As filed with the Securities and Exchange Commission on October 3, 2003
Commission File Number
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM SB-2 REGISTRATION STATEMENT
Under The Securities Act of 1933
ROYAL RIDGE, INC.
Nevada 5140 04-3623824
(State or other (Primary Standard (Employer
jurisdictions Industrial Classification Identification
of incorporation Identification Number Number)
or organization
2057 Island Circle
Weston, FL 33326
Telephone: 1-305-970-7039
(Address and telephone number of registrant's principal executive
offices and principal place of business.)
Business Advantage, Inc.
224 South Jones Blvd.
Las Vegas, Nevada 89107
Telephone: 1-775-782-2250
(Name, address and telephone number of agent for service)
with copies to:
Herman G. Herbig, Attorney At Law
224 South Jones Blvd.
Las Vegas, Nevada 89107
Telephone: 1-775-782-2250
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, check the following box: | x |
Approximate date of proposed sale to the public: As soon after the
effectiveness of the registration statement as is practicable.
CALCULATION OF REGISTRATION FEE
Title of each Proposed Proposed Amount of
class of Amount to be offering aggregate registration
securities registered price offering price(2) fee
common stock(1) 5,615,000 $3.00 $16,845,000 $1,362.76
(1)Represents common stock being registered on behalf of Selling
Security Holders.
(2)Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities
Act of 1933.
2
The registrant hereby amends this registration statement on such date
or dates as may be necessary to delay its effective date until the
registrant shall file a further amendment which specifically states
that this registration statement shall thereafter become effective in
accordance with Section 8(a) of the Securities Act of 1933 or until the
registration statement shall become effective on such date as the
Commission, acting pursuant to said Section 8(a), may determine.
3
Preliminary Prospectus Dated September 9, 2003
SUBJECT TO COMPLETION
5,615,000 common shares on behalf of
selling security holders
Royal Ridge, Inc.
Selling security holders will sell at the fixed price of $3.00 per
common share until the common stock is quoted on the bulletin board and
thereafter at prevailing market prices.
No public market currently exists for our shares.
We will not receive any cash or other proceeds in connection with the
subsequent sale by selling security holders.
The offering terminates on December 30, 2004.
Consider carefully the risk factors beginning on page 10 in this
prospectus.
Neither the SEC nor any state securities commission has approved these
common shares or determined that this prospectus is accurate or
complete. Any representation to the contrary is a criminal offense.
The information in this prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed
with the Securities and Exchange Commission is effective. This
prospectus is not an offer to sell these securities and it is not
soliciting an offer to buy these securities in any state where the
offer or sale is not permitted.
4
TABLE OF CONTENTS
PROSPECTUS SUMMARY 5
RISK FACTORS 6
We have not conducted any operations
to date
We do not have a market in our
securities
The tradability in our stock will be
limited
Adverse economic conditions could
negatively affect demand
You may experience dilution if we issue
additional restricted common shares
We will need to pursue additional debt
or equity financing
We may secure long-term debt with our
Assets
SELLING SECURITY HOLDERS 9
TERMS OF THE OFFERING 10
USE OF PROCEEDS 11
ROYAL RIDGE, INC. 11
PLAN OF OPERATION 16
MANAGEMENT 18
PRINCIPAL SHAREHOLDERS 21
CERTAIN TRANSACTIONS 22
SHARES ELIGIBLE FOR FUTURE SALE 22
MARKET FOR REGISTRANT'S COMMON EQUITY 24
DESCRIPTION OF SECURITIES 24
INDEMNIFICATION 25
CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL STATEMENTS 25
LEGAL MATTERS 26
LEGAL PROCEEDINGS 26
ADDITIONAL INFORMATION 27
EXPERTS 28
INTERESTS OF NAMED EXPERTS AND COUNSEL 28
FINANCIAL STATEMENTS 29
5
Prospectus Summary
Royal Ridge, Inc.
Our executive offices are located at 2057 Island Circle Weston, FL
33326. These offices consist of 1,000 square feet, which are provided
rent free by Mr. George Bravo. Our telephone number is 1-305-970-7039.
Corporate
Operations We are a development stage Company with limited
capital, no revenues, no current operations of any
type and have experienced losses since inception.
Royal Ridge will offer specialty ice cream
desserts. The Company intends to market the
following products:
Specialty desserts -
Ice Cream Rolls (4 flavors)
Ice Cream Cookie Sandwiches (3 Designs)
"Sesetta" Ten Layer Ice Cream Dessert
We have not yet begun to market
The specialty desserts to distributors and
national hotel and restaurant chains.
Financial
Constraints We currently have limited capital and will require
additional funding to expand operations.
Sales by Selling
Security Holders Selling security holders will sell at the fixed
price of $3.00 per common share until the common
stock is quoted on the bulletin board and
thereafter at prevailing market prices.
We are registering common shares on behalf of
selling security holders in this prospectus. We
will not receive any cash or other proceeds in
connection with the subsequent sale. We are not
selling any common shares on behalf of selling
security holders and have no control or affect
on these selling security holders.
Market for
Common Stock We currently have no active trading market for our
securities. We cannot assure you that an active
trading and/or a liquid market will develop in our
securities.
Transfer Agent Florida Atlantic Stock Transfer
7130 Nob Hill Road
Tamarac, Florida 33321
Tel: 954-726-4954
6
Risk Factors
1. We have not conducted any operations to date and have not
generated any revenues. We may never obtain profitable operations.
We have a no operating history. Since our incorporation and until April
1, 2002 when we acquired the assets used in our current operation, we
performed only administrative operations to pursue this offering. We
have an accumulated deficit of ($19,055) as of December 31, 2002. We
have had no material operating revenue to date and expect to incur
losses and administrative expenses until we receive revenues from any
of our proposed operations. If we cannot generate revenues, we may
never achieve profitable operations.
2. We do not have a market in our securities. If our common stock
has no active trading market, you may not be able to sell your common
shares at all.
We do not have a public market for our common shares. We cannot assure
you that a public market will ever develop. Consequently, you may not
be able to liquidate your investment in the event of an emergency or
for any other reason.
3. The tradability in our stock will be limited under the penny
stock regulation.
If the trading price of our common stock is less than $5.00 per share,
trading in the common stock would also be subject to the requirements
of Rule 15g-9 under the Exchange Act. Under this rule, broker/dealers
who recommend low-priced securities to persons other than established
customers and accredited investors must satisfy special sales practice
requirements. The broker/dealer must make an individualized written
suitability determination for the purchaser and receive the purchaser's
written consent prior to the transaction.
SEC regulations also require additional disclosure in connection with
any trades involving a "penny stock", including the delivery, prior to
any penny stock transaction, of a disclosure schedule explaining the
penny stock market and its associated risks. Such requirements severely
limit the liquidity of the common stock in the secondary market because
few broker or dealers are likely to undertake such compliance
activities. Generally, the term penny stock refers to a stock with a
market price of less than $5.00 per share.
4. We face operating risks specific to the ice cream business.
Royal Ridge, Inc. will be subject to all operating risks common to the
ice cream specialty industry. While the products sold by the company
are all high end, the pricing is competitive, ranging from the mid-to-
upper price range of the specialty dessert market. In order to
achieve these goals, it will be necessary to establish and maintain the
following:
7
Credibility with Consumers
High Quality products from state-of-the-art
Manufacturing facilities
Reliable Product Distribution Methods with a National
Broker Network.
5. We will need to pursue additional debt or equity financing to
fully implement our business plan. Our limited history of operations
may make it difficult for us to obtain such financing.
To fully implement our business plan Royal Ridge, Inc. will require
additional funding. If we are unable to obtain funding, we may be
unable to commence operations. We have a limited history of operations
and we may have difficulty in obtaining financing on reasonable terms.
We cannot assure you that our operations will be profitable.
8. We may secure long-term debt with our assets. We may lose these
assets if we are unable to meet future debt obligations.
Currently, Royal Ridge, Inc. does not have any long-term debt.
However, Royal Ridge, Inc. may borrow funds from lenders to acquire
equipment and, in the future, or Royal Ridge, Inc. may issue corporate
debt securities in public or private offerings.
These additional borrowings may be secured by the equipment owned by
Royal Ridge, Inc., or the revenue stream from leased equipment. We
cannot assure you that we will be able to meet our debt service
obligation.
To the extent that we cannot meet our obligations in the future, Royal
Ridge will risk the loss of some or all of our assets, including any
equipment securing such debt, to foreclosure. This could result in a
financial loss to Royal Ridge. Adverse economic conditions could
result in higher interest rates on variable rate debt that could impact
Royal Ridge's ability to repay the indebtedness as well as compete for
new leases.
