As filed with the Securities and Exchange Commission on February 27, 2012
Registration No. 333-______
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
STEVIA CORP.
(Exact name of registrant as specified in its charter)
Nevada 700 98-0537233
(State or jurisdiction of (Primary Standard Industrial (I.R.S. Employer
incorporation or organization) Classification Code Number) Identification No.)
7117 US 31S
Indianapolis, IN 46227
(888) 250-2566
(Address and telephone number of principal executive offices
and principal place of business)
CSC Services of Nevada, Inc.
2215-B Renaissance Drive
Las Vegas, NV 89119
(702) 740-4244
(Name, address and telephone number of agent for service)
Copies to:
Mark C. Lee
Saxon Peters
GREENBERG TRAURIG, LLP
1201 K Street, Suite 1100
Sacramento, California 95814
Telephone: (916) 442-1111
Facsimile: (916) 448-1709
Approximate date of proposed sale to the public:
From time to time after the effective date of this registration statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. [X]
If this Form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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. (Check one):
Non-accelerated filer [ ] Accelerated filer [ ]
Large accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
CALCULATION OF REGISTRATION FEE
=====================================================================================================
Title of each Amount Proposed Proposed Amount of
class of securities to be maximum offering maximum aggregate Registration
to be registered Registered price per share offering price Fee
-----------------------------------------------------------------------------------------------------
Common Stock 20,000,000(1)(2) $20,000,000 $2,292.00(3)
=====================================================================================================
(1) There are being registered an indeterminate number of shares of common
stock of the Registrant as shall have an aggregate offering price not to
exceed $20,000,000, that we will put ("Put Shares") to Southridge Partners
II, LP ("Southridge"), pursuant to an equity purchase agreement (the
"Equity Purchase Agreement") between Southridge and the Registrant,
effective on January 26, 2012. This amount includes such indeterminate
number of shares of common stock as may from time to time be issued at
indeterminate prices, subject to the aggregate threshold dollar amount
registered. In the event of stock splits, stock dividends, or similar
transactions involving the common stock, the number of common shares
registered shall, unless otherwise expressly provided, automatically be
deemed to cover the additional securities to be offered or issued pursuant
to Rule 416 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"). The proposed maximum offering price per share shall be
determined from time to time by the Registrant in connection with the
issuance of any securities under the registration statement.
(2) Includes such indeterminate number of shares of common stock as may from
time to time be issued at indeterminate prices, subject to the aggregate
threshold dollar amount registered.
(3) Calculated in accordance with Rule 457(o) of the Securities Act.
We hereby amend this registration statement on such date or dates as may be
necessary to delay its effective date until we shall file a further amendment
which specifically states that this registration statement shall thereafter
become effective in accordance with Section 8(a) of the Securities Act or until
the registration statement shall become effective on such date as the Securities
and Exchange Commission, acting pursuant to said Section 8(a), may determine.
================================================================================
SUBJECT TO COMPLETION, DATED FEBRUARY 27, 2012
PROSPECTUS
$20,000,000
STEVIA CORP.
COMMON STOCK
This prospectus relates to the resale of up to an aggregate of $20,000,000 of
our common stock, par value $0.001 per share, by Southridge Partners II, LP
("Southridge" or "Selling Security Holder"), which are Put Shares that we will
put to Southridge pursuant to the Equity Purchase Agreement.
The Equity Purchase Agreement with Southridge provides that Southridge is
committed to purchase up to $20,000,000 of our common stock. We may draw on the
facility from time to time, as and when we determine appropriate in accordance
with the terms and conditions of the Equity Purchase Agreement.
Southridge is an "underwriter" within the meaning of the Securities Act in
connection with the resale of our common stock under the Equity Purchase
Agreement. No other underwriter or person has been engaged to facilitate the
sale of shares of our common stock in this offering. This offering will
terminate thirty-six (36) months after the effective date of the Equity Purchase
Agreement. Southridge will pay us 93% of the lowest closing bid price of our
common stock reported by Bloomberg Finance L.P. in a five consecutive trading
day period commencing with the date a put notice is delivered.
We will not receive any proceeds from the sale of these shares of common stock
offered by Selling Security Holder. However, we will receive proceeds from the
sale of our Put Shares under the Equity Purchase Agreement. The proceeds will be
used for working capital or general corporate purposes. We will bear all costs
associated with this registration.
Our common stock is quoted on the OTC Bulletin Board under the symbol "STEV.OB."
The shares of our common stock registered hereunder are being offered for sale
by Selling Security Holder at prices established on the OTC Bulletin Board
during the term of this offering. On February 23, 2012, the closing bid price of
our common stock was $1.38 per share. These prices will fluctuate based on the
demand for our common stock.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE "RISK FACTORS"
BEGINNING ON PAGE 5 OF THIS PROSPECTUS.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The information in this Prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission becomes effective. This Prospectus is not an
offer to sell these securities and we are not soliciting an offer to buy these
securities in any state where the offer or sale is not permitted or would be
unlawful prior to registration or qualification under the securities laws of any
such state.
TABLE OF CONTENTS
PART I - INFORMATION REQUIRED IN PROSPECTUS
Page
----
PROSPECTUS SUMMARY 1
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS 4
RISK FACTORS 5
RISKS RELATED TO OUR BUSINESS AND INDUSTRY 5
RISKS RELATED TO DOING BUSINESS IN VIETNAM AND OTHER DEVELOPING
COUNTRIES 10
RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES 11
USE OF PROCEEDS 13
DETERMINATION OF OFFERING PRICE 13
SELLING SECURITY HOLDER 13
PLAN OF DISTRIBUTION 15
DESCRIPTION OF SECURITIES TO BE REGISTERED 16
INTERESTS OF NAMED EXPERTS AND COUNSEL 17
INFORMATION WITH RESPECT TO THE REGISTRANT 18
PROPERTIES 29
LEGAL PROCEEDINGS 29
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS 29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS 30
DIRECTORS AND EXECUTIVE OFFICERS 34
EXECUTIVE COMPENSATION 35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT 36
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR
INDEPENDENCE 36
DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES ACT
LIABILITIES 37
WHERE YOU CAN FIND MORE INFORMATION 37
FINANCIAL STATEMENTS 38
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE
NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH DIFFERENT INFORMATION. WE ARE NOT
MAKING AN OFFER OF THESE SECURITIES IN ANY STATE WHERE THE OFFER IS NOT
PERMITTED.
PROSPECTUS SUMMARY
YOU SHOULD READ THE FOLLOWING SUMMARY TOGETHER WITH THE MORE DETAILED
INFORMATION AND THE FINANCIAL STATEMENTS APPEARING ELSEWHERE IN THIS PROSPECTUS.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS THAT INVOLVE RISKS AND
UNCERTAINTIES. OUR ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED
IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF CERTAIN FACTORS, INCLUDING
THOSE SET FORTH UNDER "RISK FACTORS" AND ELSEWHERE IN THIS PROSPECTUS. UNLESS
THE CONTEXT INDICATES OR SUGGESTS OTHERWISE, REFERENCES TO "WE," "OUR," "US,"
THE "COMPANY," "STEVIA" OR THE "REGISTRANT" REFER TO STEVIA CORP., A NEVADA
CORPORATION AND ITS WHOLLY-OWNED SUBSIDIARY, STEVIA VENTURES INTERNATIONAL LTD.,
A BRITISH VIRGIN ISLANDS COMPANY.
OUR BUSINESS
Stevia Corp. was incorporated on May 21, 2007 in the State of Nevada. Our
initial business focus was on development of a software product for tracking
employee productivity and projects. On June 23, 2011, we closed a voluntary
share exchange transaction ("Share Exchange Transaction") with Stevia Ventures
International Ltd., a business company incorporated in the British Virgin
Islands ("BVI"), pursuant to which we acquired certain rights relating to stevia
production, including certain assignable exclusive purchase contracts and an
assignable supply agreement related to stevia.
We are a farm management company with a primary focus on stevia agronomics from
plant breeding to good agricultural practices to post-harvest techniques. We
plan to invest in research and development and intellectual property acquisition
and provide farm management services to contract growers and other industry
growers.
Our focus is on implementing quality agribusiness solutions to our partners,
contract growers and customers to maximize the efficient production of stevia
leaf. Our management team has expertise in farm management and contract growing
in Asia, and experience in international business management.
Our mission is to become the global leader of stevia leaf growers and to create
a competitive advantage by focusing on the full spectrum of agronomic and
business inputs and to develop, secure, or acquire the latest intellectual
property that will enable us to consistently produce high per unit volumes of
high quality leaf utilizing environmentally sustainable methods. We believe we
can accomplish our mission by becoming the stevia agribusiness partner of choice
for our contract growers and customers, thereby creating global synergies and
producing a sustainable supply of stevia leaf sufficient to support vertical
integration of extraction facilities in each country that we operate.
CORPORATE INFORMATION
Our principal executive offices are located at 7117 US 31 S., Indianapolis, IN,
46227. Our telephone number is 888-250-2566.
TRANSFER AGENT
Our transfer agent is Securities Transfer Corporation, and is located at 2591
Dallas Parkway, Suite 102, Frisco, Texas 75034. The agent's telephone number is
469-633-0101.
THE OFFERING
Issuer Stevia Corp.
Securities Offered for Resale Up to an aggregate of $20,000,000 of our
common stock.
Common Stock Outstanding Before
the Offering 61,327,275 shares
Common Stock to be Outstanding
After the Offering assuming all
of the Securities are Resold (1) 76,308,548 shares
Use of Proceeds We will not receive any proceeds from the
sale of the shares of common stock offered
by Selling Security Holder. However, we
will receive proceeds from sale of our
1
common stock under the Equity Purchase
Agreement. The proceeds from the offering
will be used for working capital and
general corporate purposes. See "Use of
Proceeds."
Trading Our common stock is quoted on the OTC
Bulletin Board under the symbol "STEV.OB"
Risk Factors You should carefully consider the
information set forth in the section
entitled "Risk Factors" beginning on page 2
of this prospectus in deciding whether or
not to invest in our common stock.
----------
(1) Calculated based on the average of the high and low prices of our common
stock on February 23, 2012 of $1.335.
EQUITY PURCHASE AGREEMENT
This offering relates to the resale of up to an aggregate of $20,000,000 in put
shares ("Put Shares") that we may put to Southridge pursuant to the Equity
Purchase Agreement. Assuming the resale of all of the shares being offered in
this prospectus at the average of the high and low bid prices of our common
stock on February 23, 2012, such shares would constitute approximately 19.63% of
our outstanding common stock.
On January 26, 2012, we entered into the Equity Purchase Agreement with
Southridge pursuant to which, we have the right, for a three-year period,
commencing on the date of the Equity Purchase Agreement (but not before the date
which the SEC first declares effective this registration statement) (the
"Commitment Period"), of which this prospectus forms a part, registering the
resale of the Put Shares by Southridge, to resell the Put Shares purchased by
Southridge under the Equity Purchase Agreement.
In order to sell shares to Southridge under the Equity Purchase Agreement,
during the Commitment Period, the Company must deliver to Southridge a written
put notice on any trading day (the "Put Date"), setting forth the dollar amount
to be invested by Southridge (the "Put Notice"). For each share of our common
stock purchased under the Equity Purchase Agreement, Southridge will pay
ninety-three percent (93%) of the lowest closing bid price ("Closing Price") of
any trading day during the five trading days immediately following the date on
which the Company has deposited an estimated amount of Put Shares to
Southridge's brokerage account in the manner provided by the Equity Purchase
Agreement (the "Valuation Period"). The Company may, at its sole discretion,
issue a Put Notice to Southridge and Southridge will then be irrevocably bound
to acquire such shares.
In the event that during a Valuation Period for any Put Notice, the Closing
Price on any trading day falls more than twenty percent (20%) below the average
of the five (5) most recent closing bid prices prior to the Put Date (the "Floor
Price"), then for each such trading day we shall be under no obligation to sell
and Southridge's obligation to fund one-fifth of the put amount for each such
trading day shall terminate and the put amount shall be adjusted accordingly. In
the event that during a Valuation Period the Closing Price falls below the Floor
Price for any two (2) trading days, then the balance of each party's rights and
obligations to purchase and sell the investment amount under such Put Notice
shall terminate on such second trading day, and the put amount shall be adjusted
to include only one-fifth (1/5) of the initial put amount for each trading day
during the Valuation Period prior to such termination date that the closing
Closing Price equals or exceeds the Floor Price.
If, during any Valuation Period, the Company (i) subdivides or combines the
common stock; (ii) pays a dividend in shares of common stock or makes any other
distribution of shares of common stock; (iii) issues any options or other rights
to subscribe for or purchase shares of common stock and the price per share is
less than closing price in effect immediately prior to such issuance; (iv)
issues any securities convertible into shares of common stock and the
consideration per share for which shares of common stock may at any time
thereafter be issuable pursuant to the terms of such convertible securities
shall be less that the closing price in effect immediately prior to such
issuance; (v) issue shares of common stock otherwise than as provided in the
foregoing subsections (i) through (iv) at a price per share less than the
closing price in effect immediately prior to such issuance, or without
consideration; or (vi) makes a distribution of its assets or evidences of its
indebtedness to the holders of common stock as a dividend in liquidation or by
way of return of capital or other than as a dividend payable out of earnings or
surplus legally available for dividends under applicable law (collectively, a
"Valuation Event"), then a new Valuation Period shall begin on the trading day
immediately after the occurrence of such Valuation Event and end on the fifth
trading day thereafter.
2
We are relying on an exemption from the registration requirements of the
Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The
transaction does involve a private offering, Southridge is an "accredited
investor" and/or qualified institutional buyer and Southridge has access to
information about us and its investment.
Assuming the sale of the entire $20,000,000 in Put Shares being registered
hereunder pursuant to the Equity Purchase Agreement, we will be able to receive
$20,000,000 in gross proceeds. Neither the Equity Purchase Agreement nor any
rights or obligations of the parties under the Equity Purchase Agreement may be
assigned by either party to any other person.
There are substantial risks to investors as a result of the issuance of shares
of our common stock under the Equity Purchase Agreement. These risks include
dilution of stockholders, significant decline in our stock price and our
inability to draw sufficient funds when needed.
Southridge will periodically purchase our common stock under the Equity Purchase
Agreement and will, in turn, sell such shares to investors in the market at the
market price. This may cause our stock price to decline, which will require us
to issue increasing numbers of common shares to Southridge to raise the same
amount of funds, as our stock price declines.
SUMMARY OF FINANCIAL INFORMATION
The following selected financial information is derived from the Company's
Financial Statements appearing elsewhere in this Prospectus and should be read
in conjunction with the Company's Financial Statements, including the notes
thereto, appearing elsewhere in this Prospectus.
SUMMARY OF STATEMENTS OF OPERATIONS
FOR THE PERIOD FROM APRIL 11, 2011 (INCEPTION) TO DECEMBER 31, 2011 (UNAUDITED):
Total revenue $ 1,300
Net loss $(1,303,241)
Net loss per common share (basic and diluted) $ (0.03)
Weighted average common shares 40,575,587
FOR THE PERIOD FROM APRIL 11, 2011 (INCEPTION) TO APRIL 30, 2011:
Total revenue $ --
Net loss $ (2,245)
Net loss per common share (basic and diluted) $ (0.00)
Weighted average common shares (*) 52,800,000
----------
(*) Retroactively restated to reflect the number of common shares issued by the
Company in connection with the Share Exchange Transaction.
3
STATEMENT OF FINANCIAL POSITION
December 31,
2011
----------
(Unaudited)
Cash $ 338,258
Prepaid expenses $ 49,219
Total current assets $ 387,477
Website development costs, net $ 4,781
Security deposits $ 15,000
Total assets $ 407,258
Total current liabilities $ 516,225
Stockholders' deficit $(108,967)
Total liabilities and stockholders' deficit $ 407,258
April 30,
2011
----------
Cash $ --
Total current assets $ --
Total current liabilities $ 2,145
Stockholders' deficit $ (2,145)
Total liabilities and stockholders' deficit $ --
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
EXCEPT FOR STATEMENTS OF HISTORICAL FACTS, THIS PROSPECTUS CONTAINS
FORWARD-LOOKING STATEMENTS INVOLVING RISKS AND UNCERTAINTIES. THE WORDS
"ANTICIPATE," "BELIEVE," "ESTIMATE," "EXPECT," "FUTURE," "INTEND," "PLAN" OR THE
NEGATIVE OF THESE TERMS AND SIMILAR EXPRESSIONS OR VARIATIONS THEREOF ARE
INTENDED TO FORWARD LOOKING STATEMENTS. SUCH STATEMENTS REFLECT THE CURRENT VIEW
OF THE REGISTRANT WITH RESPECT TO FUTURE EVENTS AND ARE SUBJECT TO RISKS,
UNCERTAINTIES, ASSUMPTIONS AND OTHER FACTORS (INCLUDING THE RISKS CONTAINED IN
THE SECTION OF THIS REGSTRATION STATEMENT ON FORM S-1 ENTITLED "RISK FACTORS")
RELATING TO THE REGISTRANT'S INDUSTRY, THE REGISTRANT'S OPERATIONS AND RESULTS
OF OPERATIONS AND ANY BUSINESSES THAT MAY BE ACQUIRED BY THE REGISTRANT. SHOULD
ONE OR MORE OF THESE RISKS OR UNCERTAINTIES MATERIALIZE, OR SHOULD THE
UNDERLYING ASSUMPTIONS PROVE INCORRECT, ACTUAL RESULTS MAY DIFFER SIGNIFICANTLY
FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, EXPECTED, INTENDED OR PLANNED.
ALTHOUGH THE REGISTRANT BELIEVES THAT THE EXPECTATIONS REFLECTED IN THE FORWARD
LOOKING STATEMENTS ARE REASONABLE, THE REGISTRANT CANNOT GUARANTEE FUTURE
RESULTS, LEVELS OF ACTIVITY, PERFORMANCE OR ACHIEVEMENTS. EXCEPT AS REQUIRED BY
APPLICABLE LAW, INCLUDING THE SECURITIES LAWS OF THE UNITED STATES, THE
REGISTRANT DOES NOT INTEND TO UPDATE ANY OF THE FORWARD-LOOKING STATEMENTS TO
CONFORM THESE STATEMENTS TO ACTUAL RESULTS. THE FOLLOWING DISCUSSION SHOULD BE
READ IN CONJUNCTION WITH THE REGISTRANT'S FINANCIAL STATEMENTS AND THE RELATED
NOTES INCLUDED IN THIS REGISTRATION STATEMENT ON FORM S-1.
4
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE RISKS DESCRIBED BELOW TOGETHER WITH ALL OF THE
OTHER INFORMATION INCLUDED IN OUR PUBLIC FILINGS BEFORE MAKING AN INVESTMENT
DECISION WITH REGARD TO OUR SECURITIES. THE STATEMENTS CONTAINED IN OR
INCORPORATED INTO THIS REGISTRATION STATEMENT ON FORM S-1 THAT ARE NOT HISTORIC
FACTS ARE FORWARD-LOOKING STATEMENTS THAT ARE SUBJECT TO RISKS AND UNCERTAINTIES
THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE SET FORTH IN OR
IMPLIED BY FORWARD-LOOKING STATEMENTS. WHILE THE RISKS DESCRIBED BELOW ARE THE
ONES WE BELIEVE ARE MOST IMPORTANT FOR YOU TO CONSIDER, THESE RISKS ARE NOT THE
ONLY ONES THAT WE FACE. IF ANY OF THE FOLLOWING EVENTS DESCRIBED IN THESE RISK
FACTORS ACTUALLY OCCURS, OUR BUSINESS, FINANCIAL CONDITION OR RESULTS OF
OPERATIONS COULD BE HARMED. IN THAT CASE, THE TRADING PRICE OF OUR COMMON STOCK
COULD DECLINE, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
WE ARE A DEVELOPMENT STAGE COMPANY WITH A LIMITED OPERATING HISTORY ON WHICH TO
EVALUATE OUR BUSINESS OR BASE AN INVESTMENT DECISION.
