UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
- --------------------------------------------------------------------------------
(Mark one)
[X] Quarterly Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the quarterly period ended May 31, 2006
[ ] Transition Report Under Section 13 or 15(d) of The Securities Exchange
Act of 1934
For the transition period from ______________ to _____________
- --------------------------------------------------------------------------------
Commission File Number: 333-100110
SimplaGene USA, Inc.
(Exact name of small business issuer as specified in its charter)
Nevada 01-0741042
(State of incorporation) (IRS Employer ID Number)
500 BiCounty Blvd. Suite 400, Farmingdale, NY 11735-3940
(Address of principal executive offices)
(631) 694-1111
(Issuer's telephone number)
11900 Wayzata Blvd., Suite 100, Hopkins, MN 55305
(Former name, former address and former fiscal year,
if changed since last report)
- --------------------------------------------------------------------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. YES [X] NO [ ]
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act): YES [X] NO [ ]
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date: July 19, 2006: 2,950,000
Transitional Small Business Disclosure Format (check one): YES [ ] NO [X]
SIMPLAGENE USA, INC.
(a development stage enterprise)
Form 10-QSB for the Quarter ended May 31, 2006
Table of Contents
Page
----
PART I - FINANCIAL INFORMATION
Item 1 Financial Statements 3
Item 2 Management's Discussion and Analysis or Plan of Operation 13
Item 3 Controls and Procedures 14
PART II - OTHER INFORMATION
Item 1 Legal Proceedings 15
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 15
Item 3 Defaults Upon Senior Securities 15
Item 4 Submission of Matters to a Vote of Security Holders 15
Item 5 Other Information 15
Item 6 Exhibits 16
SIGNATURES 16
2
PART I
ITEM 1 - FINANCIAL STATEMENTS
SIMPLAGENE USA, INC.
(a development stage enterprise)
BALANCE SHEETS
May 31, 2006 and 2005
(UNAUDITED)
May 31, 2006 May 31, 2005
------------ ------------
ASSETS
CURRENT ASSETS
Cash in bank $ 20,741 $ 49,639
-------- --------
TOTAL ASSETS $ 20,741 $ 49,639
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts payable - trade $ -- $ --
Loans from officer/shareholder -- --
-------- --------
TOTAL LIABILITIES -- --
-------- --------
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Preferred stock - $0.001 par value
10,000,000 shares authorized
None issued and outstanding -- --
Common stock - $0.001 par value
50,000,000 shares authorized
2,950,000 shares issued and outstanding 2,950 2,950
Additional paid-in capital 94,466 94,466
Deficit accumulated during the development stage (76,675) (47,777)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 20,741 49,639
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 20,741 $ 49,639
======== ========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
3
SIMPLAGENE USA, INC.
(a development stage enterprise)
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
Nine and Three months ended May 31, 2006 and 2005 and
Period from August 2, 2002 (date of inception) through May 31, 2006
(UNAUDITED)
Period from
August 2, 2002
Nine months Nine months Three months Three months (date of inception)
ended ended ended ended through
May 31, 2006 May 31, 2005 May 31, 2006 May 31, 2005 May 31, 2006
------------ ------------ ------------ ------------ ------------
REVENUES $ -- $ -- $ -- $ -- $ --
COST OF SALES -- -- -- -- --
---------- ---------- ---------- ---------- ----------
GROSS PROFIT -- -- -- -- --
---------- ---------- ---------- ---------- ----------
OPERATING EXPENSES
Organizational
and start-up costs -- -- -- -- 4,679
Marketing and
selling expenses -- -- -- -- 16,405
General and
administrative
expenses 28,417 13,805 8,022 4,171 55,591
Depreciation
and amortization -- -- -- -- --
---------- ---------- ---------- ---------- ----------
TOTAL OPERATING EXPENSES 28,417 13,805 8,022 4,171 76,675
---------- ---------- ---------- ---------- ----------
LOSS FROM OPERATIONS
AND BEFORE PROVISION
FOR INCOME TAXES (28,417) (13,805) (8,022) (4,171) (76,675)
PROVISION FOR
INCOME TAXES -- -- -- -- --
---------- ---------- ---------- ---------- ----------
NET LOSS (28,417) (13,805) (8,022) (4,171) (76,675)
OTHER COMPREHENSIVE
INCOME -- -- -- -- --
---------- ---------- ---------- ---------- ----------
COMPREHENSIVE LOSS $ (28,417) $ (13,805) $ (8,022) $ (4,171) $ (76,675)
========== ========== ========== ========== ==========
Loss per weighted-average
share of common stock
outstanding, computed
on net loss - basic and
fully diluted nil nil nil nil nil
========== ========== ========== ========== ==========
Weighted-average
number of common
shares outstanding 2,950,000 2,950,000 2,950,000 2,950,000 2,768,276
========== ========== ========== ========== ==========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
4
SIMPLAGENE USA, INC.
