UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X[ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended: September 30, 2011
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from __________ to __________
Commission File Number 000-53781
STEVIA CORP.
(Name of registrant as specified in its charter)
Nevada 98-0537233
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification Number)
7117 US 31 S, Indianapolis, IN 46227
(Address of Principal Executive Offices) (Zip Code)
(888) 250-2566
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class Name of each exchange on which registered
------------------- -----------------------------------------
None None
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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. [X] Yes [ ] No
Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). [X] Yes [ ] No
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer," and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.
Non-accelerated filer [ ] Accelerated filer [ ]
Large accelerated filer [ ] Smaller Reporting company [X]
(Do not check if smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at October 31, 2011
----- -------------------------------
Common stock, $.001 par value 52,800,000
STEVIA CORP.
FORM 10-Q
SEPTEMBER 30, 2011
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements................................................ 4
Consolidated Balance Sheets as of September 30, 2011 (Unaudited).... 5
Consolidated Statements of Operations for the Three Months
Ended September 30, 2011 and for the Period from April 11, 2011
(inception) through September 30, 2011 (Unaudited).................. 6
Consolidated Statements of Stockholders' Equity (Deficit) for
the period from April 11, 2011 (inception) through
September 30, 2011 (Unaudited)...................................... 7
Consolidated Statements of Cash Flows for the period from
April 11, 2011 (inception) through September 30, 2011 (Unaudited)... 8
Notes to the Consolidated Financial Statements (Unaudited).......... 9
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................23
Item 3. Quantitative and Qualitative Disclosures About Market Risk..........25
Item 4. Controls and Procedures.............................................25
PART II - OTHER INFORMATION
Item 1. Legal Proceedings...................................................26
Item 1A. Risk Factors........................................................26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.........26
Item 3. Defaults Upon Senior Securities.....................................27
Item 4. Reserved............................................................27
Item 5. Other Information...................................................27
Item 6. Exhibits............................................................27
Signatures....................................................................28
2
FORWARD-LOOKING STATEMENTS
This Report on Form 10-Q contains forward-looking statements within the meaning
of the "safe harbor" provisions of the Private Securities Litigation Reform Act
of 1995. Reference is made in particular to the description of our plans and
objectives for future operations, assumptions underlying such plans and
objectives, and other forward-looking statements included in this report. Such
statements may be identified by the use of forward-looking terminology such as
"may," "will," "expect," "believe," "estimate," "anticipate," "intend,"
"continue," or similar terms, variations of such terms, or the negative of such
terms. Such statements are based on management's current expectations and are
subject to a number of factors and uncertainties, which could cause actual
results to differ materially from those described in the forward-looking
statements. Such statements address future events and conditions concerning,
among others, capital expenditures, earnings, litigation, regulatory matters,
liquidity and capital resources, and accounting matters. Actual results in each
case could differ materially from those anticipated in such statements by reason
of factors such as future economic conditions, changes in consumer demand,
legislative, regulatory and competitive developments in markets in which we
operate, results of litigation, and other circumstances affecting anticipated
revenues and costs, and the risk factors set forth under the heading "Risk
Factors" in our Current Report on Form 8-K filed on June 29, 2011.
As used in this Form 10-Q, "we," "us" and "our" refer to Stevia Corp., which is
also sometimes referred to as the "Company."
YOU SHOULD NOT PLACE UNDUE RELIANCE ON THESE FORWARD LOOKING STATEMENTS
The forward-looking statements made in this report on Form 10-Q relate only to
events or information as of the date on which the statements are made in this
report on Form 10-Q. Except as required by law, we undertake no obligation to
update or revise publicly any forward-looking statements, whether as a result of
new information, future events, or otherwise, after the date on which the
statements are made or to reflect the occurrence of unanticipated events. You
should read this report and the documents that we reference in this report,
including documents referenced by incorporation, completely and with the
understanding that our actual future results may be materially different from
what we expect or
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Stevia Corp.
(A Development Stage Company)
September 30, 2011
Index to Consolidated Financial Statements
Contents Page
-------- ----
Consolidated Balance Sheet at September 30, 2011 (Unaudited) ................. 5
Consolidated Statements of Operation for the Three Months Ended
September 30, 2011 and for the Period from April 11, 2011 (Inception)
through September 30, 2011 (Unaudited) ...................................... 6
Consolidated Statement of Stockholders' Equity (Deficit) for the Period
from April 11, 2011 (Inception) through September 30, 2011 (Unaudited) ...... 7
Consolidated Statement of Cash Flows for the Period from April 11, 2011
(Inception) through September 30, 2011 (Unaudited) .......................... 8
Notes to the Consolidated Financial Statements (Unaudited) ................... 9
4
Stevia Corp.
(A Development Stage Company)
Consolidated Balance Sheet
September 30,
2011
----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 76,629
Accounts receivable 1,300
Prepaid expenses 5,527
----------
TOTAL CURRENT ASSETS 83,456
----------
WEBSITE DEVELOPMENT COSTS
Website development costs 5,315
Accumulated amortization (267)
----------
WEBSITE DEVELOPMENT COSTS, NET 5,048
----------
TOTAL ASSETS $ 88,504
==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable $ 26,043
Accounts payable - related party 40,000
Accrued expenses 19,078
Advances from president and significant stockholder 18,938
Convertible notes payable 350,000
----------
TOTAL CURRENT LIABILITIES 454,059
----------
STOCKHOLDERS' DEFICIT
Common stock at $0.001 par value: 100,000,000 shares authorized,
52,800,000 shares issued and outstanding 52,800
Additional paid-in capital (170,988)
Deficit accumulated during the development stage (247,367)
----------
TOTAL STOCKHOLDERS' DEFICIT (365,555)
----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ 88,504
==========
See accompanying notes to the financial statements.
5
Stevia Corp.
(A Development Stage Company)
Consolidated Statements of Operations
For the Period from
For the April 11, 2011
Three Months (inception)
Ended through
September 30, September 30,
2011 2011
------------ ------------
(Unaudited) (Unaudited)
Revenues eaarned during the development stage $ 1,300 $ 1,300
Cost of services during the development stage 60,000 60,000
------------ ------------
Gross profit (58,700) (58,700)
OPERATING EXPENSES:
Professional fees 39,658 52,729
Research and development 105,197 105,197
General and administrative 21,193 21,293
------------ ------------
TOTAL OPERATING EXPENSES 166,048 179,219
------------ ------------
Loss from operations (224,748) (237,919)
OTHER (INCOME) EXPENSE
Interest expense 8,822 9,493
Interest income (45) (45)
------------ ------------
TOTAL OTHER (INCOME) EXPENSE 8,777 9,448
------------ ------------
Loss before income taxes (233,525) (247,367)
Income tax provision -- --
------------ ------------
NET LOSS $ (233,525) $ (247,367)
============ ============
NET LOSS PER COMMON SHARE
- Basic and diluted $ (0.00) $ (0.01)
============ ============
WEIGHTED COMMON SHARES OUTSTANDING
- basic and diluted 52,800,000 32,938,080
============ ============
See accompanying notes to the financial statements
6
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period from April 11, 2011 (Inception) through September 30, 2011
(Unaudited)
Common Stock, Deficit
$0.001 Par Value Accumulated Total
---------------------- Additional During the Stockholders'
Number of Paid-in Development Equity
Shares Amount Capital Stage (Deficit)
------ ------ ------- ----- ---------
Balance, April 11, 2011 (inception) 6,000,000 $ 6,000 $ (5,900) $ -- $ 100
Common shares deemed issued in
reverse acquisition 79,800,000 79,800 (198,088) -- (118,288)
Common shares cancelled in
reverse acquisition (33,000,000) (33,000) 33,000 -- --
Net loss -- -- -- (247,367) (247,367)
----------- ----------- ----------- ----------- -----------
Balance, September 30, 2011 52,800,000 $ 52,800 $ (170,988) $ (247,367) $ (365,555)
=========== =========== =========== =========== ===========
See accompanying notes to the financial statements.