Our business prospects are difficult to predict because of our limited operating
history, early stage of development and unproven business strategy. We are a
development stage company that has yet to generate significant revenue. Stevia
is still a relatively new product in the sweetener marketplace and it has never
been commercially grown in Vietnam or many of our other target locations. Both
the continued growth of the stevia market in general, and our ability to
introduce commercial development of stevia to new regions, face numerous risks
and uncertainties. In particular, we have not proven that we can produce stevia
in a manner that enables us to be profitable and meet manufacturer requirements,
develop intellectual property to enhance stevia production, develop and maintain
relationships with key growers and strategic partners to extract value from our
intellectual property, raise sufficient capital in the public and/or private
markets, or respond effectively to competitive pressures. If we are unable to
accomplish these goals, our business is unlikely to succeed and you should
consider our prospects in light of these risks, challenges and uncertainties.
WE HAVE EARNED NOMINAL REVENUES AND HAVE INCURRED RECURRING LOSSES SINCE
INCEPTION.
Our auditors have expressed its audit opinion with an explanation paragraph as
to an uncertainty with respect to our ability to continue as a going concern as
of and for the period from April 11, 2011 (inception) through April 30, 2011. We
had a deficit accumulated during the development stage of $1,303,241 at December
31, 2011, a net loss of $1,303,241 and net cash used in operating activities of
$509,825 for the period from April 11, 2011 (inception) through December 31,
2011. These factors raise substantial doubt about our ability to continue as a
going concern.
We only generated norminal revenues since inception. While we are increasing
operations and attempting to generate sufficient revenues, our cash position may
not be sufficient enough to support our daily operations. We intend to raise
additional funds by way of a public or private offering. Such financing may not
be available in sufficient amounts, or on terms acceptable to us and may dilute
existing shareholders. We believe that the actions presently being taken to
further implement our business plan and generate sufficient revenues provide the
opportunity for us to continue as a going concern. While we believe in the
viability of our strategy to operate and generate sufficient revenues and in our
ability to raise additional funds, there can be no assurances to that effect.
Our ability to continue as a going concern is dependent upon our ability to
further implement our business plan and generate sufficient revenues.
IF WE FAIL TO RAISE ADDITIONAL CAPITAL, OUR ABILITY TO IMPLEMENT OUR BUSINESS
MODEL AND STRATEGY COULD BE COMPROMISED.
We have limited capital resources and operations. To date, our operations have
been funded entirely from the proceeds from debt and equity financings. We
expect to require substantial additional capital in the near future to develop
our intellectual property base and to establish the targeted levels of
commercial production of stevia. We may not be able to obtain additional
financing on terms acceptable to us, or at all. Even if we obtain financing for
our near term operations, we expect that we will require additional capital
beyond the near term. If we are unable to raise capital when needed, our
business, financial condition and results of operations would be materially
adversely affected, and we could be forced to reduce or discontinue our
operations.
WE FACE INTENSE COMPETITION WHICH COULD PROHIBIT US FROM DEVELOPING A CUSTOMER
BASE AND GENERATING REVENUE.
The sweetener industry is highly competitive with companies that have greater
capital resources, facilities and diversity of product lines. Additionally, if
demand for stevia continues to grow, we expect many new competitors to enter the
market as there are no significant barriers to entry in the industry. More
established agricultural companies with much greater financial resources which
5
do not currently compete with us may be able to easily adapt their existing
operations to production of stevia. Due to this competition, there is no
assurance that we will not encounter difficulties in obtaining revenues and
market share or in the positioning of our services or that competition in the
industry will not lead to reduced prices for the stevia leaf. Our competitors
may also introduce new non-stevia based low-calorie sweeteners or be successful
in developing a fermentation-derived stevia ingredient or other alternative
production method which could also increase competition and decrease demand for
stevia-based products.
INABILITY TO PROTECT OUR PROPRIETARY RIGHTS COULD DAMAGE OUR COMPETITIVE
POSITION.
Our farm management services business will be heavily dependent upon the
intellectual property we develop or acquire. Any infringement or
misappropriation of our intellectual property could damage its value and limit
our ability to compete. We will rely on patents, copyrights, trademarks, trade
secrets, confidentiality provisions and licensing arrangements to establish and
protect our intellectual property. We may have to engage in litigation to
protect the rights to our intellectual property, which could result in
significant litigation costs and require a significant amount of our time. In
addition, our ability to enforce and protect our intellectual property rights
may be limited in certain countries outside the United States, which could make
it easier for competitors to capture market position in such countries by
utilizing technologies that are similar to those developed or licensed by us.
Competitors may also harm our sales by designing products that mirror the
capabilities of our products or technology without infringing our intellectual
property rights. If we do not obtain sufficient protection for our intellectual
property, or if we are unable to effectively enforce our intellectual property
rights, our competitiveness could be impaired, which would limit our growth and
future revenue.
A successful claim of infringement against us could result in a substantial
damage award and materially harm our financial condition. Even if a claim
against us is unsuccessful, we would likely have to devote significant time and
resources to defending against it.
We may also find it necessary to bring infringement or other actions against
third parties to seek to protect our intellectual property rights. Litigation of
this nature, even if successful, is often expensive and disruptive of a
company's management's attention, and in any event may not lead to a successful
result relative to the resources dedicated to any such litigation.
WE MAY BE UNABLE TO EFFECTIVELY DEVELOP AN INTELLECTUAL PROPERTY PORTFOLIO OR
MAY FAIL TO KEEP PACE WITH ADVANCES IN TECHNOLOGY.
We have no operating history in the agriculture industry and there is no
certainty that we will be able to effectively develop a viable portfolio of
intellectual property. The success of our farm management services, which are
the core of our business, depends upon our ability to create such intellectual
property.
Even if we are able to develop, manufacture and obtain any regulatory approvals
and clearances necessary for our technologies and methods, the success of such
services will depend upon market acceptance. Levels of market acceptance for our
services could be affected by several factors, including:
* the availability of alternative services from our competitors;
* the price and reliability of the our services relative to that of our
competitors; and
* the timing of our market entry.
Additionally, our intellectual property must keep pace with advances by our
competitors. Failure to do so could cause our position in the industry to erode
rapidly.
CONFIDENTIALITY AGREEMENTS WITH EMPLOYEES AND OTHERS MAY NOT ADEQUATELY PREVENT
DISCLOSURE OF OUR TRADE SECRETS AND OTHER PROPRIETARY INFORMATION.
Our success depends upon the skills, knowledge and experience of our technical
personnel, our consultants and advisors as well as our licensors and
contractors. Because we operate in a highly competitive field, we will rely
significantly on trade secrets to protect our proprietary technology and
processes. However, trade secrets are difficult to protect. We will enter into
confidentiality and intellectual property assignment agreements with our
corporate partners, employees, consultants, outside scientific collaborators,
developers and other advisors. These agreements generally require that the
receiving party keep confidential and not disclose to third parties confidential
information developed by us during the course of the receiving party's
relationship with us. These agreements also generally provide that inventions
conceived by the receiving party in the course of rendering services to us will
6
be our exclusive property. However, these agreements may be breached and may not
effectively assign intellectual property rights to us. Our trade secrets also
could be independently discovered by competitors, in which case we would not be
able to prevent use of such trade secrets by our competitors. The enforcement of
a claim alleging that a party illegally obtained and was using our trade secrets
could be difficult, expensive and time consuming and the outcome would be
unpredictable. In addition, courts outside the United States may be less willing
to protect trade secrets. The failure to obtain or maintain meaningful trade
secret protection could adversely affect our competitive position.
WE WILL PRODUCE PRODUCTS FOR CONSUMPTION BY CONSUMERS THAT MAY EXPOSE US TO
LITIGATION BASED ON CONSUMER CLAIMS AND PRODUCT LIABILITY.
The stevia produced at our farms will be integrated into stevia-based products
which will be consumed by the general public. Additionally, we may manufacture
and sell private label stevia-based food products. Even though we intend to grow
and sell products that are safe, we have potential product risk from the
consuming public. We could be party to litigation based on consumer claims,
product liability or otherwise that could result in significant liability for us
and adversely affect our financial condition and operations.
IF OUR SERVICES DO NOT GAIN ACCEPTANCE AMONG STEVIA GROWERS, WE MAY NOT BE ABLE
TO RECOVER THE COST OF OUR INTELLECTUAL PROPERTY DEVELOPMENT.
Our business model relies on the assumption that we will be able to develop
methods and protocols, secure valuable plant strains and develop other
intellectual property for stevia farming that will be attractive to both stevia
growers and manufacturers. We plan to spend significant amounts of capital to
develop this intellectual property portfolio. If we are unable to secure such
intellectual property or if our methods and protocols do not gain acceptance
among growers or manufacturers, our intellectual property will have limited
value. A number of factors may affect the market acceptance of our products and
services, including, among others, the perception by growers of the
effectiveness of our intellectual property, the perception among manufacturers
of the quality of stevia produced using our intellectual property, our ability
to fund marketing efforts, and the effectiveness of such marketing efforts. If
such products and services do not gain acceptance by growers and/or
manufacturers, we may not be able to fund future operations, including the
expansion of our own farming projects and development and/or acquisition of
additional intellectual property, which inability would have a material adverse
effect on our business, financial condition and operating results.
ANY FAILURE TO ADEQUATELY ESTABLISH A NETWORK OF GROWERS AND MANUFACTURERS WILL
IMPEDE OUR GROWTH.
We expect to be substantially dependent on manufacturers to purchase the stevia
produced both at our own farms and at those of our customers. We have entered
into a supply agreement with a manufacturer and two purchase agreements with
growers and are in the process of establishing a network of growers to produce
stevia using our methods and protocols. The relationship with this manufacturer
and its perception of the stevia produced using our farm management services
will determine its willingness to enter into purchase contracts with us and our
customers on attractive terms. Our ability to secure such contracts will
influence our attractiveness to growers who are potentially interested in
partnering with us. Achieving significant growth in revenue will depend, in
large part, on our success in establishing this production network. If we are
unable to develop an efficient production network, it will make our growth more
difficult and our business could suffer.
IF WE ARE UNABLE TO DELIVER A CONSISTENT, HIGH QUALITY STEVIA LEAF AT SUFFICIENT
VOLUMES, OUR RELATIONSHIP WITH OUR MANUFACTURERS MAY SUFFER AND OUR OPERATING
RESULTS WILL BE ADVERSELY AFFECTED.
Manufacturers will expect us to be able to consistently deliver stevia at
sufficient volumes, while meeting their established quality standards. If we are
unable to consistently deliver such volumes either from our own farms, or those
of our grower partners, our relationship with these manufacturers could be
adversely affected which could have a negative impact on our operating results.
CHANGES IN CONSUMER PREFERENCES OR NEGATIVE PUBLICITY OR RUMORS MAY REDUCE
DEMAND FOR OUR PRODUCTS.
Recent data suggests consumers are adopting stevia as a sweetener in many
products. However, stevia is a relatively new ingredient in consumer products
and many consumers are not familiar with it. Therefore, any negative reports or
rumors regarding either the taste or perceived health effects of stevia, whether
true or not, could have a severe impact on the demand for stevia-based products.
Manufacturers may decide to rely on alternative sweeteners which have a more
established history with consumers. Primarily operating at the grower level, we
will have little opportunity to influence these perceptions and there can be no
assurance that the increased adoption of stevia in consumer food and beverage
products will continue. Additionally, new sweeteners with similar
characteristics to stevia may emerge which could be cheaper to produce or be
perceived to have other qualities superior to stevia. Any of these factors could
7
adversely affect our ability to produce revenues and our business, financial
condition and results of operations would suffer.
FAILURE TO EFFECTIVELY MANAGE GROWTH OF INTERNAL OPERATIONS AND BUSINESS MAY
STRAIN OUR FINANCIAL RESOURCES.
We intend to significantly expand the scope of our farming operations and our
research and development activities in the near term. Our growth rate may place
a significant strain on our financial resources for a number of reasons,
including, but not limited to, the following:
* The need for continued development of our financial and information
management systems;
* The need to manage strategic relationships and agreements with
manufacturers, growers and partners; and
* Difficulties in hiring and retaining skilled management, technical and
other personnel necessary to support and manage our business.
Additionally, our strategy envisions a period of rapid growth that may impose a
significant burden on our administrative and operational resources. Our ability
to effectively manage growth will require us to substantially expand the
capabilities of our administrative and operational resources and to attract,
train, manage and retain qualified management and other personnel. Our failure
to successfully manage growth could result in our sales not increasing
commensurately with capital investments. Our inability to successfully manage
growth could materially adversely affect our business.
ADVERSE WEATHER CONDITIONS, NATURAL DISASTERS, CROP DISEASE, PESTS AND OTHER
NATURAL CONDITIONS CAN IMPOSE SIGNIFICANT COSTS AND LOSSES ON OUR BUSINESS.
Weather-related events could significantly affect our results of operations. We
do not currently maintain insurance to cover weather-related losses and if we do
obtain such insurance it likely will not cover all weather-related events and,
even when an event is covered, our retention or deductible may be significant.
Cooler temperatures in the regions where we operate could negatively affect us,
while not affecting our competitors in other regions.
Our crops, and those of our grower partners, could also be affected by drought,
temperature extremes, hurricanes, windstorms and floods. In addition, such crops
could be vulnerable to crop disease and to pests, which may vary in severity and
effect, depending on the stage of agricultural production at the time of
infection or infestation, the type of treatment applied and climatic conditions.
Unfavorable growing conditions caused by these factors can reduce both crop size
and crop quality. In extreme cases, entire harvests may be lost. These factors
may result in lower production and, in the case of farms we own or manage,
increased costs due to expenditures for additional agricultural techniques or
agrichemicals, the repair of infrastructure, and the replanting of damaged or
destroyed crops. We may also experience shipping interruptions, port damage and
changes in shipping routes as a result of weather-related disruptions.
Competitors and industry participants may be affected differently by
weather-related events based on the location of their production and supply. If
adverse conditions are widespread in the industry, it may restrict supplies and
lead to an increase in prices for stevia leaf, but our typical fixed-price
supply contracts may prevent us from recovering these higher costs.
OUR OPERATIONS AND PRODUCTS ARE REGULATED IN THE AREAS OF FOOD SAFETY AND
PROTECTION OF HUMAN HEALTH AND THE ENVIRONMENT.
Our operations and products are subject to inspections by environmental, food
safety, health and customs authorities and to numerous governmental regulations,
including those relating to the use and disposal of agrichemicals, the
documentation of food shipments, the traceability of food products, and labeling
of our products for consumers, all of which involve compliance costs. Changes in
regulations or laws may require, operational modifications or capital
improvements at various locations. If violations occur, regulators can impose
fines, penalties and other sanctions. The costs of these modifications and
improvements and of any fines or penalties could be substantial. We can be
adversely affected by actions of regulators or if consumers lose confidence in
the safety and quality of stevia, even if our products are not implicated.
IF WE ARE UNABLE TO CONTINUALLY INNOVATE AND INCREASE EFFICIENCIES, OUR ABILITY
TO ATTRACT NEW CUSTOMERS MAY BE ADVERSELY AFFECTED.
In the area of innovation, we must be able to develop new processes, plant
strains, and other technologies that appeal to stevia growers. This depends, in
part, on the technological and creative skills of our personnel and on our
ability to protect our intellectual property rights. We may not be successful in
8
the development, introduction, marketing and sourcing of new technologies or
innovations, that satisfy customer needs, achieve market acceptance or generate
satisfactory financial returns.
CURRENT GLOBAL ECONOMIC CONDITIONS MAY ADVERSELY AFFECT OUR INDUSTRY, BUSINESS
AND RESULT OF OPERATIONS.
The recent disruptions in the current global credit and financial markets has
included diminished liquidity and credit availability, a decline in consumer
confidence, a decline in economic growth, an increased unemployment rate, and
uncertainty about economic stability. There can be no assurance that there will
not be further deterioration in credit and financial markets and confidence in
economic conditions. These economic uncertainties affect businesses such as ours
in a number of ways, making it difficult to accurately forecast and plan our
future business activities. The current adverse global economic conditions and
tightening of credit in financial markets may lead consumers to postpone
spending, which may cause manufacturers to cancel, decrease or delay their
existing and future orders with us. We are unable to predict the likely duration
and severity of the current disruptions in the credit and financial markets and
adverse global economic conditions. If the current uncertain economic conditions
continue or further deteriorate, our business and results of operations could be
materially and adversely affected.
OUR BUSINESS DEPENDS SUBSTANTIALLY ON THE CONTINUING EFFORTS OF OUR EXECUTIVE
OFFICERS AND OUR BUSINESS MAY BE SEVERELY DISRUPTED IF WE LOSE THEIR SERVICES.
Our future success depends substantially on the continued services of our
executive officers, especially our President and Chairman, Mr. George
Blankenbaker. We do not maintain key man life insurance on any of our executive
officers and directors. If one or more of our executive officers are unable or
unwilling to continue in their present positions, we may not be able to replace
them readily, if at all. Therefore, our business may be severely disrupted, and
we may incur additional expenses to recruit and retain new officers. In
addition, if any of our executives joins a competitor or forms a competing
company, we may lose some of our customers.
WE MAY BE REQUIRED TO INCUR SIGNIFICANT COSTS AND REQUIRE SIGNIFICANT MANAGEMENT
RESOURCES TO EVALUATE OUR INTERNAL CONTROL OVER FINANCIAL REPORTING AS REQUIRED
UNDER SECTION 404 OF THE SARBANES-OXLEY ACT, AND ANY FAILURE TO COMPLY OR ANY
ADVERSE RESULT FROM SUCH EVALUATION MAY HAVE AN ADVERSE EFFECT ON OUR STOCK
PRICE.
As a smaller reporting company as defined in Rule 12b-2 under the Securities
Exchange Act of 1934, as amended, we are required to evaluate our internal
control over financial reporting under Section 404 of the Sarbanes-Oxley Act of
2002 ("Section 404"). Section 404 requires us to include an internal control
report with our Annual Report on Form 10-K. This report must include
management's assessment of the effectiveness of our internal control over
financial reporting as of the end of the fiscal year. This report must also
include disclosure of any material weaknesses in internal control over financial
reporting that we have identified. Failure to comply, or any adverse results
from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on the trading price of our equity
securities. As of December 31, 2011, the management of the Company assessed the
effectiveness of the Company's internal control over financial reporting based
on the criteria for effective internal control over financial reporting
established in INTERNAL CONTROL--INTEGRATED FRAMEWORK issued by the Committee of
Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on
conducting such assessments. Management concluded, as of the quarter ended
December 31, 2011, that its internal controls and procedures were not effective
to detect the inappropriate application of U.S. GAAP rules. Management realized
there were deficiencies in the design or operation of our internal control that
adversely affected our internal controls which management considers to be
material weaknesses including those described below:
* We have not achieved the optimal level of segregation of duties
relative to key financial reporting functions.
* We do 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.
Achieving continued compliance with Section 404 may require us to incur
significant costs and expend significant time and management resources. No
assurance can be given that we will be able to fully comply with Section 404 or
that we would be able to conclude that our internal control over financial
reporting is effective at fiscal year end. As a result, investors could lose
confidence in our reported financial information, which could have an adverse
effect on the trading price of our securities, as well as subject us to civil or
criminal investigations and penalties. In addition, our independent registered
public accounting firm may not agree with our management's assessment or
conclude that our internal control over financial reporting is operating
effectively.
