | 39,993 |
The aggregate amount of principal payments due as of December 31, 2013 is as follows:
| Fiscal Years ending March 31, | |||||
| 2014 | $ | - | |||
| 2015 | 775,000 | ||||
| 2016 | 420,000 | ||||
| $ | 1,195,000 | ||||
Off-Balance Sheet Arrangements
We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.
Our principal executive offices are located at 8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211. We lease this office space for $6,700 per month.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
The following includes a summary of transactions since the beginning of fiscal 2011, or any currently proposed transaction, in which we were or are to be a participant and allthe amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years and in which are being registered hereunder,any related person had or will have a direct or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable to or better than terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
The acquisition of the international patents on October 15, 2013 was funded through an advance of $672,157 from an affiliate of Steven Lang at an interest rate of 6.0%. Two hundred thousand ($200,000) of the advances were satisfied through the participation of Riccardo Delle Coste and 4,500,000Steven Lang, separately through their affiliates, in the Company’s December 20, 2013 private placement of notes and warrants. Five-year warrants to purchase 333,334 shares of common stock at an exercise price of $0.45 per share were issued to each of these related parties as part of their investment. The related parties participated in the offering upon the same terms offered to other investors. The balance of the remaining loan, plus accrued interest of $5,617, was paid in full and in cash by the Company prior to the end of 2013.
Lazarus Investment Partners LLP, a greater than 10% shareholder of the Company (“Lazarus”) participated in the private placement that closed on December 20, 2013. Lazarus purchased a 2%, one-year $500,000 note and five-year warrants to purchase 833,333 shares of common stock at an exercise price of $0.45 in this offering.
During the year ended March 31, 2014 and the year ended March 31, 2013 we received cash advances in the amounts of $12,975 and $30,272, respectively, from a relative of an officer of the Company. The advances bear no interest and were repaid.
During the quarterly period ended September 30, 2011 the Company received advances of $17,000 from Garrett LLC, Ian McKinnon and Brad Miller.
During the period beginning April 1, 2010 and ending March 31, 2012, a related party that is under common control of Riccardo Delle Coste and Steven Lang made advances to us of $144,011. These advances were non-interest bearing. As of March 31, 2012, we repaid these advances. The company under common control was located in Australia and was in the same line of business of the Company; however, at the time, we did not conduct business in the same territories.
Pursuant to the Share Exchange Agreement dated January 10, 2012 we issued 37,333,328 shares of our common stock held by affiliates, all of which are restricted as per Rule 144to Riccardo Delle Coste and Steven Lang, through the entities that they controlled. Accordingly, Riccardo Delle Coste and Steven Lang, together, control more than 50% of the Securities Actvotes eligible to be cast by shareholders in the election of 1933 definesdirectors and generally. Immediately following the share exchange, Messrs. Delle Coste and Lang became our principal shareholders and were appointed as restricted securities, nonemembers of which are being registered hereunder. All shares being registered hereunder are available for resale asour board of directors.
In December 2009 we entered into a contract whereby entities controlled by Riccardo Delle Coste and Steven Lang agreed to assign to us certain intellectual property related to certain patent applications filed in the date of effectiveness of this registration statement. Of the shares not being registered hereunder, all the restricted securities held by affiliates, subjectUnited States and Canada in respect to the limitations on amounts and manner of saleingredient pack for an individual smoothie. The assignment was completed in Rule 144, could be available for sale in a public market, if developed, beginning 90 days after the date of this prospectus. The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.
Our principal executive offices were located at 90 Madison Street, Suite 701, Denver, Colorado 80206, until recently. This office is co-located with the office of Corporate Finance Group, a company that is owned by our Chief Financial Officer. We have not declaredused this property free of charge.
The Company’s policy with regard to related party transactions requires any cash dividends on our common stock since our inceptionrelated party loans that are (i) non-interest bearing and do not anticipate paying such dividends in excess of $100,000 or (ii) interest bearing, irrespective of amount, must be approved by the foreseeable future. We plan to retain any future earnings for use in our business. Any decisions as to future paymentsCompany’s board of dividends will depend on our earnings and financial position and such other facts, asdirectors. All issuances of securities by the BoardCompany must be approved by the board of Directors deems relevant.
| 31 |
The following table sets forth information concerning all cash and Exchange Commission through the end of the first full fiscal year in which our registration statement is declared effective. Our fiscal year ends December 31 each year. Thereafter, we intend voluntarily to file a registration statement on Form 8-A which will subject us to all of the reporting requirements of the 1934 Act. This will require us to file quarterly and annual reports with the SEC and will also subject us to the proxy rules of the SEC. In addition, our officers, directors and 10% stockholders will be required to submit reports to the SEC on their stock ownership and stock trading activity. We are not required under Section 12(g) or otherwise to become a mandatory 1934 Act filer unless we have more than 500 shareholders and total assets of more than $10 million on the end of the first full fiscal year in which our registration statement is declared effective. If we do not file a registration statement on Form 8-A thereafter , we will continue as a reporting company not subject to the proxy statement requirements of the 1934 Act, our securities can no longer be quoted on the OTC Bulletin Board, and our officers, directors and 10% stockholders will not be required to submit reports to the SEC on their stock ownership and stock trading activity.