7
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Cash Flows
For the Period from
April 11, 2011
(inception)
through
September 30,
2011
----------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $ (247,367)
Adjustments to reconcile net loss to net cash
used in operating activities
Amortization expense 267
Changes in operating assets and liabilities:
Accounts receivable (1,300)
Prepaid expenses (5,527)
Accounts payable (69,715)
Accounts payable - related parties 40,000
Accrued expenses 12,388
----------
NET CASH USED IN OPERATING ACTIVITIES (271,254)
----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Website development costs (5,315)
Cash received from reverse acquisition 3,198
----------
NET CASH USED IN INVESTING ACTIVITIES (2,117)
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from president and stockholder 350,000
----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 350,000
----------
Net change in cash 76,629
Cash at beginning of period --
----------
Cash at end of period $ 76,629
==========
Supplemental disclosure of cash flows information:
Interest paid $ --
==========
Income tax paid $ --
==========
See accompanying notes to the financial statements.
8
Stevia Corp.
(A Development Stage Company)
September 30, 2011
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND OPERATIONS
STEVIA CORP. (FORMERLY INTERPRO MANAGEMENT CORP.)
Interpro Management Corp ("Interpro") was incorporated under the laws of
the State of Nevada on May 21, 2007. Interpro focused on developing and offering
web based software that was designed to be an online project management tool
used to enhance an organization's efficiency through planning and monitoring the
daily operations of a business. The Company discontinued its web-based software
business upon the acquisition of Stevia Ventures International Ltd. on June 23,
2011.
On March 4, 2011, Interpro amended its Articles of Incorporation, and
changed its name to Stevia Corp. ("Stevia" or the "Company") and effectuated a
35 for 1 forward stock split of all of its issued and outstanding shares of
common stock (the "Stock Split").
All shares and per share amounts in the consolidated financial statements
have been adjusted to give retroactive effect to the Stock Split.
STEVIA VENTURES INTERNATIONAL LTD.
Stevia Ventures International Ltd. ("Ventures") was incorporated on April
11, 2011 under the laws of the Territory of the British Virgin Islands ("BVI").
Ventures owns certain rights relating to stevia production, including certain
assignable exclusive purchase contracts and an assignable supply agreement
related to stevia.
ACQUISITION OF STEVIA VENTURES INTERNATIONAL LTD. RECOGNIZED AS A REVERSE
ACQUISITION
On June 23, 2011 (the "Closing Date"), the Company closed a voluntary share
exchange transaction with Stevia Ventures International Ltd. ("Ventures")
pursuant to a Share Exchange Agreement (the "Share Exchange Agreement") by and
among the Company, Ventures and George Blankenbaker, the stockholder of Ventures
(the "Ventures Stockholder").
Immediately before the Share Exchange Transaction, the Company had
79,800,000 common shares issued and outstanding. Simultaneously with the Closing
of the Share Exchange Transaction, on the Closing Date, Mohanad Shurrab, a
shareholder and, as of the Closing Date, the Company's former Director,
President, Treasurer and Secretary, surrendered 33,000,000 shares of the
Company's common stock to the Company for cancellation.
As a result of the Share Exchange Transaction, the Company issued
12,000,000 common shares for the acquisition of 100% of the issued and
outstanding shares of Stevia Ventures International Ltd. Of the 12,000,000
common shares issued in connection with the Share Exchange Agreement, 6,000,000
of such shares are being held in escrow pending the achievement by the Company
of certain post-Closing business milestones (the "Milestones"), pursuant to the
terms of the Make Good Escrow Agreement, between the Company, Greenberg Traurig,
LLP, as escrow agent and the Ventures' Stockholder (the "Escrow Agreement").
Even though the shares issued only represented approximately 20.4% of the issued
and outstanding common stock immediately after the consummation of the Share
Exchange Agreement the stockholder of Ventures completely took over and
controlled the board of directors and management of the Company upon
acquisition.
As a result of the control of the then Ventures's Stockholder, for
financial statement reporting purposes, the merger between the Company and
Ventures has been treated as a reverse acquisition with Ventures deemed the
accounting acquirer and the Company deemed the accounting acquiree under the
purchase method of accounting in accordance with section 805-10-55 of the FASB
Accounting Standards Codification. The reverse merger is deemed a capital
transaction and the net assets of Ventures (the accounting acquirer) are carried
forward to the Company (the legal acquirer and the reporting entity) at their
carrying value before the combination. The acquisition process utilizes the
capital structure of the Company and the assets and liabilities of Ventures
which are recorded at historical cost. The equity of the Company is the
historical equity of Ventures retroactively restated to reflect the number of
shares issued by the Company in the transaction.
9
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION - UNAUDITED INTERIM FINANCIAL INFORMATION
The accompanying unaudited interim financial statements and related notes
have been prepared in accordance with accounting principles generally accepted
in the United States of America ("U.S. GAAP") for interim financial information,
and with the rules and regulations of the United States Securities and Exchange
Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP
for complete financial statements. The unaudited interim financial statements
furnished reflect all adjustments (consisting of normal recurring accruals)
which are, in the opinion of management, necessary to a fair statement of the
results for the interim periods presented. Interim results are not necessarily
indicative of the results for the full year. These financial statements should
be read in conjunction with the financial statements of the Company for the
period from April 11, 2011 (inception) through April 30, 2011 and notes thereto
contained in the Company's Report on Form 8-K as filed with the SEC on June 29,
2011.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include all accounts of Ventures as
of September 30, 2011 and for the period from April 11, 2011 (inception) through
September 30, 2011 and all accounts of Stevia as of September 30, 2011 and for
the period from June 23, 2011 (date of acquisition) through September 30, 2011.
All inter-company balances and transactions have been eliminated.
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 915-10-20
of the Financial Accounting Standards Board ("FASB") Accounting Standards
Codification. Although the Company has recognized some nominal amount of
revenues since inception, the Company is still devoting substantially all of its
efforts on establishing the business and, therefore, still qualifies as a
development stage company. All losses accumulated since inception have been
considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS
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.
The Company's significant estimates and assumptions include the fair value
of financial instruments; the carrying value, recoverability and impairment of
long-lived assets, including the values assigned to and the estimated useful
lives of website development costs; interest rate; revenue recognized or
recognizable; sales returns and allowances; foreign currency exchange rate;
income tax rate, income tax provision and valuation allowance of deferred tax
assets; and the assumption that the Company will continue as a going concern.
Those significant accounting estimates or assumptions bear the risk of change
due to the fact that there are uncertainties attached to those estimates or
assumptions, and certain estimates or assumptions are difficult to measure or
value.
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable under the circumstances, the
results of which form the basis for making judgments about the carrying values
of assets and liabilities that are not readily apparent from other sources.
Management regularly reviews its estimates utilizing currently available
information, changes in facts and circumstances, historical experience and
reasonable assumptions. After such reviews, and if deemed appropriate, those
estimates are adjusted accordingly. Actual results could differ from those
estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 820-10-35-37 of the FASB Accounting Standards
Codification ("Paragraph 820-10-35-37") to measure the fair value of its
financial instruments and paragraph 825-10-50-10 of the FASB Accounting
Standards Codification for disclosures about fair value of its financial
instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair
value in accounting principles generally accepted in the United States of
America (U.S. GAAP), and expands disclosures about fair value measurements. To
increase consistency and comparability in fair value measurements and related
disclosures, Paragraph 820-10-35-37 establishes a fair value hierarchy which
prioritizes the inputs to valuation techniques used to measure fair value into
three (3) broad levels. The three (3) levels of fair value hierarchy defined by
Paragraph 820-10-35-37 are described below:
10
Level 1 Quoted market prices available in active markets for identical assets
or liabilities as of the reporting date.
Level 2 Pricing inputs other than quoted prices in active markets included
in Level 1, which are either directly or indirectly observable as of
the reporting date.
Level 3 Pricing inputs that are generally observable inputs and not
corroborated by market data.
Financial assets are considered Level 3 when their fair values are
determined using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input is
unobservable.
The fair value hierarchy gives the highest priority to quoted prices
(unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the
financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant
to the fair value measurement of the instrument.
The carrying amounts of the Company's financial assets and liabilities,
such as cash, accounts receivable, prepaid expenses, accounts payable and
accrued expenses, approximate their fair values because of the short maturity of
these instruments.