9
RISKS RELATED TO DOING BUSINESS IN VIETNAM AND OTHER DEVELOPING COUNTRIES
OUR INTERNATIONAL OPERATIONS WILL BE SUBJECT TO THE LAWS OF THE JURISDICTIONS IN
WHICH WE OPERATE.
A significant portion of our initial business operations will occur in Vietnam.
We will be generally subject to laws and regulations applicable to foreign
investment in Vietnam. The Vietnamese legal system is based, at least in part,
on written statutes. However, since these laws and regulations are relatively
new and the Vietnamese legal system continues to rapidly evolve, the
interpretations of many laws, regulations and rules are not always uniform and
enforcement of these laws, regulations and rules involves uncertainties. We
cannot predict the effect of future developments in the Vietnamese legal system,
including the promulgation of new laws, changes to existing laws or the
interpretation or enforcement thereof, the preemption of local regulations by
national laws, or the overturn of local government's decisions by the superior
government. These uncertainties may limit legal protections available to us.
OUR INTERNATIONAL OPERATIONS INVOLVE THE USE OF FOREIGN CURRENCIES, WHICH
SUBJECTS US TO EXCHANGE RATE FLUCTUATIONS AND OTHER CURRENCY RISKS.
The revenues and expenses of our international operations will generally be
denominated in local currencies, which will subject us to exchange rate
fluctuations between such local currencies and the U.S. dollar. These exchange
rate fluctuations will subject us to currency translation risk with respect to
the reported results of our international operations, as well as to other risks
sometimes associated with international operations. In the future, we could
experience fluctuations in financial results from our operations outside of the
United States, and there can be no assurance we will be able, contractually or
otherwise, to reduce the currency risks associated with our international
operations.
WE MAY BE ADVERSELY AFFECTED BY ECONOMIC AND POLITICAL CONDITIONS IN THE
COUNTRIES WHERE WE OPERATE.
We will operate in Vietnam and other countries throughout the world. Economic
and political changes in these countries, such as inflation rates, recession,
foreign ownership restrictions, restrictions on transfer of funds into or out of
a country and similar factors may adversely affect results of operations.
While it is our understanding that the economy in Vietnam has grown
significantly in the past 20 years, the growth has been uneven, both
geographically and among various economic sectors. The government of Vietnam has
implemented various measures to encourage or control economic growth and guide
the allocation of resources. Some of these measures benefit the overall
Vietnamese economy, but may also have a negative effect on us. For example, our
financial condition and results of operations may be adversely affected by
government control over capital investments or changes in tax regulations that
are applicable to us.
The Vietnamese economy has been transitioning from a planned economy to a more
market-oriented economy. Although in recent years the Vietnamese government has
implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a
substantial portion of the productive assets in Vietnam are still owned by the
Vietnamese government. The continued control of these assets and other aspects
of the national economy by Vietnam government could materially and adversely
affect our business. The Vietnamese government also exercises significant
control over Vietnamese economic growth through the allocation of resources,
controlling payment of foreign currency-denominated obligations, setting
monetary policy and providing preferential treatment to particular industries or
companies. Efforts by the Vietnamese government to slow the pace of growth of
the Vietnamese economy could negatively affect our business.
OUR INSURANCE COVERAGE MAY BE INADEQUATE TO COVER ALL SIGNIFICANT RISK
EXPOSURES.
We will be exposed to liabilities that are unique to the products we will
provide. While we intend to maintain insurance for certain risks, the amount of
our insurance coverage may not be adequate to cover all claims or liabilities,
and we may be forced to bear substantial costs resulting from risks and
uncertainties of our business. It is also not possible to obtain insurance to
protect against all operational risks and liabilities. The failure to obtain
adequate insurance coverage on terms favorable to us, or at all, could have a
material adverse effect on our business, financial condition and results of
operations. In addition, because the insurance industry in Vietnam and other
developing countries are still in their early stages of development, business
interruption insurance available in such countries relating to our intended
services and products offers limited coverage compared to that offered in many
other developed countries. We do not have any business interruption insurance.
Any business disruption or natural disaster could result in substantial costs
and diversion of resources.
10
IT WILL BE EXTREMELY DIFFICULT TO ACQUIRE JURISDICTION AND ENFORCE LIABILITIES
AGAINST OUR OFFICERS, DIRECTORS AND ASSETS OUTSIDE THE UNITED STATES.
Substantially all of our assets will be located outside the United States and a
significant number of our officers and directors may reside outside of the
United States as well. As a result, it may not be possible for United States
investors to enforce their legal rights, to effect service of process upon our
directors or officers or to enforce judgments of United States courts predicated
upon civil liabilities and criminal penalties of our directors and officers
under Federal securities laws. Moreover, we have been advised that in
particular, Vietnam, does not have treaties providing for the reciprocal
recognition and enforcement of judgments of courts with the United States.
Further, it is unclear if extradition treaties now in effect between the United
States and, in particular, Vietnam would permit effective enforcement of
criminal penalties of the Federal securities laws.
RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES
THE RELATIVE LACK OF PUBLIC COMPANY EXPERIENCE OF OUR MANAGEMENT TEAM MAY PUT US
AT A COMPETITIVE DISADVANTAGE.
Our management team lacks public company experience and is generally unfamiliar
with the requirements of the United States securities laws and U.S. Generally
Accepted Accounting Principles, which could impair our ability to comply with
legal and regulatory requirements such as those imposed by Sarbanes-Oxley Act of
2002. The individuals who now constitute our senior management team have never
had responsibility for managing a publicly traded company. Such responsibilities
include complying with federal securities laws and making required disclosures
on a timely basis. Our senior management may not be able to implement programs
and policies in an effective and timely manner that adequately responds to such
increased legal, regulatory compliance and reporting requirements. Our failure
to comply with all applicable requirements could lead to the imposition of fines
and penalties and distract our management from attending to the growth of our
business.
OUR STOCK IS CATEGORIZED AS A PENNY STOCK. TRADING OF OUR STOCK MAY BE
RESTRICTED BY THE SEC'S PENNY STOCK REGULATIONS WHICH MAY LIMIT A SHAREHOLDER'S
ABILITY TO BUY AND SELL OUR STOCK.
Our stock is categorized as a "penny stock". The SEC has adopted Rule 15g-9
which generally defines "penny stock" to be any equity security that has a
market price (as defined) less than $4.00 per share or an exercise price of less
than $5.00 per share, subject to certain exceptions. Our securities are covered
by the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the SEC which
provides information about penny stocks and the nature and level of risks in the
penny stock market. The broker-dealer also must provide the customer with
current bid and offer quotations for the penny stock, the compensation of the
broker-dealer and its salesperson in the transaction and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations, and the broker-dealer and salesperson
compensation information, must be given to the customer orally or in writing
prior to effecting the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction in a penny stock not otherwise exempt from
these rules, the broker-dealer must make a special written determination that
the penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of our common stock.
FINRA SALES PRACTICE REQUIREMENTS MAY ALSO LIMIT A SHAREHOLDER'S ABILITY TO BUY
AND SELL OUR STOCK.
In addition to the "penny stock" rules described above, the Financial Industry
Regulatory Authority ("FINRA") has adopted rules that require that in
recommending an investment to a customer, a broker-dealer must have reasonable
grounds for believing that the investment is suitable for that customer. Prior
to recommending speculative low priced securities to their non-institutional
customers, broker-dealers must make reasonable efforts to obtain information
about the customer's financial status, tax status, investment objectives and
other information. Under interpretations of these rules, FINRA believes that
there is a high probability that speculative low priced securities will not be
suitable for at least some customers. The FINRA requirements make it more
difficult for broker-dealers to recommend that their customers buy our common
stock, which may limit your ability to buy and sell our stock and have an
adverse effect on the market for our shares.
WE EXPECT TO EXPERIENCE VOLATILITY IN OUR STOCK PRICE, WHICH COULD NEGATIVELY
AFFECT SHAREHOLDERS' INVESTMENTS.
11
The market price for shares of our common stock may be volatile and may
fluctuate based upon a number of factors, including, without limitation,
business performance, news announcements or changes in general market
conditions.
In the past, securities class action litigation has often been brought against a
company following periods of volatility in the market price of its securities.
Due to the volatility of our common stock price, we may be the target of
securities litigation in the future. Securities litigation could result in
substantial costs and divert management's attention and resources.
Shareholders should also be aware that, according to SEC Release No. 34-29093,
the market for "penny stock", such as our common stock, has suffered in recent
years from patterns of fraud and abuse. Such patterns include (1) control of the
market for the security by one or a few broker-dealers that are often related to
the promoter or issuer; (2) manipulation of prices through prearranged matching
of purchases and sales and false and misleading press releases; (3) boiler room
practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced sales persons; (4) excessive and undisclosed
bid-ask differential and markups by selling broker-dealers; and (5) the
wholesale dumping of the same securities by promoters and broker-dealers after
prices have been manipulated to a desired level, along with the resulting
inevitable collapse of those prices and with consequent investor losses. Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to dictate the
behavior of the market or of broker-dealers who participate in the market,
management will strive within the confines of practical limitations to prevent
the described patterns from being established with respect to our securities.
The occurrence of these patterns or practices could increase the future
volatility of our share price.
TO DATE, WE HAVE NOT PAID ANY CASH DIVIDENDS AND NO CASH DIVIDENDS WILL BE PAID
IN THE FORESEEABLE FUTURE.
We do not anticipate paying cash dividends on our common stock in the
foreseeable future and we may not have sufficient funds legally available to pay
dividends. Even if the funds are legally available for distribution, we may
nevertheless decide not to pay any dividends. We presently intend to retain all
earnings for our operations.
THE ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES UNDER NEVADA LAW AND THE EXISTENCE OF INDEMNIFICATION RIGHTS TO OUR
DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN SUBSTANTIAL EXPENDITURES BY OUR
COMPANY AND MAY DISCOURAGE LAWSUITS AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES.
Our Articles of Incorporation contain a provision permitting us to eliminate the
personal liability of our directors to our company and shareholders for damages
for breach of fiduciary duty as a director or officer to the extent provided by
Nevada law. We may also have contractual indemnification obligations under our
employment agreements with our officers. The foregoing indemnification
obligations could result in the Company incurring substantial expenditures to
cover the cost of settlement or damage awards against directors and officers,
which we may be unable to recoup. These provisions and resultant costs may also
discourage our company from bringing a lawsuit against directors and officers
for breaches of their fiduciary duties, and may similarly discourage the filing
of derivative litigation by our shareholders against our directors and officers
even though such actions, if successful, might otherwise benefit our company and
shareholders.
CERTAIN RESTRICTIONS ON THE EXTENT OF PUTS MAY HAVE LITTLE, IF ANY, EFFECT ON
THE ADVERSE IMPACT OF OUR ISSUANCE OF SHARES IN CONNECTION WITH THE EQUITY
PURCHASE AGREEMENT, AND AS SUCH, SOUTHRIDGE MAY SELL A LARGE NUMBER OF SHARES,
RESULTING IN SUBSTANTIAL DILUTION TO THE VALUE OF SHARES HELD BY EXISTING
SHAREHOLDERS.
Southridge has agreed to refrain from holding an amount of shares which would
result in Southridge owning more than 9.99% of the then-outstanding shares of
our common stock at any one time. These restrictions, however, do not prevent
Southridge from selling shares of common stock received in connection with a
put, and then receiving additional shares of common stock in connection with a
subsequent put. In this way, Southridge could sell more than 9.99% of the
outstanding common stock in a relatively short time frame while never holding
more than 9.99% at one time.
BECAUSE SOUTHRIDGE WILL BE PAYING LESS THAN THE THEN-PREVAILING MARKET PRICE FOR
OUR COMMON STOCK, YOUR OWNERSHIP INTEREST MAY BE DILUTED AND THE VALUE OF OUR
COMMON STOCK MAY DECLINE BY EXERCISING THE PUT RIGHT PURSUANT TO THE EQUITY
PURCHASE AGREEMENT.
The common stock to be issued to Southridge pursuant to the Equity Purchase
Agreement will be purchased at an 7% discount to the lowest closing bid price of
our common stock reported by Bloomberg, L.P. during the five consecutive trading
day period immediately following the date of our notice to Southridge of our
election to put shares pursuant to the Equity Purchase Agreement. Because the
12
put price is lower than the prevailing market price of our common stock, to the
extent that the put right is exercised, your ownership interest may be diluted.
Southridge has a financial incentive to sell our common stock immediately upon
receiving the shares to realize the profit equal to the difference between the
discounted price and the market price. If Southridge sells the shares, the price
of our common stock could decrease. If our stock price decreases, Southridge may
have a further incentive to sell the shares of our common stock that it holds.
These sales may have a further adverse impact on our stock price.
THE EQUITY PURCHASE AGREEMENT'S PRICING STRUCTURE MAY RESULT IN DILUTION TO OUR
STOCKHOLDERS.
Pursuant to the Equity Purchase Agreement, Southridge committed to purchase,
subject to certain conditions, up to $20,000,000 of our common stock over a
three-year period. If we sell shares to Southridge under the Equity Purchase
Agreement , it will have a dilutive effect on the holdings of our current
stockholders, and may result in downward pressure on the price of our common
stock. If we draw down amounts under the Equity Purchase Agreement, we will
issue shares to Southridge at a discount. If we draw down amounts under the
Equity Purchase Agreement when our share price is decreasing, we will need to
issue more shares to raise the same amount than if our stock price was higher.
Issuances in the face of a declining share price will have an even greater
dilutive effect than if our share price were stable or increasing, and may
further decrease our share price.
USE OF PROCEEDS
Selling Security Holder may sell all of the common stock offered by this
Prospectus from time-to-time. We will not receive any proceeds from the sale of
those shares of common stock. We may, however, receive aggregate gross proceeds
of $20,000,000 if all shares of common stock in this offering are sold to
Selling Security Holder pursuant to the Equity Purchase Agreement. Any such
proceeds we receive will be used for working capital and general corporate
matters.
DETERMINATION OF OFFERING PRICE
There currently is a limited public market for our common stock. Selling
Security Holder will determine at what price it may sell the offered shares, and
such sales may be made at prevailing market prices or at privately negotiated
prices. See "Plan of Distribution" below for more information.
SELLING SECURITY HOLDER
We agreed to register for resale $20,000,000 of Put Shares that we will put to
Southridge pursuant to the Equity Purchase Agreement. The Equity Purchase
Agreement provides that Southridge is committed to purchase up to $20,000,000 of
our common stock. We may draw on the facility from time to time, as and when we
determine appropriate in accordance with the terms and conditions of the Equity
Purchase Agreement. We will not receive any proceeds from the sale of these
shares of common stock offered by Southridge. However, we will receive proceeds
from the sale of our Put Shares under the Equity Purchase Agreement. The
proceeds will be used for working capital or general corporate purposes.
Southridge is the potential purchaser of our common stock under the Equity
Purchase Agreement. The $20,000,000 of Put Shares offered in this prospectus is
based on the Equity Purchase Agreement between Southridge and us. Southridge may
from time to time offer and sell any or all of the Put Shares that are
registered under this prospectus. The put option price is 93% of the lowest
Closing Price in the five trading day period immediately following the Put Date.
We are unable to determine the exact number of shares that will actually be sold
by Southridge according to this prospectus due to:
* the ability of Southridge to determine when and whether it will sell
any of the Put Shares under this prospectus; and
* the uncertainty as to the number of Put Shares that will be issued
upon exercise of our put options under the Equity Purchase Agreement.
The following information contains a description of how Southridge shall acquire
the shares to be sold in this offering. Southridge has not held a position or
office, or had any other material relationship with us, except as follows.
Southridge is a limited partnership organized and existing under the laws of the
state of Delaware. All investment decisions of, and control of, Southridge is
held by its general partner Southridge Advisors, LLC. Stephen M. Hicks is the
manager of Southridge Advisors, LLC, and he has voting and investment power over
the shares beneficially owned by Southridge Partners II, LP. To the extent such
13
shares are offered for sale through a Put Notice, Southridge will acquire all
shares being registered in this offering in the financing transactions with us.
Southridge intends to sell up to $20,000,000 of shares of our common stock
pursuant to the Equity Purchase Agreement under this prospectus. On January 26,
2012, the Company and Southridge entered into the Equity Purchase Agreement
pursuant to which we have the opportunity, for a three-year period commencing on
the date of the Equity Purchase Agreement (but not before the date which the SEC
first declares effective this registration statement), to sell shares of our
common stock. For each share of our common stock purchased under the Equity
Purchase Agreement, Southridge will pay 93% of the lowest Closing Price during
the Valuation Period.
In addition, in the event the Closing Price decreases below the Floor Price
during the Valuation Period, Southridge shall not be allowed to fund one-fifth
(1/5) of the put amount on the Put Notice for each such trading day, and the put
amount on the Put Notice shall be adjusted accordingly. In the event that during
a Valuation Period the Closing Price falls below the Floor Price for any two (2)
trading days, then the balance of each party's rights and obligations to
purchase and sell the investment amount under such Put Notice shall terminate on
such second trading day, and the put amount shall be adjusted to include only
one-fifth (1/5) of the initial put amount for each trading day during the
Valuation Period prior to such termination date that the closing Closing Price
equals or exceeds the Floor Price.
We are relying on an exemption from the registration requirements of the
Securities Act for the private placement of our securities under the Equity
Purchase Agreement pursuant to Section 4(2) of the Securities Act and/or Rule
506 of Regulation D promulgated thereunder. The transaction does not involve a
public offering, Southridge is an "accredited investor" and/or qualified
institutional buyer and Southridge has access to information about us and its
investment.
There are substantial risks to investors as a result of the issuance of shares
of our common stock under the Equity Purchase Agreement. These risks include
dilution of stockholders and significant decline in our stock price.
Southridge will periodically purchase shares of our common stock under the
Equity Purchase Agreement and will in turn, sell such shares to investors in the
market at the prevailing market price. This may cause our stock price to
decline, which will require us to issue increasing numbers of shares to
Southridge to raise the same amount of funds, as our stock price declines.
Southridge is an "underwriter" within the meaning of the Securities Act.
The following table sets forth the name of Selling Security Holder, the number
of shares of common stock beneficially owned by Selling Security Holder as of
the date hereof and the number of shares of common stock being offered by
Selling Security Holder. The shares being offered hereby are being registered to
permit public secondary trading, and Selling Security Holder may offer all or
part of the shares for resale from time to time. However, Selling Security
Holder is under no obligation to sell all or any portion of such shares nor is
Selling Security Holder obligated to sell any shares immediately upon
effectiveness of this prospectus. All information with respect to share
ownership has been furnished by Selling Security Holder. The "Amount
Beneficially Owned After Offering" column assumes the sale of all shares
offered.
Shares Amount Percent
Beneficially Beneficially Beneficially
Owned Prior to Shares to Owned After Owned After
Name Offering be Offered Offering Offering
---- -------- ---------- -------- --------
Southridge Partners II, LP (1) 35,000 14,981,273 (2) 35,000 Less than 1%
----------
(1) Southridge Partners II, LP is a limited partnership organized and exiting
under the laws of the state of Delaware. Southridge Advisors, LLC is the
general partner of Southridge and has voting and investment power over the
shares beneficially owned by Southridge Partners II, LP. Stephen M. Hicks
is the manager of Southridge Advisors, LLC, and he has voting and
investment power over the shares beneficially owned by Southridge Partners
II, LP.
14
(2) Calculated based on the average of the high and low prices of our common
stock on February 23, 2012 of $1.335. This number assumes we sell the
entire $20,000,000 worth of shares being offered pursuant to this
Prospectus. This amount also assumes that Southridge purchases the maximum
amount of registrable Put Shares in this registration statement.
