Nevada | 26-1367322 | |
(State orOther Jurisdiction of Incorporation or Organization) | (I.R.S. Employer Identification No.) |
Large accelerated filer ☐ | Accelerated filer ☐ | Non-accelerated filer ☐ (Do not check if a smaller reporting company) | Smaller reporting company ☑ |
Page | ||
Basis of Presentation | 3 | |
Forward Looking Statements | 3 | |
Part I | ||
Item 1. | Business | 6 |
Item 1A. | Risk Factors | 14 |
Item 1B. | Unresolved Staff Comments | 20 |
Item 2. | Properties | 20 |
Item 3. | Legal Proceedings | 20 |
Item 4. | Mining Safety Disclosures | 20 |
Part II | ||
Item 5. | Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 21 |
Item 6. | Selected Financial Data | 23 |
Item 7. | Management’s Discussion and Analysis of Financial Condition and Results of Operations | 23 |
Item 7A. | Quantitative and Qualitative Disclosures About Market Risk | 27 |
Item 8. | Financial Statements | 27 |
Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure | 27 |
Item 9A(T). | Controls and Procedures | 27 |
Item 9B. | Other Information | 28 |
Part III | ||
Item 10. | Directors, Executive Officers and Corporate Governance | 29 |
Item 11. | Executive Compensation | 32 |
Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 33 |
Item 13. | Certain Relationships and Related Transactions, and Director Independence | 34 |
Item 14. | Principal Accountant Fees and Services | 34 |
Part IV | ||
Item 15. | Exhibits | 35 |
· | we have a limited operating history with significant losses and expect losses to continue for the foreseeable future; |
· | we could face intense competition, which could result in lower revenues and higher expenditures and could adversely affect our results of operations; |
· | we are governed by only three persons serving as directors and officers which may lead to faulty corporate governance; |
· | we must attract and maintain key personnel or our business may fail; |
· | we may not be able to secure additional financing to meet our future capital needs due to changes in general economic conditions; |
· | our business and operating results could be harmed if we fail to manage our growth or change; |
· | we have a limited operating history and if we are not successful in growing our business, then we may have to scale back or even cease our ongoing business operations; |
· | if our intellectual property is not adequately protected, then we may not be able to compete effectively and we may not be profitable; |
· | if we are the subject of an intellectual property infringement claim, the cost of participating in any litigation could impact our ability to stay in business; |
· | we could lose our competitive advantages if we are not able to protect any of our food and nutritional products and intellectual property rights against infringement, and any related litigation could be time-consuming and costly; |
· | if we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained; |
· | if we fail to effectively manage our growth our future business results could be harmed and our managerial and operational resources may be strained; |
· | our services may become obsolete and unmarketable if we are unable to respond adequately to rapidly changing technology and customer demands; |
· | our failure to appropriately respond to changing consumer preferences and demand for new products or product enhancements could significantly harm product sales and harm our financial condition and operating results; |
· | if we do not introduce new products or make enhancements to adequately meet the changing needs of our customers, some of our products could fail in the marketplace, which could negatively impact our revenues, financial condition and operating results. |
· | we are affected by laws and governmental regulations with potential penalties or claims, which could harm our financial condition and operating results; |
· | since we rely on independent third parties for the manufacture and supply of certain of our products, if these third parties fail to reliably supply products to us at required levels of quality and which are manufactured in compliance with applicable laws, then our financial condition and operating results would be harmed; |
· | we may incur material product liability claims, which could increase our costs and harm our financial condition and operating results; |
· | unless we can generate sufficient cash from operations or additional raise funds, we may not be able to meet our debt obligations; |
· | our customers generally are not obligated to continue purchasing products from us; |
· | if we do not manage our supply chain effectively, our operating results may be adversely affected; |
· | our stock price may be volatile, which may result in losses to our shareholders; |
· | our common shares are thinly traded and our shareholders may be unable to sell at or near ask prices, or at all; |
· | the market price for our common stock is particularly volatile given our status as a relatively small and developing company, which could lead to wide fluctuations in our share price. Our shareholders may be unable to sell their common stock at or above their purchase price if at all, which may result in substantial losses to you; |
· | we do not anticipate paying any cash dividends to our common shareholders and as a result shareholders may only realize a return when the shares are sold; |
· | we are listed on the OTCQB quotation system and our common stock is subject to “penny stock” rules which could negatively impact our liquidity and our shareholders’ ability to sell their shares; |
· | volatility in our common share price may subject us to securities litigation; |
· | the elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees; |
· | our business is subject to changing regulations related to corporate governance and public disclosure that have increased both our costs and the risk of noncompliance. |
· | Donald MacPhee was appointed to our Board of Directors, Chair of the Audit Committee and as a member of the Corporate Governance Committee. |
· | Scott Chapman was appointed to our Board of Directors, Chair of the Corporate Governance Committee, member of the Audit Committee and member of the Compensation Committee. |
· | Michael Browne was appointed as our President, Chief Financial Officer, Treasurer and Secretary. |
· | Peter Salvo was appointed as our Controller. |
· | Donald MacPhee resigned as a Director of the Board of Directors, Chair of the Audit Committee and as President and Chief Executive Officer, and was appointed Director of Operations; |
· | Anthony Pallante was appointed as Director and Chairman of our Board of Directors, and as Chief Executive Officer; |