The following table summarizes all compensation for fiscal years 2014 and 2013 received by our latestprincipal executive officer and principal financial officer, who were the only executive officers of the Company in fiscal year 2014, our “Named Executive Officers”:
| Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards ($) | Option Awards ($) | Non-Equity Incentive Plan Compensation ($) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) | All Other Compensation ($) | Total ($) | |||||||||||||||||||||||||||
| Riccardo Delle Coste, | 2014 | 117,517 | 117,517 | |||||||||||||||||||||||||||||||||
| Chief Executive Officer | 2013 | 36,450 | 36,450 | |||||||||||||||||||||||||||||||||
| Arnold Tinter, | 2014 | 72,000 | 160,000 | 232,000 | ||||||||||||||||||||||||||||||||
| Chief Financial Officer | 2013 | 48,000 | 48,000 | |||||||||||||||||||||||||||||||||
Outstanding Equity Awards at Fiscal Year-End Table
At March 31, 2014, the Company had no outstanding equity awards to its Named Executive Officers.
Employment Agreements
There are no employment agreements between the Company and upits officers and directors.
Compensation of Directors
The following table summarizes the compensation paid to two additional executive officers who would have been included in the table below exceptour directors for the fact that they were not executive officers at the end of our latest fiscal year by us, or by any third party where the purpose of a transaction was to furnish compensation, for all services rendered in all capacities to us for the years ended March 31, 2010 and 2011.
| Fees | ||||||||||||||||||||||||
| Earned or | Non-Equity | |||||||||||||||||||||||
| Paid in | Stock | Option | Incentive Plan | All Other | ||||||||||||||||||||
| Name | Cash | Awards | Awards | Compensation | Compensation | Total | ||||||||||||||||||
| Riccardo Delle Coste | $ | 0 | 0 | 0 | 0 | 0 | $ | 0 | ||||||||||||||||
| Arnold Tinter | $ | 0 | $ | 0 | ||||||||||||||||||||
| Steven Lang | $ | 12,500 | 0 | $ | 115,119(1) | 0 | 0 | $ | 127,619 | |||||||||||||||
| (1) | On February 14, 2014, Steven Lang was granted an option to purchase 800,000 shares of the Company’s common stock under the Company’s 2014 Equity Incentive Plan at a purchase price of $0.50 per share. The option was fully vested at the time of grant and has a term of three years, expiring on February 14, 2017. |
| Name | Title | Year | Salary | Bonus | Stock awards | Option awards | Non equity incentive plan compensation | Non qualified deferred compensation | All other compensation | Total | ||||||||||||||||||||||||||
| Andreas Wilcken, Jr. | President | 2010 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
| Jonathan Seelbinder | Secretary | 2010 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||
| 2011 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | ||||||||||||||||||||||||||||
| OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END March 31, 2011 | ||||||||||||||||||||||||||||||||||||
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Unitsof Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number Of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||||||||
| Andreas Wilcken, Jr | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
| Jonathan Seelbinder | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||||||||
| 32 |
| Name | Fees earned or paid in cash ($) | Stock awards ($) | Option awards ($) | Non-equity incentive plan compensation ($) | Nonqualified deferred compensation earnings ($) | All other compensation ($) | Total ($) | |||||||||||||||||||||
| Andreas Wilcken, Jr. | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
| Jonathan Seelbinder | 0 | 0 | 0 | 0 | 0 | 0 | 0 | |||||||||||||||||||||
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There were no changes in or disagreements with our accountants on accounting and financial disclosure during the last two fiscal years, the quarterly period ended December 31, 2014 or the interim period from January 1, 2015 through the date of this prospectus.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market Information
Our common stock is currently traded on the OTCQB under the symbol “BRFH”. Our common stock had been quoted on the OTC Bulletin Board since July 27, 2011 under the symbol MVBX. Effective February 29, 2012, our symbol changed to BRFH based on the forward split and name change. On March 21, 2012, our common stock was delisted to Pink Sheets. On January 21, 2014, we registered our common stock under Section 12(g) of the Exchange Act. The following table sets forth the range of high and low bid quotations for the applicable period. These quotations as reported by the OTCQB reflect inter-dealer prices without retail mark-up, markdown or commissions and may not necessarily represent actual transactions.
| Bid Quotation | |||||||||
| Financial Quarter Ended | High ($) | Low ($) | |||||||
| March 31, 2015 | 0.64 | 0.42 | |||||||
| December 31, 2014 | 0.72 | 0.39 | |||||||
| September 30, 2014 | 0.85 | 0.57 | |||||||
| June 30, 2014 | 0.84 | 0.45 | |||||||
| March 31, 2014 | 0.84 | 0.40 | |||||||
| December 31, 2013 | 0.62 | 0.30 | |||||||
| September 30, 2013 | 0.50 | 0.24 | |||||||
| June 30, 2013 | 0.36 | 0.22 | |||||||
Holders
At April 29, 2015, there were 78,720,788 shares of our common stock outstanding. Our shares of common stock are held by approximately 43 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include beneficial owners of common stock whose shares are held in the names of various security brokers, dealers and registered clearing agencies.