All expenses incurred with respect to the registration of the common stock will
be borne by us, but we will not be obligated to pay any underwriting fees,
discounts, commission or other expenses incurred by Selling Security Holder in
connection with the sale of the Purchase Shares.
Neither Selling Security Holder nor any of its associates or affiliates has held
any position, office, or other material relationship with us in the past three
years.
PLAN OF DISTRIBUTION
This prospectus relates to the resale of up to $20,000,000 of our common stock,
par value $0.001 per share, by Selling Security Holder.
Selling Security Holder and any of its respective pledges, donees, assignees and
other successors-in-interest may, from time to time, sell any or all of their
shares of our common stock on any stock exchange, market or trading facility on
which the shares are traded or in private transactions. Selling Security Holder
may use any one or more of the following methods when selling shares:
* ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
* block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block as
principal to facilitate the transaction;
* purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
* an exchange distribution in accordance with the rules of the
applicable exchange;
* privately negotiated transactions;
* broker-dealers may agree with Selling Security Holder to sell a
specified number of such shares at a stipulated price per share;
* through the writing of options on the shares;
* a combination of any such methods of sale; and
* any other method permitted pursuant to applicable law.
According to the terms of the Equity Purchase Agreement, neither Southridge nor
any affiliate of Southridge acting on its behalf or pursuant to any
understanding with it will execute any short sales during the term of this
offering.
Selling Security Holder or its respective pledgees, donees, transferees or other
successors in interest, may also sell the shares directly to market makers
acting as principals and/or broker-dealers acting as agents for themselves or
their customers. Such broker-dealers may receive compensation in the form of
discounts, concessions or commissions from Selling Security Holder and/or the
purchasers of shares for whom such broker-dealers may act as agents or to whom
they sell as principal or both, which compensation as to a particular
broker-dealer might be in excess of customary commissions. Market makers and
block purchasers purchasing the shares will do so for their own account and at
their own risk. It is possible that Selling Security Holder will attempt to sell
shares of common stock in block transactions to market makers or other
purchasers at a price per share which may be below the then market price.
Selling Security Holder cannot assure that all or any of the shares offered in
this prospectus will be issued to, or sold by, Selling Security Holder. In
addition, Selling Security Holder and any brokers, dealers or agents, upon
effecting the sale of any of the shares offered in this prospectus are
"underwriters" as that term is defined under the Securities Act or the Exchange
Act, or the rules and regulations under such acts. In such event, any
commissions received by such broker-dealers or agents and any profit on the
resale of the shares purchased by them may be deemed to be underwriting
commissions or discounts under the Securities Act.
15
Discounts, concessions, commissions and similar selling expenses, if any,
attributable to the sale of shares will be borne by Selling Security Holder.
Selling Security Holder may agree to indemnify any agent, dealer or
broker-dealer that participates in transactions involving sales of the shares if
liabilities are imposed on that person under the Securities Act.
Selling Security Holder may from time to time pledge or grant a security
interest in some or all of the shares of common stock owned by it and, if it
defaults in the performance of its secured obligations, the pledgees or secured
parties may offer and sell the shares of common stock from time to time under
this prospectus after we have filed an amendment to this prospectus under Rule
424(b)(3) or any other applicable provision of the Securities Act amending the
list of Selling Security Holders to include the pledgee, transferee or other
successors in interest as Selling Security Holder under this prospectus.
Selling Security Holder also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus
and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or
other applicable provision of the Securities Act amending the list of Selling
Security Holders to include the pledgee, transferee or other successors in
interest as a Selling Security Holder under this prospectus.
We are required to pay all fees and expenses incident to the registration of the
shares of common stock. Otherwise, all discounts, commissions or fees incurred
in connection with the sale of our common stock offered hereby will be paid by
Selling Security Holder.
Selling Security Holder will acquire the securities offered hereby in the
ordinary course of business and has advised us that they have not entered into
any agreements, understandings or arrangements with any underwriters or
broker-dealers regarding the sale of their shares of common stock, nor is there
an underwriter or coordinating broker acting in connection with a proposed sale
of shares of common stock by the Selling Security Holder. We will file a
supplement to this prospectus if Selling Security Holder enters into a material
arrangement with a broker-dealer for sale of common stock being registered. If
Selling Security Holder uses this prospectus for any sale of the shares of
common stock, it will be subject to the prospectus delivery requirements of the
Securities Act.
Pursuant to a requirement by the Financial Industry Regulatory Authority, or
FINRA, the maximum commission or discount to be received by any FINRA member or
independent broker/dealer may not be greater than eight percent (8%) of the
gross proceeds received by us for the sale of any securities being registered
pursuant to SEC Rule 415 under the Securities Act.
The anti-manipulation rules of Regulation M under the Exchange Act, may apply to
sales of our common stock and activities of Selling Security Holder. Selling
Security Holder will act independently of us in making decisions with respect to
the timing, manner and size of each sale.
Southridge is an "underwriter" within the meaning of the Securities Act in
connection with the sale of our common stock under the Equity Purchase
Agreement. For each share of common stock purchased under the Equity Purchase
Agreement, Southridge will pay 93% of the lowest closing bid price of our common
stock during the Valuation Period.
We will pay all expenses incident to the registration, offering and sale of the
shares of our common stock to the public hereunder other than commissions, fees
and discounts of underwriters, brokers, dealers and agents. If any of these
other expenses exists, we expect Southridge to pay these expenses. We have
agreed to indemnify Southridge and its controlling persons against certain
liabilities, including liabilities under the Securities Act. We estimate that
the expenses of the offering to be borne by us will be approximately $35,292. We
will not receive any proceeds from the resale of any of the shares of our common
stock by Southridge. We may, however, receive proceeds from the sale of our
common stock under the Equity Purchase Agreement.
DESCRIPTION OF SECURITIES TO BE REGISTERED
GENERAL
The following summary includes a description of material provisions of our
capital stock.
AUTHORIZED AND OUTSTANDING SECURITIES
The Company is authorized to issue 100,000,000 shares of common stock, par value
$0.001 per share. As of February 23, 2012, there were issued and outstanding
61,327,275 shares of our common stock.
16
COMMON STOCK
The holders of our common stock are entitled to one vote for each share on all
matters to be voted on by the shareholders. Holders of common stock do not have
cumulative voting rights. Holders of common stock are entitled to share ratably
in dividends, if any, as may be declared from time to time by the board of
directors in its discretion from funds legally available therefore. In the event
of a liquidation, dissolution or winding up of the Company, the holders of
common stock are entitled to share pro rata all assets remaining after payment
in full of all liabilities. All of the outstanding shares of common stock are
fully paid and non-assessable. Holders of common stock have no preemptive rights
to purchase the Company's common stock. There are no conversion or redemption
rights or sinking fund provisions with respect to the common stock.
DIVIDENDS
Dividends, if any, will be contingent upon our revenues and earnings, if any,
capital requirements and financial conditions. The payment of dividends, if any,
will be within the discretion of our board of directors. We intend to retain
earnings, if any, for use in its business operations and accordingly, the board
of directors does not anticipate declaring any dividends in the foreseeable
future.
REGISTRATION RIGHTS
In accordance with the Registration Rights Agreement ("Rights Agreement")
entered into with Southridge, Southridge is entitled to certain rights with
respect to the registration of the shares of common stock issued in connection
with the Equity Purchase Agreement (the "Registrable Securities").
REGISTRATION RIGHTS.
Within ninety (90) days after the effective date of the Rights Agreement, we are
obligated to file a registration statement with respect to the Registrable
Securities. Upon becoming effective, such registration statement shall remain
effective at all times until the earliest of (i) the date that is three months
after the completetion of the last sale of common shares under the Equity
Purchase Agreement, (ii) the date when Southridge may sell all Registrable
Securities under Rule 144 without volume limitations, or (iii) the date
Southridge no longer owns any of the Registrable Securities. We must also use
all commercially reasonable efforts to registerand/or qualify the Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
Southridge may reasonably request and in which significant volumes of shares of
our common stock are traded.
EXPENSES OF REGISTRATION RIGHTS.
We will pay all reasonable expenses incurred in connection with the
registrations described above. However, we will not be responsible for any
broker or similar concessions or any legal fees or other costs of Southridge.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared or certified
any part of this prospectus or having given an opinion upon the validity of the
securities being registered or upon other legal matters in connection with the
registration or offering of the common stock was employed on a contingency
basis, or had, or is to receive, in connection with the offering, a substantial
interest, direct or indirect, in the registrant or any of its parents or
subsidiaries. Nor was any such person connected with the registrant or any of
its parents or subsidiaries as a promoter, managing or principal underwriter,
voting trustee, director, officer, or employee.
The financial statements included in this prospectus and in the registration
statement have been audited by Li & Company, PC, and are included in reliance
upon such report given upon the authority of said firm as experts in auditing
and accounting.
The validity of the issuance of the common stock hereby will be passed upon for
us by Greenberg Traurig, LLP.
17
INFORMATION WITH RESPECT TO THE REGISTRANT
BACKGROUND
We are a farm management company with a primary focus on stevia agronomics from
plant breeding to good agricultural practices to post-harvest techniques. We
plan to invest in research and development and intellectual property acquisition
and provide farm management services to contract growers and other industry
growers.
We were incorporated on May 21, 2007 in the State of Nevada. Our initial
business focus was on development of a software product for tracking employee
productivity and projects. On June 23, 2011, we closed a voluntary share
exchange transaction ("Share Exchange Transaction") with Stevia Ventures
International Ltd., a business company incorporated in the British Virgin
Islands ("BVI"), pursuant to which we acquired certain rights relating to stevia
production, including certain assignable exclusive purchase contracts and an
assignable supply agreement related to stevia.
Prior to the Share Exchange Transaction, we were a public reporting "Shell
Company", as defined in Rule 12b-2 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Following the consummation of the Exchange
Agreement we believe that we are not a shell corporation as that term is defined
in Rule 405 of the Securities Act of 1933, as amended (the "Securities Act") and
Rule 12b-2 of the Exchange Act.
Simultaneously with the closing of the Share Exchange Transaction, Mohanad
Shurrab, our shareholder and former Director, President, Treasurer and
Secretary, surrendered 33,000,000 shares of our common stock to us for
cancellation.
As a result of the Share Exchange Transaction, the sole stockholder of BVI, our
President, George Blankenbaker, received 12,000,000 shares of our common stock
in exchange for 100% of the issued and outstanding common stock of BVI. BVI
became our wholly-owned subsidiary.
Of the 12,000,000 shares issued in connection with the Share Exchange
Transaction, 6,000,000 of such shares were held in escrow pending the
achievement by Registrant of certain post-closing business milestones (the
"Milestones"), pursuant to the terms of a make good escrow agreement, between
the Registrant and Mr. Blankenbaker. As set forth in such escrow agreement, the
shares associated with each Milestone shall either be released to Mr.
Blankenbaker upon achievement of each Milestone, or forfeited to the Company
upon notification to the escrow agent that the Milestone has not been achieved.
All shares shall be either forfeited or released from escrow by the two year
anniversary of the closing of the Share Exchange Transaction. On January 12,
2012, 3,000,000 shares were released from escrow upon satisfaction of certain
Milestones.
OVERVIEW
Our focus is on implementing quality agribusiness solutions to our partners,
contract growers and customers to maximize the efficient production of stevia
leaf. Our management team has expertise in farm management and contract growing
in Asia, and experience in international business management.
Our mission is to become the global leader of stevia leaf growers and to create
a competitive advantage by focusing on the full spectrum of agronomic and
business inputs and to develop, secure, or acquire the latest intellectual
property that will enable us to consistently produce high per unit volumes of
high quality leaf utilizing environmentally sustainable methods.
We believe we can accomplish our mission by becoming the stevia agribusiness
partner of choice for our contract growers and customers, thereby creating
global synergies and producing a sustainable supply of stevia leaf sufficient to
support vertical integration of extraction facilities in each country that we
operate.
THE INDUSTRY AND OUR OPPORTUNITY
With increasing obesity giving rise to national health issues, governments are
putting pressure on the food industry to offer products with reduced calories
and we believe that consumers are looking for more natural products and simpler
ingredient lines on the foods and beverages they purchase.
In evaluating potential sweetener alternatives, manufacturers focus on taste,
pricing, and a sustainable and scalable supply. Stevia fulfills these four
criteria and has the added advantage of contributing no calories to food and
beverage with a near zero glycemic index, making it safe for diabetics.
Additionally, stevia has the benefit of having excellent application synergies
with sugar and corn as well as cost advantages that can offset sugar and corn
sweetener input costs. In addition the new blending approaches being used to
combine stevia with sugar and corn sweetener to produce reduced calorie products
completely overcomes any negative taste profiles.
Originating from Paraguay, stevia leaf has been valued for centuries because of
its sweetening properties and has been used as an approved sweetener in Japan
and Korea for decades. Extracts from stevia contain a mixture of different
molecules that vary depending upon climate and growing conditions and it was
historically impossible to come up with clear and consistent specifications of
the product needed to make it a reliable ingredient. This issue was only
overcome in recent years by identifying the steviol glycoside molecules with the
best taste profiles and by developing innovative and unique process technologies
to separate and purify stevia extract to pharmaceutical levels of purity on a
reliable and consistent basis: and, importantly, to do so in commercially viable
volumes.
In 2008, Rebaudioside A, a steviol glycoside, was granted GRAS (Generally
Recognized as Safe) status by the U.S. Food and Drug Administration following
applications by Cargill and Merisant. Since then, approval by legislators across
the world has opened the door to new formulations and reformulations of foods
and beverages with zero or reduced calorie content. In 2009, stevia was
18
incorporated into leading beverage brands manufactured by Coca-Cola and PepsiCo
and has since been incorporated into many categories of food and beverages.
The stevia industry is segmented into three main business processes: i)
extraction and purification, ii) product formulation and marketing, and iii)
plant breeding and farming.
The majority of the cost of refined stevia is composed of the leaf cost and we
believe there remains considerable opportunity to build value in the supply
chain by focusing on stevia agronomics. The stevia genus includes more than 100
species and each species contains unique sweet compounds. However, only two of
these species contain steviol glycosides and of these two the variety with the
sweetest compounds is stevia rebaudiana bertoni. There is relatively little
technical knowledge of this species and almost all commercial growing of stevia
has occurred in China because of the traditional Japanese and Korean markets.
Now with the global market demand for high TSG (total steviol glycoside) and
high Reb-A (Rebaudioside A) producing plants, there is increased demand for
agronomic and farm management expertise to establish new plantations and rapidly
scale leaf production.
PRODUCTS AND SERVICES
GROWTH CYCLE - The stevia plant is a perennial but the growing cycle varies
greatly depending on the particular strain and location. Stevia is sensitive to
frost and in China where most stevia is grown today, it is common to only have
one or two harvests. Closer to the equator it is possible to harvest year round
with some dormancy during the winter months. It is also possible to manipulate
the harvest cycle and in developing countries where manual labor is the
preferred method, a short cycle of as little as 45 to 60 days between harvests
is preferred. However, in more developed countries where mechanization is the
focus, a longer growing cycle is preferred and cycles of more than 120 days have
been achieved.
YIELD - Expected annual dry leaf yields of plant varieties commonly sourced from
China is three to six tons per Ha. Field trial data indicates that six tons or
more per hectare (Ha) can be achieved working with elite strains. We are focused
on securing such strains and adapting them to local growing environments. By
continuing to build our inventory of elite strains and refine our farm
management practices and technologies, we plan to continuously improve yield and
plant performance and exploit the economic value of our intellectual property.
HARVEST - Stevia is a very labor intensive plant and traditionally has been
harvested by hand. As larger commercial operations have begun to focus on
stevia, a considerable amount of research is being put into the mechanization of
planting, harvesting and leaf removal. While we will need to maximize
mechanization in the United States to be economical, in many Asian locations
there is both an abundance of low cost labor and an expectation that stevia will
provide an economic stimulus and employ many of the farmers in poor rural areas.
So the adoption of mechanization will need to consider both economic and social
factors.
LOCATION - Infrastructure is a major criteria for field site selection and can
be especially challenging in developing countries. A viable site must have the
proper weather and soil that is suitable for plant growth as well as being in a
location that satisfies logistical business considerations, such as being easily
accessible and in close proximity to a capable labor pool. Access to water can
often be a challenge and greatly limits the areas where an irrigation model can
be applied. Vietnam has excellent road infrastructure and our fields are easily
accessible by passenger car or lorry and most potential growing areas are
located within hours of a major port city. Indonesia has an abundance of low
cost labor and land available for acquisition that is suitable for new varieties
of stevia that we are breeding and/or acquiring to grow in the equatorial zone.
LAND USE - Based on current land ownership in Vietnam, we will need to rely on
both contract farming and plantation models. In Indonesia, we will be able to
acquire vast tracts of land and will prioritize farming models based purely on
the economics and preferred levels of capital risk exposure. We are conducting
field trials under both methods to determine the preferred model.
LABOR AND RESEARCH AND DEVELOPMENT - Stevia is a labor intensive plant and it is
also a very technical plant requiring a high degree of knowledge and/or
expertise to manage it properly. This is especially true of the newer high Reb-A
varieties. Although the stevia plant naturally produces Reb-A, it does not
require a high concentration to survive in its natural environment. The high
Reb-A varieties are newly developed and there is very limited experience and
knowledge in the world about the proper techniques to care for these plants.
Therefore, our initial funding will be largely used to secure elite plant
varieties, culling the current planted varieties, developing state of the art
propagation techniques, conducting field trials, documenting local operating
procedures and developing post-harvest techniques.
19
FINANCIAL - The value of the stevia leaf fluctuates based on supply and demand
and the quality of the leaf. Wide seasonal variances on the open market are
common and make long-term planning difficult. By entering into long-term supply
contracts with leaf buyers we will be able to plan our growth and commit to
large plantations and contract growers. In addition, buyers of leaf pay a
substantial premium for high quality leaf. This places strong economic value on
our intellectual property, including our elite stevia strains, and our farm
management solutions.
Current contracted selling price for leaf that meets the minimum standards is
set at a fixed price. Leaf exceeding the minimum standards will receive a
premium for which the benchmarks and price tiers will be reviewed each year
based on comparative market leaf quality and supply and demand.
Historically, leaf that produced 13% TSG and 70% Reb-A was purchased at a
premium. Elite strains can potentially deliver TSG well above 12% and Reb-A
above 80% providing significant economic advantage. Minimum standards for high
Reb-A extraction require a TSG of 12% or more, Reb-A to be at least 60% of TSG,
maximum of 5% impurities and a maximum moisture content of 10%.
OUR KEY CONTRACTS AND RELATIONSHIPS
SUPPLY CONTRACTS
In connection with the Share Exchange Transaction, we assumed a Supply Agreement
with PureCircle dated February 20, 2009, through an assignment agreement dated
April 12, 2011, whereby PureCircle agreed to purchase leaf we produced at a
fixed price during the term of the Supply Agreement. On February 20, 2012, such
Supply Agreement lapsed and on February 21, 2012 we entered into a new Supply
Agreement with Guangzhou Health China Technology Development Company Limited
("Health") whereby Health agreed to purchase all of the plant material including
the stem. In addition to extraction technologies that utilize stevia leaf
extracts for human consumption, Health and its affiliates have developed
hightech organic formulations for fertilizers and animal feed with specific
applications to acquaculture as well as post harvest preservation applications
that incorporate materials derived from the entire stevia plant. The ability to
utilize the entire stevia plant greatly increases the efficiencies of our stevia
harvest production and we believe this relationship with Health will make us
more attractive to potential grower partners and will also provide us a broader
more diversified market.
As our operations expand, we would also like to collaborate with Health and/or
its affiliates to operate an extraction facility and vertically intergrate our
supply chain and we have entered into a Cooperative Agreement on February 21,
2012 with Health to explore potential areas in which to collaborate.