· | Mark Holcombe resigned as Chairman of the Board of Directors and was appointed as President, Director and Chair of the Compensation Committee. |
· | Scott Chapman, our Director and Chair of the Corporate Governance Committee, was also appointed as Chair of the Audit Committee. |
· | Michael Browne resigned as Corporate Secretary of Trident Brands Incorporated and will continue to serve as Brand Director, Chief Financial Officer, and Treasurer; and |
· | Peter Salvo, Controller of the Company was also appointed as Corporate Secretary. |
· | Life science technologies and related products that have applications to a range of consumer products; |
· | Nutritional supplements and related consumer goods providing defined benefits to the consumer; and |
· | Functional foods and beverages ingredients with defined health and wellness benefits. |
· | To execute our multi-tier brand and innovation strategy to drive revenue; |
· | To aggressively manage our asset light business model to drive a low cost platform; and |
· | To drive disciplines leading to increased investor awareness and ability to finance and govern growing operations. |
· | Extending established brands with existing equity that can be leveraged; |
· | Delivering consumer benefit with unique technology or intellectual properties; and |
· | Targeting dynamic growth segments. |
· | Brand licenses in fast growing categories; |
· | Consumer goods with focus on supplements, functional foods & beverages; |
· | Life science technology that has applications in consumer products with a focus on nutritional, brain and heart health products; and |
· | Intellectual property and/or licenses in recognized brand platforms. |
· | Build and grow strategic brands organically; |
· | Make strategic investments in high growth companies; |
· | Develop and then merge brands/business lines into larger multi-national Companies; and |
· | Mitigate risk by creating a diverse portfolio of brands/operations in the growth sectors listed above. |
Country | Title | Device | Official No. | Application Date | Case Status | Owner | ||||||
Australia | BRAIN ARMOR | 1818703 | 04-Jan-2017 | Registered | Brain Armor Inc. | |||||||
Canada | BRAIN ARMOR Logo | 1,870,806 | 01-Dec-2017 | Application Filed | Brain Armor Inc. | |||||||
China | BRAIN ARMOR | 22604683 | 13-Jan-2017 | Application Filed | Brain Armor Inc. | |||||||
China | BRAIN ARMOR | 22909187 | 23-Feb-2017 | Application Filed | Brain Armor Inc. | |||||||
China | BRAIN ARMOR in Chinese Characters | 22741430 | 25-Jan-2017 | Awaiting Further Action or Approval | Brain Armor Inc. | |||||||
China | BRAIN ARMOR in Chinese Characters | 22741429 | 25-Jan-2017 | Awaiting Further Action or Approval | Brain Armor Inc. |
Country | Title | Device | Official No. | Application Date | Case Status | Owner | ||||||
European Union Trademark | BRAIN ARMOR | 016227605 | 04-Jan-2017 | Application Filed | Brain Armor Inc. | |||||||
U.S.A. | BRAIN ARMOR FOCUS FIX | 87/644,654 | 13-Oct-2017 | Official Action Received | Brain Armor Inc. | |||||||
U.S.A. | BRAIN ARMOR Logo | 87/705,173 | 01-Dec-2017 | Official Action Received | Brain Armor Inc. | |||||||
U.S.A. | FOCUS FIX | 87/644,666 | 13-Oct-2017 | Official Action Received | Brain Armor Inc. | |||||||
United Kingdom | BRAIN ARMOR | UK00003204840 | 04-Jan-2017 | Registered | Brain Armor Inc. | |||||||
U.S.A. | P2N PEAK PERFORMANCE NUTRITION | 87/626,644 | 28-Sep-2017 | Official Action Received | Trident Brands Incorporated | |||||||
U.S.A. | P2N PEAK PERFORMANCE NUTRITION & Design | 87/626,631 | 28-Sep-2017 | Official Action Received | Trident Brands Incorporated | |||||||
U.S.A. | WELLGEL | 87/672,915 | 06-Nov-2017 | Application Filed | Trident Brands Incorporated | |||||||
Bahamas | BAHAMIAN RAIN | 42002 | 15-Aug-2017 | Application Filed | Trident Brands International Ltd. | |||||||
Bahamas | CARIBBEAN RAIN | 42003 | 15-Aug-2017 | Application Filed | Trident Brands International Ltd. | |||||||
Bahamas | EVOLUTION2 | 28-Aug-2017 | Application Filed | Trident Brands International Ltd. | ||||||||
Bahamas | LOTTERY WATER | 10-Nov-2017 | Application Filed | Trident Brands International Ltd. | ||||||||
Bahamas | LOTTO WATER | 10-Nov-2017 | Application Filed | Trident Brands International Ltd. | ||||||||
Haiti | LOTTERY WATER | 1290-M | 15-Nov-2017 | Application Filed | Trident Brands International Ltd. | |||||||
Haiti | LOTTO WATER | 1292-M | 15-Nov-2017 | Application Filed | Trident Brands International Ltd. | |||||||
U.S.A. | BAHAMIAN RAIN | 87/562,266 | 09-Aug-2017 | Application Advertised | Trident Brands International Ltd. | |||||||
U.S.A. | CARIBBEAN RAIN | 87/562,264 | 09-Aug-2017 | Application Advertised | Trident Brands International Ltd. |
· | variations in our operating results; |
· | changes in expectations of our future financial performance, including financial estimates by securities analysts and investors; |
· | changes in operating and stock price performance of other companies in our industry; |
· | additions or departures of key personnel; and |
· | future sales of our common stock. |
The elimination of monetary liability against our directors, officers and employees under Nevada law and the existence of indemnification rights of our directors, officers and employees may result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contains a specific provision that eliminates the liability of our directors and officers for monetary damages to our company and shareholders. Further, we are prepared to give such indemnification to our directors and officers to the extent provided for by Nevada law. We may also have contractual indemnification obligations under our employment agreements with our officers. The foregoing indemnification obligations could result in our company incurring substantial expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup. These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
On January 17, 2019, Everlast World’s Boxing Headquarters Corp. (“Everlast”) filed a counter civil lawsuit against the Company and other defendants. In that lawsuit, Everlast seeks payment from the defendants under a License Agreement dated June 4, 2013, for $425,555 in unpaid royalties allegedly due and owing under the License Agreement and interest on the allegedly unpaid royalties of $96,265, which interest allegedly continues to accrue. Everlast has also sought all costs, expenses, and legal fees incurred by Everlast in collecting monies that it claims are due under the License Agreement. The case is at an early stage, and the defendants (including the Company) have not yet appeared or answered in the case.