Dividends
We have never declared or paid a cash dividend. Any future decisions regarding dividends will be made by our board of directors. We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.
Securities Authorized for Issuance Under Equity Compensation Plans
The following table provides information, as of March 31, 2011
| Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (a) | Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights (b) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in Column (a))(c) | |||||||||
| Equity compensation plans approved by security holders | 0 | $ | 0 | 0 | ||||||||
| Equity compensation plans not approved by security holders | 800,000 | $ | 0.50 | 8,200,000 | ||||||||
| TOTAL | 800,000 | $ | 0.50 | 8,200,000 | ||||||||
Transfer Agent
Our transfer agent, Action Stock Transfer, is located at 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, Utah 84121, and its telephone number is (801) 274-1088.
MATERIAL CHANGES
There have been no material changes in the Company’s affairs since its fiscal year ended March 31, 2014 that have not been described in its subsequently filed Quarterly Reports or Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934.
The SEC allows us to “incorporate by reference” into this prospectus the information we have filed with the SEC. This means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is considered to be part of this prospectus. We are incorporating by reference the following documents that we have filed with the SEC (other than any filing or portion thereof that is furnished, rather than filed, under applicable SEC rules):
| ● | ||||||
| our Annual Report | on Form 10-K for the year ended March 31, 2014, filed with the SEC on June 30, 2014; | |||||
| ● | our Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2014 and September 30, 2014, filed with the SEC on August 13, 2014 and November 14, 2014, respectively; | |||||
| ● | our Quarterly Report on Form 10-Q for the | as amended on Form 10-Q/A on February 19, 2015; | ||||
| ● | our Current Reports on Form 8-K and amendments thereto filed with the | |||||
| ● | the description of | . |
Our website addresses arewww.barfresh.com/us/ andwww.smoothieinc.com and the URL where incorporated reports and other reports may be accessed ishttp://barfresh.com/us/.
The reports incorporated by reference into this prospectus are available from us upon request. We will provide a copy of any and all of the reports and documents that are incorporated by reference, including exhibits to such reports and documents, in this prospectus to any person, including a beneficial owner, to whom a prospectus is delivered, without charge, upon written or oral request. Requests for such copies should be directed to the following:
Barfresh Food Group, Inc.
Investor Relations
8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211
(310) 598-7113
info@smoothieinc.com
Except as expressly provided above, no other information, including none of the information on our website, is incorporated by reference into this prospectus.
| 34 |
WHERE YOU CAN FIND ADDITIONAL INFORMATION
We have audited the accompanying balance sheets of Moving Box, Inc. (a development stage company) as of March 31, 2011 and 2010 and the related statements of operations, changes in stockholders' deficit, and cash flows for the year ended March 31, 2011 and the periods from January 1, 2010 (inception) through March 31, 2010 and 2011. 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 audits.
| ASSETS | March 31, | March 31, | ||||||
| 2011 | 2010 | |||||||
| CURRENT ASSETS | ||||||||
| Cash | $ | 9,771 | $ | 25,823 | ||||
Total current assets | 9,771 | 25,823 | ||||||
| TOTAL ASSETS | $ | 9,771 | $ | 25,823 | ||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| CURRENT LIABILITIES | ||||||||
| Loan payable - related party | $ | 110,200 | $ | - | ||||
| Related party advances | 154,250 | 37,600 | ||||||
| Interest payable | 7,991 | - | ||||||
Total current liabilities | 272,441 | 37,600 | ||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | ||||||||
| Preferred stock, $0.000001 par value, 5,000,000 shares authorized; issued & outstanding -0- | - | - | ||||||
| Common stock, $0.000001 par value, 95,000,000 shares authorized; issued & outstanding | 7 | 5 | ||||||
| 6,500,000 and 4,500,000 as of March 31, 2011 and March 31, 2010, respectively | ||||||||
| Additional paid in capital | 39,993 | (5 | ) | |||||
| Deficit accumulated during the development stage | (302,670 | ) | (11,777 | ) | ||||