9. You may experience dilution if we issue additional restricted
common shares.
We may issue additional restricted common shares pursuant to private
business transactions. Any sales under Rule 144 after the applicable
holding period may have a depressive effect upon the market price of
Royal Ridge 's, Inc. common shares and investors in this offering.
Selling Security Holders
Royal Ridge, Inc. shall register pursuant to this prospectus 5,615,000
common shares currently outstanding for the account of the following
individuals or entities. The percentage owned prior to and after the
offering reflects all of the then outstanding common shares. The
amount and percentage owned after the offering assumes the sale of all
of the common shares being registered on behalf of the selling security
holders.
8
Name Amount Total Number % Owned Number of % Owned
Being Owned Prior to Shares Owned After
Registered Currently offering After offering offering
<s> <c> <c> <c> <c> <c>
Dennis C. Jordan(1) 330,000 330,000 1.910% 0 0%
Craig Thomas(2) 400,000 400,000 2.312% 0 0%
Godfrey Comrie 5,000 5,000 0.029% 0 0%
Herman G. Herbig 75,000 75,000 0.433% 0 0%
Mark W. Sanwo 5,000 5,000 0.029% 0 0%
John J. Jado 5,000 5,000 0.029% 0 0%
Leonardo Castro 5,000 5,000 0.029% 0 0%
Earnest Strong 5,000 5,000 0.029% 0 0%
Binh Nguyen 2,500 2,500 0.014% 0 0%
Stephanie Geiger 5,000 5,000 0.029% 0 0%
Christian J.C. Herbig 5,000 5,000 0.029% 0 0%
Cris Alaimo 2,500 2,500 0.014% 0 0%
Aung Maung 2,500 2,500 0.014% 0 0%
Jean Pailet 2,500 2,500 0.014% 0 0%
Carol A. McSwiney 5,000 5,000 0.029% 0 0%
Geraldine Salvatorelli 5,000 5,000 0.029% 0 0%
Phyllis M. Hedges 5,000 5,000 0.029% 0 0%
Howard J. Willis 2,500 2,500 0.014% 0 0%
First Source, Inc.(3) 50,000 50,000 0.289% 0 0%
Hector Carrasquillo 5,000 5,000 0.029% 0 0%
Carmen N. Perez 5,000 5,000 0.029% 0 0%
Aida L. Carrasquillo 5,000 5,000 0.029% 0 0%
Jeffrey Carrasquillo 5,000 5,000 0.029% 0 0%
Marilyn Salmonson 5,000 5,000 0.029% 0 0%
Lisa Ross 5,000 5,000 0.029% 0 0%
Joseph A. Milo 25,000 25,000 0.145% 0 0%
Louis Weisman 5,000 5,000 0.029% 0 0%
William Moreno 2,500 2,500 0.014% 0 0%
Victor Corda 100,000 200,000 1.156% 100,000 0.578%
Richard Kletjian 100,000 200,000 1.156% 100,000 0.578%
Thomas Russell 50,000 100,000 0.578% 50,000 0.289%
Salvatore Balsamo 200,000 200,000 1.156% 0 0%
John Van 100,000 200,000 1.156% 100,000 0.578%
Craig Rafter 200,000 200,000 1.156% 0 0%
Chris Zizza 200,000 200,000 1.156% 0 0%
Mike Sico 150,000 300,000 1.734% 150,000 0.867%
Todd Eric Weardon Trust 100,000 200,000 1.156% 100,000 0.578%
Mike Hiler 795,000 795,000 4.590% 0 0%
Frank Bertrand 835,000 835,000 4.825% 0 0%
Davin McAteer 65,000 65,000 0.376% 0 0%
Richard Gabay 135,000 135,000 0.780% 0 0%
John Fashjian 100,000 200,000 1.156% 100,000 0.578%
Todd Russo 250,000 250,000 1.445% 0 0%
Jorge Ortiz 500,000 500,000 2.889% 0 0%
Robert P. Kletjian 200,000 200,000 1.156% 0 0%
Scott Rubinchik 50,000 50,000 0.289% 0 0%
Daniel Mejia 20,000 20,000 0.116% 0 0%
Lisa Albert 10,000 10,000 0.058% 0 0%
William P. Bingham 365,000 365,000 2.109% 0 0%
Jacquelyn Beaudoin 44,100 44,100 0.250% 0 0%
9
Richard Bigley 10,000 10,000 0.060% 0 0%
Sylvia Brickner 1,000 1,000 0.010% 0 0%
Craig Fichtman 2,500 2,500 0.010% 0 0%
Manuel Fernandez 2,500 2,500 0.010% 0 0%
Seymour Field 30,000 30,000 0.170% 0 0%
Menny Gila 2,000 2,000 0.010% 0 0%
Peter Grigore 2,500 2,500 0.010% 0 0%
Arnold Kaufman 10,000 10,000 0.058% 0 0%
Janice Linnert 2,000 2,000 0.010% 0 0%
Salvatore Lombardo 4,500 4,500 0.030% 0 0%
Davin McAteer 20,900 20,900 0.120% 0 0%
Margaret McCullum 2,500 2,500 0.010% 0 0%
John Mulroy 2,500 2,500 0.010% 0 0%
David Nixon 4,000 4,000 0.020% 0 0%
Max Raver 10,000 10,000 0.058% 0 0%
Bruce Reingold 5,000 5,000 0.030% 0 0%
Lloyd Rubin 2,000 2,000 0.010% 0 0%
Nancy Spivack 3,000 3,000 0.020% 0 0%
Heather Stewart 1,000 1,000 0.010% 0 0%
Erin Stokes 1,000 1,000 0.010% 0 0%
Wayne Tullos 3,000 3,000 0.020% 0 0%
Joseph Turner 4,000 4,000 0.020% 0 0%
1. Dennis C. Jordan is a registered principal and owner of Independent
Securities Investors Corporation, a registered broker/dealer.
2. Craig A. Thomas is a registered principal and FINOP of Independent
Securities Investors Corporation, a registered broker/dealer.
3. Arnold Purnell is the sole owner of First Source, Inc.
Mr. Jordan and Mr. Thomas were the previous officers of Royal Ridge,
Inc. prior to the change of control and the name change from Business
Advantage No. 6, Inc. They purchased the common shares through the
ordinary course of business and, at the time of the purchase of the
securities to be resold, did not have any agreements or understandings,
directly or indirectly, with any person to distribute the securities.
Terms of the Offering
Plan of Distribution. We are not selling any common shares on behalf
of selling security holders and have no control or affect on the common
shares being registered on behalf of these selling security holders.
Our common shares are not traded currently on the over-the-counter
market. The selling security holders may sell their common shares in
one or more transactions. These may include "block" transactions in
the over-the-counter market, if one develops, in negotiated
transactions or in a combination of such methods of sales, at $3.00 per
common share.
The selling security holders may effect such transactions by selling
the common shares directly to purchasers, or may sell to or through
agents, dealers or underwriters designated from time to time, and such
agents, dealers or underwriters may receive compensation in the form of
10
discounts, concessions or commissions from the selling security holders
and/or the purchaser(s) of the common shares for whom they may act as
agent or to whom they may sell as principals, or both.
The selling security holders and any agents, dealers or underwriters
that act in connection with the sale of the common shares might be
deemed to be underwriters within the meaning of Section 2(11) of the
Securities Act, and any discount or commission received by them and any
profit on the resale of the common shares as principal might be deemed
to be underwriting discounts or commissions under the Securities Act.
Royal Ridge, Inc. is not aware of any current or future plans,
proposals, arrangements or understandings by any selling security
holders to distribute their registered shares of common stock of Royal
Ridge, Inc. to their respective outstanding shareholders or partners.
Royal Ridge, Inc. is not aware of any plans, arrangements or
understandings by any selling security holders to sell their registered
shares of common stock to any particular individual(s) or to use such
registered shares to satisfy contractual obligations.
Royal Ridge, Inc. will receive no portion of the proceeds from the sale
of the common shares by the selling security holders and will bear all
of the costs relating to the registration of this offering (other than
any fees and expenses of counsel for the selling security holders).
Any commissions, discounts or other fees payable to a broker, dealer,
underwriter, agent or market maker in connection with the sale of any
of the common shares will be borne by the selling security holders.
Royal Ridge, Inc. expects to pay offering expenses from revenues that
will be generated shortly after operations commence.
Offering Period. This offering will terminate on or before December
30, 2004.
Use of Proceeds
We will not receive any cash or other proceeds in connection with the
subsequent sale by the selling security holders.
Royal Ridge, Inc.