(a development stage enterprise)
STATEMENTS OF CASH FLOWS
Nine months ended May 31, 2006 and 2005 and
Period from August 2, 2002 (date of inception) through May 31, 2006
(UNAUDITED)
Period from
August 2, 2002
Nine months Nine months (date of inception)
ended ended through
May 31, 2006 May 31, 2005 May 31, 2006
------------ ------------ ------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss $ (28,417) $ (13,805) $ (76,675)
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation -- -- --
Increase (Decrease) in
Accounts payable-trade (77) (315) --
--------- --------- ---------
NET CASH USED IN OPERATING ACTIVITIES (28,494) (14,120) (76,675)
--------- --------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES -- -- --
--------- --------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES
Cash advanced by officer/shareholder -- 4,400 16,800
Cash repaid to officer/shareholder -- (16,800) (16,800)
Proceeds from sale of common stock -- -- 119,500
Cash paid to raise capital -- -- (22,084)
--------- --------- ---------
NET CASH PROVIDED BY FINANCING ACTIVITIES -- (12,400) 97,416
--------- --------- ---------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS (28,494) (26,520) 20,741
Cash and cash equivalents at beginning of period 49,235 76,159 --
--------- --------- ---------
Cash and cash equivalents at end of period $ 20,741 $ 49,639 $ 20,741
========= ========= =========
SUPPLEMENTAL DISCLOSURES OF INTEREST AND
INCOME TAXES PAID
Interest paid during the period $ -- $ -- $ --
========= ========= =========
Income taxes paid (refunded) $ -- $ -- $ --
========= ========= =========
The financial information presented herein has been prepared by management
without audit by independent certified public accountants.
The accompanying notes are an integral part of these financial statements.
5
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS
NOTE A - ORGANIZATION AND DESCRIPTION OF BUSINESS
SimplaGene USA, Inc. (Company) was incorporated on August 2, 2002 under the laws
of the State of Nevada. The Company was formed to market hepatitis B virus (HBV)
genetic data gathered by Ningbo SimplaGene Institute, a Chinese research
institute, to pharmaceutical firms and research organizations.
In November 2005, the Company's U. S. based management discovered that Ningbo
SimplaGene Institute had substantially curtailed its business and sold a number
of its assets, including a substantial portion of its blood samples. As a result
of these developments, the marketing agreement with Ningbo SimplaGene Institute
was terminated and the Company has does not have access to any saleable product,
as anticipated in it's initial business plan.
Management has determined that it is in the best interests of the Company, and
it's shareholders, to abandon its initial business plan and seek an opportunity
to participate with the available remaining resources in another
to-be-determined business venture which management believes has the appropriate,
in management's opinion, potential for being successful. The selection of a
business venture in which to participate is complex and risky and will be made
by management in the exercise of its business judgment. There is no assurance
that the Company will be able to identify and align itself with, through a
merger or other types of business relationships, any business venture that will
ultimately prove to be beneficial to the Company and its shareholders.
As the Company has never implemented any business plan and has had no
substantial assets or operations since inception, it is considered in the
development stage.
NOTE B - PREPARATION OF FINANCIAL STATEMENTS
The Company follows the accrual basis of accounting in accordance with
accounting principles generally accepted in the United States of America and has
an original year-end of August 31. Concurrent with a reverse acquisition
transaction on July 14, 2006, the Company changed it's year-end to December 31.
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 reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
Management further acknowledges that it is solely responsible for adopting sound
accounting practices, establishing and maintaining a system of internal
accounting control and preventing and detecting fraud. The Company's system of
internal accounting control is designed to assure, among other items, that 1)
recorded transactions are valid; 2) valid transactions are recorded; and 3)
transactions are recorded in the proper period in a timely manner to produce
financial statements which present fairly the financial condition, results of
operations and cash flows of the Company for the respective periods being
presented.
Through the interim periods ended June 30, 2006, the Company follows the
accounting policies set forth in its annual audited financial statements filed
with the U. S. Securities and Exchange Commission on its Annual Report on Form
10-KSB for the year ended August 31, 2005. The information presented within
these interim financial statements may not include all disclosures required by
generally accepted accounting principles and the users of financial information
provided for interim periods should refer to the annual financial information
and footnotes when reviewing the interim financial results presented herein.
In the opinion of management, the accompanying interim financial statements,
prepared in accordance with the U. S. Securities and Exchange Commission's
instructions for Form 10-QSB, are unaudited and contain all material
adjustments, consisting only of normal recurring adjustments necessary to
present fairly the financial condition, results of operations and cash flows of
the Company for the respective interim periods presented. The current period
results of operations are not necessarily indicative of results which ultimately
will be reported for the full reset fiscal year ending December 31, 2006.
6
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE C - GOING CONCERN UNCERTAINTY
In April 2003, the Company completed an initial public offering of common stock,
has not completed implementation of a business plan and has not generated
revenue producing transactions. Accordingly, the Company is considered in the
development stage.
From inception through November 2005, the Company attempted to market hepatitis
B virus (HBV) genetic data gathered by Ningbo SimplaGene Institute, a Chinese
related party research institute, to pharmaceutical firms and research
organizations through a Marketing Agreement with Ningbo Freetrade Zone Aipuweixi
Trading Co., Ltd. (Ningbo Freetrade), located in Ningbo, Zhejiang Province,
China (an unrelated entity).