The Company's convertible notes payable approximates the fair value of such
instrument based upon management's best estimate of interest rates that would be
available to the Company for similar financial arrangements at September 30,
2011.
Transactions involving related parties cannot be presumed to be carried out
on an arm's-length basis, as the requisite conditions of competitive,
free-market dealings may not exist. Representations about transactions with
related parties, if made, shall not imply that the related party transactions
were consummated on terms equivalent to those that prevail in arm's-length
transactions unless such representations can be substantiated.
It is not however, practical to determine the fair value of advances from
stockholders due to their related party nature.
CARRYING VALUE, RECOVERABILITY AND IMPAIRMENT OF LONG-LIVED ASSETS
The Company has adopted paragraph 360-10-35-17 of the FASB Accounting
Standards Codification for its long-lived assets. The Company's long-lived
assets, which include website development costs, are reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable.
The Company assesses the recoverability of its long-lived assets by
comparing the projected undiscounted net cash flows associated with the related
long-lived asset or group of long-lived assets over their remaining estimated
useful lives against their respective carrying amounts. Impairment, if any, is
based on the excess of the carrying amount over the fair value of those assets.
Fair value is generally determined using the asset's expected future discounted
cash flows or market value, if readily determinable. If long-lived assets are
determined to be recoverable, but the newly determined remaining estimated
useful lives are shorter than originally estimated, the net book values of the
long-lived assets are depreciated over the newly determined remaining estimated
useful lives.
The Company considers the following to be some examples of important
indicators that may trigger an impairment review: (i) significant
under-performance or losses of assets relative to expected historical or
projected future operating results; (ii) significant changes in the manner or
use of assets or in the Company's overall strategy with respect to the manner or
use of the acquired assets or changes in the Company's overall business
strategy; (iii) significant negative industry or economic trends; (iv) increased
competitive pressures; (v) a significant decline in the Company's stock price
for a sustained period of time; and (vi) regulatory changes. The Company
evaluates acquired assets for potential impairment indicators at least annually
and more frequently upon the occurrence of such events.
The key assumptions used in management's estimates of projected cash flow
deal largely with forecasts of sales levels and gross margins. These forecasts
are typically based on historical trends and take into account recent
developments as well as management's plans and intentions. Other factors, such
as increased competition or a decrease in the desirability of the Company's
products or services, could lead to lower projected sales levels, which would
adversely impact cash flows. A significant change in cash flows in the future
could result in an impairment of long lived assets.
The impairment charges, if any, is included in operating expenses in the
accompanying consolidated statements of income and comprehensive income (loss).
11
FISCAL YEAR END
The Company elected March 31 as its fiscal year ending date.
CASH EQUIVALENTS
The Company considers all highly liquid investments with maturities of
three months or less at the time of purchase to be cash equivalents.
ACCOUNTS RECEIVABLE AND ALLOWANCE FOR DOUBTFUL ACCOUNTS
Accounts receivable are recorded at the invoiced amount, net of an
allowance for doubtful accounts. The Company follows paragraph 310-10-50-9 of
the FASB Accounting Standards Codification to estimate the allowance for
doubtful accounts. The Company performs on-going credit evaluations of its
customers and adjusts credit limits based upon payment history and the
customer's current credit worthiness, as determined by the review of their
current credit information; and determines the allowance for doubtful accounts
based on historical write-off experience, customer specific facts and economic
conditions.
Outstanding account balances are reviewed individually for collectability.
The allowance for doubtful accounts is the Company's best estimate of the amount
of probable credit losses in the Company's existing accounts receivable. Bad
debt expense is included in general and administrative expenses, if any.
Pursuant to paragraph 310-10-50-2 of the FASB Accounting Standards Codification
account balances are charged off against the allowance after all means of
collection have been exhausted and the potential for recovery is considered
remote. The Company has adopted paragraph 310-10-50-6 of the FASB Accounting
Standards Codification and determine when receivables are past due or delinquent
based on how recently payments have been received.
There was no allowance for doubtful accounts at September 30, 2011.
The Company does not have any off-balance-sheet credit exposure to its
customers.
WEBSITE DEVELOPMENT COSTS
Website development costs are stated at cost less accumulated amortization.
The cost of the website development is amortized on a straight-line basis over
its estimated useful life of five (5) years. Upon becoming fully amortized, the
related cost and accumulated amortization are removed from the accounts.
RELATED PARTIES
The Company follows subtopic 850-10 of the FASB Accounting Standards
Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section 850-10-20 the related parties include a. affiliates of
the Company; b. entities for which investments in their equity securities would
be required, absent the election of the fair value option under the Fair Value
Option Subsection of Section 825-10-15, to be accounted for by the equity method
by the investing entity; c. trusts for the benefit of employees, such as pension
and profit-sharing trusts that are managed by or under the trusteeship of
management; d.principal owners of the Company; e. management of the Company; f.
other parties with which the Company may deal if one party controls or can
significantly influence the management or operating policies of the other to an
extent that one of the transacting parties might be prevented from fully
pursuing its own separate interests; and g. other parties that can significantly
influence the management or operating policies of the transacting parties or
that have an ownership interest in one of the transacting parties and can
significantly influence the other to an extent that one or more of the
transacting parties might be prevented from fully pursuing its own separate
interests.
The financial statements shall include disclosures of material related
party transactions, other than compensation arrangements, expense allowances,
and other similar items in the ordinary course of business. However, disclosure
of transactions that are eliminated in the preparation of consolidated or
combined financial statements is not required in those statements. The
disclosures shall include: a. the nature of the relationship(s) involvedb.
description of the transactions, including transactions to which no amounts or
nominal amounts were ascribed, for each of the periods for which income
statements are presented, and such other information deemed necessary to an
understanding of the effects of the transactions on the financial statements; c.
the dollar amounts of transactions for each of the periods for which income
statements are presented and the effects of any change in the method of
establishing the terms from that used in the preceding period; and d. mounts due
from or to related parties as of the date of each balance sheet presented and,
if not otherwise apparent, the terms and manner of settlement.
12
COMMITMENT AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Certain conditions may
exist as of the date the consolidated financial statements are issued, which may
result in a loss to the Company but which will only be resolved when one or more
future events occur or fail to occur. The Company assesses such contingent
liabilities, and such assessment inherently involves an exercise of judgment. In
assessing loss contingencies related to legal proceedings that are pending
against the Company or unasserted claims that may result in such proceedings,
the Company evaluates the perceived merits of any legal proceedings or
unasserted claims as well as the perceived merits of the amount of relief sought
or expected to be sought therein.
If the assessment of a contingency indicates that it is probable that a
material loss has been incurred and the amount of the liability can be
estimated, then the estimated liability would be accrued in the Company's
consolidated financial statements. If the assessment indicates that a potential
material loss contingency is not probable but is reasonably possible, or is
probable but cannot be estimated, then the nature of the contingent liability,
and an estimate of the range of possible losses, if determinable and material,
would be disclosed.
Loss contingencies considered remote are generally not disclosed unless
they involve guarantees, in which case the guarantees would be disclosed.
Management does not believe, based upon information available at this time, that
these matters will have a material adverse effect on the Company's consolidated
financial position, results of operations or cash flows. However, there is no
assurance that such matters will not materially and adversely affect the
Company's business, financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company recognizes revenue when it is
realized or realizable and earned. The Company considers revenue realized or
realizable and earned when all of the following criteria are met: (i) persuasive
evidence of an arrangement exists, (ii) the product has been shipped or the
services have been rendered to the customer, (iii) the sales price is fixed or
determinable, and (iv) collectability is reasonably assured.