Royal Ridge was incorporated on November 12, 1997, in the State of
Nevada as Business Advantage No.6. The name was changed on April 15,
2002. Currently Royal Ridge is in good standing under Nevada state
corporate law.
Royal Ridge 's executive offices are located at 2057 Island Circle
Weston, FL 33326. These offices consist of 1,000 square feet, which are
provided rent free By Mr. George Bravo. Our telephone number is 1-305-
970-7039.
11
As part of our business plan, Royal Ridge shall file a form 8-A on a
voluntary basis in order to become subject to the reporting
requirements of the Securities Exchange Act of 1934.
Employees. Royal Ridge, Inc. has no employees.
Acquisition of Assets. On April 1, 2002, we acquired the assets
necessary to pursue our current operations from Jorge Bravo, Jr.
Pursuant to the acquisition agreement, we issued 10,020,000 common
shares to Mr. Bravo. The officers and directors resigned and Mr.
Bravo and Leo Finklestein were appointed as interim directors. On April
10, 2002 the new board was elected.
The assets acquired were a computer, business plan with contacts of
manufacturing and distribution channels, along with templates for
advertising, artwork, and recipes. The assets were valued at the fair
market value of the common shares issued which approximates the
historical cost of the assets to Mr. Bravo.
Business of Royal Ridge
Royal Ridge, Inc. is in the early developmental and promotional stages.
To date our only activities have been organizational ones, directed at
developing its business plan. Royal Ridge, Inc. has not commenced any
commercial operations.
Royal Ridge will participate in the specialty ice cream market which is
part of a broader frozen dessert market. Royal Ridge's ice cream
rolls, ice cream cookies and mini ice cream cakes are considered
novelty ice cream products. Novelty items are separately packaged
single servings of a frozen dessert that may or may not contain dairy
ingredients.
Sales and Distribution.
Royal Ridge intends to sells its products principally to supermarkets,
and to other foods stores. Distribution will be made through
independent distributors and commissioned food brokers.
Royal Ridge intends to advertise its product through select food shows,
along through advertising through the media, and commercials to the
general public.
Royal Ridge intends to attract new markets through the independent
efforts of its principal officers, and through the collective efforts
of its officers and their distribution channel contacts. In each new
market, Royal Ridge generally will be required to pay slotting fees to
the supermarket for shelf space. These fees are common in most segments
of the food industry and vary from chain to chain. Supermarket chains
generally are reluctant to give up shelf space to new products when
existing products are performing.
Consequently, the expansion of Royal Ridge to new markets, if any, may
be constrained by cash available to pay for slotting fees.
12
Royal Ridge intends to participate in direct store distribution system.
Under this system, Royal Ridge products are distributed directly to the
retail ice cream cabinet by independent distributors who primarily
distribute ice cream products. This store level distribution allows
service to be tailored to the needs of each store. Royal Ridge believes
this service ensures proper product handling, quality control, flavor
selection and retail display. The implementation of this system will
result in an ice cream distribution network capable of providing
frequent direct service to grocery stores in every market where Royal
Ridge's products are to be sold. At this time, Royal Ridge does not
have written agreement with any independent distributor regarding its
product distribution.
Manufacturing Process.
Royal Ridge's products are to be manufactured through independent
manufacturers. Each individual product unit is packed by the
manufacturer. For quality assurance purposes, Royal Ridge's product
is to be tested by the manufacturer on every shipment to ensure
quality. Royal Ridge believes that the manufacturer's capacity will
meet Royal Ridge projected production requirements for the foreseeable
future. Royal Ridge intends to pay the manufacturer a fixed fee per
case for manufacturing and packing the product. At this time, Royal
Ridge does not have a written agreement with any manufacturer.
During fiscal year ending December 31, 2002, the Company did not expend
any amounts on research and development costs.
Regulation.
Royal Ridge is subject to regulation by various governmental agencies,
including the U.S. Food and Drug Administration and the U. S.
Department of Agriculture. Royal Ridge's manufacturer must comply
with federal and local environmental laws and regulations relating to
air quality, waste management and other related land use matters. The
FDA also regulates finished products by requiring disclosure of
ingredients and nutritional information. The FDA can audit Royal
Ridge or its manufacturer to determine the accuracy of our disclosure.
State laws may also impose additional health and cleanliness
regulations on our manufacturers.
Royal Ridge believes that it, and its future manufacturers, will be in
compliance with these laws and regulations and will passed all
regulatory inspections necessary for it to sell its product into the
market. Royal Ridge believes that the cost of compliance with
applicable governmental laws and regulations is not material to its
business.
Competition.
Royal Ridge's intended business is highly competitive. Royal Ridge's
products compete on the basis of brand image, quality, breadth of
flavor selection and price. Furthermore, there are relatively few
barriers to new entrants in the ice cream business. Many of these
competitive products are manufactured by large national or
international food companies, with significantly greater resources than
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that of Royal Ridge. Royal Ridge expects strong competition in the
form of price, competition for adequate distribution and limited shelf
space. However, despite these factors, Royal Ridge believes that the
taste and quality of its products, and its unique product packaging
will enable it to effectively compete in its market.
Product Liability.
Royal Ridge intends to engaged in a business that could expose it to
possible claims for personal injury resulting from contamination of its
ice cream. While Royal Ridge believes that through regular product
testing the quality of its products will be carefully monitored, it may
be subject to liability due to customer or distributor misuse or
storage. Royal Ridge maintains product liability insurance against
certain types of claims in amounts which it believes to be adequate.
Royal Ridge also maintains an umbrella insurance policy that it
believes to be adequate to cover claims made above the limits of its
product liability insurance. Although no claims have been made
against Royal Ridge or its distributors to date and Royal Ridge
believes its current level of insurance to be adequate for its proposed
business operations, there can be no assurances that such claims will
not arise in the future or this Royal Ridge's policies will be
sufficient to pay for such claims.
Reports to Security Holders. We shall become subject to the
informational requirements of the Securities Exchange Act of 1934, as
amended, and in accordance therewith will file reports and other
information with the Securities and Exchange Commission. We have not
yet filed any reports with the Securities and Exchange Commission.
The reports and other information filed by us can be inspected and
copied at the public reference facilities maintained by the Commission
in Washington, D.C. Copies of such material can be obtained from the
Public Reference Section of the Commission, Washington, D.C. 20549 at
prescribed rates.
We will furnish to shareholders:
- an annual report containing financial
information examined and reported upon
by its certified public accountants;
- unaudited financial statements for each
of the first three quarters of the
fiscal year; and
- additional information concerning the
business and operations of The Prison
Connection deemed appropriate by
the Board of Directors.
Plan of Operation
We have not had any revenues since inception.
Our ability to continue as a going concern is dependent upon obtaining
capital in order to meet its ongoing corporate obligations and in order
to continue and expand pursuant to the current strategic business plan
14
Financial Liquidity and Capital Resources. Royal Ridge, Inc. requires
substantial capital in order to meet its ongoing corporate obligations
and in order to continue and expand pursuant to the current strategic
business plan. The initial working capital for Royal Ridge has been
obtained through sale of its common stock.
For the years ended December 31, 2002 and 2001, Royal Ridge did not
pursue any investing activities.
For the years ended December 31, 2002 and 2001, Royal Ridge did not
pursue any financing activities.
On a long-term basis, liquidity is dependent on commencement of
operations and the receipt of revenues as well as additional infusions
of equity and debt capital. Royal Ridge, Inc. believes that additional
equity and debt financing in the short term will allow us to implement
the business opportunity. We believe this will result in the receipt
of revenue and increased liquidity in the long term. However, there
can be no assurance that Royal Ridge will be able to obtain the
additional equity or debt financing in the future.
Results of Operations.
For the year ended December 31, 2002,Royal Ridge received no revenues
and had a net loss of ($12,805). The costs and expenses consisted of
general and administrative expenses including legal and accounting fees
and administrative fees and the impairment of the assets acquired
during April 2002 valued at $10,020.
For the year ended December 31, 2001,Royal Ridge received no revenues
and had a net loss of ($500). The costs and expenses consisted of
contributed expenses of $500.
The losses for the June periods are $1,000 for 2003 and $12,555 for
2002 - 2003 consists of contributed expenses and 2002 of the $10,020 in
impaired assets and $2,285 in stock issued for services and $250 in
contributed expenses
Financial Strategy.
It is our intent to seek and obtain additional equity or debt financing
in the future. We will have to pursue some type of financing in the
next twelve months to expand operations.
Management
Pursuant to the certificate of incorporation, each director shall serve
until the annual meeting of the stockholders, or until his successor is
elected and qualified. Royal Ridge 's basic philosophy mandates the
inclusion of directors who will be representative of management,
employees and the minority shareholders of Royal Ridge, Inc. Directors
may only be removed for "cause". The term of office of each officer of
Royal Ridge, Inc. is at the pleasure of our board of directors.