INDEPENDENT GROWER RELATIONSHIPS
We plan to develop a significant network of partner growers who we can market
our production methods and technologies to and who will also help supply us with
the stevia product necessary to fulfill our supply obligations. We have entered
into initial purchase agreements with each of Asia Stevia Investment Development
Company Ltd. and Stevia Ventures Corporation (each a "Supplier"), whereby the
Suppliers will provide us with stevia on the terms and conditions set forth
therein.
AGRO GENESIS
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 engaged AGPL to be our technology provider consultant for stevia
propagation and cultivation in Vietnam, and potentially other countries. AGPL is
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 our stevia fields in
Vietnam and will have a term of at least two years. For its services, AGPL could
receive a fee of up to 275,000 Singapore dollars, plus related expenses
estimated at USD $274,000. 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.
20
GROWERS SYNERGY
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.
We believe that the relationship with Growers Synergy will provide us with a
strategic advantage and potential synergistic partnership by providing us with
guaranteed off-take agreements for agriculture crops other than stevia, which
will be produced as part of inter-cropping practices to maintain optimal soil
conditions for stevia farming. Growers Synergy will work with us and our
technology partners to combine the agronomy protocol with the farming models.
Models and their related protocols will be commercially field tested during the
first two years working with the provincial and national programs and
establishing 100 Ha of field trials.
A local farm management service, such as Growers Synergy is critical to assist
us in training local teams with the documented protocol sufficient to scale to
1,000 Ha to create a turnkey project. Our goal, after two years, is to be vested
with fully documented protocols, local teams of trained staff capable of
supporting the scale up to 1,000 Ha and farmers communities that are capable of
growing stevia. To help us achieve this Growers Synergy will provide the
necessary resources and assign staff to fill the following positions:
* Development Manager
* Operations Manager
* Logistics Manager
* Field Manager
* Technical Supervisor
* Training Manager
In addition they will provide the following support staff and infrastructure to
support our commercial presence:
* Accountant
* Secretary
* Office
* Utilities
* Phones for assigned personnel
* All related regional (Asia) travel for all assigned personnel
OUR FARM MANAGEMENT SERVICES
Our objective is to provide a full spectrum of farm management services to
manage our contract farms, service industry growers and provide for optimal
stevia and intercrop production.
To achieve this objective we plan to develop a local SOP (standard operating
procedures) manual specific to each growing location and plant variety, which
documents the proper use of all inputs including a proprietary crop production
system utilizing licensed formulation technologies and a Micro Suspension
technology which delivers fertilizers that we believe are more efficient and
cost effective than current chemical fertilizers. We believe this customized
operating manual will result in advanced propagation and growing techniques that
can improve the quality and efficiency of the stevia plants and intercrops.
We have also licensed a wide portfolio of highly efficient and environmentally
friendly crop nutrition products. These products are performance minerals, plant
phyto-chemicals, functional nutrients and microbial formulations. All products
are derived from natural sources and can be used as sustainable agriculture
solutions and/or for organic farming.
Currently, we believe we may be the only company that delivers the full spectrum
of agricultural consulting and solutions for stevia growers, including:
ELITE GERMPLASM - high performance mother stock suitable for varied regions and
environment.
21
ADVANCED PROPAGATION TECHNIQUES - methods that are efficient, more cost
effective, and produce a higher quality plant.
MICRO SUSPENSION PRODUCTS - a range of fertilizers produced using a licensed
proprietary Micro Suspension technology.
GF SYSTEM (G'FARM CROP PRODUCTION TECHNOLOGY SYSTEM) - a crop production system
that leverages consulting expertise and Micro Suspension products to provide
location and strain specific, sustainable farming practices.
INTELLECTUAL PROPERTY DEVELOPMENT
During the coming 18 months, our primary focus in intellectual property
development will be on identifying optimal cultivar varieties for intended
growing sites, developing and testing a propagation protocol, developing
cultivation technology including an intercropping system and regional
adaptability test, and developing post-harvest and refinery processes.
As further described above in the section titled "Our Key Contracts and
Relationships", we have entered into a contract with Agro Genesis to serve as
our technology partner and to grant us an exclusive license to their g'farm
system (powered by MS Technology) for stevia growing. In addition, we have
entered into cooperative research agreements with two Vietnamese research
institutes and have entered into a cooperative agreement to explore potential
technology partnerships with Health. We have also circulated a request for
proposal to targeted universities in the U.S. and we plan to initiate a U.S.-
based research project during 2012.
We will continue seeking relationships with technology partners as we believe
technology will be key to maintaining a competitive advantage.
OUR COMPETITIVE ADVANTAGE
We believe our intellectual property suite and our ability to serve as a
one-stop agribusiness solution will provide us with a competitive advantage
against our competitors.
Our intellectual property, particularly our fertilizers and other input products
used in our protocols, have the potential to create a dedicated customer base
because the protocols once implemented on a farm call for continual use of our
fertilizers and other products as a mandatory crop input. This long-term
customer relationship can enable us to create a substantial barrier to entry to
potential new competitors, while at the same time providing networking benefits
that could further propagate our business.
Additionally, our developing relationship with Health has the potential to make
us an attractive partner to growers who are looking for a guaranteed market for
their stevia and our supply relationship with Health will allow us to commit to
purchase the entire plant material harvested including the stem which increases
total crop yield, productivity and income.
OUR PROPERTIES
Although our primary focus will be on providing farm management services to our
contract growers, we also plan to implement our technology and protocols to
develop and expand our own stevia production. This will allow us to fully
capitalize on the value of the intellectual property we create, while also
providing us an environment in which to continue to develop and refine our farm
management techniques and strategies.
We have acquired two grower supply contracts and have established more than 50
Ha of contracted field trials located across several provinces in north and
north central Vietnam, with a goal to reach 100 Ha by the end of 2012.
As further described above in the section titled "Our Key Contracts and
Relationships", we have engaged a regional farm management services provider,
Growers Synergy, to manage in-country operations in both Vietnam and Indonesia.
We anticipate to commence commercial scale cultivation at the beginning of our
third fiscal year ending March 31, 2014 with a plan to target 1,000 Ha. The
exact months to be targeted for planting will be determined by the protocol
confirmed during the first two years. Logistically, the process of going from
propagation center to greenhouse to seedling to field is a very labor intensive
effort that requires a large number of trained workers. In addition, the field
preparations are critical and need to be inspected and supervised. Therefore a
balance will be made between the quality of the available biological windows and
22
the logistical cost against the backdrop of our targeted Ha. Another significant
factor is the nursery and greenhouse requirements. The more confined the window,
the more capacity is required.
On December 14, 2011 we entered into a land lease agreement with Stevia Ventures
Corporation, one of our Suppliers, and Vinh Phuc Province People's Committee Tam
Dao Agriculture & Industry Co., Ltd ("Vinh Phuc") whereby Stevia Ventures
Corporation leased 10 Ha of land over 5 years and we have begun to develop a
research facility that will also serve as a propagation center for farms located
in the surrounding provinces and particularly those serving the provincial and
national sponsored projects.
To better service multiple farms located across the many provinces stretching
from north central Vietnam to the Chinese border, we will utilize the greenhouse
facilities of our local grower partners in a decentralized model that more
efficiently addresses the logistical challenges presented by the contract
farming model. It is assumed that the commercial fields will be scaled by stem
cutting and we will receive reimbursement for the cost of seedlings one month
after delivery.
To ensure quality control, we will provide the equipment specifications,
intellectual property, and protocol processes derived from our research and
development program for post-harvest processing of leaf. Under a decentralized
model suitable to contract farming in Vietnam, the grower partners will be
responsible for processing the harvested stevia plant material and intercrops
under our protocols which will be monitored by our quality control staff.
However, depending on the results of our research and development, a centralized
processing facility may be recommended.
REGULATION
Stevia extracts may be used in a wide variety of consumer products including
soft drinks, vegetable products, tabletop sweeteners, confectioneries, fruit
products and processed seafood products, in a wide range of countries, including
almost all major markets, and as a dietary supplement in others. Clinical
studies have supported the safety and stability of stevia's various high purity
compounds used in food and beverages. There is no known health threat and this
is increasing consumer confidence in stevia as a sugar substitute.
In June 2007, the Joint Expert Committee on Food Additives ("JECFA") concluded
that steviol glycoside showed no adverse affects and was stable for use in food
and acidic beverages under normal conditions, and in June 2008, extended its
recommendation for acceptable daily intake of up to four mg per kg of body
weight per day.
In April 2010, at the request of the European Commission, the European Food
Safety Authority's scientific panel on additives, the ANS Panel, assessed the
safety of steviol glycosides, sweeteners extracted from stevia plant leaves, and
established an acceptable daily intake for their safe use.
The toxicological testing conducted by the ANS panel showed that the substances
are not genotoxic, nor carcinogenic, nor are they linked to any adverse effects
on the human reproductive system or for the developing child. The ANS panel set
an acceptable daily intake of four mg per kg of body weight per day for steviol
glycosides, a level consistent with that already established by JECFA.
In 2008, Cargill and Merisant each submitted applications to the United Stated
Food and Drug Administration (FDA) for GRAS approval. On December 17, 2008 the
stevia extract, Rebaudioside A (Reb-A), received GRAS approval.
In December 2008, Australia and New Zealand approved highly purified forms of
stevia extracts as safe for use in food and beverages. Previously, such extracts
had only been permitted for use as a dietary supplement in these countries.
Stevia extracts have been sanctioned by the Ministry of Health of China to be
used as a food additive, and are listed in the Sanitation Standard of Food
Additives.
In July 2010 the FDA issued GRAS clearance for PureCircle's high purity SG95
stevia product allowing for higher levels of other steviol glycosides in
addition to rebaudioside A which opened up opportunities for many more
applications as well as more cost effective solutions.
On November 11, 2011, Cargill, an official petitioner for the use of stevia in
Europe, received notification by the European Commission of its formal approval
of steviol glycosides in Europe.
Country Type of Approval
------- ----------------
USA Food additive
Canada Dietary supplement
23
Mexico Food additive
LATIN AMERICA
Argentina Food additive
Brazil Food additive
Chile Food additive
Colombia Food additive
Ecuador Food additive
Paraguay Food additive
Peru Food additive
Uruguay Food additive
Venezuela Food additive
ASIA PACIFIC
Australia Food additive
Brunei Food additive
China Food additive
Hong Kong Food additive
Indonesia Food additive
Israel Food additive
Japan Food additive
Malaysia Food additive
New Zealand Food additive
Singapore Food additive
South Korea Food additive
Taiwan Food additive
Thailand Food additive
Vietnam Dietary supplement
EUROPE
Austria Food additive
Belgium Food additive
Bulgaria Food additive
Cyprus Food additive
Czech Republic Food additive
Denmark Food additive
Estonia Food additive
Finland Food additive
France Food additive
Germany Food additive
Hungary Food additive
Ireland Food additive
Italy Food additive
Latvia Food additive
Lithuania Food additive
Luxembourg Food additive
Malta Food additive
The Netherlands Food additive
Poland Food additive
Portugal Food additive
Romania Food additive
Slovakia Food additive
Solvenia Food additive
Spain Food additive
Sweden Food additive
Switzerland Food additive
Russia Food additive
United Kingdom Food additive
24
TAXATION
The primary stevia extraction sites in the Vietnam region are currently located
in China, and for this reason we expect that all the stevia leaf we produce in
Vietnam will initially be imported into China for processing. Therefore, China's
import taxation regulations will be of critical importance to us. In China,
stevia is currently classified as a medicinal plant and is assessed a 30% tax on
imports. In other countries the importation of the finished product is high. As
stevia leaf production becomes more diversified globally, the location of the
extraction facilities will also begin to decentralize and there will be
opportunities for vertical integration within leaf growing countries to more
competitively serve the domestic markets.
Trade regulations with China and neighboring countries are very positive.
Standard taxation in Vietnam includes 5% on domestic sales, 10% on exports and
25% income tax on net profit.
VIETNAM LAWS
A significant portion of our initial business operations will occur in Vietnam.
We will be generally subject to laws and regulations applicable to foreign
investment in Vietnam. The Vietnam legal system is based, at least in part, on
written statutes. However, since these laws and regulations are relatively new
and the Vietnamese legal system continues to rapidly evolve, the interpretations
of many laws, regulations and rules are not always uniform and enforcement of
these laws, regulations and rules involves uncertainties. We cannot predict the
effect of future developments in the Vietnamese legal system, including the
promulgation of new laws, changes to existing laws or the interpretation or
enforcement thereof, the preemption of local regulations by national laws, or
the overturn of local government's decisions by the superior government. These
uncertainties may limit legal protections available to us.
MARKET TRENDS AND CONSUMER SENTIMENT
Major food and beverage companies are continuing to launch new products
containing stevia across an increasing number of categories. Market sentiment
has been positive and some brands are beginning to capitalize on this by
emphasizing stevia in its promotional material and packaging which is further
creating positive awareness of stevia.
The market trend data suggests that consumers are seeking lower calorie but all
natural products and an increasing number of product launches include stevia in
combination with sugar which reduces overall calories while still maintaining
functionality and taste with all natural ingredients. This trend is rapidly
increasing new market opportunities for stevia.
Two of the industry leaders, PureCircle and GLG Life Tech, have partnered with
major sugar manufacturers in the U.S. (Imperial Sugar), Denmark (NordZucker),
France (Tereos), Great Britain (British Sugar), and Australia (Sugar Australia)
to market blended reduced calorie products. SteviaCane is a stevia-sucrose
retail product being marketed in the U.S. by Natural Sweet Ventures, a joint
venture between PureCircle and Imperial Sugar.
MARKET SEGMENTS
Originally it was thought that stevia's market would be restricted to zero
calorie beverage applications and would primarily be a premium-priced natural
ingredient replacement for artificial High Intensity Sweeteners (HIS). While
stevia did make a large impact within the HIS sector, overtaking aspartame and
saccharine within its first year of launch, the potential consumer market has
expanded to the entire sweetener market and across all food and beverage
categories. While the consumer market has been widely publicized after the FDA
approval in 2008, there is also an emerging market as an organic application for
fertilizer, animal feed, post harvest processing applications and others.
Much of the original research for stevia to be used in commercial applications
was done in Japan and Korea where stevia has been approved for consumer use for
over thirty years. Stevia has traditionally been used as a medicinal herb and in
China, which grows the majority of the world's supply, it is classified as a
medicinal plant. As stevia's many properties are being better understood by the
global scientific community it is expected that it will have applications across
many market segments.
SALES STRATEGY AND IMPLEMENTATION
We have entered into a supply contract with Health, whereby Health has agreed to
purchase the stevia we produce during the term of the supply contract. We have
also entered into a cooperative agreement with Health to explore potential areas
to collaborate that include downstream processing technologies and product
25
applications such as Reb-A extraction, fertilizer, feed and other products
derived from stevia.
We intend to vertically integrate downstream intellectual property to produce
stevia-derived products such as hightech organic fertilizer that will in turn
enhance our farm management operations by providing additional superior organic
input products. Indications have shown that fruits and vegetables grown with
stevia-derived inputs may produce superior tasting crops. We intend to further
develop these sciences and leverage the consumer's positive perception of stevia
and create awareness around the fact that our intercrops are grown with organic
stevia inputs and develop a mark that can be applied to our buyers' brands that
signifies premium quality produce.
Through our off-take agreement with Growers Synergy, we will have pre-commited
sales for the intercrops that we grow. We intend to integrate technologies that
add value to our crops and create a positive brand image leveraging stevia's
rising market awareness and positive perception by the consumer so that we can
command a premium price.
We intend to evaluate the feasibility of applying a similar approach to
acquaculture whereby we integrate Health's technology to produce feed with
stevia ingredients and contract the growing of shrimp and/or fish with an
off-take agreement in place for the harvest. This would be accomplished with the
aim of developing a positive brand image around stevia. We believe Health's many
technologies have demonstrated a competitive advantage for application to
acquaculture and that they have successfully commercialized these technologies
providing the entire system and protocols, and possess the farm management
skills to oversee the acquaculture operations.
Similar to the stevia and intercrops, an acquaculture business model will
require that we provide the intellectual property, required inputs, operational
protocols, equipment specifications, farm management oversight and pre-committed
offtake agreement for the harvest. We believe integrating with Health may
provide the required technology and management skills and we have entered into a
cooperative agreement to explore a potential collaboration. Growers Synergy,
which also trades seafood, has provided a non-binding letter of intent to
off-take shrimp and other seafood produced with stevia derived feed with
intention to brand and market the products under the same concept as described
above for the intercrops.
Through our cooperative agreement with Health, we will also explore a potential
relationship to integrate extraction and refining technology to produce high
purity Reb-A and other steviol glycosides for the consumer market. We believe
that vertically integrating our technologies for both commercial and consumer
products may provide advantages of a diversified market, but we do not intend to
enter the consumer market with a finished product. We believe that our core
competency is farm management and developing technologies for production and
post harvest processes and that the consumer market is extremely competitive.
We believe that it will be to our advantage to participate in the various
downstream value-add processes which will in turn enhance our competitive
advantage for upstream production. We also believe that the stevia industry is
in a rapid growth phase and will experience volatility of supply and demand
typical of a new emerging market and we believe it is important to control both
upstream and downstream processes. The standard product development and launch
cycle for the consumer market is eighteen months to three or more years and the
industry will not be able to immediately respond to changes in supply and demand
creating further volatility. We believe it is important to develop a diversified
market for stevia products to create long-term stability.
Our cooperative agreement with Health proposes many opportunities to explore.
Depending on the results of our explorations, we may not proceed to develop any
of the opportunities. If we do execute on one or more of the opportunities, it
is not our intent to do these all at once. Our approach will be deliberate and
measured and we intend to start with small trials initially to fully test our
business models and concepts followed by a progressive and steady process of
integration and growth.
GEOGRAPHIC MARKETS
Our initial target markets for growing stevia have been Vietnam and Indonesia
where we have contracted with growers and have established nurseries and/or test
fields but our services are not limited to specific countries and we plan to
pursue viable opportunities in other markets. While our operations are currently
more established in Vietnam, our goal is to begin farm trials in Indonesia
before the end of 2012.
Crop nutrition forms a core component of our farm management system and is a
highly specialized field which requires extensive knowledge and experience which
is both crop-specific and country-specific. However, there are fundamental crop
26
characteristics that are similar for a specific crop sector across countries. We
believe this will allow a successful model in one country to be replicated in
another country.
MARKETING
We believe it is important to educate the local governments and farmer
communities on the merits of stevia becoming a new commercial crop and its
potential as a new economic stimulus for rural farmers. Our President, Mr.
George Blankenbaker, and our local partner have been conducting talks and
training sessions for more than three years in Vietnam and have fostered local
support at many levels. To support the farmer's transition to stevia farming and
provide an opportunity to showcase the stevia opportunity to farmers'
communities, the Vietnam government has approved financial support at both the
provincial and national level to plant 20 Ha and 50 Ha respectively. The fields
will be small plots located in several villages and will serve as demonstration
fields and stepping stones to gain wide support from growers in several
villages.
We entered into a formal cooperative agreement with the National Institute of
Medicinal Materials in Hanoi. We also entered an additional cooperative
agreement with Asia Stevia Investment Development JSC and the Agricultural
Science Institute of Northern Central Vietnam located in Nghe An province. These
agreements will provide local technical assistance for our grower partners and
also provide additional credibility when our grower partners present the stevia
opportunity to the local farmers' communities.
We are also in contact with non-governmental organizations (NGO) that are
seeking programs to bring to the communities that they serve which are generally
located in poor rural areas in need of economically sound projects. If the
stevia model proves to be viable for these locations, the NGOs have indicated
that they will be interested to introduce and fund stevia farming programs.