Name and Position | Number of Options | Date of Grant | Exercise Price | Expiration | Vesting from date of Grant | |||||||||||
1. | Michael Browne (former President, CFO, Treasurer and Secretary), Brand Director | 375,000 125,000 125,000 | May 5, 2014 Nov 30, 2015 Nov 30, 2015 | $ $ $ | 0.75 1.00 1.50 | May 5, 2019 May 5, 2019 May 5, 2019 | 12 months August 2016 August 2017 | |||||||||
2. | Donald MacPhee (former President & CEO, Director, Chair of the Audit Committee and member of the Corporate Governance Committee) | 100,000 100,000 100,000 | May 5, 2014 May 5, 2014 May 5, 2014 | $ $ $ | 0.75 1.00 1.50 | May 5, 2019 May 5, 2019 May 5, 2019 | 12 months 24 months 36 months | |||||||||
3. | Scott Chapman Director, Chair of Corporate Governance Committee | 100,000 100,000 100,000 150,000 150,000 | May 5, 2014 May 5, 2014 May 5, 2014 Dec 6, 2017 Dec 6, 2017 | $ $ $ $ $ | 0.75 1.00 1.50 0.85 1.00 | May 5, 2019 May 5, 2019 May 5, 2019 Dec 6, 2022 Dec 6, 2022 | 12 months 24 months 36 months Immediate 12 months | |||||||||
4. | Mark Holcombe President, CFO, Director, Chairman of the Compensation Committee | 100,000 100,000 100,000 150,000 150,000 | May 5, 2014 May 5, 2014 May 5, 2014 Dec 6, 2017 Dec 6, 2017 | $ $ $ $ $ | 0.75 1.00 1.50 0.85 1.00 | May 5, 2019 May 5, 2019 May 5, 2019 Dec 6, 2022 Dec 6, 2022 | 12 months 24 months 36 months Immediate 12 months | |||||||||
5. | Peter Salvo Controller | 50,000 50,000 50,000 75,000 75,000 | May 5, 2014 May 5, 2014 May 5, 2014 Dec 6, 2017 Dec 6, 2017 | $ $ $ $ $ | 0.75 1.00 1.50 0.85 1.00 | May 5, 2019 May 5, 2019 May 5, 2019 Dec 6, 2022 Dec 6, 2022 | 12 months 24 months 36 months Immediate 12 months |
6. | Anthony Pallante CEO, Director, Chairman of the Board | 375,000 375,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
7. | Brad Caistor | 150,000 150,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
8. | Mark Cluett | 150,000 150,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
9. | Nick Pili | 75,000 75,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
10. | Alan Jones | 75,000 75,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
11. | Brian Rola | 75,000 75,000 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
12. | Landon McCluskey | 16,250 16,250 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
13. | Tony Haddeman | 16,250 16,250 | Dec 6, 2017 Dec 6, 2017 | $ $ | 0.85 1.00 | Dec 6, 2022 Dec 6, 2022 | Immediate 12 months | |||||||||
14. | Robert Campbell Special Advisor | 116,666 116,667 116,667 | May 5, 2014 May 5, 2014 May 5, 2014 | $ $ $ | 0.75 1.00 1.50 | May 5, 2019 May 5, 2019 May 5, 2019 | 12 months 24 months 36 months | |||||||||
Total: | 4,640,000 |
Critical Accounting Estimates |
The preparation of financial statements in conformity with U.S. generally accepted accounting principles (“U.S. GAAP”) requires management to make certain estimates and assumptions that affect the reported amounts of assets and liabilities, related revenues and expenses, and disclosure of gain and loss contingencies at the date of the financial statements. The estimates and assumptions made require us to exercise our judgment and are based on our experience and various other factors that we believe to be reasonable under the circumstances. We continually evaluate the information that forms the basis of our estimates and assumptions as our business and the business environment generally changes. The following are the accounting estimates which we believe to be most important to our business. |
Accounts Receivable and Allowance for Doubtful Accounts |
Accounts receivable are recorded at their original invoice amounts. We regularly review collectability and establish an allowance for uncollectible amounts as necessary. |
Inventory |
Inventory is our largest current asset other than cash and consists primarily of raw materials and finished goods held for sale. Inventories are valued at the lower of cost, measured on a first-in, first out basis, or estimated net realizable value. In order to determine the value of inventory at the balance sheet date, we evaluate a number of factors to determine the adequacy of provisions for inventory. These factors include the age of inventory, the amount of inventory held by type, future demand for products, and the expected future selling price we expect to realize by selling the inventory. Our estimates are judgmental in nature and are made at a point in time, using available information, expected business plans, and expected market conditions. As a result, the actual amount received on sale could differ from our estimated value of inventory. |
Long-Lived Assets |
We review our long-lived assets, to include intangible assets subject to amortization, for recoverability whenever events or changes in circumstances indicate that the carrying amount of such long-lived asset or group of long-lived assets (collectively referred to as "the asset") may not be recoverable. Such circumstances include, but are not limited to: |
· a significant decrease in the market price of the asset; |
· a significant change in the extent or manner in which the asset is being used; |