RESEARCH AND DEVELOPMENT
The Company follows paragraph 730-10-25-1 of the FASB Accounting Standards
Codification (formerly Statement of Financial Accounting Standards No. 2
"ACCOUNTING FOR RESEARCH AND DEVELOPMENT COSTS") and paragraph 730-20-25-11 of
the FASB Accounting Standards Codification (formerly Statement of Financial
Accounting Standards No. 68 "RESEARCH AND DEVELOPMENT ARRANGEMENTS") for
research and development costs. Research and development costs are charged to
expense as incurred. Research and development costs consist primarily of
remuneration for research and development staff, depreciation and maintenance
expenses of research and development equipment, material and testing costs for
research and development as well as research and development arrangements with
unrelated third party research and development institutions. The research and
development arrangements usually involve one specific research and development
project for the development of a plant's growing protocol. Often times, the
Company makes non-refundable advances upon signing of these arrangements. The
Company adopted paragraph 730-20-25-13 and 730-20-35-1 of the FASB Accounting
Standards Codification (formerly Emerging Issues Task Force Issue No. 07-3
"ACCOUNTING FOR NONREFUNDABLE ADVANCE PAYMENTS FOR GOODS OR SERVICES TO BE USED
IN FUTURE RESEARCH AND DEVELOPMENT ACTIVITIES") for those non-refundable
advances. Non-refundable advance payments for goods or services that will be
used or rendered for future research and development activities are deferred and
capitalized. Such amounts are recognized as an expense as the related goods are
delivered or the related services are performed. The management continues to
evaluate whether the Company expect the goods to be delivered or services to be
rendered. If the management does not expect the goods to be delivered or
services to be rendered, the capitalized advance payment are charged to expense.
FOREIGN CURRENCY TRANSACTIONS
The Company applies the guidelines as set out in Section 830-20-35 of the
FASB Accounting Standards Codification ("Section 830-20-35") for foreign
currency transactions. Pursuant to Section 830-20-35 of the FASB Accounting
Standards Codification, foreign currency transactions are transactions
denominated in currencies other than U.S. Dollar, the Company's functional and
reporting currency. Foreign currency transactions may produce receivables or
payables that are fixed in terms of the amount of foreign currency that will be
received or paid. A change in exchange rates between the functional currency and
the currency in which a transaction is denominated increases or decreases the
expected amount of functional currency cash flows upon settlement of the
transaction. That increase or decrease in expected functional currency cash
flows is a foreign currency transaction gain or loss that generally shall be
included in determining net income for the period in which the exchange rate
changes. Likewise, a transaction gain or loss (measured from the transaction
date or the most recent intervening balance sheet date, whichever is later)
realized upon settlement of a foreign currency transaction generally shall be
included in determining net income for the period in which the transaction is
settled. The exceptions to this requirement for inclusion in net income of
transaction gains and losses pertain to certain intercompany transactions and to
transactions that are designated as, and effective as, economic hedges of net
investments and foreign currency commitments. Pursuant to Section 830-20-25 of
the FASB Accounting Standards Codification, the following shall apply to all
13
foreign currency transactions of an enterprise and its investees: (a) at the
date the transaction is recognized, each asset, liability, revenue, expense,
gain, or loss arising from the transaction shall be measured and recorded in the
functional currency of the recording entity by use of the exchange rate in
effect at that date as defined in section 830-10-20 of the FASB Accounting
Standards Codification; and (b) at each balance sheet date, recorded balances
that are denominated in currencies other than the functional currency or
reporting currency of the recording entity shall be adjusted to reflect the
current exchange rate.
STOCK-BASED COMPENSATION FOR OBTAINING EMPLOYEE SERVICES
The Company accounts for its stock based compensation in which the Company
obtains employee services in share-based payment transactions under the
recognition and measurement principles of the fair value recognition provisions
of section 718-10-30 of the FASB Accounting Standards Codification. Pursuant to
paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all
transactions in which goods or services are the consideration received for the
issuance of equity instruments are accounted for based on the fair value of the
consideration received or the fair value of the equity instrument issued,
whichever is more reliably measurable. The measurement date used to determine
the fair value of the equity instrument issued is the earlier of the date on
which the performance is complete or the date on which it is probable that
performance will occur.
The fair value of each option award is estimated on the date of grant using
a Black-Scholes option-pricing valuation model. The ranges of assumptions for
inputs are as follows:
* The Company uses historical data to estimate employee termination
behavior. The expected life of options granted is derived from
paragraph 718-10-S99-1 of the FASB Accounting Standards Codification
and represents the period of time the options are expected to be
outstanding.
* The expected volatility is based on a combination of the historical
volatility of the comparable companies' stock over the contractual
life of the options.
* The risk-free interest rate is based on the U.S. Treasury yield curve
in effect at the time of grant for periods within the contractual life
of the option.
* The expected dividend yield is based on the Company's current dividend
yield as the best estimate of projected dividend yield for periods
within the contractual life of the option.
The Company's policy is to recognize compensation cost for awards with only
service conditions and a graded vesting schedule on a straight-line basis over
the requisite service period for the entire award.
EQUITY INSTRUMENTS ISSUED TO PARTIES OTHER THAN EMPLOYEES FOR ACQUIRING GOODS OR
SERVICES
The Company accounts for equity instruments issued to parties other than
employees for acquiring goods or services under guidance of section 505-50-30 of
the FASB Accounting Standards Codification ("Section 505-50-30").
Pursuant to Section 505-50-30, all transactions in which goods or services
are the consideration received for the issuance of equity instruments are
accounted for based on the fair value of the consideration received or the fair
value of the equity instrument issued, whichever is more reliably measurable.
The measurement date used to determine the fair value of the equity instrument
issued is the earlier of the date on which the performance is complete or the
date on which it is probable that performance will occur.
Pursuant to Paragraph 505-50-30-S99-1, if the Company receives a right to
receive future services in exchange for unvested, forfeitable equity
instruments, those equity instruments are treated as unissued for accounting
purposes until the future services are received (that is, the instruments are
not considered issued until they vest). Consequently, there would be no
recognition at the measurement date and no entry should be recorded.
INCOME TAXES
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification, which requires recognition of deferred tax
assets and liabilities for the expected future tax consequences of events that
have been included in the financial statements or tax returns. Under this
method, deferred tax assets and liabilities are based on the differences between
the financial statement and tax bases of assets and liabilities using enacted
tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent
management concludes it is more likely than not that the assets will not be
realized. Deferred tax assets and liabilities are measured using enacted tax
rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in the
consolidated statements of income and comprehensive income (loss) in the period
that includes the enactment date.
14
The Company adopted section 740-10-25 of the FASB Accounting Standards
Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax
return should be recorded in the financial statements. Under Section 740-10-25,
the Company may recognize the tax benefit from an uncertain tax position only if
it is more likely than not that the tax position will be sustained on
examination by the taxing authorities, based on the technical merits of the
position. The tax benefits recognized in the financial statements from such a
position should be measured based on the largest benefit that has a greater than
fifty (50) percent likelihood of being realized upon ultimate settlement.
Section 740-10-25 also provides guidance on de-recognition, classification,
interest and penalties on income taxes, accounting in interim periods and
requires increased disclosures.
The estimated future tax effects of temporary differences between the tax
basis of assets and liabilities are reported in the accompanying consolidated
balance sheets, as well as tax credit carry-backs and carry-forwards. The
Company periodically reviews the recoverability of deferred tax assets recorded
on its consolidated balance sheets and provides valuation allowances as
management deems necessary.
Management makes judgments as to the interpretation of the tax laws that
might be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing
jurisdictions and is subject to audit in these jurisdictions. In management's
opinion, adequate provisions for income taxes have been made for all years. If
actual taxable income by tax jurisdiction varies from estimates, additional
allowances or reversals of reserves may be necessary.
The Company had no material adjustments to its liabilities for unrecognized
income tax benefits according to the provisions of Section 740-10-25.
LIMITATION ON UTILIZATION OF NOLS DUE TO CHANGE IN CONTROL
Pursuant to the Internal Revenue Code Section 382 ("Section 382"), certain
ownership changes may subject the NOL's to annual limitations which could reduce
or defer the NOL. Section 382 imposes limitations on a corporation's ability to
utilize NOLs if it experiences an "ownership change." In general terms, an
ownership change may result from transactions increasing the ownership of
certain stockholders in the stock of a corporation by more than 50 percentage
points over a three-year period. In the event of an ownership change,
utilization of the NOLs would be subject to an annual limitation under Section
382 determined by multiplying the value of its stock at the time of the
ownership change by the applicable long-term tax-exempt rate. Any unused annual
limitation may be carried over to later years. The imposition of this limitation
on its ability to use the NOLs to offset future taxable income could cause the
Company to pay U.S. federal income taxes earlier than if such limitation were
not in effect and could cause such NOLs to expire unused, reducing or
eliminating the benefit of such NOLs.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss) per common share is computed pursuant to section
260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss)
per common share is computed by dividing net income (loss) by the weighted
average number of shares of common stock outstanding during the period. Diluted
net income (loss) per common share is computed by dividing net income (loss) by
the weighted average number of shares of common stock and potentially
outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent shares
issuance arrangement, stock options or warrants.