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The principal executive officers and directors of Royal Ridge are as
follows:
Term(s) of
Name Position Office
- --------------------- ------------------- ----------------
Jorge Bravo, Jr. President/CEO April 10, 2002
Age 40 to present
Leo Finklestein Secretary/Treasurer April 10, 2002
Age 50 to present
Upon commencement of operations, Mr. Bravo and Mr. Finklestein will
devote 100% of their time to the operation of the business.
The directors named above will serve until the next annual meeting of
Royal Ridge 's stockholders. Officers will hold their positions at
the pleasure of the board of directors, absent any employment
agreement, of which none currently exists or is contemplated.
There is no arrangement or understanding between the directors and
officers of Royal Ridge, Inc. and any other person under which any
director or officer was or is to be selected as a director or officer.
Biographical Information
Jorge Bravo, Jr., President/CEO.
From 1986 to 2000, George Bravo served as Executive Vice President, for
Natural Fruit Corporation; Hialeah, Florida. Within 2 years of
joining the company as sales manager, he built a customer base for over
500 accounts with over $1,000,000 in sales. He also began distribution
outside of the South Florida market, to include Florida, Georgia, and
South Carolina. Sold products through a group of over 150 distributors.
Developed private label product line, for
Key Foods
Trader Joe's
Harris Teeter
Super "A" Brand
A&P Supermarkets
Furrs
Dominick's
Big Y
Texas Rich Brand
Other Major accounts with over $7,000,000 in sales included:
Walt Disney World
Giant Foods
7-11 Convenience Stores
Winn Dixie Food Stores
Miami Seaquarium
Miami Metro Zoo
Pro Player Stadium
Shaw's Supermarkets
16
At the end of Jorge's tenure at Natural Fruit, sales had grown to over
$12,000,000.
From 1990 to 1993 Founded and operated Sun Coast Ice Cream Company
Concurrent with his duties at Natural Fruit. Built Route sales to over
$700,000. in 1993 and then sold company to competitor.
Mr. Bravo will be responsible for day-to-day operations of the company.
Mr. Bravo attended the University of Wisconsin-Green Bay from 1980 to
1985, Business Administration with an emphasis in marketing.
Leo Finklestein, Secretary/Treasurer.
Mr. Finklestein has more than 30 years experience in general/operations
management in the trucking and recycling business. He has expertise in
sales/brokerage and contract negotiations with numerous international
contacts.
From 1984 to Present: Employed by L.M.F. Fibres of Weston, Florida as a
broker of recycled fibres and trucking services catering to national
and international accounts. He performed account service as well as
all related management and accounting.
From 1964 to 1984: Employed by Benjamin Finklestein, Inc. of Webster,
Massachusetts. Mr. Finklestein supervised all operations of this family
business operating in the recycling industry. His duties and
responsibilities included the purchasing of all necessary heavy
equipment, hiring, training and scheduling sorters, drivers,
collectors, bailing machine operators and office support.
He led sales efforts and traveled to paper mills to negotiate
contracts. He oversaw insurance and employee benefits. He prepared
budgets, controlled costs, performed all necessary accounting, served
as a member of the executive team and participated in strategic long
term planning, marketing and overall problem solving.
During Mr. Finklestein's tenure at the company, Mr. Finklestein
assisted in the start-up, development and growth of this $4 million
dollar a year business. The company achieved profitability during every
year of operation while enjoying an extremely employee turnover ratio.
From 1971-1974: Mr. Finklestein was president of R.R.&L. Trucking
Company, Inc. Mr. Finklestein owned and operated a fleet of trucks for
the recycling industry in addition to providing general freight
service.
Mr. Finklestein holds an Associates Degree in Business Management from
Worchester Junior College of Worchester, Massachusetts. Mr. Finklestein
was honorably discharged from the U.S. Army Reserves in 1969.
Remuneration. No remuneration has been paid to the executive officers
since inception. Current executive officers did not assume their
positions until fiscal year 2002.
17
Executive officers will participate in company benefit plans including
health insurance, life insurance and future 401K Plans.
Board of Directors Compensation. Director liability insurance may be
provided to all members of the Board of Directors. Royal Ridge, Inc.
has not yet obtained such insurance and does not have any specifics for
available cost and coverage. Royal Ridge, Inc. does not have a
specific time frame to obtain the insurance.
No differentiation is made in the compensation of "outside directors"
and those officers of Royal Ridge, Inc. serving in that capacity.
Management Incentive Plan. We intend to establish a management
incentive plan by which our executive officers will receive additional
annual compensation based on meeting criteria of growth relating to our
sales and profits. No specific criteria has been determined and no
written agreements have been entered into with members of management.
On April 1, 2002, the executive officers were issued the following
common shares valued at $.001 per common share as partial compensation.
Jorge Bravo, Jr. 10,020,000
Leo Finklestein 485,000
Robert Toombs 485,000
Upon successfully generating revenue and obtaining a positive cash
flow, the following is the estimated salaries that will be paid.
Name and Position Year Salary Bonus Other Total
- ----------------- ---- -------- ----- ----- --------
Jorge Bravo, Jr. 2003 $100,000 - - $100,000
Leo Finklestein 2003 $100,000 - - $100,000
Principal Shareholders
There are currently 17,305,000 common shares outstanding. The following
tabulates holdings of shares of Royal Ridge by each person who, subject
to the above, at the date of this prospectus, holds of record or is
known by management to own beneficially more than 5.0% of the common
shares and, in addition, by all directors and officers of Royal Ridge
individually and as a group
# of shares % owned # of shares % owned
currently before after after
Name and Address owned(1) offering offering offering
<s> <c> <c> <c> <c>
Jorge Bravo, Jr. 10,020,000 57.9% 10,020,000 57.9%
2057 Island Circle
Ft. Lauderdale, Florida 33326
Leo Finklestein 485,000 2.8% 485,000 2.8%
1967 Pisces Terrace
Weston, Florida 33327
18
Officers and Directors
(2 persons) as a group
10,505,000 60.7% 10,505,000 60.7%
(1)Pursuant to Rule 13d-3 under the Securities Exchange Act of 1934, as
amended, beneficial ownership of a security consists of sole or shared
voting power, including the power to vote or direct the voting, and/or
sole or shared investment power, including the power to dispose or
direct the disposition, with respect to a security whether through a
contract, arrangement, understanding, relationship or otherwise.
Unless otherwise indicated, each person indicated above has sole power
to vote, or dispose or direct the disposition of all shares
beneficially owned, subject to applicable unity property laws.
Certain Transactions
Acquisition of Assets. On April 1, 2002, we acquired the assets
necessary to pursue our current operations from Jorge Bravo, Jr.,
Pursuant to the acquisition agreement, we issued 10,020,000 common
shares valued at $.001 per common share to Mr. Bravo. The officers
and directors resigned and Mr. Bravo and Leo Finklestein were appointed
as interim directors. On April 10, 2002, the new board was elected.
Shares Eligible for Future Sale
Royal Ridge currently has 17,305,000 shares of common stock
outstanding. Of these, 11,690,000 common shares will be deemed to be
restricted securities after the offering. Other securities may be
issued, in the future, in private transactions pursuant to an exemption
from the Securities Act. Rule 144 provides, in essence, that a person
who has held restricted securities for a period of two years may sell
every three months in a brokerage transaction or with a market maker an
amount equal to the greater of 1% of Royal Ridge 's outstanding shares
or the average weekly trading volume, if any, of the shares during the
four calendar weeks preceding the sale.
The amount of restricted securities which a person who is not an
affiliate of Royal Ridge may sell is not so limited. Non affiliates
may each sell without limitation shares held for three years. Royal
Ridge will make application for the listing of its Shares in the over-
the-counter market. Sales under Rule 144 may, in the future, depress
the price of Royal Ridge 's Shares in the over-the-counter market,
should a market develop. Prior to this offering there has been no
public market for the common stock of Royal Ridge. The effect, if
any, of a public trading market or the availability of shares for sale
at prevailing market prices cannot be predicted. Nevertheless, sales
of substantial amounts of shares in the public market could adversely
effect prevailing market prices.
19
Market for Registrant's Common Equity and
Related Stockholder Matters
Market Information. Royal Ridge's common stock is not listed in the
pink sheets or in the OTC Bulletin Board maintained by the NASD.
After the offering, 11,690,000 common shares will be available to
potential resale under the requirements of Rule 144.
Holders. The approximate number of holders of record of Royal Ridge's
no par value common stock, as of August 31, 2003 was 75.