In November 2004, the Company's U. S. based management discovered that Ningbo
SimplaGene Institute had substantially curtailed its business and sold a number
of its assets, including a substantial portion of its blood samples. As a result
of these developments, the marketing agreement with Ningbo SimplaGene Institute
was terminated and the Company has does not have access to any saleable product,
as anticipated in it's initial business plan.
Management determined that it is in the best interests of the Company, and it's
shareholders, to abandon its prior business plan and seek an opportunity to
participate with the limited resources remaining in another business venture
that management believes has potential for being successful.
On July 14, 2006 (the "Closing Date"), pursuant to an Agreement and Plan of
Reorganization (the "Merger Agreement"), among the Registrant, SMPG Merco Co.,
Inc., a Delaware corporation and a wholly owned subsidiary of the Registrant
("Merco"), New Colorado Prime Holdings, Inc., a privately owned Delaware
corporation ("NCPH"), and Craig Laughlin ("Laughlin"), the Registrant acquired,
through a merger (the "Merger") of Merco with and into NCPH, all of the issued
and outstanding capital stock of NCPH (the "NCPH Capital Stock"). Upon
completion of this transaction, the former NCPH shareholders and NCPH's
financial advisor have acquired approximately 93.5% of the Company's issued and
outstanding shares of $0.001 par value common stock. This transaction
constituted a change in control of the Company. Accordingly, in connection with
the change of control, Paul A. Roman, Chairman of the Board and Chief Executive
Officer of NCPH, became Chairman of the Board and Chief Executive Officer of the
Company, Thomas McNeill, Vice President, Chief Financial Officer and a director
of NCPH, became Vice President, Chief Financial Officer and a director of the
Registrant, and Richard Gray, a director of NCPH, became a director of the
Registrant. Craig Laughlin was the Company's sole officer and director prior to
this transaction and resigned at the time the transaction was consummated. Mr.
Laughlin was also the Company's majority stockholder immediately prior to the
Closing Date. The reader of these financial statements is also directed to a
Current Report on Form 8-K filed on July 19, 2006 for a complete description of
this transaction, as well as a business description of NCPH and the simultaneous
issuance of $2.5 million in convertible debt and accompanying warrants.
NCPH is a Delaware corporation established in 2001. The Company owns 100% of
Colorado Prime Corporation, a company originally established in 1959 to provide
in-home "restaurant quality" beef shopping services throughout the United
States. During 2005, NCPH established the DINEWise(TM) brand to serve this
market by attracting new customers through multi-channel media which includes
catalogues, e-commerce and strategic alliances, as well as existing customer
referrals. DINEWise(TM) is a direct-to-consumer gourmet home meal replacement
provider. DINEWise(TM) targets lifestyle profiles, i.e. busy moms, singles,
retirees, seniors, and working couples, as well as health profiles including
diabetic, heart smart, low carbohydrate, low calorie, and weight loss. The
Company has positioned its DINEWise(TM) brand as the solution for
time-constrained but discerning consumers focused on satisfying every member of
the family by offering a broad array of the highest quality meal planning,
delivery, and preparation services. Products are customized meal solutions,
delivered fresh-frozen directly to the home. Using the efficiency, exposure and
reach of the Internet and other direct marketing channels, DINEWise(TM)
capitalizes on consumers' emerging need for convenient, simple, customized
solutions for home meal planning and preparation that satisfies the consumers'
health and lifestyle needs in three (3) market segments:
* HOME MEAL REPLACEMENT ("HMR"), which includes ready-to-eat, ready-to-heat,
or ready-to-assemble hot or cold meals or entrees.;
* DIRECT-TO-CONSUMER ("DTC") FOODS, which includes all direct-mail catalogs
and online shopping; and
* DTC DIET AND HEALTH COMPLIANT FOODS MARKET, which includes branded product
programs and branded compliant products.
7
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE D - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
1. CASH AND CASH EQUIVALENTS
For Statement of Cash Flows purposes, the Company considers all cash on
hand and in banks, certificates of deposit and other highly-liquid
investments with maturities of three months or less, when purchased, to be
cash and cash equivalents.
Cash overdraft positions may occur from time to time due to the timing of
making bank deposits and releasing checks, in accordance with the Company's
cash management policies.
2. ORGANIZATION COSTS
The Company has adopted the provisions of AICPA Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" whereby all organization
and initial costs incurred with the incorporation and initial
capitalization of the Company were charged to operations as incurred.
3. INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes. At May 31, 2006 and 2005, respectively, the deferred tax asset and
deferred tax liability accounts, as recorded when material to the financial
statements, are entirely the result of temporary differences. Temporary
differences represent differences in the recognition of assets and
liabilities for tax and financial reporting purposes, primarily accumulated
depreciation and amortization, allowance for doubtful accounts and vacation
accruals.
As of May 31, 2006 and 2005, the deferred tax asset related to the
Company's net operating loss carryforward is fully reserved. If these
carryforwards are not utilized, they will begin to expire in 2020.
4. EARNINGS (LOSS) PER SHARE
Basic earnings (loss) per share is computed by dividing the net income
(loss) available to common stockholders by the weighted-average number of
common shares outstanding during the respective period presented in our
accompanying financial statements.
Fully diluted earnings (loss) per share is computed similar to basic income
(loss) per share except that the denominator is increased to include the
number of common stock equivalents (primarily outstanding options and
warrants).