· a significant change in the business climate that could affect the value of the asset; |
· a current period loss combined with projection of continuing loss associated with use of the asset; and |
· a current expectation that, more likely than not, the asset will be sold or otherwise disposed of before the end of its previously estimated useful life. |
We continually evaluate whether such events and circumstances have occurred. When such events or circumstances exist, the recoverability of the asset's carrying value shall be determined by estimating the undiscounted future cash flows (cash inflows less associated cash outflows) that are directly associated with and that are expected to arise as a direct result of the use and eventual disposition of the asset. To date, no such impairment has occurred. To the extent such events or circumstances occur that could affect the recoverability of our long-lived assets, we may incur charges for impairment in the future. |
Revenue Recognition |
We recognize revenue at the time of delivery of the product and when all of the following have occurred: a sales agreement is in place; price is fixed or determinable; and collection is reasonably assured. Agreed trading terms with customers such as value incentives, rebates, early payment discounts and other discounts are recorded as reductions to revenues at the time of sale. |
Cost of Sales |
Cost of sales includes the direct purchase cost of the product based on the FIFO method. |
Stock-Based Compensation |
We maintain a stock incentive plan under which stock options and other stock-based awards may be granted to selected officer, directors and service providers. For grants of stock options, we are required to estimate a number of inputs at each grant date, such as the estimated life of the option, future stock price volatility, and the forfeiture rate used in the Black-Scholes option-pricing model to determine a fair value for the options granted to employees or non-employee directors. Once determined at the grant date, the fair value of the stock option award is recorded over the vesting period of the options granted. |
Income Taxes |
We are liable for income taxes in jurisdictions where we operate. Our effective tax rate may differ from the statutory tax rate and will vary from year to year primarily as a result of any permanent differences, investment and other tax credits, as well as the provision for income taxes at different rates in various jurisdictions. In making an estimate of our income tax liability, we first assess which items of income and expense are taxable in a particular jurisdiction. This process involves a determination of the amount of taxes currently payable as well as the assessment of the effect of temporary timing differences resulting from different treatment of items for accounting and tax purposes. These differences in the timing of the recognition of income or the deductibility of expenses may result in deferred income tax balances that are recorded as assets or liabilities as the case may be on our balance sheet. We also estimate the amount of valuation allowance to maintain relating to loss carry forwards and other balances that can be used to reduce future taxes payable. We assess the likelihood of the ultimate realization of these tax assets by looking at the relative size of the tax assets in relation to the profitability of the businesses and the jurisdiction to which they can be applied, the number of years based on management’s estimate it will take to use the tax assets and any other special circumstances. Given our history of operating losses we have taken a valuation allowance to offset the potential future value of loss carry-forwards. |
Year Ended | Year Ended | |||||||
November 30, | November 30, | |||||||
2018 | 2017 | |||||||
Revenues | $ | 5,655,431 | $ | 4,743,421 | ||||
Gross Profit | $ | 347,929 | $ | 95,399 | ||||
Operating Expenses | $ | 6,152,660 | $ | 3,323,369 | ||||
Impairment Loss | $ | 440,542 | 2,125,000 | |||||
Other Expenses | $ | 2,175,098 | $ | 1,521,211 | ||||
Net Loss | $ | 8,420,371 | $ | 6,874,181 | ||||
EBITDA | $ | (5,764,015 | ) | $ | (2,902,637 | ) |
2018 | 2017 | |||||||
Professional Fees | $ | 518,086 | $ | 177,897 | ||||
General & Administrative Expenses | $ | 4,396,801 | $ | 1,964,280 | ||||
Marketing, Selling & Warehousing Expenses | $ | 866,598 | $ | 647,982 | ||||
Management Salary | $ | 102,500 | $ | 90,000 | ||||
Director's Fees | $ | 90,000 | $ | 90,000 | ||||
Rent | $ | 149,925 | $ | 10,293 | ||||
Royalty Fees | $ | 28,750 | $ | 342,917 |
Operating expenses for the year ended November 30, 2018 were $6,152,660 as compared to $3,323,369 for the comparative period in 2017, an increase of 85.1%. The increase in our operating expenses is primarily due to increased general and administrative costs as we invest in the operational infrastructure necessary to build out our organization to support current and future growth. Significant increases were in non-cash options expense of $1,194,775, non-cash provision of bad debts of $617,010 and legal expenses of $430,983.