Total stockholders' equity (deficit) | (262,670 | ) | (11,777 | ) | ||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 9,771 | $ | 25,823 | ||||
| FOR THE YEAR ENDED | FOR THE PERIOD ENDED | DEVELOPMENT STAGE JANUARY 1, 2010 | ||||||||||
| MARCH 31, 2011 | MARCH 31, 2010 | MARCH 31, 2011 | ||||||||||
| REVENUE | $ | - | $ | - | $ | - | ||||||
| OPERATING EXPENSES | ||||||||||||
| Production costs | 248,924 | 10,015 | 258,939 | |||||||||
| Professional fees | 19,134 | - | 19,134 | |||||||||
| General and administrative | 22,835 | 1,762 | 24,597 | |||||||||
| Total operating expenses | 290,893 | 11,777 | 302,670 | |||||||||
| NET INCOME (LOSS) | $ | (290,893 | ) | $ | (11,777 | ) | $ | (302,670 | ) | |||
| BASIC AND DILUTED EARNINGS PER SHARE | $ | (0.06 | ) | $ | (0.00 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 5,163,041 | 4,500,000 | ||||||||||
| YEAR ENDED MARCH 31, 2011 | PERIOD ENDED MARCH 31, 2010 | DEVELOPMENT STAGE JANUARY 1, 2010 THROUGH | ||||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||||
| Net loss | $ | (290,893 | ) | $ | (11,777 | ) | $ | (302,670 | ) | |||
| Change in assets and liabilities | ||||||||||||
| Increase / Decrease in accrued liabilities | 7,991 | - | 7,991 | |||||||||
| Net cash used in operating activities # # | (282,902 | ) | (11,777 | ) | (294,679 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||||||
| Cash received for issuance of stock | 40,000 | - | 40,000 | |||||||||
| Loan payable - related party | 110,200 | - | 110,200 | |||||||||
| Related party advances | 116,650 | 37,600 | 154,250 | |||||||||
| Net cash provided by financing activities | 266,850 | 37,600 | 304,450 | |||||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | (16,052 | ) | 25,823 | 9,771 | ||||||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 25,823 | - | - | |||||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 9,771 | $ | 25,823 | $ | 9,771 | ||||||
| Supplemental Disclosures of Cash Flow Information | ||||||||||||
| Cash paid for income taxes | $ | - | $ | - | $ | - | ||||||
| Cash paid for interest | $ | - | $ | - | $ | - | ||||||
| MOVING BOX, INC. | ||||||||||||||||||||
| (A DEVELOPMENT STAGE COMPANY) | ||||||||||||||||||||
| STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT | ||||||||||||||||||||
| FOR THE PERIOD FROM JANUARY 1, 2010 (INCEPTION) THROUGH MARCH 31, 2011 | ||||||||||||||||||||
| Common Stock | Additional Paid-in | Deficit Accumulated During the Development | ||||||||||||||||||
| Shares | Amount | Capital | Stage | Total | ||||||||||||||||
| Balance at January 1, 2010 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| Stock issued to founders | 4,500,000 | 5 | (5 | ) | - | - | ||||||||||||||
| Net loss | - | - | - | (11,777 | ) | (11,777 | ) | |||||||||||||
| Balance at March 31, 2010 | 4,500,000 | 5 | (5 | ) | (11,777 | ) | (11,777 | ) | ||||||||||||
| Stock issued for cash | 2,000,000 | 2 | 39,998 | - | 40,000 | |||||||||||||||
| Net loss | - | - | - | (290,893 | ) | (290,893 | ) | |||||||||||||
| Balance at March 31, 2011 | 6,500,000 | $ | 7 | $ | 39,993 | $ | (302,670 | ) | $ | (262,670 | ) | |||||||||
You can read our SEC filings, including the future. The net operating loss carryforward was $301,592registration statement, over the Internet at March 31, 2011. The significant componentsthe SEC’s website at www.sec.gov. You may also read and copy any document we file with the SEC at its public reference facilities at 100 F Street, NE, Washington, D.C. 20549. You may also obtain copies of these documents at prescribed rates by writing to the Public Reference Section of the deferred tax asset as of March 31, 2011 are as follows:
| Net operating loss carryforwards | $ | (105,557 | ) | |
| Valuation allowance | 105,557 | |||
| Net deferred tax asset | $ | - |
We are subject to the company $110,200information reporting requirements of the Securities Exchange Act of 1934, as amended, and we will file reports, proxy statements and other information with interestthe SEC. These reports, proxy statements and other information will be available for inspection and copying at 8% per year. The interest payablethe public reference room and web site of the SEC referred to above. We also maintain a website atwww.barfresh.com/us/, at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with, or furnished to, the SEC. Information contained on this note at March 31, 2011or accessible through our website is $7,991. Also during the year periods March 31, 2011 and 2010, there were related party advances of $116,650 and $37,600, respectively, from Garrett, LLC, Ian McKinnon and Brad Miller.