However, many of these poor rural areas are located in areas of poor soil
quality, that lack adequate access to water or that suffer from other
environmental constraints which limits the opportunities for this approach.
We also hope to generate many local testimonials from our field trials and the
farmers in Vietnam are very fluid and willing to adopt new crops if the new
crops are proven to be more economically viable than their current crops.
If we proceed with the Health opportunities for stevia derived fertilizer and
acquaculture feed, we intend to develop a mark that can be applied to a buyer's
brand which would signify premium quality products.
COMPETITION
As a full service stevia farm management service provider we will face
competition from both non-stevia sweetener products and from other service
providers within the stevia industry.
We believe stevia is the leader among natural zero calorie sweeteners at this
time and it takes years to develop and bring to market new sweeteners of which
few end up possessing all the qualities needed to be adopted mainstream. At this
time we are not aware of any proven and viable alternative which possesses all
of the positive qualities of stevia. As discussed above, the other sweeteners
currently on the market lack many of the qualities that make stevia attractive
to consumers and manufacturers, including the natural zero calorie/near zero
glycemic index combination.
Because stevia is an emerging industry and few companies had previously done
extensive research on growing high Reb-A producing stevia prior to its approval
in December of 2008, there are few companies that posses a comprehensive
knowledge of stevia. As a result, and because the market is growing so rapidly,
we do not believe we will face an influx of competitors in the near term.
PRODUCT ALTERNATIVES - We believe that the most likely threat to stevia growers
will come from alternative "natural" methods to produce stevia extracts that
obviate the need to farm stevia, such as fermentation-derived stevia.
A fermentation-derived stevia ingredient would still meet the requirements to be
classified as a "natural" ingredient and when done at volume could potentially
be produced more economically than the farming method without impurities.
Major known companies that are progressing down this track include Evolva
Holding SA of Switzerland who has acquired San Francisco based Abunda Nutrition,
Inc., and Blue California of Rancho Santa Margarita, California.
There are four areas that we will focus to reduce the risk and/or impact of
alternative methods of stevia ingredient production.
27
1. INCREASE FARMING EFFICIENCIES. The more efficient and scaled farming becomes,
the higher the economic hurdle will be for other methods of production. We
believe our intellectual property and continued research and development
activities will allow our farms and those of our customers to increase
efficiencies, decrease cost of production and produce better quality leaf.
2. INTELLECTUAL PROPERTY PROTECTIONS. We plan to have a strong focus on
developing protectable intellectual property which can create barriers to entry
and protect our methodologies. Additionally, where applicable we will consider
the acquisition of potentially synergistic intellectual property.
3. CROP DIVERSIFICATION. Our farm management infrastructure and the majority of
our intellectual property will be applicable to other high-value crops providing
us with the flexibility to diversify our crops and the customer base for our
farm management solutions.
4. PRODUCT DIVERSIFICATION. We will explore additional markets and uses for
stevia and seek to acquire technology to diversify its applications.
GEOGRAPHIC DIVERSIFICATION AND COMPETITORS - Currently over 80% of stevia is
grown in China and almost all of the high Reb-A variety stevia leaf is being
produced in China. China is the center of commercial stevia growing for
historical reasons due to its proximity to Japan and Korea, which have
historically been the major markets for stevia. There is an effort to diversify
away from China for high Reb-A production now that high Reb-A leaf production is
in global demand. Due to its climate, China is likely not the most
geographically optimal location to grow stevia, as stevia is sensitive to frost
and China typically produces only one or two crops per year, requiring leaf
processors to purchase and store sufficient leaf for an entire year of
production.
Diversifying the supply chain of stevia leaf would provide several advantages:
* Incorporating Southern Hemisphere production provides two major
growing seasons;
* Incorporation Equatorial production provides for year round
production;
* Enables better control of leaf quality where major propagation of
stevia varieties is controlled;
* Provides protection against country-specific political, regulatory,
disease, and natural disaster risk; and
* Provides operations closer to end markets.
PureCircle has taken the lead to diversify away from China by establishing
subsidiaries in South America (Paraguay) and Africa (Kenya). Both operations
produced successful field trial results in 2010 and are now preparing for
commercial cultivation under contract farming models.
Stevia One, an independent grower established in Peru, is adopting the
plantation model and has produced successful field trials.
S&W Seed Company signed a supply agreement with PureCircle in July of 2010 to
grow stevia in North America under its subsidiary, Stevia California. S&W,
founded in 1980, is headquartered in the Central Valley of California and
specializes in producing alfalfa seed varieties.
In addition, GLG Life Tech Corporation is a China-centric company and has chosen
to continue to focus on building and expanding its supply chain within China. We
are positioned to be the first major operation in Asia, outside of China, to
produce stevia on a commercial scale.
EMPLOYEES
George Blankenbaker, our President and director, is our sole employee.
We have entered into the Management Agreement with Growers Synergy to provide
the staffing necessary to operate our farms. Similarly, Agro Genesis, our
technical partner, provides staffing for our technical operations.
We chose to outsource the operations management during our development phase to
minimize expenses and provide a team of qualified experienced staff to lead us
through the development phase until we are ready to commercialize. Once we reach
revenue phase, we intend to hire full time staff.
28
PROPERTIES
Our international corporate office is located at 14 Chin Bee Road, Singapore
619824. The office is part of a building complex owned by a company affiliated
with our President and because we have no physical employees located there, we
are not charged any rent. The office serves as the administrative headquarters
for our Asian operations primarily because Growers Synergy operates here.
We also maintain an office in Vietnam at No. 602, CC2A, Thanh Ha `s building,
Bac Linh Dam, Hoang Mai district, Hanoi, Vietnam. This location is the office of
Stevia Ventures Corporation, our local grower parner, and we utilize it as
necessary from time to time. We are not charged rent for using this office at
this time.
Our office in the United States is located at 7117 US 31 South, Indianapolis, IN
46227. This location is owned by our President. We have a reserved space in the
building, but no rent will be requested or collected until we start generating
revenue.
On December 14, 2011, Stevia Corp and Stevia Ventures Corporation (one of our
Suppliers) entered into a Land Lease Agreement with Vinh Phuc Province People's
Committee Tam Dao Agriculture & Industry Co., Ltd. Pursuant to which Stevia
Ventures Corporation has leased 10 hectares of land for a term expiring five (5)
years from the date of signing. We have begun development of a research facility
on the Leased Property and have prepaid the first year lease payment.
LEGAL PROCEEDINGS
None.
MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
MARKET INFORMATION
Our common stock is quoted on the Over the Counter Bulletin Board under the
symbol STEV. The closing bid price for our stock as of February 23, 2012 was
$1.38.
There has not been an active trading market for our common stock during the two
most recent fiscal years. The following is the range of high and low bid prices
for our common stock for the periods indicated. The quotations reflect
inter-dealer prices, without retail mark-up, mark-down or commissions and may
not represent actual transactions.
From April 11, 2011 to Present High Low
------------------------------ ---- ---
First Quarter (June 30, 2011) $1.60 $0.25
Second Quarter (September 30, 2011) $1.00 $0.85
Third Quarter (December 31, 2011) $1.05 $0.56
Fiscal Year Ended March 31, 2011 High Low
-------------------------------- ---- ---
First Quarter (June 30, 2010) $0.005714 $0.005714
Second Quarter (September 30, 2010) $0.009143 $0.009143
Third Quarter (December 31, 2010) $0.010286 $0.010286
Fourth Quarter (March 31, 2010) $0.012571 $0.012571
STOCKHOLDERS
As of February 23, 2012, there were 61,327,275 shares of common stock issued and
outstanding held by fourteen stockholders of record (including street name
holders).
DIVIDENDS
We have not paid dividends to date and do not anticipate paying any dividends in
the foreseeable future. Our Board of Directors intends to follow a policy of
retaining earnings, if any, to finance our growth. The declaration and payment
of dividends in the future will be determined by our Board of Directors in light
of conditions then existing, including our earnings, financial condition,
capital requirements and other factors.
29
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
THE FOLLOWING DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL
CONDITION FOR THE PERIOD FROM INCEPTION (APRIL 11, 2011) TO DECEMBER 31, 2011,
PERIOD FROM INCEPTION (APRIL 11, 2011) THROUGH APRIL 30, 2011, AND THE THREE
MONTHS ENDED DECEMBER 31, 2011, SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL
STATEMENTS AND RELATED NOTES AND THE OTHER FINANCIAL INFORMATION THAT ARE
INCLUDED ELSEWHERE IN THIS PROSPECTUS. THIS DISCUSSION INCLUDES FORWARD-LOOKING
STATEMENTS BASED UPON CURRENT EXPECTATIONS THAT INVOLVE RISKS AND UNCERTAINTIES,
SUCH AS OUR PLANS, OBJECTIVES, EXPECTATIONS AND INTENTIONS. ACTUAL RESULTS AND
THE TIMING OF EVENTS COULD DIFFER MATERIALLY FROM THOSE ANTICIPATED IN THESE
FORWARD-LOOKING STATEMENTS AS A RESULT OF A NUMBER OF FACTORS, INCLUDING THOSE
SET FORTH UNDER THE RISK FACTORS, CAUTIONARY NOTICE REGARDING FORWARD-LOOKING
STATEMENTS AND BUSINESS SECTIONS IN THIS REGISTRATION STATEMENT ON FORM S-1. WE
USE WORDS SUCH AS "ANTICIPATE," "ESTIMATE," "PLAN," "PROJECT," "CONTINUING,"
"ONGOING," "EXPECT," "BELIEVE," "INTEND," "MAY," "WILL," "SHOULD," "COULD," AND
SIMILAR EXPRESSIONS TO IDENTIFY FORWARD-LOOKING STATEMENTS.
The following discussion should be read in conjunction with our consolidated
financial statements and notes thereto included elsewhere in this Registration
Statement on Form S-1. 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.
OVERVIEW
We are a development stage company that has yet to generate significant revenue.
Our operations have been funded entirely by the proceeds of debt and equity
financings. We plan to generate revenues by (i) providing farm management
services, which will provide plant breeding, agricultural protocols,
post-harvest techniques and other services to stevia growers, (ii) the sale of
agriculture inputs such as fertilizer to stevia growers, (iii) the sale of
stevia and intercrops grown on our own farmed property and (iv) the sale of
products derived from the stevia plant.
Our initial farming efforts and farm management service are focused in Vietnam
and Indonesia. In Vietnam we have established a research facility, as well as
nurseries and test fields through our grower partners, and we have entered into
cooperative agreements for stevia research and development.
We have acquired certain rights relating to stevia production, including rights
to crop production methodologies of Agro Genesis Pte. Ltd. ("AGPL"), assignable
exclusive purchase contracts with Growers Synergy Pte Ltd, ("Growers Synergy").
Effective July 16, 2011, we entered into an Agribusiness Development Agreement
(the "Agreement") with 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 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 development
of potential revenue generating opportunities and intellectual property
development, including the Project, and cooperative research programs, including
with the National Institute of Medicinal Materials and Agricultural Science
Institute of Northern Central Vietnam, 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
30
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 FOR THE QUARTER ENDED DECEMBER 31, 2011
To-date our operations have primarily consisted of establishing initial test
fields, negotiating farm management agreements and developing research
strategies and relationships.
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.
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. Such financial statements have been
prepared in conformity with U.S. GAAP and are stated in United States dollars.
CASH AND CASH EQUIVALENTS
As of December 31, 2011, we had cash of $338,258.
The successful implementation of our business plan is dependent upon our ability
to develop valuable intellectual property relating to stevia cultivation through
our research programs, as well as our ability to develop and manage our own
stevia production operations. These planned research and agricultural
development activities require significant cash expenditures. We do not expect
to generate the necessary cash from our operations during the next 6 to 12
months to carry out these business objectives. As such, in order to fund our
operations during the next 6 to 12 months, we anticipate that we will have to
raise additional capital through debt and/or equity financings, including the
sale of shares to Southridge pursuant to the Purchase Agreement, which may
result in substantial dilution to our existing stockholders.
RESULTS OF OPERATIONS (PERIOD FROM INCEPTION (APRIL 11, 2011) TO DECEMBER 31,
2011)
During the period from inception (April 11, 2011) to December 31, 2011, we
incurred a comprehensive loss of $1,303,241. This loss was largely attributed to
(i) the issuance of 3,000,000 escrowed shares in connection with the Share
Exchange Agreement dated June 23, 2011, which resulted in the recording of
$750,000 of officer compensation, (ii) $144,369 for research and development,
(iii) $135,183 for professional fees, (iv) $93,750 of vested shares charged to
Director's fees and (v) $120,000 for Cost of services during the development
stage. This represented an increase in our comprehensive loss from $247,367
during the period from inception to September 30, 2011.
RESULTS OF OPERATIONS (THREE MONTHS ENDED DECEMBER 31, 2011)
During the three month period ended December 31, 2011, we incurred a
comprehensive loss of $1,055,874. This loss was largely attributed to (i) the
issuance of 3,000,000 escrowed shares in connection with the Share Exchange
Agreement dated June 23, 2011, which resulted in the recording of $750,000 of
officer compensation, (ii) $39,172 for research and development, (iii) $82,454
for professional fees, (iv) $93,750 of vested shares charged to Director's fees
and (v) $60,000 for cost of services during the development stage. This
represented an increase in our comprehensive loss from $233,525 during the three
month period ended September 30, 2011.
RESULTS OF OPERATIONS (FROM INCEPTION (APRIL 11, 2011) THROUGH APRIL 30, 2011)
We had limited operations, which have primarily consisted of securing purchase
and supply contracts and office space 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.
The following table sets forth certain audited financial information for the
period from April 11, 2011 (inception) through April 30, 2011.
31
For the
Period from
April 11, 2011
(Inception)
through
April 30,
2011
------------
REVENUE $ --
------------
OPERATING EXPENSES
Accounting and legal 2,145
Office and miscellaneous 100
------------
Loss before income taxes (2,245)
Provision for income taxes --
------------
Net loss $ (2,245)
============
Net loss per common share - basic and diluted $ (0.00)
============
Weighted average common shares - basic and diluted (*) 52,800,000
============
----------
(*) Retroactively restated to reflect the number of common shares issued by the
Company in connection with the Share Exchange Transaction.
REVENUES
The Company has earned norminal revenues since inception. It expects to commence
operations and begin earning revenues on a normal recurring basis once the
Company has established licensable intellectual property or has begun producing
commercial quantities of stevia.
EXPENSES
Expenses from inception to date relate to costs associated with incorporating
the Company, completion of the business plan, negotiating its purchase and
supply contracts and securing office space.
NET LOSS
The net loss was due to the lack of revenues and increases in expenses discussed
above.
LIQUIDITY AND CAPITAL RESOURCES
As at December 31, 2011 we have $387,477 in current assets, and $516,225 in
current liabilities. This represents an increase in current assets from $83,456
at September 30, 2011, which is largely attributable to an increase in cash
balance to $338,258, and an increase in current liabilities from $454,059 at
September 30, 2011, which is largely attributable to an increase in Convertible
notes payable to $400,000. As at December 31, 2011, our total assets were
$407,258 and our total liabilities were $515,225. This represents an increase in
total assets from $88,504 at September 30, 2011, which is largely attributable
to an increase in cash balance to $338,258, and an increase in total liabilities
from $454,059 at September 30, 2011, which is largely attributable to an
increase in Convertible notes payable to $400,000. Our net working capital
deficiency as at December 31, 2011 was, on a pro forma basis, $108,967.
32
On January 26, 2012, we entered into an Equity Purchase Agreement (the "Purchase
Agreement") with Southridge Partners II, LP ("Southridge"), pursuant to which
Southridge agreed to purchase, at our election, up to $20,000,000 of our
registered common stock. Subject to certain restrictions, the purchase price for
such shares shall be equal to ninety-three percent (93%) of the lowest closing
bid price for our common stock during the five-day trading period immediately
after the shares to be purchased are delivered to Southridge. The number of
shares sold to Southridge shall not exceed the number of such shares that, when
aggregated with all other shares of common stock of the Company then
beneficially owned by Southridge, would result in Southridge owning more than
9.99% of all of the Company's common stock then outstanding.
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 for commercial production. During the
three month period ended December 31, 2011, we funded our operations from the
proceeds of convertible notes and equity financings.
During the quarter ended December 31, 2011, we raised $100,000 through the sale
of shares of our common stock at a price of $0.25 per share. In addition, during
such period we raised an aggregate of $650,000 from the proceeds of convertible
notes. We are currently reliant on short term financing arrangements, including
the Purchase Agreement with Southridge, to meet our short-term and long-term
obligations and changes in our operating plans, increased expenses,
acquisitions, or other events, may cause us to seek greater amounts of equity or
debt financing. There are no assurances that we will be able to raise the
required working capital on terms favorable to the Company, or that such working
capital will be available on any terms when needed.
For the period from April 11, 2011 (inception) through December 31, 2011, we
used net cash of $509,825 in operating activities, which represents an increase
from our net cash used in operating activities of $247,367 during the period
from April 11, 2011 (inception) through September 30, 2011. This increase is
specifically related to prepaid expenses, security deposits and accounts payable
incurred during the quarter ended December 31, 2011 from $247,367 to $1,303,241.
Net cash from investing activities totaled $2,117, which is the same as the
amount of net cash from investing activities during the period from April 11,
2011 (inception) through September 30, 2011.
Net cash from financing activities totaled $850,200, which represents an
increase from our net cash used from financing activities of $350,000 during the
period from April 11, 2011 (inception) through September 30, 2011. This increase
is specifically related to an increase in cash from the issuance of convertible
notes by $400,000 and from the receipt of $100,000 from the sale of common stock
during the quarter ended December 31, 2011.
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 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.
Our 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 rates; revenue recognized or recognizable;
sales returns and allowances; foreign currency exchange rates; income tax rates,
income tax provisions, deferred tax assets 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.
33
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole 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 evaluates the key factors and assumptions used to develop
the estimates utilizing currently available information, changes in facts and
circumstances, historical experience and reasonable assumptions. After such
evaluations, and if deemed appropriate, those estimates are adjusted
accordingly. Actual results could differ from those 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 Quarterly Report on Form 10-Q for the period ended December 31, 2011 filed
with the SEC on February 17, 2012 and our Current Report on Form 8-K filed with
the SEC on June 29, 2011.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of our current directors and
executive officers, the principal offices and positions held by each person:
Person Age Position
------ --- --------
George Blankenbaker 46 Director, President, Secretary and Treasurer
Dr. Pablo Erat 41 Director
Rodney L. Cook 59 Director
The information below with respect to our directors includes such director's
experience, qualifications, attributes, and skills that led us to the conclusion
that he should serve as a director.
GEORGE BLANKENBAKER - PRESIDENT, SECRETARY, TREASURER AND DIRECTOR
Mr. Blankenbaker became our President, Secretary, Treasurer and Director in
June, 2011. Since November 2008, Mr. Blankenbaker has been leading the
development of high Reb-A stevia farming in Vietnam, where he imported the
Morita variety to trial in 2008 and signed a contract to supply stevia leaf to
PureCircle, the industry's leading refiner, in 2009. Mr. Blankenbaker was raised
on a farm and became involved in large scale commercial agriculture in 2002 when
he began working with the Agri-Food Veterinary Authority of Singapore (AVA) to
provide strategically important food supplies to Singapore and has extensive
experience managing agriculture projects in South East Asia. Mr. Blankenbaker
received a Bachelors of Science in Business Finance from Indiana University in
1988, where he also studied Asian Political Science. Mr. Blankenbaker's recent
activities and experience in Vietnam have laid the groundwork for the Company's
current business strategy, and his in-depth knowledge of such matters will be
invaluable to our board of directors.