Common stock equivalents represent the dilutive effect of the assumed
exercise of the outstanding stock options and warrants, using the treasury
stock method, at either the beginning of the respective period presented or
the date of issuance, whichever is later, and only if the common stock
equivalents are considered dilutive based upon the Company's net income
(loss) position at the calculation date.
As of May 31, 2006 and 2005, the Company has no outstanding stock options
and warrants which would be deemed dilutive.
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS
The carrying amount of cash, accounts receivable, accounts payable and notes
payable, as applicable, approximates fair value due to the short term nature of
these items and/or the current interest rates payable in relation to current
market conditions.
Interest rate risk is the risk that the Company's earnings are subject to
fluctuations in interest rates on either investments or on debt and is fully
dependent upon the volatility of these rates. The Company does not use
derivative instruments to moderate its exposure to interest rate risk, if any.
8
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE E - FAIR VALUE OF FINANCIAL INSTRUMENTS - CONTINUED
Financial risk is the risk that the Company's earnings are subject to
fluctuations in interest rates or foreign exchange rates and are fully dependent
upon the volatility of these rates. The company does not use derivative
instruments to moderate its exposure to financial risk, if any.
NOTE F - ADVANCES FROM SHAREHOLDER
Through August 31, 2005, the Company was advanced approximately an aggregate of
$16,800 by the Company's former President and then-controlling shareholder,
Xinbo Wang, for the purpose of funding the Company's Marketing Agreement and to
provide working capital. These advances were non-interest bearing and were
repaid in full during the quarter ended May 31, 2005.
NOTE G - INCOME TAXES
The components of income tax (benefit) expense for the nine month periods ended
May 31, 2006 and 2005 and for the period from August 2, 2002 (date of inception)
through May 31, 2006, are as follows:
Period from
August 2, 2002
(date of
Nine months Nine months incorporation)
ended ended through
May 31, May 31, May 31,
2006 2005 2006
------- ------- -------
Federal:
Current $ -- $ -- $ --
Deferred -- -- --
------- ------- -------
-- -- --
------- ------- -------
State:
Current -- -- --
Deferred -- -- --
------- ------- -------
-- -- --
------- ------- -------
Total $ -- $ -- $ --
======= ======= =======
As of May 31, 2006, the Company has a net operating loss carryforward of
approximately $20,700, as a result of a November 2005 change in control, to
offset future taxable income. Subject to current regulations, this carryforward
will begin to expire in 2023. The amount and availability of the net operating
loss carryforwards may be subject to limitations set forth by the Internal
Revenue Code. Factors such as the number of shares ultimately issued within a
three year look-back period; whether there is a deemed more than 50 percent
change in control among shareholders controlling 5.0% or more of the Company's
issued and outstanding common stock; the applicable long-term tax exempt bond
rate; continuity of historical business; and subsequent income of the Company
all enter into the annual computation of allowable annual utilization of the
carryforwards.
In conjunction with the July 14, 2006 reverse acquisition transaction, the
Company's net operating loss carryforward will be severely limited.
(Remainder of this page left blank intentionally)
9
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE G - INCOME TAXES - CONTINUED
The Company's income tax expense (benefit) for each of the nine month periods
ended May 31, 2006 and 2005 and for the period from August 2, 2002 (date of
inception) through May 31, 2006, respectively, differed from the statutory rate
of 34% as follows:
Period from
August 2, 2002
(date of
Nine months Nine months incorporation)
ended ended through
May 31, 2006 May 31, 2005 May 31, 2006
------------ ------------ ------------
Statutory rate applied to income (loss) before
income taxes $ (9,662) $ (4,694) $(26,070)
Increase (decrease) in income taxes resulting from:
State income taxes -- -- --
Difference between book method and statutory
recognition differences on organization costs (239) (239) 398
Other, including reserve for deferred tax asset
and application of net operating loss carryforward 9,901 4,933 25,672
-------- -------- --------
Income tax expense $ -- $ -- $ --
======== ======== ========
Temporary differences, consisting primarily of net operating loss carryforwards
and statutory deferrals of expenses for organizational expenses, between the
financial statement carrying amounts and tax bases of assets and liabilities
give rise to deferred tax assets and liabilities as of May 31, 2006 and 2005,
respectively:
May 31, 2006 May 31, 2005
------------ ------------
Deferred tax assets
Net operating loss carryforwards $ 8,700 $ 15,500
Less valuation allowance (8,700) (15,500)
-------- --------
Net Deferred Tax Asset $ -- $ --
======== ========
During the nine months ended May 31, 2006 and 2005, respectively, the valuation
allowance increased by approximately $(7,100) and $4,930.
NOTE H - EQUITY TRANSACTIONS
On April 16, 2003, the Company completed the sale of an aggregate of 1,000,000
shares of its common stock for aggregate proceeds of approximately $100,000, in
satisfaction of the offering requirement of its self-underwritten public
offering of securities, pursuant to a Registration Statement Under The
Securities Act of 1933on Form SB-2. Offering proceeds were released from escrow
in April 2003 pursuant to the terms of the offering as detailed in the Company's
prospectus dated January 9, 2003. On April 16, 2003, the Company closed its
self-underwritten public offering of securities.