| ASSETS | December 31, | March 31, | |||||||
| 2010 | 2010 | ||||||||
| (unaudited) | |||||||||
| CURRENT ASSETS | |||||||||
| Cash | $ | 11,905 | $ | 25,823 | |||||
| Total current assets | 11,905 | 25,823 | |||||||
| TOTAL ASSETS | $ | 11,905 | $ | 25,823 | |||||
| LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||
| CURRENT LIABILITIES | |||||||||
| Loan payable - related party | $ | 110,200 | $ | - | |||||
| Related party advances | 154,250 | 37,600 | |||||||
| Interest payable | 5,817 | - | |||||||
| Total current liabilities | 270,267 | 37,600 | |||||||
| STOCKHOLDERS' EQUITY (DEFICIT) | |||||||||
| Preferred stock, $0.000001 par value, 5,000,000 shares authorized; issued & outstanding -0- | - | - | |||||||
| Common stock, $0.000001 par value, 95,000,000 shares authorized; issued & outstanding | 7 | 5 | |||||||
| 6,500,000 and 4,500,000 as of December 31, 2010 and March 31, 2010, respectively | |||||||||
| Additional paid in capital | 39,993 | (5 | ) | ||||||
| Deficit accumulated during the development stage | (298,362 | ) | (11,777 | ) | |||||
| Total stockholders' equity (deficit) | (258,362 | ) | (11,777 | ) | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT) | $ | 11,905 | $ | 25,823 | |||||
| DEVELOPMENT STAGE | ||||||||||||
| APRIL 1, 2010 | OCTOBER 1, 2010 | JANUARY 1, 2010 | ||||||||||
| THROUGH | THROUGH | THROUGH | ||||||||||
| DECEMBER 31, 2010 | DECEMBER 31, 2010 | DECEMBER 31, 2010 | ||||||||||
| REVENUE | $ | - | $ | - | $ | - | ||||||
| OPERATING EXPENSES | ||||||||||||
| Production costs | 248,565 | 131 | 157,811 | |||||||||
| Professional fees | 19,134 | - | 54,817 | |||||||||
| General and administrative | 18,886 | 1,614 | 85,734 | |||||||||
| Total operating expenses | 286,585 | 1,745 | 298,362 | |||||||||
| NET INCOME (LOSS) | $ | (286,585 | ) | $ | (1,745 | ) | $ | (298,362 | ) | |||
| BASIC AND DILUTED EARNINGS PER SHARE | $ | (0.05 | ) | $ | (0.00 | ) | ||||||
| WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING | 5,380,000 | 6,500,000 | ||||||||||
| Additional | ||||||||||||||||||||
| Common Stock | Paid-in | Accumulated | ||||||||||||||||||
| Shares | Amount | Capital | Deficit | Total | ||||||||||||||||
| Balance at January 1, 2010 | - | $ | - | $ | - | $ | - | $ | - | |||||||||||
| Stock issued to founders | 4,500,000 | 5 | (5 | ) | - | - | ||||||||||||||
| Net loss | - | - | - | (11,777 | ) | (11,777 | ) | |||||||||||||
| Balance at March 31, 2010 | 4,500,000 | 5 | (5 | ) | (11,777 | ) | (11,777 | ) | ||||||||||||
| Stock issued for cash | 2,000,000 | 2 | 39,998 | - | 40,000 | |||||||||||||||
| Net loss | - | - | - | (286,585 | ) | (286,585 | ) | |||||||||||||
| Balance at December 31, 2010 | 6,500,000 | $ | 7 | $ | 39,993 | $ | (298,362 | ) | $ | (258,362 | ) | |||||||||
APRIL 1, 2010 THROUGH DECEMBER 31, 2010 | DEVELOPMENT STAGE JANUARY 1, 2010 THROUGH | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net loss | $ | (286,585 | ) | $ | (298,362 | ) | ||
| Change in assets and liabilities | ||||||||
| Increase / Decrease in accrued liabilities | 5,817 | 5,817 | ||||||
| Net cash used in operating activities | (280,768 | ) | (292,545 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
| Cash received for issuance of stock | 40,000 | 40,000 | ||||||
| Loan payable - related party | 110,200 | 110,200 | ||||||
| Related party advances | 116,650 | 154,250 | ||||||
| Borrowings of debt | 18,991 | 18,991 | ||||||
| Repayments of debt | (18,991 | ) | (18,991 | ) | ||||
| Net cash provided by financing activities | 266,850 | 304,450 | ||||||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | (13,918 | ) | 11,905 | |||||
| CASH AND CASH EQUIVALENTS - BEGINNING OF PERIOD | 25,823 | - | ||||||
| CASH AND CASH EQUIVALENTS - END OF PERIOD | $ | 11,905 | $ | 11,905 | ||||
| Supplemental Disclosures of Cash Flow Information | ||||||||
| Cash paid for income taxes | $ | - | $ | - | ||||
| Cash paid for interest | $ | - | $ | - | ||||
| Net operating loss carryforwards | $ | (89,509 | ) | |
| Valuation allowance | 89,509 | |||
| Net deferred tax asset | $ | - |
| Name and Address | Contribution | Royalty Percentage Interest | ||
GARRETT, LLC 3505 Castlegate Court Lexington, Kentucky 40502 | $25,000 | 16.23% | ||
Ian McKinnon #2302, 4801 Bonita Bay Boulevard Bonita Springs, Florida 34134 | $104,000 | 67.53% | ||
Brad Miller PO Box 487 Hamilton, Indiana 47642 | $25,000 | 16.23% |
6. In connection with the Project, MBE agrees to:PART II
a.First to pay the Costs of the Project.