The following table shows the potentially outstanding dilutive common
shares excluded from the diluted net income (loss) per common share calculation
for the period from April 11, 2011 (inception) through September 30, 2011 as
they were anti-dilutive:
15
Potentially outstanding dilutive common shares
For the
Period from
April 11, 2011
(inception)
through
September 30,
2011
----------
Make Good Escrow Agreement shares issued and held with the
escrow agent on June 23, 2011 in connection with the
Share Exchange Agreement pending the achievement by
the Company of certain post-Closing business milestones
(the "Milestones"). 6,000,000
Sub-total - Make Good Escrow Agreement shares 6,000,000
----------
Total potentially outstanding dilutive common shares 6,000,000
==========
CASH FLOWS REPORTING
The Company adopted paragraph 230-10-45-24 of the FASB Accounting Standards
Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing
activities and provides definitions of each category, and uses the indirect or
reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25
of the FASB Accounting Standards Codification to report net cash flow from
operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past
operating cash receipts and payments and all accruals of expected future
operating cash receipts and payments and (b) all items that are included in net
income that do not affect operating cash receipts and payments. The Company
reports the reporting currency equivalent of foreign currency cash flows, using
the current exchange rate at the time of the cash flows and the effect of
exchange rate changes on cash held in foreign currencies is reported as a
separate item in the reconciliation of beginning and ending balances of cash and
cash equivalents and separately provides information about investing and
financing activities not resulting in cash receipts or payments in the period
pursuant to paragraph 830-230-45-1 of the FASB Accounting Standards
Codification.
SUBSEQUENT EVENTS
The Company follows the guidance in Section 855-10-50 of the FASB
Accounting Standards Codification for the disclosure of subsequent events. The
Company will evaluate subsequent events through the date when the financial
statements are issued. Pursuant to ASU 2010-09 of the FASB Accounting Standards
Codification, the Company as an SEC filer considers its financial statements
issued when they are widely distributed to users, such as through filing them on
EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In May 2011, the FASB issued the FASB Accounting Standards Update No.
2011-04 "FAIR VALUE MEASUREMENT" ("ASU 2011-04"). This amendment and guidance
are the result of the work by the FASB and the IASB to develop common
requirements for measuring fair value and for disclosing information about fair
value measurements in accordance with U.S. GAAP and International Financial
Reporting Standards (IFRSs).
This update does not modify the requirements for when fair value
measurements apply; rather, they generally represent clarifications on how to
measure and disclose fair value under ASC 820, FAIR VALUE MEASUREMENT, including
the following revisions:
* An entity that holds a group of financial assets and financial
liabilities whose market risk (that is, interest rate risk, currency
risk, or other price risk) and credit risk are managed on the basis of
the entity's net risk exposure may apply an exception to the fair
value requirements in ASC 820 if certain criteria are met. The
exception allows such financial instruments to be measured on the
basis of the reporting entity's net, rather than gross, exposure to
those risks.
* In the absence of a Level 1 input, a reporting entity should apply
premiums or discounts when market participants would do so when
pricing the asset or liability consistent with the unit of account.
* Additional disclosures about fair value measurements.
16
The amendments in this Update are to be applied prospectively and are
effective for public entity during interim and annual periods beginning after
December 15, 2011.
In June 2011, the FASB issued the FASB Accounting Standards Update No.
2011-05 "COMPREHENSIVE INCOME ("ASU 2011-05"), which was the result of a joint
project with the IASB and amends the guidance in ASC 220, COMPREHENSIVE INCOME,
by eliminating the option to present components of other comprehensive income
(OCI) in the statement of stockholders' equity. Instead, the new guidance now
gives entities the option to present all non-owner changes in stockholders'
equity either as a single continuous statement of comprehensive income or as two
separate but consecutive statements. Regardless of whether an entity chooses to
present comprehensive income in a single continuous statement or in two separate
but consecutive statements, the amendments require entities to present all
reclassification adjustments from OCI to net income on the face of the statement
of comprehensive income.
The amendments in this Update should be applied retrospectively and are
effective for public entity for fiscal years, and interim periods within those
years, beginning after December 15, 2011.
Management does not believe that any other recently issued, but not yet
effective accounting pronouncements, if adopted, would have a material effect on
the accompanying financial statements.
NOTE 3 - GOING CONCERN
The accompanying consolidated financial statements have been prepared
assuming that the Company will continue as a going concern. As reflected in the
accompanying consolidated financial statements, the Company had a deficit
accumulated during the development stage at September 30, 2011, a net loss and
net cash used in operating activities for the period from April 11, 2011
(inception) through September 30, 2011.
While the Company is attempting to commence operations and generate
sufficient revenues, the Company's cash position may not be sufficient enough to
support the Company's daily operations. Management intends to raise additional
funds by way of a public or private offering. Management believes that the
actions presently being taken to further implement its business plan and
generate sufficient revenues provide the opportunity for the Company to continue
as a going concern. While the Company believes in the viability of its strategy
to commence operations and generate sufficient revenues and in its ability to
raise additional funds, there can be no assurances to that effect. The ability
of the Company to continue as a going concern is dependent upon the Company's
ability to further implement its business plan and generate sufficient revenues.
The consolidated financial statements do not include any adjustments that
might be necessary if the Company is unable to continue as a going concern.
NOTE 4 - WEBSITE DEVELOPMENT COSTS
Website development costs, stated at cost, less accumulated amortization at
September 30, 2011, consisted of the following:
September 30,
2011
--------
Website development costs $ 5,315
Accumulated amortization (267)
--------
$ 5,048
========
AMORTIZATION EXPENSE
Amortization expense was $267 for the period from April 11, 2011
(inception) through September 30, 2011.
NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
17
Related Parties Relationship
--------------- ------------
George Blankenbaker President and major stockholder of the Company
Leverage Investments LLC An entity owned and controlled by president and
major stockholder of the Company
Growers Synergy Pte Ltd. An entity owned and controlled by president and
major stockholder of the Company
ADVANCES FROM STOCKHOLDER
From time to time, stockholders of the Company advance funds to the Company
for working capital purpose. Those advances are unsecured, non-interest bearing
and due on demand.
LEASE OF CERTAIN OFFICE SPACE FROM LEVERAGE INVESTMENTS, LLC
The Company leased certain office space with Leverage Investments, LLC for
$500 per month on a month-to-month basis.
CONSULTING SERVICES FROM GROWERS SYNERGY PTE LTD.
Consulting services provided by Growers Synergy Pte Ltd. for the period
from April 11, 2011 (inception) through September 30, 2011 is as follows:
September 30,
2011
--------
Consulting services received and consulting fees booked $ 60,000
--------
$ 60,000
========
NOTE 6 - CONVERTIBLE NOTES PAYABLE
On February 14, 2011, the Company issued a convertible note in the amount
of $250,000 with interest at 10% per annum due one (1) year from the date of
issuance.
On June 23, 2011, the Company issued a convertible note in the amount of
$100,000 with interest at 10% per annum due one (1) year from the date of
issuance.
The notes may be converted into common shares of the Company should the
Company complete a private placement with gross proceeds of at least $100,000.
The conversion price shall be the same as the private placement price on a per
share basis.
As of September 30, 2011, the Company did not complete any private
placement.
NOTE 7 - STOCKHOLDERS' DEFICIT
SHARES AUTHORIZED
Upon formation the total number of shares of common stock which the Company
is authorized to issue is One Hundred Million (100,000,000) shares, par value
$.001 per share.