Dividends. Holders of Royal Ridge 's common stock are entitled to
receive such dividends as may be declared by its board of directors.
Description of Securities
Our articles of incorporation authorize us to issue up to 50,000,000
common shares, $.001 par value per common share
Common Stock.
Liquidation Rights. Upon liquidation or dissolution, each outstanding
common share will be entitled to share equally in the assets of Royal
Ridge legally available for distribution to shareholders after the
payment of all debts and other liabilities.
Dividend Rights. There are no limitations or restrictions upon the
rights of the Board of Directors to declare dividends out of any funds
legally available therefore. Royal Ridge has not paid dividends to
date and it is not anticipated that any dividends will be paid in the
foreseeable future. The Board of Directors initially may follow a
policy of retaining earnings, if any, to finance the future growth of
Royal Ridge. Accordingly, future dividends, if any, will depend upon,
among other considerations, Royal Ridge's need for working capital and
its financial conditions at the time.
Voting Rights. Holders of common shares of Royal Ridge are entitled
to cast one vote for each share held at all shareholders meetings for
all purposes.
Other Rights. Common shares are not redeemable, have no conversion
rights and carry no preemptive or other rights to subscribe to or
purchase additional common shares in the event of a subsequent
offering.
Transfer Agent. Florida Atlantic Stock Transfer will act as transfer
agent for Royal Ridge, Inc.
Indemnification
Our bylaws do not contain a provision entitling any director or
executive officer to indemnification against liability under the
Securities Act of 1933. The Nevada Revised Statutes allow a company to
indemnify its officers, directors, employees, and agents from any
threatened, pending, or completed action, suit, or proceeding, whether
20
civil, criminal, administrative, or investigative, except under certain
circumstances. Indemnification may only occur if a determination has
been made that the officer, director, employee, or agent acted in good
faith and in a manner, which such person believed to be in the best
interests of the company. A determination may be made by the
shareholders; by a majority of the directors who were not parties to
the action, suit, or proceeding confirmed by opinion of independent
legal counsel; or by opinion of independent legal counsel in the event
a quorum of directors who were not a party to such action, suit, or
proceeding does not exist.
Provided the terms and conditions of these provisions under Nevada law
are met, officers, directors, employees, and agents of Royal Ridge,
Inc. may be indemnified against any cost, loss, or expense arising out
of any liability under the '33 Act. Insofar as indemnification for
liabilities arising under the '33 Act may be permitted to directors,
officers and controlling persons of Royal Ridge, Inc. Royal Ridge,
Inc. has been advised that in the opinion of the Securities and
Exchange Commission, such indemnification is against public policy and
is, therefore, unenforceable.
Legal Matters
Certain legal matters with respect to the issuance of the securities
offered hereby will be passed upon by Herman G. Herbig, Attorney-At-
Law.
Legal Proceedings
Royal Ridge, Inc. is not involved in any legal proceedings as of the
date of this prospectus.
Additional Information
We have filed with the Securities and Exchange Commission a
registration statement under the Act with respect to the securities
offered hereby. This prospectus does not contain all of the
information set forth in the registration statement, some parts are
omitted in accordance with the Rules and Regulations of the Commission.
For further information with respect to Royal Ridge, Inc. and the
securities offered hereby, reference is made to the registration
statement.
Copies of such materials may be examined without charge at, or obtained
upon payment of prescribed fees from, the Public Reference Section of
the Commission at Room 1024, telephone number 1-800-SEC-0330, Judiciary
Plaza, 450 Fifth Street, N.W., Washington, DC 20549.
We will voluntarily file periodic reports in the event its obligation
to file such reports is suspended under Section 15(d) of the Exchange
Act.
21
We will provide without charge to each person who receives a
prospectus, upon written or oral request of such person, a copy of any
of the information that was incorporated by reference in the prospectus
(not including exhibits to the information that is incorporated by
reference unless the exhibits are themselves specifically incorporated
by reference). Requests for copies of said documents should be
directed to Jorge Bravo, Jr., President.
The Commission maintains a Web site -- //www.sec.gov -- that contains
reports, proxy and information statements and other information
regarding issuers that file electronically with the Commission.
No dealer, salesman, agent or any other person has been authorized to
give any information or to make any representation other than those
contained in this prospectus. If given or made, this information or
representation must not be relied on as having been authorized by Royal
Ridge, Inc. or the underwriter, if an underwriter assists in the sale
of the securities.
This prospectus does not constitute an offer or a solicitation by
anyone to any person in any state, territory or possession of the
United States in which the offer or solicitation is not authorized by
the laws thereof, or to any person to whom it is unlawful to make such
offer or solicitation.
Neither the delivery of this prospectus or any sale made hereunder
shall, under any circumstances, create an implication that there has
not been any change in the facts set forth in this prospectus or in the
affairs of Royal Ridge , Inc. since the date hereof.
Experts
The audited financial statements included in this prospectus have been
so included in reliance on the report of Stark, Winter, Schenkein &
Co., LLP, Certified Public Accountants, on the authority of such firm
as experts in auditing and accounting.
Interests of Named
Experts and Counsel
The experts or counsel named in the prospectus are not affiliated with
Royal Ridge, Inc.
22
Financial Statements
Index to Financial Statements
Independent Auditor's Report dated February 14, 2003
Balance Sheet as of December 31, 2002
Statement of Operations for the years ended December 31, 2002 and 2001,
and the Period from Inception (November 12, 1997) to December 31,
2002
Statements of Cash Flows for the Years ended December 31, 2002 and 2001
and the period from inception (November 12, 1997) to December 31,
2002
Statement of Stockholders' (Deficit) for the Period from (inception)
November 12, 1997, through December 31, 2002
Notes to Financial Statements
Unaudited Balance Sheet as of June 30, 2003
Statements of Operations Flows (Unaudited) for the Six Months Ended
June 30, 2003 and 2002, and the period From Inception (November 12,
1997) to June 30, 2003
Statements of Cash Flows (Unaudited) For the Six Months Ended June 30,
2003 and 2002, and the Period From Inception (November 12, 1997) to
June 30, 2003
Notes to Financial Statements
23
REPORT OF INDEPENDENT AUDITORS
Stockholders and Board of Directors
Royal Ridge, Inc.
We have audited the accompanying balance sheet of Royal Ridge, Inc. (A
Development Stage Company) as of December 31, 2002, and the related
statements of operations, stockholders' (deficit) and cash flows for the
years ended December 31, 2002 and 2001 and the period from inception
(November 12, 1997) to December 31, 2002. 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.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audits to obtain reasonable assurance about whether
the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes assessing
the accounting principles used and significant estimates by management,
as well as evaluating the overall financial statement presentation. We
believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present
fairly, in all material respects, the financial position of Royal Ridge,
Inc. (A Development Stage Company) as of December 31, 2002, and results
of its operations and its cash flows for the years ended December 31,
2002 and 2001 and the period from inception (November 12, 1997) to
December 31, 2002, in conformity with accounting principles generally
accepted in the United States of America.
The accompanying financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note 4 to
the financial statements, the Company has suffered a loss from operations
and is in the development stage. These factors raise substantial doubt
about the Company's ability to continue as a going concern. Management's
plans in regard to this matter are also discussed in Note 4. The
financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
Stark Winter Schenkein & Co., LLP
Denver, Colorado
February 14, 2003
24
Royal Ridge, Inc.
(A Development Stage Company)
Balance Sheet
December 31, 2002
ASSETS
Current Assets:
Total Current Assets $ -
===========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Total current liabilities $ -
-----------
Stockholders' (deficit):
Common stock, $.001 par value,
50,000,000 shares authorized,
17,305,000 shares issued and outstanding 17,305
Additional paid in capital 1,750
(Deficit) accumulated during the development stage (19,055)
-----------
-
-----------
$ -
===========
See the accompanying notes to the financial statements
25
Royal Ridge, Inc.
(A Development Stage Company)
Statements of Operations
For the Years Ended December 31, 2002 and 2001, and
the Period From Inception (November 12, 1997) to December 31, 2002
Year Ended Year Ended Inception to
December 31, December 31, December 31,
2002 2001 2002
----------- ----------- -----------
Revenue $ - $ - $ -
Operating expenses:
Impairment of assets 10,020 - 10,020
General and administrative
expenses 2,785 500 9,035
----------- ----------- -----------
12,805 500 19,055
Net (loss) $ (12,805) $ (500) $ (19,055)
=========== =========== ===========
Per share information
- basic and fully diluted
Weighted average shares
outstanding 14,270,890 5,000,000 5,618,059
=========== =========== ===========
Net (loss) per share $ (0.00) $ (0.00) $ (0.00)
=========== =========== ===========
See the accompanying notes to the financial statements
26
Royal Ridge, Inc.