Item 24. Indemnification of Incorporation provideDirectors and Officers
Section 145 of the Delaware General Corporation Law provides that noa corporation may indemnify directors and officers as well as other employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the corporation. Section 145 of the Delaware General Corporation Law also provides that expenses (including attorneys’ fees) incurred by a director or officer in defending an action may be paid by a corporation in advance of the Companyfinal disposition of an action if the director or officer undertakes to repay the advanced amounts if it is determined such person is not entitled to be indemnified by the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors or otherwise. The provision does not affect directors’ responsibilities under any other laws, such as the federal securities laws.The Company’s Certificate of Incorporation provides for such indemnification to the fullest extent of Section 145 and states that the indemnification is not exclusive of other rights of those seeking indemnification may be entitled.
Section 102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a director of the corporation shall not be personally liable to the Companycorporation or its stockholdersshareholders for monetary damages for any breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for any transaction from which the director derived an improper personal benefit. The Company’s Certificate of Incorporation provides for such limitation of liability.
The Company intends to enter into agreements with its directors and executive officers, that will require the Company to indemnify such persons to the fullest extent permitted by law, against expenses, judgments, fines, settlements and other amounts incurred (including attorneys’ fees), and advance expenses if requested by such person, asin connection with investigating, defending, being a directorwitness in, participating, or officer, exceptpreparing for the payment of dividends in violation of Delaware law. Our Bylaws provide, in pertinent part, that the Company shall indemnify any person made a party tothreatened, pending, or involved in any civil, criminal or administrativecompleted action, suit, or proceeding by reasonor any alternative dispute resolution mechanism, or any inquiry, hearing or investigation (collectively, a “Proceeding”), relating to any event or occurrence that takes place either prior to or after the execution of the indemnification agreement, related to the fact that such person is or was a director or officer of the Company, or of any corporation which such person served as suchwhile a director or officer is or was serving at the request of the Company against expenses reasonably incurredas a director, officer, employee, trustee, agent or fiduciary of another foreign or domestic corporation, partnership, joint venture, employee benefit plan, trust or other enterprise, or was a director, officer, employee or agent of a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of such predecessor corporation, or related to anything done or not done by or imposed on, such person in connection with,any such capacity, whether or resultingnot the basis of the Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity while serving as a director, officer, employee, or agent of the Company. Indemnification is prohibited on account of any Proceeding in which judgment is rendered against such persons for an accounting of profits made from the exercisepurchase or sale by such persons of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or similar provisions of any federal, state or local laws. The indemnification agreements also set forth certain procedures that will apply in the event of a claim for indemnification thereunder.
The Company may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the Company, or is or was serving at the request of the Company as a director, officer, employee or agent of another company, partnership, joint venture, trust or other enterprise against liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the Company would have the power to indemnify him against liability under the provisions of this section.
The right of any person to be indemnified is subject always to the right of the Company by its board of directors, in lieu of such action, suit, proceeding or appeal thereon, except with respectindemnity, to matters as to which it is adjudged insettle any such claim, action, suit or proceeding that such person was liable toat the expense of the Company or such other corporation, for negligence or misconduct inby the performancepayment of the amount of such persons duties as a director or officer of the Company. The determination of the rights of such indemnificationsettlement and the amount thereofcosts and expenses incurred in connection therewith.
Insofar as indemnification for liabilities arising under the Securities Act may be made, atpermitted to directors, officers or persons controlling the option of the person to be indemnified, by (1) order of the Court or administrative body or agency having jurisdiction over the matter for which indemnification is being sought; (2) resolution adopted by a majority of a quorum of our disinterested directors; (3) if there is no such quorum, resolution adopted by a majority of the committee of stockholders and disinterested directors of the Company; (4) resolution adopted by a majority of the quorum of directors entitled to vote at any meeting; or (5) Order of any Court having jurisdiction over the Company. Such right of indemnification is not exclusive of any other right which such director or officer may have, and without limiting the generality of such statement, they are entitled to their respective rights of indemnification under any bylaws, agreement, vote of stockholders, provision of law, or otherwise in addition to their rights under our Bylaws.
In the event that a claim for indemnification against such liabilities (other than the payment by us of expenses incurred or paid by a director, officer or controlling person of the Corporation in thea successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, we will, unless in the opinion of ourits counsel the matter has been settled by a controlling precedent, submit to athe court of appropriate jurisdiction the question of whether such indemnification by usit is against public policy as expressed in the Securities Act of 1933, as amended, and will be governed by the final adjudication of such case.
At present, there is no pending litigation or proceeding involving any of our directors, officers or employees as to which indemnification is sought, nor are we aware of any threatened litigation or proceeding that may result in claims for indemnification.