DR. PABLO ERAT - DIRECTOR
Dr. Erat was elected to our board of directors on October 4, 2011. Since January
2009, Dr. Erat has served as CEO of Pal & Partners AG, a Swiss-based group
domiciled in Zug with offices in Zurich and Mumbai and with a focus on the
Indian agriculture industry. Prior to joining Pal & Partners AG, in 2008 Dr.
Erat served as a consultant to corporations and start-up companies in various
industries to assist in the development and implementation of innovative
strategies. In April 2001, he co-founded Executive Insight, a strategy
consulting firm and in January 2003, he co-founded DocsLogic, a company
specialized on the development of knowledge applications, where he remained
through 2007. Dr. Erat is also Assistant Professor at the ETH Zurich and
regularly delivers speeches and workshops on strategic management principles for
educational and business communities. Dr. Erat received a Doctorate from the
University of St. Gallen in Switzerland in June 2003. Dr. Erat's extensive
knowledge and experience working for and advising early stage companies as well
as his experience in the agriculture industry will be extremely relevant to the
board.
RODNEY L. COOK - DIRECTOR
Mr. Cook was elected to the board of directors on October 6, 2011. Mr. Cook has
an extensive background in agribusiness and is a practicing horticulturist with
twenty years experience in grower education, technology transfer from university
to field, research and project development. In 2009, he founded Ag-View
34
Consulting, a horticulture and market development consulting firm, where he
remained until 2011. From 2008 to 2009, Mr. Cook has served as Chief Executive
Officer and President of Naturipe Foods, LLC a multinational partnership of
fruit growers. Prior to joining Naturipe, Mr. Cook was with Producer Marketing
Company from 1995 to 2008, where he served as Chief Executive Officer and
President. Producer Maketing was a grower owned corporation marketing
blueberries for a group of growers. Mr. Cook received a Masters of Science, with
Honor, in Horticulture from Michigan State University and a Bachelors of
Science, with Honor, in Resource Development from Michigan State University. Mr.
Cook's experience in the agriculture industry will provide critical experience
and perspective to the Company's board of directors.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
No director, executive officer, significant employee or control person of the
Company has been involved in any legal proceeding listed in Item 401(f) of
Regulation S-K in the past 10 years.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by our Board of Directors
and hold office until removed by the Board, absent an employment agreement.
EXECUTIVE COMPENSATION
DIRECTOR COMPENSATION
We have no standard arrangement to compensate directors for their services in
their capacity as directors. Directors are not paid for meetings attended.
However, we intend to review and consider future proposals regarding Board
compensation. All travel and lodging expenses associated with corporate matters
are reimbursed by us, if and when incurred.
EXECUTIVE COMPENSATION - FORMER EXECUTIVE OFFICERS
No director, officer or employee of the Company received compensation during the
fiscal year ended March 31, 2011.
EXECUTIVE COMPENSATION - CURRENT EXECUTIVE OFFICERS
Pursuant to the Letter of Intent entered into on February 14, 2011, between the
Company and Mr. Blankenbaker, included in on our Current Report on Form 8-K, as
filed with the SEC on February 18, 2011, we plan to establish either a stock or
cash bonus plan for Mr. Blankenbaker which would compensate him upon the
achievement of certain project milestones.
Other than as set forth above, none of our executive officers or directors
received, nor do we have any arrangements to pay out, any bonus, stock awards,
option awards, non-equity incentive plan compensation, or non-qualified deferred
compensation.
EMPLOYMENT AGREEMENTS
None of our executive officers currently have employment agreements with us and
the manner and amount of compensation for the above-referenced new officer and
director has not yet been determined.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE-IN-CONTROL
We currently have no employment agreements with any of our executive officers,
nor any compensatory plans or arrangements resulting from the resignation,
retirement or any other termination of any of our executive officers, from a
change-in-control, or from a change in any executive officer's responsibilities
following a change-in-control. As a result, we have omitted this table.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No interlocking relationship exists between our Board of Directors and the Board
of Directors or compensation committee of any other company, nor has any
interlocking relationship existed in the past.
35
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of February 23, 2012 with
respect to the beneficial ownership of our common stock for (i) each director
and officer, (ii) all of our directors and officers as a group, and (iii) each
person known to us to own beneficially 5% or more of the outstanding shares of
our common stock. To our knowledge, except as indicated in any footnotes to this
table or pursuant to applicable community property laws, the persons named in
the table have sole voting and investment power with respect to the shares of
common stock indicated.
Amount and Nature
Name and Address of Beneficial Percentage
of Beneficial Owner (1) Ownership of Class (2)
----------------------- --------- ------------
George Blankenbaker 12,000,000 19.57%
President, Secretary, Treasurer,
and Director
6451 Buck Creek Pkwy
Indianapolis, IN 46227
Rodney L Cook 1,500,000 2.45%
Director
1720 Medallion Loop NW
Olympia, WA 98502
Pablo Erat 1,500,000 2.45%
Director
Ludretikonerstrasse 53
880 Thalwil
Switzerland
All Officers and Directors 15,000,000 24.46%
as a Group
----------
(1) Beneficial ownership has been determined in accordance with Rule 13d-3
under the Exchange Act. Pursuant to the rules of the SEC, shares of common
stock which an individual or group has a right to acquire within 60 days
pursuant to the exercise of options or warrants are deemed to be
outstanding for the purpose of computing the percentage ownership of such
individual or group, but are not deemed to be beneficially owned and
outstanding for the purpose of computing the percentage ownership of any
other person shown in the table.
(2) Based on 61,327,275 shares of our common stock outstanding as of February
23, 2012.
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
AND DIRECTOR INDEPENDENCE
On June 23, 2011, we entered into the Exchange Agreement. As a result of the
Share Exchange Transaction, the sole shareholder of BVI received 12,000,000
shares of our common stock in exchange for 100% of the issued and outstanding
common stock of BVI. Mr. Blankenbaker, our newly appointed officer and director,
was the sole shareholder and officer of BVI. Accordingly, he was a recipient of
12,000,000 shares of our common stock issued in connection with the Share
Exchange Transaction, 3,000,000 of which are being held in escrow pending the
achievement by the Company of certain business milestones. Effective at the
closing of the Share Exchange Transaction, Mr. Blankenbaker was appointed as an
officer of the Company and as a member of the Company's Board of Directors. In
connection with the Share Exchange Transaction, Mohanad Shurrab, our former sole
officer and director, surrendered 33,000,000 shares of the Company's common
stock to the Company for cancellation.
The Supply Contract with PureCircle was originally executed by and between
PureCircle and Waterland Holdings PTE Ltd. ("Waterland Holdings"). Mr.
Blankenbaker is the Managing Director of Waterland Holdings. Waterland Holdings
assigned the Supply Contract to Growers Synergy PTE Ltd ("Growers Synergy"). Mr.
Blankenbaker is the Managing Director of Growers Synergy. Growers Synergy
assigned the Supply Contract to BVI.
Effective November 1, 2011, we entered into the Management Agreement with
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. As mentioned above,
Mr. Blankenbaker is the Managing Director of Growers Synergy.
36
REVIEW, APPROVAL OR RATIFICATION OF TRANSACTIONS WITH RELATED PERSONS
Although we have adopted a Code of Ethics, we still rely on our Board to review
related party transactions on an ongoing basis to prevent conflicts of interest.
Our Board reviews a transaction in light of the affiliations of the director,
officer or employee and the affiliation's of such person's immediate family.
Transactions are presented to our Board for approval before they are entered
into or, if this is not possible, for ratification after the transaction has
occurred. If our Board finds that a conflict of interest exists, then it will
determine the appropriate remedial action, if any. Our Board approves or
ratifies a transaction if it determines that the transaction is consistent with
the best interests of the Company.
DIRECTOR INDEPENDENCE
During the year ended March 31, 2011, we did not have any independent directors
on our Board. Mr. Blankenbaker is not independent. We evaluate independence by
the standards for director independence established by applicable laws, rules,
and listing standards including, without limitation, the standards for
independent directors established by The New York Stock Exchange, Inc., the
NASDAQ National Market, and the SEC.
Subject to some exceptions, these standards generally provide that a director
will not be independent if (a) the director is, or in the past three years has
been, an employee of ours; (b) a member of the director's immediate family is,
or in the past three years has been, an executive officer of ours; (c) the
director or a member of the director's immediate family has received more than
$120,000 per year in direct compensation from us other than for service as a
director (or for a family member, as a non-executive employee); (d) the director
or a member of the director's immediate family is, or in the past three years
has been, employed in a professional capacity by our independent public
accountants, or has worked for such firm in any capacity on our audit; (e) the
director or a member of the director's immediate family is, or in the past three
years has been, employed as an executive officer of a company where one of our
executive officers serves on the compensation committee; or (f) the director or
a member of the director's immediate family is an executive officer of a company
that makes payments to, or receives payments from, us in an amount which, in any
twelve-month period during the past three years, exceeds the greater of
$1,000,000 or 2% of that other company's consolidated gross revenues.
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Sections 78.7502 and 78.751 of the Nevada Revised Statutes authorizes a court to
award, or a corporation's board of directors to grant indemnity to directors and
officers in terms sufficiently broad to permit indemnification, including
reimbursement of expenses incurred, under certain circumstances for liabilities
arising under the Securities Act of 1933, as amended. In addition, the
registrant's Bylaws provide that the registrant has the authority to indemnify
the registrant's directors and officers and may indemnify the registrant's
employees and agents (other than officers and directors) against liabilities to
the fullest extent permitted by Nevada law. The registrant is also empowered
under the registrant's Bylaws to purchase insurance on behalf of any person whom
the registrant is required or permitted to indemnify.
Insofar as indemnification for liabilities arising under the Securities Act may
be permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the SEC, such indemnification is against public policy as expressed in the
Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement on Form S-1, together with all amendments
and exhibits, with the SEC. This Prospectus, which forms a part of that
registration statement, does not contain all information included in the
registration statement. Certain information is omitted and you should refer to
the registration statement and its exhibits. With respect to references made in
this Prospectus to any of our contracts or other documents, the references are
not necessarily complete and you should refer to the exhibits attached to the
registration statement for copies of the actual contracts or documents. You may
read and copy any document that we file at the Commission's Public Reference
Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at
1-800-SEC-0330 for further information on the operation of the public reference
rooms. Our filings and the registration statement can also be reviewed by
accessing the SEC's website at http://www.sec.gov.
37
FINANCIAL STATEMENTS
Our interim consolidated financial statements as of December 31, 2011 and for
the period from April 11, 2011 (inception) through December 31, 2011 (unaudited)
and audited financial statements as of April 30, 2011 and for the period from
April 11, 2011 (inception) through April 30, 2011 are included herewith.
38
INDEX TO STEVIA CORP. CONSOLIDATED FINANCIAL STATEMENTS
Consolidated Balance Sheet at December 31, 2011 (Unaudited) F-2
Consolidated Statements of Operations for the Three Months Ended
December 31, 2011 and for the Period from April 11, 2011 (Inception)
through December 31, 2011 (Unaudited) F-3
Consolidated Statement of Stockholders' Equity (Deficit) for the Period
from April 11, 2011 (Inception) through December 31, 2011 (Unaudited) F-4
Consolidated Statement of Cash Flows for the Period from April 11, 2011
(Inception) through December 31, 2011 (Unaudited) F-5
Notes to the Consolidated Financial Statements (Unaudited) F-6
Report of Independent Registered Public Accounting Firm F-23
Balance Sheet as of April 30, 2011 F-24
Statement of Operations for the period from April 11, 2011 (Inception)
through April 30, 2011 F-25
Statement of Stockholder's Deficit for the period from April 11, 2011
(Inception) through April 30, 2011 F-26
Statement of Cash Flows for the period from April 11, 2011
(Inception) through April 30, 2011 F-27
Notes to the Financial Statements F-28
F-1
Stevia Corp.
(A Development Stage Company)
Consolidated Balance Sheet
December 31, 2011
-----------------
(Unaudited)
ASSETS
Current assets:
Cash $ 338,258
Prepaid expenses 49,219
------------
Total current assets 387,477
------------
Website development costs:
Website development costs 5,315
Accumulated amortization (534)
------------
Website development costs, net 4,781
------------
Security Deposit
Security deposit 15,000
------------
Total assets $ 407,258
============
LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
Accounts payable $ 59,691
Accounts payable - related party 15,150
Accrued expenses 7,000
Accrued interest 15,246
Advances from president and significant stockholder 19,138
Convertible notes payable 400,000
------------
Total current liabilities 516,225
------------
Stockholders' deficit:
Common stock at $0.001 par value: 100,000,000 shares authorized,
57,674,849 shares issued and outstanding 57,675
Additional paid-in capital 1,136,599
Deficit accumulated during the development stage (1,303,241)
------------
Total stockholders' deficit (108,967)
------------
Total liabilities and stockholders' deficit $ 407,258
============
See accompanying notes to the consolidated financial statements.
F-2
Stevia Corp.
(A Development Stage Company)
Consolidated Statements of Operations
For the Period from
For the Three Months April 11, 2011
Ended (inception) through
December 31, 2011 December 31, 2011
----------------- -----------------
(Unaudited) (Unaudited)
Revenues earned during the development stage $ -- $ 1,300
Cost of services during the development stage 60,000 120,000
------------ ------------
Gross profit (loss) (60,000) (118,700)
Operating expenses:
Directors' fees 93,750 93,750
Professional fees 82,454 135,183
Research and development 39,172 144,369
Salary and compensation - officer 750,000 750,000
General and administrative 14,867 36,160
------------ ------------
Total operating expenses 980,243 1,159,462
------------ ------------
Loss from operations (1,040,243) (1,278,162)
Other (income) expense:
Interest expense 15,631 25,124
Interest income -- (45)
------------ ------------
Total other (income) expense 15,631 25,079
------------ ------------
Loss before income taxes (1,055,874) (1,303,241)
Income tax provision -- --
------------ ------------
Net loss $ (1,055,874) $ (1,303,241)
============ ============
Net loss per common share
- Basic and diluted: $ (0.02) $ (0.03)
============ ============
Weighted average common shares outstanding
- basic and diluted 54,854,293 40,575,587
============ ============
See accompanying notes to the consolidated financial statements.
F-3
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders' Equity (Deficit)
For the Period from April 11, 2011 (Inception) through December 31, 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 -- --
Common shares issued for cash
at $0.25 per share on
October 4, 2011 400,000 400 99,600 100,000
Common shares issued for notes
conversion at $0.25 per share
on October 4, 2011 1,400,000 1,400 348,600 350,000
Common shares issued for conversion
of accrued interest at $0.25 per
share on October 4, 2011 74,849 75 18,637 18,712
Common shares cancelled by significant
stockholder on October 4, 2011 (3,000,000) (3,000) 3,000 --
Common shares issued for future
director services on October 4, 2011 3,000,000 3,000 747,000 750,000
Common shares issued for future
director services on October 4, 2011 (750,000) (750,000)
Amortization of future director
service earned during the period 93,750 93,750
Make good shares released to officer
for achieving the first milestone
on December 23, 2011 3,000,000 3,000 747,000 750,000
Net loss (1,303,241) (1,303,241)
----------- ----------- ----------- ----------- -----------
Balance, December 31, 2011 57,674,849 $ 57,675 $ 1,136,599 $(1,303,241) $ (108,967)
=========== =========== =========== =========== ===========
See accompanying notes to the consolidated financial statements.
F-4
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Cash Flows
For the Period from
April 11, 2011
(inception) through
December 31, 2011
-----------------
(Unaudited)
Cash flows from operating activities:
Net loss $ (1,303,241)
Adjustments to reconcile net loss to net
cash used in operating activities
Amortization expense 534
Common shares issued for compensation 750,000
Common shares issued for director services earned during the period 93,750
Changes in operating assets and liabilities:
Prepaid expenses (49,219)
Security deposit (15,000)
Accounts payable (36,067)
Accounts payable - related parties 15,150
Accrued expenses 310
Accrued interest 33,958
------------
Net cash used in operating activities (509,825)
------------
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 200
Proceeds from issuance of convertible notes 750,000
Proceeds from sale of common stock 100,000
------------
Net cash provided by financing activities 850,200
------------
Net change in cash 338,258
Cash at beginning of period --
------------
Cash at end of period $ 338,258
============
Supplemental disclosure of cash flows information:
Interest paid $ --
============
Income tax paid $ --
============
Non-cash investing and financing activities:
Issuance of common stock for convertible notes conversion $ 350,000
============
Issuance of common stock for accrued note interest conversion $ 18,712
============
See accompanying notes to the consolidated financial statements.
F-5
Stevia Corp.
(A Development Stage Company)
December 31, 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 (1:35) 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 prior to the Share Exchange Transaction on June 23, 2011, 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 change in control of the then Ventures 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
F-6
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.
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 fiscal 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 Current 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 the
entities as of the reporting period ending date(s) and for the reporting
period(s) as follows:
Entity Reporting period ending date(s) and reporting period(s)
------ -------------------------------------------------------
Stevia As of December 31, 2011 and for the period from June 23, 2011
(date of acquisition) through December 31, 2011
Ventures As of December 31, 2011 and for the period from April 11, 2011
(inception) through December 31, 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, deferred tax assets 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.
F-7
Management bases its estimates on historical experience and on various
assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole 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 evaluates the key factors and assumptions used to
develop the estimates utilizing currently available information, changes in
facts and circumstances, historical experience and reasonable assumptions. After
such evaluations, 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:
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 December 31,
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.
F-8
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).
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 December 31, 2011.
The Company does not have any off-balance-sheet credit exposure to its
customers.
F-9
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.
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.
F-10
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 specific research and development
projects. 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
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
F-11
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.
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
F-12
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.
UNCERTAIN TAX POSITIONS
The Company did not take any uncertain tax positions and had no adjustments
to its income tax liabilities or benefits pursuant to the provisions of Section
740-10-25 for the Period from April 11, 2011 (Inception) through December 31,
2011.
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 December 31, 2011 as they
were anti-dilutive:
F-13
Potentially Outstanding Dilutive
Common Shares
--------------------------------
For the Period
from April 11, 2011
(inception) through
December 31, 2011
-----------------
The remainder of the Make Good Escrow
Agreement shares issued and held with the
escrow agent in connection with the Share
Exchange Agreement consummated on June 23,
2011 pending the achievement by the Company
of certain post-Closing business milestones
(the "Milestones"). 3,000,000
----------
Total potentially outstanding dilutive
common shares 3,000,000
==========
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.
F-14
* 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.
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 nonowner 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, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities
in the normal course of business.
As reflected in the accompanying consolidated financial statements, the
Company had a deficit accumulated during the development stage at December 31,
2011, a net loss and net cash used in operating activities for the period from
April 11, 2011 (inception) through December 31, 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
related to the recoverability and classification of recorded asset amounts or
the amounts and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
NOTE 4 - WEBSITE DEVELOPMENT COSTS
Website development costs, stated at cost, less accumulated amortization at
December 31, 2011, consisted of the following:
F-15
December 31, 2011
-----------------
Website development costs $ 5,315
Accumulated amortization (534)
-------
$ 4,781
=======
AMORTIZATION EXPENSE
Amortization expense was $534 for the period from April 11, 2011
(inception) through December 31, 2011.
NOTE 5 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with whom the Company had transactions are:
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 December 31, 2011 is as follows:
December 31, 2011
-----------------
Consulting services received and consulting fees booked $120,000
--------
$120,000
========
ENTRY INTO A MANAGEMENT AND OFF-TAKE AGREEMENT WITH GROWERS SYNERGY PTE LTD.
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 the 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
F-16
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
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:
FISCAL YEAR ENDING MARCH 31:
2012 (remainder of the fiscal year) $ 60,000
2013 240,000
2014 140,000
--------
$440,000
========
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 October 4, 2011, the note holder converted the entire principal of
$250,000 and accrued interest through the date of conversion of $15,890.41 to
1,000,000 and 63,561 shares of the Company's common stock at $0.25 per share,
respectively.