(A Development Stage Company)
Statement of Stockholders' (Deficit)
For the Period from Inception (November 12, 1997) to December 31, 2002
Additional (Deficit) Accumulated
Common Stock Paid in During the
Shares Amount Capital Development Stage Total
<s> <c> <c> <c> <c> <c>
Inception - $ - $ - $ - $ -
Shares issued for
organizational expenses
at $.00275 per share 5,000,000 2,750 - - 2,750
Net (loss) for the period - - - (2,750) (2,750)
Balance December 31,
1997 5,000,000 2,750 - (2,750) -
Capital contribution of
operating expenses - - 500 - 500
Net (loss) for the year - - - (500) (500)
Balance December 31,
1998 5,000,000 2,750 500 (3,250) -
Capital contribution
of operating expenses - - 500 - 500
Net (loss) for the year - - - (500) (500)
Balance December 31,
1999 5,000,000 2,750 1,000 (3,750) -
Capital contribution of
operating expenses - - 2,000 - 2,000
Net (loss) for the year - - - (2,000) (2,000)
Balance December 31,
2000 5,000,000 2,750 3,000 (5,750) -
Capital contribution of
operating expenses - - 500 - 500
Net (loss) for the year - - - (500) (500)
Balance December 31,
2001 5,000,000 2,750 3,500 (6,250) -
Capital contribution of
operating expenses - - 500 - 500
Shares issued for asset
purchase at $.001
per share 10,020,000 10,020 - - 10,020
Shares issued for
services at $.001
per share 2,285,000 2,285 - - 2,285
Reclassification of
paid in capital - 2,250 (2,250) - -
Net (loss) for the year - - - (12,805) (12,805)
Balance December 31,
2002 17,305,000 $17,305 $ 1,750 $(19,055) $ -
</TABLE
See the accompanying notes to the financial statements
27
Royal Ridge, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Years Ended December 31, 2002 and 2001, and
the Period From Inception (November 12, 1997) to December 31, 2002
Year Ended Year Ended Inception to
December 31, December 31, December 31,
2002 2001 2002
----------- ------------ -------------
<s> <c> <c> <c>
Cash flows from operating activities:
Net (loss) $ (12,805) $ (500) b $ (19,055)
Adjustments to reconcile net (loss)
to net cash provided by
(used in) operating activities:
Non cash capital contribution 500 500 4,000
Issuance of common shares for
non cash items 12,305 - 15,055
Net cash provided by (used in)
operating activities - - -
Cash flows from investing activities:
Net cash provided by (used in)
investing activities - - -
Cash flows from financing activities:
Net cash provided by (used in)
financing activities - - -
Net increase in cash - - -
Beginning - cash balance - - -
Ending - cash balance $ - $ - $ -
Supplemental cash flow information:
Cash paid for income taxes $ - $ - $ -
Cash paid for interest $ - $ - $ -
See the accompanying notes to the financial statements
28
Royal Ridge, Inc.
(A Development Stage Company)
Notes To Financial Statements
December 31, 2002
Note 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Organization
The Company was incorporated on November 12, 1997 in the State of Nevada
and is in the development stage. The Company intends to market specialty
ice cream deserts. The Company has chosen December 31, as a year-end and
has had no significant activity from inception to December 31, 2002.
Revenue Recognition
The Company recognizes revenue when services are provided or products
are shipped.
Cash and Cash Equivalents
The Company considers all highly liquid investments with an original
maturity of three months or less to be cash equivalents.
Financial Instruments
Fair value estimates discussed herein are based upon certain market
assumptions and pertinent information available to management as of
December 31, 2002. The respective carrying value of certain on-balance-
sheet financial instruments approximated their fair values. These
financial instruments include accrued expenses. Fair values were assumed
to approximate carrying values for these financial instruments because
they are short term in nature and their carrying amounts approximate fair
values.
Net Income (Loss) Per Common Share
The Company calculates net income (loss) per share as required by
Statement of Financial Accounting Standards (SFAS) 128, "Earnings per
Share." Basic earnings (loss) per share is calculated by dividing net
income (loss) by the weighted average number of common shares
outstanding for the period. Diluted earnings (loss) per share is
calculated by dividing net income (loss) by the weighted average number
of common shares and dilutive common stock equivalents outstanding.
During periods in which the Company incurs losses common stock
equivalents, if any, are not considered, as their effect would be anti
dilutive.
Use of Estimates
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and accompanying notes. Actual
results could differ from those estimates.
29
Segment Information
The Company follows SFAS 131, "Disclosures about Segments of an
Enterprise and Related Information." Certain information is disclosed,
per SFAS 131, based on the way management organizes financial
information for making operating decisions and assessing performance.
The Company currently operates in a single segment and will evaluate
additional segment disclosure requirements as it expands its
operations.
Income Taxes
The Company follows SFAS 109 "Accounting for Income Taxes" for
recording the provision for income taxes. Deferred tax assets and
liabilities are computed based upon the difference between the
financial statement and income tax basis of assets and liabilities
using the enacted marginal tax rate applicable when the related asset
or liability is expected to be realized or settled. Deferred income tax
expenses or benefits are based on the changes in the asset or liability
each period. If available evidence suggests that it is more likely than
not that some portion or all of the deferred tax assets will not be
realized, a valuation allowance is required to reduce the deferred tax
assets to the amount that is more likely than not to be realized.
Future changes in such valuation allowance are included in the
provision for deferred income taxes in the period of change.
Stock-Based Compensation
The Company accounts for equity instruments issued to employees for
services based on the fair value of the equity instruments issued and
accounts for equity instruments issued to other than employees based on
the fair value of the consideration received or the fair value of the
equity instruments, whichever is more reliably measurable.
The Company accounts for stock based compensation in accordance with
SFAS 123, "Accounting for Stock-Based Compensation." The provisions of
SFAS 123 allow companies to either expense the estimated fair value of
stock options or to continue to follow the intrinsic value method set
forth in Accounting Principles Board Opinion 25, "Accounting for Stock
Issued to Employees" (APB 25) but disclose the pro forma effects on net
income (loss) had the fair value of the options been expensed. The
Company has elected to continue to apply APB 25 in accounting for its
stock option incentive plans.
Impairment of Long-Lived Assets
The Company accounts for long-lived assets and goodwill in accordance
with the provisions of SFAS 144, "Accounting for the Impairment or
Disposal of Long-Lived Assets" and SFAS 142, "Goodwill and Other
Intangible Assets." SFAS 144 requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. Recoverability of assets to be held
and used is measured by a comparison of the carrying amount of an asset
to future net cash flows expected to be generated by the asset. If such
assets are considered to be impaired, the impairment to be recognized
30
is measured by the amount by which the carrying amount of the assets
exceeds the fair value of the assets. Assets to be disposed of are
reported at the lower of the carrying amount or fair value less costs
to sell. SFAS 142 requires annual tests for impairment of goodwill and
intangible assets that have indefinite useful lives and interim tests
when an event has occurred that more likely than not has reduced the
fair value of such assets. During the year ended December 31, 2002 the
Company charged $10,020 to operations related to the impairment of
certain assets.
Recent Pronouncements
In December 2002, the Financial Accounting Standards Board (FASB)
issued SFAS 148 "Accounting for Stock-Based Compensation--Transition
and Disclosure--an amendment of SFAS 123." SFAS 148 provides
alternative methods of transition for a voluntary change to the fair
value based method of accounting for stock-based employee compensation
from the intrinsic value-based method of accounting prescribed by APB
25. As allowed by SFAS 123, the Company has elected to continue to
apply the intrinsic value-based method of accounting, and has adopted
the disclosure requirements of SFAS 123. The Company currently does not
anticipate adopting the provisions of SFAS 148.
In July 2002, the FASB issued SFAS 146, "Accounting for Costs
Associated with Exit or Disposal Activities." SFAS 146 provides new
guidance on the recognition of costs associated with exit or disposal
activities. The standard requires companies to recognize costs
associated with exit or disposal activities when they are incurred
rather than at the date of commitment to an exit or disposal plan. SFAS
146 supercedes previous accounting guidance provided by the EITF Issue
No. 94-3 "Liability Recognition for Certain Employee Termination
Benefits and Other Costs to Exit an Activity (including Certain Costs
Incurred in a Restructuring)." EITF Issue No. 94-3 required recognition
of costs at the date of commitment to an exit or disposal plan. SFAS
146 is to be applied prospectively to exit or disposal activities
initiated after December 31, 2002. Early application is permitted. The
adoption of SFAS 146 by the Company is not expected to have a material
impact on the Company's financial position, results of operations, or
cash flows.