On September 26, 2016, we entered into a Securities Purchase Agreement with a non-US institutional investor pursuant to which, in consideration for proceeds of $4,100,000, we issued a secured convertible promissory note in the amount of $4,100,000. Pursuant to the Securities Purchase Agreement, the investor has agreed, from time to time after January 1, 2017, to make additional investments at our request of up to $5,900,000 ($10,000,000 in the aggregate) in one or more tranches of not less than one tranche during any 60 day period. The funding of any tranche under the agreement (other than the first $4,100,000 which has been funded) is subject to the mutual agreement of the parties as to the use of funds. The parties have agreed to negotiate in good faith to pre-approve use of funds within 120 days following September 26, 2016. On May 9, 2017, the Company received the second tranche of funding with proceeds of $4,400,000 and on May 16, 2018 the third tranche of funding with proceeds of $1,500,000 for a total investment by the investor of $10,000,000. The Company intends to use the proceeds of the secured convertible note for general working capital purposes including, without limitation, settlement of accounts payable and repayment of mature loans. In consideration of each advance made by the investor pursuant to the Securities Purchase Agreement, we will issue to the investor a convertible promissory note of equal value, maturing three years after issuance, and bearing interest at the rate of 8% per annum. Each note will be secured in first priority against the present and after acquired assets of the Company, and will be convertible in whole or in part at the option of the holder into common shares of the Company at a conversion price per share of $.60, equal to a 25% discount to the 10 day average closing price of the Company’s common stock for the period immediately preceding the issuance of the applicable note.
Expense | Amount ($) | |||
Professional fees | 90,000 | |||
Consulting/Advisor fees | 300,000 | |||
Management Salary/Personal Services | 1,750,000 | |||
Sales, Travel and Marketing | 1,700,000 | |||
Other general administrative expenses | 500,000 | |||
Rent | 160,000 | |||
Total | 4,500,000 |
Name | Age | Position | ||
Anthony Pallante(1) | 61 | Chief Executive Officer, Director and Chair of the Board of Directors. | ||
Mark Holcombe(2) | 47 | President, CFO, Director and Chair of the Compensation Committee. | ||
Mark Cluett(3) | 48 | Chief Operating Officer | ||
Scott Chapman(4) | 55 | Director, Chair of the Audit Committee and Chair of the Corporate Governance Committee | ||
Peter Salvo(5) | 64 | VP Finance, Controller and Secretary . |
(1) | Anthony Pallante was appointed CEO, Director and Chair of the Board of Directors on December 2, 2016. |
(2) | Mark Holcombe was appointed President on December 2, 2016. He was appointed as a Director of our company on November 5, 2007 and served as Chief Executive Officer, President, Secretary and Treasurer through March 21, 2014. He also serves as Chair of the Compensation Committee. |
(3) | Mark Cluett was appointed Chief Operating Officer on February 15, 2017. |
(4) | Scott Chapman was appointed as Chair of the Audit Committee on December 2, 2016 and as a Director and Chair of the Governance Committee of our company on March 21, 2014. |
(5) | Peter Salvo was appointed as a Controller of our company on March 21, 2014. |
1. | been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); |
2. | had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; |
3. | been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; |
4. | been found by a court of competent jurisdiction in a civil action or by the SEC 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 vacated; |
5. | been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or |
6. | been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. |
Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option Awards | Non- Equity Incentive Plan Compen- sation | Change in Pension Value and Non- qualified Deferred Compen- sation Earnings | All Other Compen- sation | Total | |||||||||||||||||||||||||
Anthony Pallante, | 2018 | 0 | $ | 3,750 | 0 | $ | 317,735 | 0 | 0 | $ | 216,000 | $ | 537,485 | |||||||||||||||||||||