10
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE I - COMMITMENTS
On May 15, 2004, the Company entered into a Marketing Agreement with Ningbo
Freetrade Zone Aipuweixi Trading Co., Ltd. (an unrelated party) (Ningbo
Freetrade), located in Ningbo, Zhejiang Province, China whereby Ningbo Freetrade
would provide all marketing activities related to the Company's HBV DNA data and
data processing results in the United States of America and Canada. This
agreement was for an initial term of six (6) months and required an initial
payment of $3,000 USD and monthly payments of $2,200 USD. Further, Ningbo
Freetrade would receive a commission of 20% of the retail selling price of any
products sold through Ningbo Freetrade's efforts. As of August 31, 2005, all
amounts due to Ningbo Freetrade have been paid in full and no sales transactions
triggering the commission payment have been consummated.
NOTE J - SELECTED FINANCIAL DATA (UNAUDITED)
The following is a summary of the quarterly results of operations for the fiscal
years ended August 31, 2006, 2005 and 2004, respectively.
Quarter ended Quarter ended Quarter ended Quarter ended Year ended
November 30 February 28/29 May 31 August 31 August 31
----------- -------------- ------ --------- ---------
YEAR ENDED AUGUST 31, 2006
Net revenues $ -- $ -- $ --
Gross profit -- -- --
Net loss from operations (2,834) (17,562) (8,022)
Basic and fully diluted
earnings per share nil $ (0.01) nil
Weighted-average
number of shares
outstanding 2,950,000 2,950,000 2,950,000
YEAR ENDED AUGUST 31, 2005
Net revenues $ -- $ -- $ -- $ -- $ --
Gross profit -- -- -- -- --
Net loss from operations (6,163) (3,471) (4,171) (481) (14,286)
Basic and fully diluted
earnings per share nil nil nil nil nil
Weighted-average
number of shares
outstanding 2,950,000 2,950,000 2,950,000 2,950,000 2,950,000
YEAR ENDED AUGUST 31, 2004
Net revenues $ -- $ -- $ -- $ -- $ --
Gross profit -- -- -- -- --
Net loss from operations (3,268) (4,163) (1,927) (14,916) (24,274)
Basic and fully diluted
earnings per share nil nil nil nil (0.01)
Weighted-average
number of shares
outstanding 2,950,000 2,950,000 2,950,000 2,950,000 2,950,000
The Company experiences fluctuations in quarterly operating expenses,
principally an expired marketing contract and professional services, which are
charged to expense as the services are incurred.
(Remainder of this page left blank intentionally)
11
SIMPLAGENE USA, INC.
(a development stage enterprise)
NOTES TO FINANCIAL STATEMENTS - CONTINUED
NOTE K - SUBSEQUENT EVENT
On July 14, 2006 (the "Closing Date"), pursuant to an Agreement and Plan of
Reorganization (the "Merger Agreement"), among the Registrant, SMPG Merco Co.,
Inc., a Delaware corporation and a wholly owned subsidiary of the Registrant
("Merco"), New Colorado Prime Holdings, Inc., a privately owned Delaware
corporation ("NCPH"), and Craig Laughlin ("Laughlin"), the Registrant acquired,
through a merger (the "Merger") of Merco with and into NCPH, all of the issued
and outstanding capital stock of NCPH (the "NCPH Capital Stock"). Upon
completion of this transaction, the former NCPH shareholders and NCPH's
financial advisor have acquired approximately 93.5% of the Company's issued and
outstanding shares of $0.001 par value common stock. This transaction
constituted a change in control of the Company. Accordingly, in connection with
the change of control, Paul A. Roman, Chairman of the Board and Chief Executive
Officer of NCPH, became Chairman of the Board and Chief Executive Officer of the
Company, Thomas McNeill, Vice President, Chief Financial Officer and a director
of NCPH, became Vice President, Chief Financial Officer and a director of the
Registrant, and Richard Gray, a director of NCPH, became a director of the
Registrant. Craig Laughlin was the Company's sole officer and director prior to
this transaction and resigned at the time the transaction was consummated. Mr.
Laughlin was also the Company's majority stockholder immediately prior to the
Closing Date. The reader of these financial statements is also directed to a
Current Report on Form 8-K filed on July 19, 2006 for a complete description of
this transaction, as well as a business description of NCPH and the simultaneous
issuance of $2.5 million in convertible debt and accompanying warrants.