COMMON STOCK
Immediately before the Share Exchange Transaction, the Company had
79,800,000 common shares issued and outstanding on June 23, 2011. Simultaneously
with the Closing of the Share Exchange Transaction, on the Closing Date, Mohanad
Shurrab, a shareholder and, as of the Closing Date, the Company's former
Director, President, Treasurer and Secretary, surrendered 33,000,000 shares of
the Company's common stock to the Company for cancellation.
18
As a result of the Share Exchange Transaction, the Company issued
12,000,000 common shares for the acquisition of 100% of the issued and
outstanding shares of Stevia Ventures International Ltd. Of the 12,000,000
common shares issued in connection with the Share Exchange Agreement, 6,000,000
of such shares are being held in escrow ("Escrow Shares") pending the
achievement by the Company of certain post-Closing business milestones (the
"Milestones"), pursuant to the terms of the Make Good Escrow Agreement, between
the Company, Greenberg Traurig, LLP, as escrow agent and the Ventures'
Stockholder (the "Escrow Agreement").
As of September 30, 2011, none of the 6,000,000 Escrow Shares had been
released to Ventures stockholder or the Company.
NOTE 8 - RESEARCH AND DEVELOPMENT
AGRIBUSINESS DEVELOPMENT AGREEMENT - AGRO GENESIS PTE LTD.
On July 16, 2011, the Company entered into an Agribusiness Development
Agreement (the "Agribusiness Development Agreement") with Agro Genesis Pte Ltd.
("AGPL"), a corporation organized under the laws of the Republic of Singapore
expiring two (2) years from the date of signing.
Under the terms of the Agreement, the Company engaged AGPL to be the
Company's technology provider consultant for stevia propagation and cultivation
in Vietnam, and potentially other countries for a period of two (2) years. AGPL
will be tasked with developing stevia propagation and cultivation technology in
Vietnam, recommend quality agronomic programs for stevia cultivation, harvest
and post harvest, alert findings on stevia propagation and cultivation that may
impact profitability and develop a successful model in Vietnam that can be
replicated elsewhere (the "Project"). The Project will be on-site at stevia
fields in Vietnam and will have a term of at least two (2) years. For its
services, AGPL could receive a fee of up to 275,000 Singapore dollars, plus
related expenses estimated at $274,000 as specified in Appendix A to the
Agribusiness Development Agreement. Additionally, the Company will be AGPL's
exclusive distributor for AGPL's G-Farm system (a novel crop production system)
for stevia growing resulting from the Project. AGPL will receive a commission of
no less than 2% of the price paid for crops other than stevia, from cropping
systems that utilize the G-Farm system resulting from the Project. All
technology-related patents resulting from the Project will be jointly owned by
AGPL and the Company, with the Company holding a right of first offer for the
use and distribution rights to registered patents resulting from the Project.
On August 26, 2011, in accordance with Appendix A , 3(a), the Company and
AGPL have mutually agreed to add to the current Project budget $100,000 per
annum for one, on-site resident AGPL expert for 2 (two) years effective
September 1, 2011, or $200,000 in aggregate for the term of the contract as
specified in Appendix C. In-country accommodation for the resident expert will
be born separately by the Company and is excluded from the above amount. The
expert, Dr. Cho, Young-Cheol, Director, Life Sciences has been appointed and
will commence on September 1, 2011.
Future minimum payments required under the Agribusiness Development
Agreement as amended were as follows:
Under Appendix A Under
Equivalent Appendix C TOTAL
Fiscal year ending March 31 SG$ in $ $ $
--------------------------- -------- -------- -------- --------
2012 (remainder of the
fiscal year) 49,500 $ 38,024 $ 50,000 $ 88,204
2013 99,000 76,408 100,000 176,408
2014 44,000 33,959 25,000 58,959
-------- -------- -------- --------
Total 192,500 148,571 175,000 323,571
======== ======== ======== ========
NOTE 9 - COMMITMENTS AND CONTINGENCIES
MAKE GOOD AGREEMENT SHARES
(I) NUMBER OF MAKE GOOD SHARES
On June 23, 2011, the Company issued 12,000,000 common shares for 100% of
the issued and outstanding shares of Ventures in connection with the Share
Exchange Agreement. Of the 12,000,000 common shares issued, 6,000,000 of such
shares are being held in escrow pending the achievement by the Company of
certain post-Closing business milestones (the "Milestones"), pursuant to the
terms of the Escrow Agreement.
19
(II) DURATION OF ESCROWAGREEMENT
The Make Good Escrow Agreement shall terminate on the sooner of (i) the
distribution of all the escrow shares, or (ii) December 31, 2013.
(III) DISBURSEMENT OF MAKE GOOD SHARES
Upon achievement of any Milestone on or before the date associated with
such Milestone on Exhibit A, the Company shall promptly provide written notice
to the Escrow Agent and the Selling Shareholder of such achievement (each a
"COMPLETION NOTICE"). Upon the passage of any Milestone date set forth on
Exhibit A for which the Company has not achieved the associated Milestone, the
Company shall promptly provide written notice to the Escrow Agent and the
Selling Shareholder of such failure to achieve the milestone (each a
"NONCOMPLETION NOTICE").
(IV) EXHIBIT A - SCHEDULE OF MILESTONES
Number of Escrow
Milestone Completion Date Shares
--------- --------------- ------
(1) Enter into exclusive international license agreement
for all Agro Genesis intellectual property and products
as it applies to Stevia
(2) Enter into cooperative agreements to work with Vietnam 3,000,000
Institutes (a) Medical Date Plant Institute in Hanoi; shares
(b) Agricultural Science Institute of Northern only if and
Central Vietnam when ALL
(3) Enter into farm management agreements with local growers Within 180 four (4)
including the Provincial and National projects; days of the milestones
(4) Take over management of three existing nurseries Closing reached
Within two
years of the 1,500,000
Achieve 100 Ha field trials and first test shipment of dry leaf Closing Date shares
Within two
Leaf of test shipment to achieve minimum specs for contracted years of the 1,500,000
base price (currently $2.00 per kilo) Closing Date shares
CONSULTING AGREEMENT - DORIAN BANKS
On July 1, 2011 the Company entered into a consulting agreement (the
"Consulting Agreement") with Dorian Banks (the "Consultant").
(I) SCOPE OF SERVICES
Under the terms of the Consulting Agreement, the Company engaged the
Consultant to provide advice in general business development, strategy,
assistance with new business and land acquisition, introductions, and assistance
with Public Relations ("PR") and Investor Relations ("IR").
(II) TERM
The term of this Agreement shall be six (6) months, commencing on July 1,
2011 and continuing until December 31, 2011. This Agreement may be terminated by
either the Company or the Consultant at any time prior to the end of the
Consulting Period by giving thirty (30) days written notice of termination. Such
notice may be given at any time for any reason, with or without cause. The
Company will pay Consultant for all Service performed by Consultant through the
date of termination.
(III) COMPENSATION
The Company shall pay the Consultant a fee of $3,000.00 per month.
20
CONSULTING AGREEMENT - DAVID CLIFTON
On July 1, 2011 the Company entered into a consulting agreement (the
"Consulting Agreement") with David Clifton ( "Clifton").
(I) SCOPE OF SERVICES
Under the terms of the Consulting Agreement, the Company engaged Clifton to
introduce interested investors to the Company, advise the Company on available
financing options and provide periodic updates on the stevia sector and provide
insights and strategies for the Company to undertake.
(II) TERM
The term of this Agreement shall be six (6) months, commencing on July 1,
2011 and continuing until December 31, 2011. This Agreement may be terminated by
either the Company or Clifton at any time prior to the end of the consulting
period by giving thirty (30) days written notice of termination. Such notice may
be given at any time for any reason, with or without cause. The Company will pay
Clifton for all service performed by him through the date of termination.
(III) COMPENSATION
The Company shall pay Clifton a fee of $3,000.00 per month.
NOTE 10 - CONCENTRATIONS AND CREDIT RISK
CUSTOMERS AND CREDIT CONCENTRATIONS
One (1) customer accounted for all of accounts receivable at September 30,
2011 and all of the sales for the period from April 11, 2011 (inception) through
September 30, 2011. A reduction in sales from or loss of such customer would
have a material adverse effect on the Company's results of operations and
financial condition.