Director & CEO | 2017 | 0 | $ | 0 | 0 | $ | 0 | 0 | 0 | $ | 216,000 | $ | 216,000 | |||||||||||||||||||||
Mark Holcombe, | 2018 | 0 | $ | 3,000 | 0 | $ | 127,094 | 0 | 0 | $ | 188,000 | $ | 318,094 | |||||||||||||||||||||
Director, President | 2017 | 0 | $ | 0 | 0 | $ | 0 | 0 | 0 | $ | 144,000 | $ | 144,000 | |||||||||||||||||||||
& CFO | ||||||||||||||||||||||||||||||||||
Mark Cluett, COO | 2018 | 0 | $ | 1,250 | 0 | $ | 127,094 | 0 | 0 | $ | 152,000 | $ | 280,344 | |||||||||||||||||||||
2017 | 0 | $ | 0 | 0 | $ | 0 | 0 | 0 | $ | 121,000 | $ | 121,000 | ||||||||||||||||||||||
Scott Chapman, | 2018 | 0 | 0 | 0 | $ | 127,094 | 0 | 0 | $ | 24,000 | $ | 151,094 | ||||||||||||||||||||||
Director | 2017 | 0 | 0 | 0 | $ | 0 | 0 | 0 | $ | 24,000 | $ | 24,000 | ||||||||||||||||||||||
Peter | 2018 | 0 | $ | 2,000 | 0 | $ | 63,547 | 0 | 0 | $ | 96,000 | $ | 161,547 | |||||||||||||||||||||
Salvo, | 2017 | 0 | $ | 0 | 0 | $ | 0 | 0 | 0 | $ | 78,000 | $ | 78,000 | |||||||||||||||||||||
Controller |
Name | Fees Earned or Paid in Cash | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | |||||||||||||||||||||
Anthony Pallante | $ | 24,000 | 0 | $ | 317,735 | 0 | 0 | $ | 195,750 | $ | 537,485 | |||||||||||||||||
Mark Holcombe | $ | 24,000 | 0 | $ | 127,094 | 0 | 0 | $ | 167,000 | $ | 318,094 | |||||||||||||||||
Scott Chapman | $ | 24,000 | 0 | $ | 127,094 | 0 | 0 | 0 | $ | 151,094 |
Name and Address of Beneficial Owner | Title of Class | Amount and Nature of Beneficial Ownership(1) | Percent of Class(2) | |||||||
Officers and Directors | ||||||||||
Anthony Pallante | Common Stock | 8,441,724 | 26.13 | % | ||||||
Mark Holcombe | Common Stock | 500,000 | 1.55 | % | ||||||
Scott Chapman | Common Stock | 400,000 | 1.24 | % | ||||||
Mark Cluett | Common Stock | 52,000 | .16 | % | ||||||
All officers and directors as a group | Common stock, $0.001 par value | 9,393,724 | 29.07 | % | ||||||
5%+ Security Holders | ||||||||||
2373539 Ontario Inc | Common Stock | 3,000,000 | 9.28 | % | ||||||
Francesca Pallante | Common Stock | 3,000,000 | 9.28 | % | ||||||
Fengate Trident GP Inc | Common Stock | 2,000,000 | 6.19 | % | ||||||
All 5%+ Security Holders | Common stock, $0.001 par value | 8,000,000 | 24.76 | % |
(1) | Beneficial Ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock. |
(2) | Percentage of shares outstanding is calculated based on total shares outstanding as at March 15, 2019 of 32,311,887. This total does not include outstanding warrants or options of the Company. |
Number of Options | Date of Grant | Exercise price | Expiration | Vesting from date of Grant | ||||||
100,000 | May 5, 2014 | $ | 0.75 | May 5, 2019 | 12 months | |||||
100,000 | May 5, 2014 | $ | 1.00 | May 5, 2019 | 24 months | |||||
100,000 | May 5, 2014 | $ | 1.50 | May 5, 2019 | 36 months | |||||
150,000 | Dec 6, 2017 | $ | 0.85 | Dec 6, 2022 | Immediate | |||||
150,000 | Dec 6, 2017 | $ | 1.00 | Dec 6, 2022 | 12 months |
The total fees charged to the company for audit services were $58,500 and for other services were $Nil during the year ended November 30, 2018.
Exhibit | Description | |
3(i) | Articles of Incorporation* | |
3(ii) | Bylaws* | |
31.1 | Sec. 302 Certification of CEO | |
31.2 | Sec. 302 Certification of CFO | |
32.1 | Sec. 906 Certification of CEO | |
32.2 | Sec. 906 Certification of CFO | |
101 | Interactive Data Files pursuant to Rule 405 of Regulation S-T. |
* | Included in our original Registration Statement on Form SB-2 (subsequently amended utilizing Form S-1) under Commission File Number 333-148710. |
March 15, 2019 | Trident Brands Incorporated | |
/s/ Anthony Pallante | ||
By: Anthony Pallante | ||
(CEO, Director & Chair of the Board) | ||
/s/ Mark Holcombe | ||
By: Mark Holcombe | ||
(President, CFO & Director) | ||
/s/ Scott Chapman | ||
By: Scott Chapman | ||
(Director) |
/s/ MaloneBailey, LLP | |
www.malonebailey.com | |
We have served as the Company's auditor since 2015. | |
Houston, Texas | |
March 15, 2019 |
As of | As of | |||||||
November 30, | November 30, | |||||||
2018 | 2017 | |||||||
ASSETS | ||||||||
Current Assets | ||||||||
Cash and Cash Equivalents | $ | 3,133,303 | $ | 3,143,788 | ||||
Accounts Receivable, net of allowance of $32,383 and $29,852, respectively | 357,492 | 1,071,576 | ||||||
Inventory | 2,055,063 | 132,951 | ||||||