In April 2002, the FASB issued SFAS 145, "Rescission of FASB Statements
No. 4, 44, and 64, Amendment of FASB Statement No. 13, and Technical
Corrections." Among other things, this statement rescinds FASB
Statement No. 4, "Reporting Gains and Losses from Extinguishment of
Debt" which required all gains and losses from extinguishment of debt
to be aggregated and, if material, classified as an extraordinary item,
net of related income tax effect. As a result, the criteria in APB
Opinion No. 30, "Reporting the Results of Operations -- Reporting the
Effects of Disposal of a Segment of a Business, and Extraordinary,
Unusual and Infrequently Occurring Events and Transactions," will now
be used to classify those gains and losses. The provisions of SFAS 145
related to the classification of debt extinguishment are effective for
years beginning after May 15, 2002. The adoption of SFAS 145 by the
Company is not expected to have a material impact on the Company's
financial position, results of operations, or cash flows.
31
In November 2001, the EITF of the FASB issued EITF 01-9 "Accounting for
Consideration Given by a Vendor to a Subscriber (Including a Reseller
of the Vendor's Products)." EITF 01-9 provides guidance on when a sales
incentive or other consideration given should be a reduction of revenue
or an expense and the timing of such recognition. The guidance provided
in EITF 01-9 is effective for financial statements for interim or
annual periods beginning after December 15, 2001. The adoption of EITF
01-9 by the Company did not have a material impact on the Company's
financial statements.
In August 2001, the FASB issued SFAS 144, "Accounting for the
Impairment or Disposal of Long-Lived Assets." SFAS 144 provides new
guidance on the recognition of impairment losses on long-lived assets
with definite lives to be held and used or to be disposed of and also
issued the definition of what constitutes a discontinued operation and
how the results of a discontinued operation are to be measured and
presented. SFAS 144 is effective for fiscal years beginning after
December 15, 2001. The adoption of SFAS 144 did not have a material
impact on the Company's financial position, results of operations, or
cash flows.
In June 2001, the FASB issued SFAS 143, "Accounting for Asset
Retirement Obligations." SFAS 143 requires the fair value of a
liability for an asset retirement obligation to be recognized in the
period that it is incurred if a reasonable estimate of fair value can
be made. The associated asset retirement costs are capitalized as part
of the carrying amount of the long-lived asset. SFAS 143 is effective
for fiscal years beginning after June 15, 2002. The adoption of SFAS
143 did not have a material impact on the Company's financial position,
results of operations or cash flows.
In June 2001, the FASB issued SFAS 142, "Goodwill and Other Intangible
Assets," which provides for non-amortization of goodwill and intangible
assets that have indefinite useful lives, annual tests of impairments
of those assets and interim tests of impairment when an event occurs
that more likely than not has reduced the fair value of such assets.
The statement also provides specific guidance about how to determine
and measure goodwill impairments, and requires additional disclosure of
information about goodwill and other intangible assets. The provisions
of this statement are required to be applied starting with fiscal years
beginning after December 15, 2001, and applied to all goodwill and
other intangible assets recognized in the financial statements at that
date. Goodwill and intangible assets acquired after June 30, 2001 will
be subject to the non-amortization provisions of the statement. Early
application is permitted for entities with fiscal years beginning after
March 15, 2001, provided that the first interim financial statements
had not been issued previously. The Company's adoption of the
provisions of SFAS 142 did not have a material impact on the Company's
financial position, results of operations or cash flows.
In June 2001, the FASB issued SFAS 141, "Business Combinations," which
is effective for all business combinations initiated after June 30,
2001. SFAS 141 requires companies to account for all business
combinations using the purchase method of accounting, recognize
intangible assets if certain criteria are met, as well as provide
32
additional disclosures regarding business combinations and allocation
of purchase price. The adoption of SFAS 141 did not have a material
impact on the Company's financial position, results of operations or
cash flows.
Note 2. STOCKHOLDERS' (DEFICIT)
During March 2002 the Company affected a 5 for 1 forward stock split of
its common shares. All share and per share amounts have been restated
to give effect to this split.
At inception, the Company issued 5,000,000 shares of its common stock
for costs and services related to its organization aggregating $2,750,
which approximates the fair market value of the costs and services
provided. Accordingly, the Company has recorded a charge to operations
of $2,750 during the period ended December 31, 1997.
During April 2002 the Company issued 10,020,000 shares of common stock
in exchange for the name Royal Ridge, Inc. and a business and
development plan. The value assigned to the shares issued was $.001 per
share, which approximates the fair market value of the shares. The
aggregate value of the shares issued of $10,202 has been charged to
operations during the year ended December 31, 2002 as the Company
determined that the value of the assets acquired was impaired. In
addition, during April 2002 the Company issued 2,285,000 shares of
common stock for services. The value assigned to the shares issued was
$.001 per share, which approximates the fair market value of the
shares. The aggregate value of the shares issued of $2,285 has been
charged to operations during the year ended December 31, 2002.
During the period from inception to December 31, 2002 an affiliate of the
Company contributed an aggregate of $2,500 to the capital of the Company
consisting of administrative services provided and $1,500 paid for
administrative expenses incurred by the Company.
During 2003 the Company intends to file a Form SB-2 registration
statement with the Securities and Exchange Commission whereby it will
attempt to register common shares to be sold by certain selling
shareholders. The Company will receive no cash proceeds from this
offering but is paying the costs related to the proposed offering. These
costs will be charged to the operations of the Company.
Note 3. INCOME TAXES
The Company accounts for income taxes under SFAS 109, "Accounting for
Income Taxes", which requires use of the liability method. SFAS 109
provides that deferred tax assets and liabilities are recorded based on
the differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes, referred to as
temporary differences. Deferred tax assets and liabilities at the end of
each period are determined using the currently enacted tax rates applied
to taxable income in the periods in which the deferred tax assets and
liabilities are expected to be settled or realized.
33
The provision for income taxes differs from the amount computed by
applying the statutory federal income tax rate to income before
provision for income taxes. The sources and tax effects of the
differences are as follows:
Income tax provision at
the federal statutory rate 34 %
Effect of operating losses (34)%
-----
-
=====
As of December 31, 2002, the Company has a net operating loss
carryforward of $16,500. This loss will be available to offset future
taxable income. If not used, this carryforward will expire in 2022. The
deferred tax asset relating to the operating loss carryforward has been
fully reserved at December 31, 2002. The difference between the net
loss for income tax purposes and the amount recorded in the Company's
books and records results from $2,500 in contributed services not being
deducted for income tax purposes.
Note 4. BASIS OF REPORTING
The Company's financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has experienced a loss from operations during its
development stage as a result of its investment necessary to achieve
its operating plan, which is long-range in nature. For the period from
inception to December 31, 2002, the Company incurred a net loss of
$19,055. In addition, the Company has no significant assets or revenue
generating operations.
The Company's ability to continue as a going concern is contingent upon
its ability to attain profitable operations by securing financing and
implementing its business plan. In addition, the Company's ability to
continue as a going concern must be considered in light of the
problems, expenses and complications frequently encountered by entrance
into established markets and the competitive environment in which the
Company operates.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going
concern.
34
Royal Ridge, Inc.
(A Development Stage Company)
Balance Sheet
June 30, 2003
(Unaudited)
ASSETS
Current Assets:
Total Current Assets $ -
==========
LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current Liabilities:
Total current liabilities $ -
----------
Stockholders' (deficit):
Common stock, $.001 par value,
50,000,000 shares authorized,
17,305,000 shares issued and outstanding 17,305
Additional paid in capital 2,750
(Deficit) accumulated during the development stage (20,055)
----------
-
----------
$ -
==========
See the accompanying notes to the financial statements
35
Royal Ridge, Inc.
(A Development Stage Company)
Statements of Operations
For the Six Months Ended June 30, 2003 and 2002, and
the Period From Inception (November 12, 1997) to June 30, 2003
(Unaudited)
Six Months Six Months Inception
Ended Ended to
June 30, June 30, June 30,
2003 2002 2003
---------- ---------- ----------
Revenue $ - $ - $ -
---------- ---------- ----------
Operating expenses:
Impairment of assets - 10,020 10,020
General and administrative
expenses 1,000 2,535 10,035
---------- ---------- ----------
1,000 12,555 20,055
---------- ---------- ----------
Net (loss) $ (1,000) $ (12,555) $ (20,055)
========== ========== ==========
Per share information- basic and fully diluted
Weighted average shares
outstanding 17,305,000 11,186,492 6,114,380
========== ========== ==========
Net (loss) per share $ (0.00) $ (0.00) $ (0.00)
========== ========== ==========
See the accompanying notes to the financial statements
36
Royal Ridge, Inc.