NCPH is a Delaware corporation established in 2001. The Company owns 100% of
Colorado Prime Corporation, a company originally established in 1959 to provide
in-home "restaurant quality" beef shopping services throughout the United
States. During 2005, NCPH established the DINEWise(TM) brand to serve this
market by attracting new customers through multi-channel media which includes
catalogues, e-commerce and strategic alliances, as well as existing customer
referrals. DINEWise(TM) is a direct-to-consumer gourmet home meal replacement
provider. DINEWise(TM) targets lifestyle profiles, i.e. busy moms, singles,
retirees, seniors, and working couples, as well as health profiles including
diabetic, heart smart, low carbohydrate, low calorie, and weight loss. The
Company has positioned its DINEWise(TM) brand as the solution for
time-constrained but discerning consumers focused on satisfying every member of
the family by offering a broad array of the highest quality meal planning,
delivery, and preparation services. Products are customized meal solutions,
delivered fresh-frozen directly to the home. Using the efficiency, exposure and
reach of the Internet and other direct marketing channels, DINEWise(TM)
capitalizes on consumers' emerging need for convenient, simple, customized
solutions for home meal planning and preparation that satisfies the consumers'
health and lifestyle needs in three (3) market segments:
* HOME MEAL REPLACEMENT ("HMR"), which includes ready-to-eat, ready-to-heat,
or ready-to-assemble hot or cold meals or entrees.;
* DIRECT-TO-CONSUMER ("DTC") FOODS, which includes all direct-mail catalogs
and online shopping; and
* DTC DIET AND HEALTH COMPLIANT FOODS MARKET, which includes branded product
programs and branded compliant products.
The July 14, 2006 acquisition of NCPH by SimplaGene USA, Inc. effected a change
in control and was accounted for as a "reverse acquisition" whereby NCPH is the
accounting acquiror for financial statement purposes. Accordingly, for all
periods subsequent to the July 14, 2006, the financial statements of the Company
will reflect the historical financial statements of NCPH since it's inception
and the operations of SimplaGene USA, Inc. subsequent to the July 14, 2006.
(Remainder of this page left blank intentionally)
12
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
CAUTION REGARDING FORWARD-LOOKING INFORMATION
Certain statements contained in this annual filing, including, without
limitation, statements containing the words "believes", "anticipates", "expects"
and words of similar import, constitute forward-looking statements. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors that may cause the actual results, performance or achievements of
the Company, or industry results, to be materially different from any future
results, performance or achievements expressed or implied by such
forward-looking statements.
Such factors include, among others, the following: international, national and
local general economic and market conditions: demographic changes; the ability
of the Company to sustain, manage or forecast its growth; the ability of the
Company to successfully make and integrate acquisitions; raw material costs and
availability; new product development and introduction; existing government
regulations and changes in, or the failure to comply with, government
regulations; adverse publicity; competition; the loss of significant customers
or suppliers; fluctuations and difficulty in forecasting operating results;
changes in business strategy or development plans; business disruptions; the
ability to attract and retain qualified personnel; the ability to protect
technology; and other factors referenced in this and previous filings.
Given these uncertainties, readers of this Form 10-QSB and investors are
cautioned not to place undue reliance on such forward-looking statements. The
Company disclaims any obligation to update any such factors or to publicly
announce the result of any revisions to any of the forward-looking statements
contained herein to reflect future events or developments.
PLAN OF OPERATION
SimplaGene USA was originally formed to market hepatitis B virus (HBV) genetic
data gathered by Ningbo SimplaGene Institute, a Chinese research institute, to
pharmaceutical firms and research organizations. We have not engaged in any
material operations or generated any revenues. Since the completion of our
public offering of common stock, we have worked on developing and implementing
marketing programs that have not proven successful. In May 2004, we entered into
a six-month agreement with Ningbo Freetrade Zone Aipuweixi Trading Co., Ltd.,
located in Ningbo, Zhejiang Province, China to market our HBV data, as well as
DNA processing. As compensation for its services, we paid Ningbo Freetrade an
initial fee of $3,000 and $2,200 a month and agreed to pay a 20 percent
commission on all product sold. In November 2004, the Company's U. S. based
management discovered that Ningbo SimplaGene Institute had substantially
curtailed its business and sold a number of its assets, including a substantial
portion of its blood samples. As a result of these developments, the marketing
agreement with Ningbo SimplaGene Institute was terminated and the Company did
not have access to any saleable product, as anticipated in it's initial business
plan. Management then determined that it was in the best interests of the
Company, and it's shareholders, to abandon its prior business plan and seek an
opportunity to participate with the limited resources remaining in another
business venture that management believes has potential for being successful.
On July 14, 2006 (the "Closing Date"), pursuant to an Agreement and Plan of
Reorganization (the "Merger Agreement"), among the Registrant, SMPG Merco Co.,
Inc., a Delaware corporation and a wholly owned subsidiary of the Registrant
("Merco"), New Colorado Prime Holdings, Inc., a privately owned Delaware
corporation ("NCPH"), and Craig Laughlin ("Laughlin"), the Registrant acquired,
through a merger (the "Merger") of Merco with and into NCPH, all of the issued
and outstanding capital stock of NCPH (the "NCPH Capital Stock"). Upon
completion of this transaction, the former NCPH shareholders and NCPH's
financial advisor have acquired approximately 93.5% of the Company's issued and
outstanding shares of $0.001 par value common stock. This transaction
constituted a change in control of the Company. Accordingly, in connection with
the change of control, Paul A. Roman, Chairman of the Board and Chief Executive
Officer of NCPH, became Chairman of the Board and Chief Executive Officer of the
Company, Thomas McNeill, Vice President, Chief Financial Officer and a director
of NCPH, became Vice President, Chief Financial Officer and a director of the
Registrant, and Richard Gray, a director of NCPH, became a director of the
Registrant. Craig Laughlin was the Company's sole officer and director prior to
this transaction and resigned at the time the transaction was consummated. Mr.