Prepaid and other current assets | 123,599 | 236,528 | ||||||
Total Current Assets | 5,669,457 | 4,584,843 | ||||||
Fixed Assets-Furniture & Fixtures, net | 31,663 | 40,046 | ||||||
Note Receivable, net of allowance of $617,010 and $0, respectively | - | 617,010 | ||||||
Intangible Assets, net | 393,580 | 472,875 | ||||||
TOTAL ASSETS | $ | 6,094,700 | $ | 5,714,774 | ||||
LIABILITIES & STOCKHOLDERS' DEFICIT | ||||||||
Current Liabilities | ||||||||
Accounts Payable | $ | 1,289,833 | $ | 1,388,393 | ||||
Accrued Liabilities | 2,994,453 | 1,454,770 | ||||||
Derivative Liability | 892,000 | - | ||||||
Total Current Liabilities | 5,176,286 | 2,843,163 | ||||||
Convertible Debt, net of discount $2,082,975 and $1,954,594, respectively | 13,617,805 | 8,845,406 | ||||||
Total Liabilities | 18,794,091 | 11,688,569 | ||||||
Stockholders' Deficit | ||||||||
Common stock, $0.001 par value, 300,000,000 shares authorized; | ||||||||
32,311,887 shares issued and outstanding as of November 30, 2018 and November 30, 2017 | 32,312 | 32,312 | ||||||
Additional paid-in capital | 9,564,737 | 7,869,962 | ||||||
Non-Controlling Interest in Subsidiary | (170,999 | ) | (124,649 | ) | ||||
Accumulated Deficit | (22,125,441 | ) | (13,751,420 | ) | ||||
Total Stockholders' Deficit | (12,699,391 | ) | (5,973,795 | ) | ||||
TOTAL LIABILITIES & STOCKHOLDERS' DEFICIT | $ | 6,094,700 | $ | 5,714,774 |
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
November 30, | November 30, | |||||||
2018 | 2017 | |||||||
Revenues, net | $ | 5,655,431 | $ | 4,743,421 | ||||
Cost of Sales | 5,307,502 | 4,648,022 | ||||||
Gross Profit | 347,929 | 95,399 | ||||||
General & Administrative Expenses | (6,152,660 | ) | (3,323,369 | ) | ||||
Impairment Loss | (440,542 | ) | (2,125,000 | ) | ||||
Loss from Operations | (6,245,273 | ) | (5,352,970 | ) | ||||
Other Income (Expenses) | ||||||||
Interest Expense, net | (2,175,098 | ) | (1,521,211 | ) | ||||
Total Other Income (Expenses) | (2,175,098 | ) | (1,521,211 | ) | ||||
Net Loss | $ | (8,420,371 | ) | $ | (6,874,181 | ) | ||
Net loss attributable to Trident | (8,374,021 | ) | (6,815,318 | ) | ||||
Net loss attributable to Non-Controlling Interests | (46,350 | ) | (58,863 | ) | ||||
Loss per share - Basic and diluted | $ | (0.26 | ) | $ | (0.22 | ) | ||
Weighted average number of common shares outstanding - Basic and diluted | 32,311,887 | 31,295,756 |
Common | Additional | ||||||||||||||||||||||
Common | Stock | Paid-in | Accumulated | Non-Conrolling | |||||||||||||||||||
Stock | Amount | Capital | Deficit | Interest | Total | ||||||||||||||||||
Balance, November 30, 2016 | 31,000,000 | $ | 31,000 | $ | 5,431,976 | $ | (6,936,102 | ) | $ | (65,786 | ) | $ | (1,538,912 | ) | |||||||||
Beneficial Conversion Feature on Convertible Debt | - | - | 1,466,667 | - | - | 1,466,667 | |||||||||||||||||
Shares issued for Acquisition of Streampak Ltd | 500,000 | 500 | 359,500 | - | - | 360,000 | |||||||||||||||||
Shares issued for Purchase of Note Receivable | 811,887 | 812 | 604,855 | - | - | 605,667 | |||||||||||||||||
Stock Options Expenses | - | - | 6,964 | - | - | 6,964 | |||||||||||||||||
Net loss, November 30, 2017 | - | - | - | (6,815,318 | ) | (58,863 | ) | (6,874,181 | ) | ||||||||||||||
Balance, November 30, 2017 | 32,311,887 | $ | 32,312 | $ | 7,869,962 | $ | (13,751,420 | ) | $ | (124,649 | ) | $ | (5,973,795 | ) | |||||||||
Beneficial Conversion Feature on Convertible Debt | - | - | 500,000 | - | - | 500,000 | |||||||||||||||||
Stock Options Expenses | - | - | 1,194,775 | - | - | 1,194,775 | |||||||||||||||||
Net loss, November 30, 2018 | - | - | - | (8,374,021 | ) | (46,350 | ) | (8,420,371 | ) | ||||||||||||||
Balance, November 30, 2018 | 32,311,887 | $ | 32,312 | $ | 9,564,737 | $ | (22,125,441 | ) | $ | (170,999 | ) | $ | (12,699,391 | ) |
Twelve Months | Twelve Months | |||||||
Ended | Ended | |||||||
November 30, | November 30, | |||||||
2018 | 2017 | |||||||
CASH FLOWS FROM OPERATING ACTIVITIES | ||||||||
Net loss | $ | (8,420,371 | ) | $ | (6,874,181 | ) | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
Amortization of debt discount | 1,263,619 | 806,721 | ||||||
Amortization of license, IP | 32,333 | 312,125 | ||||||
Depreciation expense | 8,383 | 1,864 | ||||||
Impairment Loss | 440,542 | 2,125,000 | ||||||