VENDORS AND ACCOUNTS PAYABLE CONCENTRATIONS
Growers Synergy Pte Ltd., an entity owned and controlled by president and
significant stockholder of the Company accounted for 60.6% of the Company's
accounts payable at September 30, 2011 and provided all of the Company's farm
management services for the period from April 11, 2011 (inception) through
September 30, 2011.
CREDIT RISK
Financial instruments that potentially subject the Company to significant
concentration of credit risk consist primarily of cash and cash equivalents.
As of September 30, 2011, substantially all of the Company's cash and cash
equivalents were held by major financial institutions, and the balance at
certain accounts exceeded the maximum amount insured by the Federal Deposits
Insurance Corporation ("FDIC"). However, the Company has not experienced losses
on these accounts and management believes that the Company is not exposed to
significant risks on such accounts.
NOTE 11 - SUBSEQUENT EVENTS
The Company has evaluated all events that occurred after the balance sheet
date through the date when the financial statements were issued to determine if
they must be reported. The Management of the Company determined that there were
certain reportable subsequent events to be disclosed as follows:
ENTRY INTO A MANAGEMENT AND OFF-TAKE AGREEMENT WITH AN ENTITY CONTROLLED BY
PRESIDENT AND MAJOR STOCKHOLDER
On November 1, 2011, the Company entered into a Management and Off-Take
Agreement (the "Agreement") with Growers Synergy Pte Ltd. ("GSPL"), a Singapore
corporation owned and controlled by president and major stockholder of the
Company. Under the terms of the Agreement, the Company will engage GSPL to
supervise the Company's farm management operations, recommend quality farm
management programs for stevia cultivation, assist in the hiring of employees
and provide training to help the Company meet its commercialization targets,
develop successful models to propagate future agribusiness services, and provide
back-office and regional logistical support for the development of proprietary
stevia farm systems in Vietnam, Indonesia and potentially other countries. GSPL
will provide services for a term of two (2) years from the date of signing, at
$20,000 per month. The Agreement may be terminated by the Company upon 30 day
21
notice. In connection with the Agreement, the parties agreed to enter into an
off-take agreement whereby GSPL agreed to purchase all of the non-stevia crops
produced at the Company's GSPL supervised farms.
Future minimum payments required under this agreement were as follows:
Year ending December 31:
------------------------
2012 (remainder of the fiscal year) $100,000
2013 240,000
2014 140,000
--------
$480,000
========
22
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere in this Quarterly
Report on Form 10-Q. Forward looking statements are statements not based on
historical information and which relate to future operations, strategies,
financial results or other developments. Forward-looking statements are based
upon estimates, forecasts, and assumptions that are inherently subject to
significant business, economic and competitive uncertainties and contingencies,
many of which are beyond our control and many of which, with respect to future
business decisions, are subject to change. These uncertainties and contingencies
can affect actual results and could cause actual results to differ materially
from those expressed in any forward-looking statements made by us, or on our
behalf. We disclaim any obligation to update forward-looking statements.
BACKGROUND AND PLAN OF OPERATIONS
We are a development stage company that has acquired certain rights relating to
stevia production, including certain assignable exclusive purchase contracts and
an assignable supply agreement related to stevia.
We plan to generate revenue through two primary sources: (i) the sale of stevia
grown on our own farmed property and (ii) our farm management services, which
will provide plant breeding, agricultural protocols, post-harvest techniques and
other services to stevia growers.
Our initial farming efforts and farm management service are focused in Vietnam
and Indonesia. We plan to partner with leading refiners to create a reliable
purchasing source for both the stevia we grow as well as that produced by our
contract grower partners using our methods and technologies. In Vietnam we have
established several nurseries and test fields in several provinces through our
grower partners and we have entered into cooperative agreements with major
institutes for stevia research and development.
Effective July 16, 2011, we entered into an Agribusiness Development Agreement
(the "Agreement") with Agro Genesis Pte. Ltd. ("Agpl"). Under the terms of the
Agreement, we will engage AGPL to be our technology provider consultant for
stevia propagation and cultivation in Vietnam, and potentially other countries.
AGPL will be tasked with developing stevia propagation and cultivation
technology in Vietnam, recommend quality agronomic programs for stevia
cultivation, harvest and post harvest, alert findings on stevia propagation and
cultivation that may impact profitability and develop a successful model in
Vietnam that can be replicated elsewhere (the "Project"). Additionally, we will
be AGPL's exclusive distributor for AGPL's g'farm system (a novel crop
production system) for stevia growing resulting from the Project.
Effective November 1, 2011, we entered into a Management and Off-Take Agreement
(the "Management Agreement") with Growers Synergy Pte Ltd, ("Growers Synergy")
pursuant to which Growers Synergy will provide farm management operations and
back-office and regional logistical support for our Vietnam and Indonesia
operations for a period of two years. In addition, Growers Synergy will enter
into an agreement to purchase from us all the non-stevia crops produced at the
farms for which they are providing management services. The Management Agreement
is terminable by the Company upon 30 days notice, and provides for monthly
payments to Growers Synergy of $20,000.
Our initial focus and capital expenditures have been directed toward
intellectual property development, including the Project, whereby we are
attempting to identify optimal cultivar varieties for intended growing sites,
develop and test propagation protocols, develop cultivation technology including
an intercropping system and regional adaptability tests, and develop
post-harvest and refinery processes. Once such protocols and technologies are
established, we plan to expand our commercial farming of stevia using such
intellectual property, with the goal of 5,000 Ha of production by the end of our
sixth fiscal year, while also marketing such farming methods and technologies to
other stevia farmers.
RESULTS OF OPERATIONS
We have had limited operations to-date, which have primarily consisted of
securing purchase and supply contracts and office space, negotiating the
Agreements and developing relationships with potential partners.
Our auditors have issued a going concern opinion. This means that there is
substantial doubt that we can continue as an on-going business for the next
twelve months unless we obtain additional capital.
23
CASH AND CASH EQUIVALENTS
As of September 30, 2011, we had cash of $76,629. We anticipate that a
substantial amount of cash will be used as working capital and to execute our
strategy and business plan. As such, we further anticipate that we will have to
raise additional capital through debt or equity financings to fund our
operations during the next 6 to 12 months.
RESULTS OF OPERATIONS
The following discussion of the financial condition, results of operations, cash
flows, and changes in our financial position should be read in conjunction with
our audited consolidated financial statements and notes included in our Current
Report on Form 8-K filed June 29, 2011.
As a development stage company, we currently have limited operations,
principally directed at potential acquisition targets and revenue-generating
opportunities.
The financial statements mentioned above have been prepared in conformity with
U.S. GAAP and are stated in United States dollars.
PERIOD FROM INCEPTION (APRIL 11, 2011) TO SEPTEMBER 30, 2011
During the period from inception (April 11, 2011) to September 30, 2011, we
incurred a comprehensive loss of $247,367. This loss was largely attributed to
professional fees associated with our formation and related transactions of
$52,729 and research and development costs $105,197. This represented an
increase in our comprehensive loss from $13,842 during the period from inception
to June 30, 2011.
LIQUIDITY AND CAPITAL RESOURCES
As at September 30, 2011 we have $83,456 in current assets, and $454,059 in
current liabilities. This represents a decrease in current assets from $353,098
at June 30, 2011 and a decrease in current liabilities from $485,128 at June 30,
2011. As at September 30, 2011, our total assets were $88,504 and our total
liabilities were $454,059. This represents a decrease in total assets from
$353,098 at June 30, 2011 and a decrease in total liabilities from $485,128 at
June 30, 2011. Our net working capital deficiency as at September 30, 2011 was,
on a pro forma basis, $365,555.
Our current cash requirements are significant due to the planned development and
expansion of our business, including intellectual property development, initial
field trials and planning and readiness development for the commercialization
that we hope to begin in year three. During the three month period ended
September 30, 2011, we funded our operations from the proceeds of convertible
notes. Subsequent to the quarter ended September 30, 2011, we raised $100,000
through the sale of shares of our common stock at a price of $0.25 per share. In
addition, subsequent to the quarter ended September 30, 2011, we raised an
aggregate of $400,000 from the proceeds of convertible notes. We are currently
reliant on short term financing arrangements to meet our short-term and
long-term obligations. Changes in our operating plans, increased expenses,
acquisitions, or other events, may cause us to seek additional equity or debt
financing in the future.