(A Development Stage Company)
Statements of Cash Flows
For the Six Months Ended June 30, 2003 and 2002, and
the Period From Inception (November 12, 1997) to June 30, 2003
(Unaudited)
Six Months Six Months Inception
Ended Ended to
June 30, June 30, June 30,
2003 2002 2003
---------- ---------- ----------
Cash flows from operating activities:
Net cash provided by (used in)
operating activities $ - $ - $ -
---------- ---------- ----------
Cash flows from investing activities:
Net cash provided by (used in)
investing activities - - -
---------- ---------- ----------
Cash flows from financing activities:
Net cash provided by (used in)
financing activities - - -
---------- ---------- ----------
Net increase in cash - - -
Beginning - cash balance - - -
---------- ---------- ----------
Ending - cash balance $ - $ - $ -
========== ========== ==========
Supplemental cash flow information:
Cash paid for income taxes $ - $ - $ -
========== ========== ==========
Cash paid for interest $ - $ - $ -
========== ========== ==========
See the accompanying notes to the financial statements
37
Royal Ridge, Inc.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2003
(Unaudited)
(1) Basis Of Presentation
The accompanying unaudited financial statements have been prepared in
accordance with accounting principles generally accepted in the United
States of America ("GAAP") for interim financial information. They do
not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all
adjustments (consisting only of normal recurring adjustments)
considered necessary for a fair presentation have been included. The
results of operations for the periods presented are not necessarily
indicative of the results to be expected for the full year. For
further information, refer to the financial statements of the Company
as of December 31, 2002 and the two years then ended, and the period
from inception to December 31, 2002, including notes thereto.
(2) Earnings Per Share
The Company calculates net income (loss) per share as required by SFAS
No. 128, "Earnings per Share." Basic earnings (loss) per share is
calculated by dividing net income (loss) by the weighted average number
of common shares outstanding for the period. Diluted earnings (loss)
per share is calculated by dividing net income (loss) by the weighted
average number of common shares and dilutive common stock equivalents
outstanding. During the periods presented common stock equivalents were
not considered as their effect would be anti-dilutive.
(3) Stockholders (Deficit)
During the six months ended June 30, 2003 shareholders of the Company
contributed services aggregating $1,000 to the capital of the Company.
(4) Going Concern
The Company's financial statements are presented on a going concern
basis, which contemplates the realization of assets and satisfaction of
liabilities in the normal course of business.
The Company has experienced a significant loss from operations as a
result of its investment necessary to achieve its operating plan, which
is long-range in nature. For the period ended June 30, 2003 and the
period from inception to June 30, 2003, the Company incurred a net
losses of $1,000 and $20,055. In addition, the Company has no revenue
generating operations.
The Company's ability to continue as a going concern is contingent upon
its ability to attain profitable operations and secure financing. In
addition, the Company's ability to continue as a going concern must be
considered in light of the problems, expenses and complications
frequently encountered by entrance into established markets and the
competitive environment in which the Company operates.
38
The Company is pursuing equity financing for its operations. Failure to
secure such financing or to raise additional capital or borrow
additional funds may result in the Company depleting its available
funds and not being able pay its obligations.
The financial statements do not include any adjustments to reflect the
possible future effects on the recoverability and classification of
assets or the amounts and classification of liabilities that may result
from the possible inability of the Company to continue as a going
concern.
39
PART II
INFORMATION NOT REQUIRED BY PROSPECTUS
Item 24. Indemnification of Officers and Directors.
The By-Laws of Royal Ridge, Inc. provides that a director of the
registrant shall have no personal liability to the Registrant or its
stockholders for monetary damages for breach of a fiduciary duty as a
director, except for liability (a) for any breach of the director's
duty of loyalty to the Registrant or its stockholders, (b) for acts and
omissions not in good faith or which involve intentional misconduct or
a knowing violation of law, and (c) pursuant to Nevada law for any
transaction from which the director derived an improper personal
benefit.
Registrant's By-Laws exculpates and indemnifies the directors,
officers, employees, and agents of the registrant from and against
liabilities. Further the By-Laws also provides that the Registrant
shall indemnify to the full extent permitted under Nevada law any
director, officer employee or agent of Registrant who has served as a
director, officer, employee or agent or the Registrant or, at the
Registrant's request, has served as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or
other enterprise.
INDEMNIFICATION OF OFFICERS OR PERSONS CONTROLLING THE COMPANY FOR
LIABILITIES ARISING UNDER THE SECURITIES ACT OF 1933, IS HELD TO BE
AGAINST PUBLIC POLICY BY THE SECURITIES AND EXCHANGE COMMISSION AND IS
THEREFORE UNENFORCEABLE.
Item 25. Other Expenses of Issuance and Distribution. Other
expenses in connection with this offering which will be paid by Royal
Ridge , Inc. are estimated to be substantially as follows:
Amount Payable
Item By Company
--------------
S.E.C. Registration Fees $ 750
Printing and Engraving Fees 2,500
Legal Fees 15,000
Accounting Fees and Expenses 2,500
Miscellaneous 2,500
----------
Total $ 23,250
==========
The selling security holders will not pay any expenses in connection
with the offering.
Item 26. Recent Sales of Unregistered Securities.
On April 1, 2002, we issued 10,020,000 common shares to Jorge Bravo,
Jr. in exchange for assets valued at $10,020.
40
On April 1, 2002, we issued 1,315,000 to the following individuals at
$.001 per common share for organizational services rendered valued at
$1,315.
Victor Corda 100,000
Richard Kletjian 100,000
Thomas Russell 50,000
John Van 100,000
Mike Sico 150,000
Todd Eric Weardon Trust 100,000
John Fashjian 100,000
Todd Russo 250,000
William P. Bingham 365,000
In addition, Royal Ridge issued 970,000 common shares to officers and
directors as partial compensation valued at $970 ($.001 per common
share).
All of the above issuances were made pursuant to an exemption from
registration under Section 4(2) of the Securities Act of 1933 to
sophisticated investors who were provided access to information
regarding the company, including but not limited to: risks,
operations, shareholdings, management and financial condition.
Item 27. Exhibit Index.
(1) Not Applicable
(2) Not Applicable
(3) Articles of Incorporation
(3.1) Bylaws
(4) Specimen certificate for common
stock
(5) Consent and Opinion of Herman G.
Herbig regarding legality of
securities registered under
this Registration Statement and
to the references to such
attorney in the prospectus
filed as part of this
Registration Statement
(6) Not Applicable
(7) Not Applicable
(8) Not Applicable
(9) Not Applicable
(10) Asset Purchase Agreement
between Business Advantage No.
6, Inc. and Royal Ridge
dated April 1, 2002
(11) Not Applicable
(12) Not Applicable
(13) Not Applicable
(14) Not Applicable
(15) Not Applicable
(16) Not Applicable
(17) Not Applicable
(18) Not Applicable
41
(19) Not Applicable
(20) Not Applicable
(21) Not Applicable
(22) Not Applicable
(23) Consent of Stark Winter Schenkein
& Co., LLP, Certified Public
Accountant
(24) Not Applicable
(25) Not Applicable
(26) Not Applicable
(27) Not Applicable
(28) Not Applicable
Item 28. Undertaking.
The undersigned registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act of 1933;
(ii) 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 form 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 volume and price 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
(iii) To include any additional or changed material information on the
plan of distribution.
(2) That, for the purpose of determining any liability under the
Securities Act, we shall treat each such post-effective amendment as a
new registration statement of the securities offered, and the offering
of the securities at that time shall be deemed 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.
(b) Not applicable.
(c) Not applicable.
(d) Not applicable.
42
(e) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and
controlling persons of the small business issuer pursuant to the
foregoing provisions, or otherwise, the small business issuer has been
advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable.
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements of filing on Form SB-2 and authorized
this registration statement to be signed on its behalf by the
undersigned, in the City of Miami, State of Florida on the 3rd day of
October, 2003.
Royal Ridge , Inc.
/s/Jorge Bravo, Jr.
- -----------------------------------
By: Jorge Bravo, Jr., President/CEO
In accordance with the requirements of the Securities Act of 1933, this
registration statement was signed by the following persons in the
capacities and on the dates stated.
Signature Capacity Date
/s/Jorge Bravo, Jr. President/CEO 10/3/03
- -----------------------
Jorge Bravo, Jr.
/s/ Leo Finklestein Secretary/Treasurer 10/3/03
- -----------------------
Leo Finklestein