Stock options expense | 1,194,775 | 6,964 | ||||||
Provision for bad debts on note receivable | 617,010 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Accounts Receivable | 714,084 | (1,018,523 | ) | |||||
Interest Receivable | - | (11,343 | ) | |||||
Prepaid expenses | 190,334 | (169,196 | ) | |||||
Inventory | (1,922,112 | ) | 98,270 | |||||
Accounts payable and accrued liabilities | 1,213,398 | 2,305,373 | ||||||
Cash used in operating activities | (4,668,005 | ) | (2,416,926 | ) | ||||
CASH FLOWS FROM INVESTING ACTIVITIES | ||||||||
Purchase of Fixed Assets | - | (41,910 | ) | |||||
Additions of Intangible Assets | (243,260 | ) | (125,000 | ) | ||||
Cash used in investing activities | (243,260 | ) | (166,910 | ) | ||||
CASH FLOWS FROM FINANCING ACTIVITIES | ||||||||
Principal payments on loan payable - third party | - | (200,000 | ) | |||||
Proceeds on convertible debt | 4,900,780 | 4,400,000 | ||||||
Cash provided by financing activities | 4,900,780 | 4,200,000 | ||||||
Net change in cash and cash equivalents | (10,485 | ) | 1,616,164 | |||||
Cash and cash equivalents at beginning of period | 3,143,788 | 1,527,624 | ||||||
Cash and cash equivalents at end of period | $ | 3,133,303 | $ | 3,143,788 | ||||
NON-CASH TRANSACTIONS | ||||||||
Unpaid intangible asset acquired | $ | 150,320 | $ | - | ||||
Beneficial conversion feature | 500,000 | 1,466,667 | ||||||
Common stock issued for Acquisition of Streampak Ltd | - | 360,000 | ||||||
Common stock issued for Purchase of Note Receivable | - | 605,667 | ||||||
Nonmonetary exchange of Streampak Ltd for investment in Packaging Innovation Lab | 440,542 | - | ||||||
Financing of insurance premiums | 77,405 | - | ||||||
Debt discount related to derivative liablility | 892,000 | - | ||||||
Supplemental disclosure of cash flow information: | ||||||||
Cash paid for: | ||||||||
Income taxes | $ | - | $ | - | ||||
Interest | $ | - | $ | 8,740 |
· | a significant decrease in the market price of the asset; |
· | a significant change in the extent or manner in which the asset is being used; |
· | a significant change in the business climate that could affect the value of the asset; |
· | a current period loss combined with projection of continuing loss associated with use of the asset; and |
· | a current expectation that, more likely than not, the asset will be sold or otherwise disposed of before the end of its previously estimated useful life. |
Number of Options | Weighted Average Exercise Price | Contractual Life in Years | Intrinsic Value | |||||||||||||
Outstanding - November 30, 2016 | 2,358,333 | $ | 0.96 | 2.51 | ||||||||||||
Exercisable - November 30, 2016 | 1,666,667 | $ | 1.17 | 2.43 | $ | 57,500 | ||||||||||
Granted | 0 | |||||||||||||||
Exercised or Vested | 0 | |||||||||||||||
Forfeited or Expired | (333,333 | ) | ||||||||||||||
Outstanding - November 30, 2017 | 2,025,000 | $ | 0.96 | 1.43 | ||||||||||||
Exercisable - November 30, 2017 | 2,025,000 | $ | 0.96 | 1.43 | $ | 84,167 | ||||||||||
Granted | 2,615,000 | |||||||||||||||
Exercised or Vested | 0 | |||||||||||||||
Forfeited or Expired | 0 | |||||||||||||||
Outstanding - November 30, 2018 | 4,640,000 | $ | 1.02 | 2.45 | ||||||||||||
Exercisable - November 30, 2018 | 3,332,500 | $ | 1.03 | 1.84 | 0 |
Number of Warrants | Weighted Average Exercise Price | Contractual Life in Years | Intrinsic Value | |||||||||||||
Outstanding – November 30, 2016 | 225,000 | $ | 1.35 | 2.21 | - | |||||||||||
Exercisable – November 30, 2016 | 225,000 | |||||||||||||||
Granted | 0 | |||||||||||||||
Exercised or Vested | 0 | |||||||||||||||
Cancelled or Expired | 0 | |||||||||||||||
Outstanding – November 30, 2017 | 225,000 | 1.35 | 1.20 | - | ||||||||||||
Exercisable - November 30, 2017 | 225,000 | |||||||||||||||
Granted | 0 | |||||||||||||||
Exercised or Vested | 0 | |||||||||||||||
Cancelled or Expired | 0 | |||||||||||||||
Outstanding – November 30, 2018 | 225,000 | $ | 1.35 | .20 | - |
As of November 30, 2018 | As of November 30, 2017 | |||||||
Deferred tax assets: | ||||||||
Net operating tax carryforwards | $ | 13,622,442 | $ | 8,915,112 | ||||
Tax Rate | 21 | % | 35 | % | ||||
Gross deferred tax assets | 2,860,713 | 3,120,289 | ||||||
Valuation allowance | (2,860,713 | ) | (3,120,289 | ) | ||||
Net deferred tax assets | $ | 0 | $ | 0 |