For the period from April 11, 2011 (inception) through September 30, 2011, we
used net cash of $271,254 in operating activities. Net cash from investing
activities totaled a negative $2,117. Net cash from financing activities totaled
$350,000.
Our management believes that we will be able to generate sufficient revenue or
raise sufficient amounts of working capital through debt or equity offerings, as
may be required to meet our short-term and long-term obligations. We will
require additional capital to expand our commercial production to reach our
target of 5,000 Ha in Vietnam. In order to execute on our business strategy, we
will require additional working capital, commensurate with our operational
needs. Such working capital will most likely be obtained through equity or debt
financings until such time as our operations are producing revenue in excess of
operating expenses. There are no assurances that we will be able to raise the
required working capital on terms favorable, or that such working capital will
be available on any terms when needed.
24
OFF-BALANCE SHEET ARRANGEMENTS
We have not entered into any other financial guarantees or other commitments to
guarantee the payment obligations of any third parties. We have not entered into
any derivative contracts that are indexed to our shares and classified as
shareholder's equity or that are not reflected in our consolidated financial
statements. Furthermore, we do not have any retained or contingent interest in
assets transferred to an unconsolidated entity that serves as credit, liquidity
or market risk support to such entity. We do not have any variable interest in
any unconsolidated entity that provides financing, liquidity, market risk or
credit support to us or engages in leasing, hedging or research and development
services with us.
CRITICAL ACCOUNTING ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States (GAAP) 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 year. The more significant areas requiring the use of estimates
include asset impairment, stock-based compensation, and future income tax
amounts. Management bases its estimates on historical experience and on other
assumptions considered to be reasonable under the circumstances. However, actual
results may differ from the estimates.
The discussion and analysis of our financial condition and results of operations
are based upon our financial statements, which have been prepared in accordance
with GAAP. We believe certain critical accounting policies affect our more
significant judgments and estimates used in the preparation of the financial
statements. A description of our critical accounting policies is set forth in
our Current Report on Form 8-K filed on June 29, 2011. As of, and for the three
months ended September 30, 2011, there have been no material changes or updates
to our critical accounting policies.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ITEM 4. CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
We carried out an evaluation, under the supervision and with the participation
of our management, including our principal executive officer and principal
financial officer, of the effectiveness of the design of our disclosure controls
and procedures (as defined by Exchange Act Rules 13a-15(e) or 15d-15(e)) as of
September 30, 2011 pursuant to Exchange Act Rule 13a-15. Based upon that
evaluation, our Principal Executive Officer and Principal Financial Officer
concluded that our disclosure controls and procedures are not effective as of
September 30, 2011 in ensuring that information required to be disclosed by us
in reports that we file or submit under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified in the Securities and
Exchange Commission's rules and forms. This conclusion is based on findings that
constituted material weaknesses. A material weakness is a deficiency, or a
combination of control deficiencies, in internal control over financial
reporting such that there is a reasonable possibility that a material
misstatement of the Company's interim financial statements will not be prevented
or detected on a timely basis.
MANAGEMENT'S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
In performing the above-referenced assessment, our management identified the
following material weaknesses:
i) We have not achieved the optimal level of segregation of duties
relative to key financial reporting functions.
ii) We did not have an audit committee or an independent audit committee
financial expert. While not being legally obligated to have an audit
committee or independent audit committee financial expert, it is the
management's view that to have an audit committee, comprised of
independent board members, and an independent audit committee
financial expert is an important entity-level control over our
financial statements.
25
We are currently reviewing our disclosure controls and procedures related to
these material weaknesses and expect to implement changes in the near term,
including identifying specific areas within our governance, accounting and
financial reporting processes to add adequate resources and personnel to
potentially mitigate these material weaknesses.
Our present management will continue to monitor and evaluate the effectiveness
of our internal controls and procedures and our internal controls over financial
reporting on an ongoing basis and are committed to taking further action and
implementing additional enhancements or improvements, as necessary and as funds
allow.
Because of its inherent limitations, internal control over financial reporting
may not prevent or detect misstatements. Projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate. All internal control systems,
no matter how well designed, have inherent limitations. Therefore, even those
systems determined to be effective can provide only reasonable assurance with
respect to financial statement preparation and presentation.
CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
There were no changes in our internal controls over financial reporting that
occurred during the three months ended September 30, 2011 that have materially
affected, or are reasonably likely to materially affect, our internal controls
over financial reporting. Subsequent to our quarter ended September 30, 2011, on
October 25, 2011, our board of directors approved the adoption of an insider
trading policy, code of ethical conduct, and disclosure controls and procedures.
We believe that a control system, no matter how well designed and operated,
cannot provide absolute assurance that the objectives of the control system are
met, and no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within any company have been
detected.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 1A. RISK FACTORS
None.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
On October 6, 2011, we raised $100,000 through the sale of 400,000 shares of our
common stock at a price of $0.25 per share (the "Shares").
On October 6, 2011, we raised $150,000 from the proceeds of a convertible note
(the "October Note"). The October Note was based upon the Company's standard
form of promissory note, accrues interest at the rate of ten percent per annum,
simple interest and the principal balance of the October Note and any accrued
interest thereon is convertible into our common stock at a $0.25 per share
conversion price.
On November 16, 2011, we raised $250,000 from the proceeds of a convertible note
(the "November Note" and together with the October Note, the "Notes"). The
November Note was based upon the Company's standard form of promissory note,
accrues interest at the rate of ten percent per annum, simple interest and the
principal balance of the November Note and any accrued interest thereon is
convertible into our common stock at the lower of (a) the price per share at
which shares of capital stock are sold in our next equity financing, or (b) the
closing price of our securities if traded on a securities exchange, or if
actively traded over-the-counter, the average closing bid price for the
securities, in each case over the thirty (30) day period prior to the date of
conversion; provided however, that if no active trading market for the
securities exists at the time of the conversion, such conversion price shall be
the fair market value of a share of our common stock as determined in good faith
by our Board of Directors.
The issuance of the Shares and Notes were conducted in reliance upon Regulation
S of the Securities Act of 1933, as amended and the rules and regulations
promulgated thereunder (the "Securities Act"), to investors who are "accredited
investors," as such term is defined in Rule 501(a) under the Securities Act, in
offshore transactions (as defined in Rule 902 under Regulation S of the
Securities Act), based upon representations made by such investors.
26
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. RESERVED
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS
EXHIBIT NUMBER NAME
-------------- ----
3.1(1) Articles of Incorporation, including all amendments to date
3.2(2) Amended and Restated Bylaws
10.1 Stock Purchase Agreement, dated October 6, 2011
10.2 Form of Convertible Promissory Note
10.3(3) Agribusiness Development Agreement, dated July 16, 2011
10.4(4) Management and Off-Take Agreement, dated November 1, 2011
31 Rule 13a-14(a)/15d-14(a) Certification (Principal Executive
Officer and Principal Financial Officer)
32 Section 1350 Certification
101* Interactive data files pursuant to Rule 405 of Regulation S-T
----------
Footnotes to Exhibits Index
(1) Incorporated by reference to the Form S-1 filed on July 16, 2008 and the
Current Report on Form 8-K filed March 9, 2011.
(2) Incorporated by reference to the Current Report on Form 8-K filed on March
22, 2011.
(3) Incorporated by reference to the Current Report on Form 8-K filed on
October 18, 2011.
(4) Incorporated by reference to the Current Report on Form 8-K filed on
October 31, 2011.
* Pursuant to Rule 406T of Regulation S-T, these interactive data files are
deemed not filed or part of a registration statement or prospectus for
purposes of Sections 11 or 12 of the Securities Act of 1933 or Section 18
of the Securities Exchange Act of 1934 and otherwise are not subject to
liability.
27
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
STEVIA CORP.
Dated: November 21, 2011 /s/ George Blankenbaker
-----------------------------------
By: George Blankenbaker
Its: President, Secretary, Treasurer
and Director (Principal Executive
Officer, Principal Financial
Officer and Principal Accounting
Officer)
28