Item 25. Other Expenses of Issuance and Distribution
The following table is an itemization of allsets forth the costs and expenses without consideration to future contingencies, incurred or expected to be incurredpayable by us in connection with the issuanceoffering of the common stock being registered. All amounts are estimates. The selling shareholders will pay none of the expenses set forth below.
| SEC filing fees | $ | 1,100 | ||
| Legal fees and expenses | 25,000 | |||
| Accounting fees and expenses | 2,500 | |||
| Transfer agent fees and expenses | 100 | |||
| Printing fees | 2,500 | |||
| Miscellaneous | 2,000 | |||
| Total | $ | 33,200 |
Item 26. Recent Sales of Unregistered Securities
The following sets forth all sales of unregistered securities we have completed during the last three years. Except as otherwise indicated below, the following transactions were effected in reliance upon the exemption from registration set forth in Section 4(2) of the Securities Act. We based such reliance upon the following facts and circumstances: (i) the investors were accredited investors, as defined in Rule 501 of the Securities Act and were sophisticated, having sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of the investment, (ii) the investors represented that they were purchasing the securities for investment purposes without a view to distribution, (iii) the investors had access to our management and information concerning the Company, its business and financial information and (iv) we conducted the sale of the securities being offered by this prospectus. Items marked with an asterisk (*) represent estimated expenses. We have agreedwithout general solicitation or advertising. Except as otherwise indicated below, no underwriting discounts or commissions were paid in the transactions.
On March 13, 2015 we sold in a private placement to pay all the costsinstitutional and expensesaccredited investors 10,550,000 shares of this offering. Selling security holders will pay no offering expenses.
| ITEM | AMOUNT | |||
| SEC Registration Fee* | $ | 3 | ||
| Legal Fees and Expenses | 10.000 | |||
| Accounting Fees and Expenses* | 10,000 | |||
| Miscellaneous | 4,997 | |||
| Total* | $ | 25,000 | ||
During November 2014 we issued 494,000 shares of our common stock for total consideration of $247,000. In addition to the Common Stock, the Company issued 247,000 warrants to purchase shares of the CompanyCompany’s common stock for a non-U.S. citizen or resident. We valued these shares at par valuepurchase price of $0.000001$0.60 per share and for a term of 5 years.
On March 20, 2014 we completed a private placement to accredited investors of 5,000,000 shares of common stock and Series E Warrants to purchase up to 2,500,000 shares for aggregate considerationgross proceeds to the Company of $4.50 .
On December 20, 2013 we completed a private offering of an aggregate of $775,000 in promissory notes. The notes bear interest at a rate of 2.0% and are due and payable on December 20, 2014, with certain provisions for extension. In addition to the notes, the Company issued to the holders five-year warrants to purchase 1,291,667 shares of the Company’s common stock for a purchase price of $0.45 per share.
On August 2010,7, 2013 we sold 2,000,000completed a private placement of 7,626,000 units at a purchase price of $0.25 per unit for a total aggregate amount of $1,906,500. Each unit consists of one share of common stock, one three-year Series C Warrant to purchase a share of common stock at a purchase price of $0.25 per share, and one five-year Series D Warrant to purchase one-half share of common stock at a purchase price of $0.25 per one-half share ($0.50 per share). Network 1 Financial Securities, Inc., a licensed broker dealer, acted as placement agent and received a selling commission equal to $190,650 and non-accountable expense reimbursement of $57,195.
In August 2012 we issued 50,000 shares of common stock to an investment banking firm for services.
During the year ended March 31, non-U.S. investors2013 we issued options to purchase 150,000 shares of common stock to a non-employee for services rendered.
During the year ended March 31, 2013 we issued 1,350,000 shares of our common stock to non-employees for various consulting services.
In August 2012 we completed a private offering of $440,000 of 12.0% convertible notes and seven-year warrants to purchase 956,519 shares of common stock at a per share exercise price of $.02$0.46. The notes were convertible to common stock at a per share for aggregate considerationconversion price of $40,000 .
In June 2012 we issued 250,000 shares of common stock to an individual based on the terms of a new employment contract.