Laughlin was also the Company's majority stockholder immediately prior to the
Closing Date. The reader of these financial statements is also directed to a
Current Report on Form 8-K filed on July 19, 2006 for a complete description of
this transaction, as well as a business description of NCPH and the simultaneous
issuance of $2.5 million in convertible debt and accompanying warrants.
NCPH is a Delaware corporation established in 2001. The Company owns 100% of
Colorado Prime Corporation, a company originally established in 1959 to provide
in-home "restaurant quality" beef shopping services throughout the United
States. During 2005, NCPH established the DINEWise(TM) brand to serve this
market by attracting new customers through multi-channel media which includes
catalogues, e-commerce and strategic alliances, as well as existing customer
referrals. DINEWise(TM) is a direct-to-consumer gourmet home meal replacement
provider. DINEWise(TM) targets lifestyle profiles, i.e. busy moms, singles,
retirees, seniors, and working couples, as well as health profiles including
13
diabetic, heart smart, low carbohydrate, low calorie, and weight loss. The
Company has positioned its DINEWise(TM) brand as the solution for
time-constrained but discerning consumers focused on satisfying every member of
the family by offering a broad array of the highest quality meal planning,
delivery, and preparation services. Products are customized meal solutions,
delivered fresh-frozen directly to the home. Using the efficiency, exposure and
reach of the Internet and other direct marketing channels, DINEWise(TM)
capitalizes on consumers' emerging need for convenient, simple, customized
solutions for home meal planning and preparation that satisfies the consumers'
health and lifestyle needs in three (3) market segments:
* HOME MEAL REPLACEMENT ("HMR"), which includes ready-to-eat, ready-to-heat,
or ready-to-assemble hot or cold meals or entrees.;
* DIRECT-TO-CONSUMER ("DTC") FOODS, which includes all direct-mail catalogs
and online shopping; and
* DTC DIET AND HEALTH COMPLIANT FOODS MARKET, which includes branded product
programs and branded compliant products.
The July 14, 2006 acquisition of NCPH by SimplaGene USA, Inc. effected a change
in control and was accounted for as a "reverse acquisition" whereby NCPH is the
accounting acquiror for financial statement purposes. Accordingly, for all
periods subsequent to the July 14, 2006, the financial statements of the Company
will reflect the historical financial statements of NCPH since it's inception
and the operations of SimplaGene USA, Inc. subsequent to the July 14, 2006.
RESULTS OF OPERATIONS
For the nine months ended May 31, 2006 and 2005, we incurred general and
administrative expenses related primarily to compliance with the Securities
Exchange Act of 1934, as amended, of approximately $20,740 and $9,200,
respectively. During the nine months ended May 31, 2005, we incurred
approximately $4,605 in selling and marketing expenses related to our former
business plan and venture with Ningbo SimplaGene Institute.
Concurrent with our reverse acquisition transaction with New Colorado Prime
Holdings, Inc., we anticipate that our entire financial picture will change in
future periods. We direct the reader of this document to also read and
understand our Current Report on Form 8-K reporting the details and audited
financial statements of New Colorado Prime Holdings, Inc.
At May 31, 2006, August 31, 2005 and May 31, 2005, we had approximately $20,741,
$49,235 and $49,600 in cash and cash equivalents and our working capital was
approximately the same. During Fiscal 2005 and 2004, the Company was advanced an
aggregate of approximately $16,200 by its President and controlling shareholder,
Xinbo Wang, for the purpose of funding a marketing agreement and to provide
working capital. These advances were non-interest bearing and were repayable
upon demand. During the quarter ended May 31, 2005, the Company repaid these
advances in full.
Through July 14, 2006, the date of our reverse acquisition transaction with New
Colorado Prime Holdings, Inc., we experienced negative cash flows from operating
activities. For periods subsequent to July 14, 2006, we are unable, at this
time, to project what our cash flows and requirements will be.
ITEM 3 - CONTROLS AND PROCEDURES
(a) Evaluation of Disclosure Controls and Procedures
Under the supervision and with the participation of our management, including
our principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as
amended (Exchange Act), as of January 31, 2005. Based on this evaluation, our
principal executive officer and principal financial officer concluded that our
disclosure controls and procedures are effective in alerting them on a timely
basis to material information relating to our Company required to be included in
our reports filed or submitted under the Exchange Act.
(b) Changes in Internal Controls
There were no significant changes (including corrective actions with regard to
significant deficiencies or material weaknesses) in our internal controls over
financial reporting that occurred during the quarter ended May 31, 2006 that has
materially affected, or is reasonably likely to materially affect, our internal
control over financial reporting.
14
PART II
ITEM 1 - LEGAL PROCEEDINGS
None
ITEM 2 - CHANGES IN SECURITIES
On July 14, 2006 (Closing Date), New Colorado Prime Holdings, Inc. (NCPH) and
Craig Laughlin (Laughlin) entered into a Stock Purchase Agreement (the "Stock
Purchase Agreement") pursuant to which Laughlin sold 999,300 shares of our
Common Stock to NCPH in consideration of a cash payment of $449,042. On the
Closing Date, NCPH surrendered the shares to the Company for cancellation.