Item 27. Exhibits
Exhibit Number | Description | |
| Amended and Restated Bylaws of Barfresh Food Group Inc. (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed August 4, 2014) | ||
| 3.3 | ||
| 3.4 | Certificate of Amendment of Certificate of Incorporation of Smoothie Holdings Inc. dated February 16, 2012 (incorporated by reference to Exhibit 3.2 to Current Report on Form 8-K as filed February 17, 2012) | |
4.1 | Form of Series A Warrant (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K as filed January 17, 2012) | |
| 4.2 | Form of Series B Warrant (incorporated by reference to Exhibit 4.2 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) | |
| 4.3 | Form of Series C Warrant (incorporated by reference to Exhibit 4.3 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) | |
4.4 | Form of Series D Warrant (incorporated by reference to Exhibit 4.4 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) | |
| 4.5 | Form of Series PA Warrant (incorporated by reference to Exhibit 4.5 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) | |
| 4.6 | Form of Series CN Warrant (incorporated by reference to Exhibit 4.6 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) | |
| 4.7 | Form of Series N Warrant** | |
| Form of Series G Warrant (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K as filed February 16, 2015) | ||
| 4.10 | Form of Note dated December 20, 2013 by Barfresh Food Group Inc. in favor of certain investors (incorporated by reference to Exhibit 4.1 to Form 10Q for the period ending December 31, 2013, as filed February 13, 2014) | |
| 5.1 | Opinion and Consent of | |
| 10.1 | Form of Registration Rights Agreement dated December 20, 2013 (incorporated by reference to Exhibit 4.2 to Form 10Q for the period ending December 31, 2013, as filed February 13, 2014) | |
| 10.2 | Intellectual Property Sale Deed by and between National Australia Bank Limited and Barfresh Inc. dated October 15, 2013 (incorporated by reference to Exhibit 10.1 to Quarterly Report on Form 10-Q as filed November 20, 2013) | |
| 10.3 | Agreement of Sale, dated January 10, 2012, by and among Moving Box Inc. and Andreas Wilcken, Jr. (incorporated by reference to Exhibit 10.1 of Current Report on Form 8-K as filed January 17, 2012) | |
| 10.4 | Form of Subscription Agreement dated January 10, 2012 by and between Moving Box, Inc. and certain investors. (incorporated by reference to Exhibit 10.2 of Current Report on Form 8-K as filed January 17, 2012) | |
| 10.5 | Form of Lock Up Agreement dated January 10, 2012 (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K as filed January 17, 2012) | |
| 10.6 | Amendment No. 2, dated January 10, 2012 to Agreement dated March 21, 2010, by and among Moving Box Inc., Moving Box Entertainment LLC, Garrett LLC, Ian McKinnon, Brad Miller, Andreas Wilckin, Jr. and Uptone Pictures, Inc. (incorporated by reference to Exhibit 10.5 to Current Report on Form 8-K, as filed January 17, 2012) | |
| 10.7 | Investor Release dated January 10, 2012, by and among Moving Box Inc., Andreas Wilcken, Jr., Garrett LLC, Ian McKinnon and Brad Miller (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K as filed January 17, 2012) | |
| 10.8 | Form of Registration Rights Agreement dated March 13, 2015 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K as filed February 16, 2015) | |
| 21.0 | Subsidiaries** | |
| 23.1 | Consent of | |
| 23.2 | Opinion of Libertas Law |
* Filed herewith.
**Previously filed with the initial filing of this registration statement on Form S-1 on April 10, 2015.
| 38 |
Item 28.Undertakings
The undersigned registrant hereby undertakes:
1. To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement: a. To include any prospectus required by Section 10(a)(3) of the Securities Act; b. To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in the volume and rise represent no more than a 20% change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and c. To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material changes to such information in the Registration Statement. 2. For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering. 3. To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering. 4. For determining liability of the undersigned issuer under the Securities Act to any purchaser in the initial distribution of the securities, the undersigned issuer undertakes that in a primary offering of securities of the undersigned issuer pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned issuer will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser: i. Any preliminary prospectus or prospectus of the undersigned issuer relating to the offering required to be filed pursuant to Rule 424; ii. Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned issuer or used or referred to by the undersigned issuer; iii. The portion of any other free writing prospectus relating to the offering containing material information about the undersigned issuer or its securities provided by or on behalf of the undersigned issuer; and iv. Any other communication that is an offer in the offering made by the undersigned issuer to the purchaser. 5. |
6. For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission declared it effective.
7. For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus as a new registration statement for the securities offered in the registration statement, and that offering of the securities at that time as the initial bona fide offering of those securities.
8. That, for the purpose of determining liability under the Securities Act to any purchaser:
a. If the issuer is relying on Rule 430B:
1. Each prospectus filed by the undersigned issuer pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement; and
2. Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date; or
b. If the issuer is subject to Rule 430C: Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has duly causedreasonable grounds to believe that it meets all of the requirements of filing on Form S-1 and authorized this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized in Wake Forest NCthe City of Beverly Hills, State of California, on June 9, 2011.
| /s/ Riccardo Delle Coste | ||||||
| Riccardo Delle Coste | ||||||
In accordance with the requirements of the Securities Act of 1933, this Registration Statement has beenregistration statement was signed by the following persons in the capacities and on the date indicated.
| /s/ Riccardo Delle Coste | Chief Executive Officer and Director | May 7, 2015 | ||||
| Riccardo Delle Coste | (Principal Executive Officer) | |||||
| /s/ Arnold Tinter | Chief Financial Officer, Secretary, Director | May 7, 2015 | ||||
| Arnold Tinter | (Principal | |||||
| * | Director | May 7, 2015 | ||||
| Steven Lang | ||||||
* | Director | |||||
| Joseph M. Cugine | ||||||
| * | Director | May 7, 2015 | ||||
| Alice Elliot |
| By: | /s/ Riccardo Delle Coste | |
| Riccardo Delle Coste | ||
| Attorney in Fact |