Accordingly, on the Closing Date, we issued 25,799,141 shares of our Common
Stock in exchange for all of the issued and outstanding securities of NCPH. In
addition, an additional 2,250,000 shares of our Common Stock were issued to
Crusader Securities, LLC, NCPH's financial advisor. Immediately after closing,
the Registrant had 50,000,000 shares of our Common Stock authorized and
approximately 30,000,000 shares of the our Common Stock issued and outstanding.
Immediately following the closing, the former shareholders of the Registrant
held 1,950,700, or 6.5%, of our issued and outstanding Common Stock.
ITEM 3 - DEFAULTS ON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company has held no regularly scheduled, called or special meetings of
shareholders during the reporting period.
ITEM 5 - OTHER INFORMATION
On July 14, 2006 (the "Closing Date"), pursuant to an Agreement and Plan of
Reorganization (the "Merger Agreement"), among the Registrant, SMPG Merco Co.,
Inc., a Delaware corporation and a wholly owned subsidiary of the Registrant
("Merco"), New Colorado Prime Holdings, Inc., a privately owned Delaware
corporation ("NCPH"), and Craig Laughlin ("Laughlin"), the Registrant acquired,
through a merger (the "Merger") of Merco with and into NCPH, all of the issued
and outstanding capital stock of NCPH (the "NCPH Capital Stock"). Upon
completion of this transaction, the former NCPH shareholders and NCPH's
financial advisor have acquired approximately 93.5% of the Company's issued and
outstanding shares of $0.001 par value common stock. This transaction
constituted a change in control of the Company. Accordingly, in connection with
the change of control, Paul A. Roman, Chairman of the Board and Chief Executive
Officer of NCPH, became Chairman of the Board and Chief Executive Officer of the
Company, Thomas McNeill, Vice President, Chief Financial Officer and a director
of NCPH, became Vice President, Chief Financial Officer and a director of the
Registrant, and Richard Gray, a director of NCPH, became a director of the
Registrant. Craig Laughlin was the Company's sole officer and director prior to
this transaction and resigned at the time the transaction was consummated. Mr.
Laughlin was also the Company's majority stockholder immediately prior to the
Closing Date. The reader of these financial statements is also directed to a
Current Report on Form 8-K filed on July 19, 2006 for a complete description of
this transaction, as well as a business description of NCPH and the simultaneous
issuance of $2.5 million in convertible debt and accompanying warrants.
NCPH is a Delaware corporation established in 2001. The Company owns 100% of
Colorado Prime Corporation, a company originally established in 1959 to provide
in-home "restaurant quality" beef shopping services throughout the United
States. During 2005, NCPH established the DINEWise(TM) brand to serve this
market by attracting new customers through multi-channel media which includes
catalogues, e-commerce and strategic alliances, as well as existing customer
referrals. DINEWise(TM) is a direct-to-consumer gourmet home meal replacement
provider. DINEWise(TM) targets lifestyle profiles, i.e. busy moms, singles,
retirees, seniors, and working couples, as well as health profiles including
diabetic, heart smart, low carbohydrate, low calorie, and weight loss. The
Company has positioned its DINEWise(TM) brand as the solution for
time-constrained but discerning consumers focused on satisfying every member of
the family by offering a broad array of the highest quality meal planning,
delivery, and preparation services. Products are customized meal solutions,
delivered fresh-frozen directly to the home. Using the efficiency, exposure and
reach of the Internet and other direct marketing channels, DINEWise(TM)
capitalizes on consumers' emerging need for convenient, simple, customized
solutions for home meal planning and preparation that satisfies the consumers'
health and lifestyle needs in three (3) market segments:
* HOME MEAL REPLACEMENT ("HMR"), which includes ready-to-eat, ready-to-heat,
or ready-to-assemble hot or cold meals or entrees.;
* DIRECT-TO-CONSUMER ("DTC") FOODS, which includes all direct-mail catalogs
and online shopping; and
* DTC DIET AND HEALTH COMPLIANT FOODS MARKET, which includes branded product
programs and branded compliant products.
15
The July 14, 2006 acquisition of NCPH by SimplaGene USA, Inc. effected a change
in control and was accounted for as a "reverse acquisition" whereby NCPH is the
accounting acquiror for financial statement purposes. Accordingly, for all
periods subsequent to the July 14, 2006, the financial statements of the Company
will reflect the historical financial statements of NCPH since it's inception
and the operations of SimplaGene USA, Inc. subsequent to the July 14, 2006.
We direct all readers to our Current Report on Form 8-K which more completely
discusses and discloses the operational history of New Colorado Prime Holdings,
Inc., as well as the terms and conditions of the July 14, 2006 transaction.
ITEM 6 - EXHIBITS
Exhibits
- --------
31.1 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 -
Chief Executive Officer
31.2 Certification pursuant to Section 302 of Sarbanes-Oxley Act of 2002 -
Chief Financial Officer
32.1 Certifications pursuant to Section 906 of Sarbanes-Oxley Act of 2002.
- --------------------------------------------------------------------------------
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
SIMPLAGENE USA, INC.
Dated: July 19, 2006 /s/ Thomas McNeill
------------- --------------------------
Thomas McNeill
Vice President and
Chief Financial Officer
16