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. On October 4, 2011, the note holder converted the entire principal of
$100,000 and accrued interest through the date of conversion of $2,821.92 to
400,000 and 11,288 shares of the Company's common stock at $0.25 per share.
On October 4, 2011, the Company issued a convertible note in the amount of
$150,000 with interest at 10% per annum due one (1) year from the date of
issuance. On January 18, 2012, the note holder converted the entire principal of
$150,000 and accrued interest through the date of conversion of $4,356 to
617,425 shares of the Company's common stock at $0.25 per share.
On November 16, 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. The note 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.
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 prior to the Share Exchange Transaction on June 23, 2011, 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.
F-17
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").
On October 4, 2011, a significant stockholder of the Company, Mohanad
Shurrab, surrendered another 3,000,000 shares of the Company's common stock to
the Company for cancellation. The Company recorded this transaction by debiting
common stock at par of $3,000 and crediting additional paid-in capital of the
same.
On October 4, 2011 the Company sold 400,000 shares of its common stock to
one investor at $0.25 per share or $100,000.
On October 14, 2011 the Company issued 1,500,000 shares each to two (2)
newly appointed members of the board of directors or 3,000,000 shares of its
common stock in aggregate as compensation for future services. These shares
shall vest with respect to 750,000 shares of restricted stock on each of the
first two anniversaries of the date of grant, subject to the director's
continuous service to the company as directors. These shares were valued at
$0.25 per share or $750,000 on the date of grant and are being amortized over
the vesting period of two (2) years or $93,750 per quarter.
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.
(ii) DURATION OF ESCROW AGREEMENT
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
Milestone Completion Date Escrow 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
F-18
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
On December 23, 2011, 3,000,000 out of the 6,000,000 Escrow Shares have
been earned and released to Ventures stockholder upon achievement of the First
Milestone within 180 days of June 23, 2011, the Closing Date associated with the
First Milestone. These shares were valued at $0.25 per share or $750,000 on the
date of release and was recorded as compensation.
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 $200,000 in aggregate for the term of the contract as
specified in Appendix C. In-country accommodation for the resident expert will
be born separately by the Company and is excluded from the above amount. The
expert, Dr. Cho, Young-Cheol, Director, Life Sciences has been appointed and
commenced on September 1, 2011.
Future minimum payments required under the Agribusiness Development
Agreement as amended were as follows:
Under Appendix A Under Appendix C TOTAL
---------------------------- ---------------- --------
SG$ Equivalent in $ $ $
-------- --------------- -------- --------
FISCAL YEAR ENDING MARCH 31:
2012 (remainder of the fiscal year) 24,750 $ 19,055 $ 25,000 $ 44,025
2013 99,000 76,220 100,000 176,220
2014 44,000 33,876 25,000 58,876
-------- -------- -------- --------
Total 167,750 $129,151 $150,000 $279,151
======== ======== ======== ========
F-19
LAND TRANSFER AGREEMENT
On December 14, 2011, the Company and Stevia Ventures Corporation ("Stevia
Ventures") entered into a Land Lease Agreement with Vinh Phuc Province People's
Committee Tam Dao Agriculture & Industry Co., Ltd. pursuant to which Stevia
Ventures has leased l0 hectares of land (the "Leased Property") for a term
expiring five (5) years from the date of signing.
The Company has begun development of a research facility on the Leased
Property and has prepaid (i) the first year lease payment of $30,000 and (ii)
the six month lease payment of $15,000 as security deposit, or $45,000 in
aggregate upon signing of the agreement.
NOTE 9 - COMMITMENTS AND CONTINGENCIES
CONSULTING AGREEMENT - DORIAN BANKS
On July 1, 2011 the Company entered into a consulting agreement (the
"Consulting Agreement") with Dorian Banks ("Banks").
(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.
EXTENSION OF THE CONSULTING AGREEMENT
On December 30, 2011, the Consulting Agreement was extended with the same
terms and conditions to December 31, 2012.
F-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 the sales for the period from April
11, 2011 (inception) through December 31, 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 39.2% of the Company's
accounts payable at December 31, 2011 and provided all of the Company's farm
management services for the period from April 11, 2011 (inception) through
December 31, 2011.
Agro Genesis Pte Ltd., an unrelated third party accounted for 37.0% of the
Company's accounts payable at December 31, 2011 and provided all of the
Company's research and development for the period from April 11, 2011
(inception) through December 31, 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 December 31, 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:
F-21
ISSUANCE OF CONVERTIBLE NOTE
On January 16, 2012, 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.
ENTRY INTO AN EQUITY PURCHASE AGREEMENT
On January 26, 2012, the Company entered into an equity purchase agreement
with Southridge Partners II, LP, a Delaware limited partnership (The
"Investor"). Upon the terms and subject to the conditions contained in the
agreement, the Company shall issue and sell to the Investor, and the Investor
shall purchase, up to Twenty Million Dollars ($20,000,000) of its common stock,
par value $0.001 per share.
At any time and from time to time during the Commitment Period, which mean
the period commencing on the effective date, and ending on the earlier of (i)
the date on which investor shall have purchased put shares pursuant to this
agreement for an aggregate purchase price of the maximum commitment amount, or
(ii) the date occurring thirty six (36) months from the date of commencement of
the commitment period. the Company may exercise a put by the delivery of a put
notice, the number of put shares that investor shall purchase pursuant to such
put shall be determined by dividing the investment amount specified in the put
notice by the purchase price with respect to such put notice. However, that the
investment amount identified in the applicable put notice shall not be greater
than the maximum put amount and, when taken together with any prior put notices,
shall not exceed the maximum commitment The purchase price shall mean 93% of the
market price on such date on which the purchase price is calculated in
accordance with the terms and conditions of this Agreement.
As a condition for the execution of this agreement by the investor, the
company shall issue to the investor 35,000 shares of restricted common stock
(the "restricted shares") upon the signing of this agreement. The restricted
shares shall have no registration rights.
ENTRY INTO A REGISTRATION RIGHTS AGREEMENT
On January 26, 2012, The Company entered into a registration rights
agreement with Southridge Partners II, LP, a Delaware limited partnership (the
"Investor"). To induce the investor to execute and deliver the equity purchase
agreement which the Company has agreed to issue and sell to the investor shares
(the "put shares") of its common stock, par value $0.001 per share (the "common
stock") from time to time for an aggregate investment price of up to twenty
million dollars ($20,000,000) (the "registrable securities"), the company has
agreed to provide certain registration rights under the securities act of 1933,
as amended, and the rules and regulations thereunder, or any similar successor
statute (collectively, "securities act"), and applicable state securities laws
with respect to the registrable securities.
F-22
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholder of
Stevia Ventures International Ltd.
(A development stage company)
Indianapolis, Indiana
We have audited the accompanying balance sheet of Stevia Ventures
International Ltd (a development stage company) (the "Company"), as of April 30,
2011 and the related statements of operations, stockholder's deficit and cash
flows for the period from April 11, 2011 (inception) through April 30, 2011.
These financial statements are the responsibility of the Company's management.
Our responsibility is to express an opinion on these financial statements based
on our audit.
We conducted our audit in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that
we plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. The Company is not
required to have, nor were we engaged to perform, an audit of its internal
control over financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Company's internal control over financial
reporting. Accordingly, we express no such opinion. An audit includes examining
on a test basis, evidence supporting the amount and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the Company as of April 30,
2011, and the related statements of operations, stockholder's deficit and cash
flows for the period from April 11, 2011 (inception) through April 30, 2011 in
conformity with accounting principles generally accepted in the United States of
America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has a deficit accumulated during the
development stage at April 30, 2011 and had a net loss and net cash used in
operating activities for the period from April 11, 2011 (inception) through
April 30, 2011, respectively with no revenue earned since inception, all of
which raise substantial doubt about the Company's ability to continue as a going
concern. Management's plans in regards to these matters are also described in
Note 3. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/ Li & Company, PC
--------------------------------
Li & Company, PC
Skillman, New Jersey
June 29, 2011
F-23
Stevia Ventures International Ltd.
(A Development Stage Company)
Balance Sheet
April 30,
2011
--------
Assets
Current Assets
Cash $ --
--------
Total current assets --
Total Assets $ --
========
Liabilities and Stockholder's Deficit
Current Liabilities
Accrued expenses $ 2,145
--------
Total current liabilities 2,145
--------
Stockholder's Deficit
Common stock, $1.00 par value; 50,000 shares authorized;
100 shares issued and outstanding 100
Deficit accumulated during the development stage (2,245)
--------
Total Stockholder's Deficit (2,145)
--------
Total Liabilities and Stockholder's Deficit $ --
========
See accompanying notes to financial statements
F-24
Stevia Ventures International Ltd.
(A Development Stage Company)
Statement of Operations
For the
Period from
April 11, 2011
(Inception)
through
April 30,
2011
--------
REVENUE $ --
--------
OPERATING EXPENSES
Accounting and legal 2,145
Office and miscellaneous 100
--------
Loss before income taxes (2,245)
Provision for income taxes --
--------
Net loss $ (2,245)
========
Net loss per common share - basic and diluted $ (22.45)
========
Weighted average number of common shares outstanding -
basic and diluted 100
========
See accompanying notes to financial statements
F-25
Stevia Ventures International Ltd.
(A Development Stage Company)
Statement of Stockholder's Deficit
For the period from April 11, 2011 (Inception) through April 30, 2011
Deficit
Accumulated
During the Total
Common Stock Development Stockholder's
Shares Amount Stage Deficit
------ ------ ----- -------
Balance, April 11, 2011 (inception) -- $ -- $ -- $ --
Shares issued to founder on April 11, 2011
at par value of $1.00 per share 100 100 -- 100
Net loss -- -- (2,245) (2,245)
------ ------ ------- -------
Balance, April 30, 2011 100 $ 100 $(2,245) $(2,145)
====== ====== ======= =======
See accompanying notes to financial statements
F-26
Stevia Ventures International Ltd.
(A Development Stage Company)
Statement of Cash Flows
For the
Period from
April 11, 2011
(Inception)
through
April 30,
2011
--------
Cash Flows from operating activities:
Net loss $ (2,245)
Adjustments to reconcile net loss to
cash used in operating activities:
Common stock issued for compensation 100
Changes in operating assets and liabilities
Accrued expenses 2,145
--------
Net Cash Used in Operating Activities --
--------
NET CHANGE IN CASH --
CASH AT BEGINNING OF PERIOD --
--------
CASH AT END OF PERIOD $ --
========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest paid $ --
========
Taxes paid $ --
========
See accompanying notes to financial statements
F-27
Stevia Ventures International Ltd.
(A Development Stage Company)
April 30, 2011
Notes to Financial Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
Stevia Ventures International Ltd. (the "Company") was incorporated in the
British Virgin Islands on April 11, 2011. Initial operations have included
organization and incorporation, target market identification, new product
development, marketing plans, and capital formation. A substantial portion of
the Company's activities has involved developing a business plan and
establishing contacts and visibility in the marketplace. The Company has
generated no revenues since inception. The Company's business activities will be
focused on Stevia agriculture and distribution.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The Company's financial statements have been prepared in accordance with
accounting principles generally accepted in the United States of America ("U.S.
GAAP").
DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by section 810-10-20 of
the FASB Accounting Standards Codification. The Company is still devoting
substantially all of its efforts on establishing the business and its planned
principal operations have not commenced. All losses accumulated since inception
have been considered as part of the Company's exploration stage activities.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles of the United States 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.
FISCAL YEAR END
The Company elected April 30 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.
F-28
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards
Codification for disclosures about fair value of its financial instruments and
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. 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
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. The three (3) levels of fair value hierarchy defined by
Paragraph 820-10-35-37 are described below:
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.
The carrying amounts of the Company's financial assets and liabilities, such as
accrued expenses, approximate their fair values because of the short maturity of
these instruments.
The Company does not have any assets or liabilities measured at fair value on a
recurring or a non-recurring basis, consequently, the Company did not have any
fair value adjustments for assets and liabilities measured at fair value at
April 30, 2011; no gains or losses are reported in the statement of operations
that are attributable to the change in unrealized gains or losses relating to
those assets and liabilities still held at the reporting date for the period
ended April 30, 2011.
REVENUE RECOGNITION
The Company follows paragraph 605-10-S99-1 of the FASB Accounting Standards
Codification for revenue recognition. The Company will recognize revenue when it
is realized or realizable and earned. The Company considers revenue realized or
realizable and earned when it has persuasive evidence of an arrangement that the
services have been rendered to the customer, the sales price is fixed or
determinable, and collectability is reasonably assured.
INCOME TAXES
The Company accounts for income taxes under Section 740-10-30 of the FASB
Accounting Standards Codification. Deferred income tax assets and liabilities
are determined based upon differences between the financial reporting and tax
bases of assets and liabilities and are measured using the enacted tax rates and
laws that will be in effect when 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 statements
of operations in the period that includes the enactment date.
F-29
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 percent (50%) 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 Company had no material adjustments to its
liabilities for unrecognized income tax benefits according to the provisions of
Section 740-10-25.
NET LOSS PER COMMON SHARE
Net loss per common share is computed pursuant to section 260-10-45 of the FASB
Accounting Standards Codification. Basic net loss per share is computed by
dividing net loss by the weighted average number of shares of common stock
outstanding during the period. Diluted net loss per share is computed by
dividing net loss by the weighted average number of shares of common stock and
potentially outstanding shares of common stock during each period. There were no
potentially dilutive shares outstanding as of April 30, 2011.
COMMITMENTS AND CONTINGENCIES
The Company follows subtopic 450-20 of the FASB Accounting Standards
Codification to report accounting for contingencies. Liabilities for loss
contingencies arising from claims, assessments, litigation, fines and penalties
and other sources are recorded when it is probable that a liability has been
incurred and the amount of the assessment can be reasonably estimated.
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 were
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.
F-30
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In January 2010, the FASB issued the FASB Accounting Standards Update No.
2010-06 "FAIR VALUE MEASUREMENTS AND DISCLOSURES (TOPIC 820) IMPROVING
DISCLOSURES ABOUT FAIR VALUE MEASUREMENTS", which provides amendments to
Subtopic 820-10 that require new disclosures as follows:
1. Transfers in and out of Levels 1 and 2. A reporting entity should
disclose separately the amounts of significant transfers in and out of
Level 1 and Level 2 fair value measurements and describe the reasons
for the transfers.
2. Activity in Level 3 fair value measurements. In the reconciliation for
fair value measurements using significant unobservable inputs (Level
3), a reporting entity should present separately information about
purchases, sales, issuances, and settlements (that is, on a gross
basis rather than as one net number).
This Update provides amendments to Subtopic 820-10 that clarify existing
disclosures as follows:
1. Level of disaggregation. A reporting entity should provide fair value
measurement disclosures for each class of assets and liabilities. A
class is often a subset of assets or liabilities within a line item in
the statement of financial position. A reporting entity needs to use
judgment in determining the appropriate classes of assets and
liabilities.
2. Disclosures about inputs and valuation techniques. A reporting entity
should provide disclosures about the valuation techniques and inputs
used to measure fair value for both recurring and nonrecurring fair
value measurements. Those disclosures are required for fair value
measurements that fall in either Level 2 or Level 3.
This Update also includes conforming amendments to the guidance on employers'
disclosures about postretirement benefit plan assets (Subtopic 715-20). The
conforming amendments to Subtopic 715-20 change the terminology from MAJOR
CATEGORIES of assets to CLASSES of assets and provide a cross reference to the
guidance in Subtopic 820-10 on how to determine appropriate classes to present
fair value disclosures. The new disclosures and clarifications of existing
disclosures are effective for interim and annual reporting periods beginning
after December 15, 2009, except for the disclosures about purchases, sales,
issuances, and settlements in the roll forward of activity in Level 3 fair value
measurements. Those disclosures are effective for fiscal years beginning after
December 15, 2010, and for interim periods within those fiscal years.
In August 2010, the FASB issued ASU 2010-21, "ACCOUNTING FOR TECHNICAL
AMENDMENTS TO VARIOUS SEC RULES AND SCHEDULES: AMENDMENTS TO SEC PARAGRAPHS
PURSUANT TO RELEASE NO. 33-9026: TECHNICAL AMENDMENTS TO RULES, FORMS, SCHEDULES
AND CODIFICATION OF FINANCIAL REPORTING POLICIES" ("ASU 2010-21"), was issued to
conform the SEC's reporting requirements to the terminology and provisions in
ASC 805, BUSINESS COMBINATIONS, and in ASC 810-10, CONSOLIDATION. ASU No.
2010-21 was issued to reflect SEC Release No. 33-9026, "Technical Amendments to
Rules, Forms, Schedules and Codification of Financial Reporting Policies," which
was effective April 23, 2009. The ASU also proposes additions or modifications
to the XBRL taxonomy as a result of the amendments in the update.
In August 2010, the FASB issued ASU 2010-22, "ACCOUNTING FOR VARIOUS TOPICS:
TECHNICAL CORRECTIONS TO SEC PARAGRAPHS" ("ASU 2010-22"), which amends various
SEC paragraphs based on external comments received and the issuance of SEC Staff
Accounting Bulletin (SAB) No. 112, which amends or rescinds portions of certain
SAB topics. The topics affected include reporting of inventories in condensed
financial statements for Form 10-Q, debt issue costs in conjunction with a
business combination, sales of stock by subsidiary, gain recognition on sales of
business, business combinations prior to an initial public offering, loss
contingent and liability assumed in business combination, divestitures, and oil
and gas exchange offers.
F-31
In December 2010, the FASB issued the FASB Accounting Standards Update No.
2010-28 "INTANGIBLES--GOODWILL AND OTHER (TOPIC 350): WHEN TO PERFORM STEP 2 OF
THE GOODWILL IMPAIRMENT TEST FOR REPORTING UNITS WITH ZERO OR NEGATIVE CARRYING
AMOUNTS" ("ASU 2010-28").Under ASU 2010-28, if the carrying amount of a
reporting unit is zero or negative, an entity must assess whether it is more
likely than not that goodwill impairment exists. To make that determination, an
entity should consider whether there are adverse qualitative factors that could
impact the amount of goodwill, including those listed in ASC 350-20-35-30. As a
result of the new guidance, an entity can no longer assert that a reporting unit
is not required to perform the second step of the goodwill impairment test
because the carrying amount of the reporting unit is zero or negative, despite
the existence of qualitative factors that indicate goodwill is more likely than
not impaired. ASU 2010-28 is effective for public entities for fiscal years, and
for interim periods within those years, beginning after December 15, 2010, with
early adoption prohibited.
In December 2010, the FASB issued the FASB Accounting Standards Update No.
2010-29 "BUSINESS COMBINATIONS (TOPIC 805): DISCLOSURE OF SUPPLEMENTARY PRO
FORMA INFORMATION FOR BUSINESS COMBINATIONS" ("ASU 2010-29"). ASU 2010-29
specifies that if a public entity presents comparative financial statements, the
entity should disclose revenue and earnings of the combined entity as though the
business combination(s) that occurred during the current year had occurred as of
the beginning of the comparable prior annual reporting period only. The
amendments in this Update also expand the supplemental pro forma disclosures
under Topic 805 to include a description of the nature and amount of material,
nonrecurring pro forma adjustments directly attributable to the business
combination included in the reported pro forma revenue and earnings. The amended
guidance is effective prospectively for business combinations for which the
acquisition date is on or after the beginning of the first annual reporting
period beginning on or after December 15, 2010. Early adoption is permitted.
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 consolidated financial statements.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. The Company has a deficit accumulated
during the development stage of $2,245 at April 30, 2011, and had a net loss of
$2,245, with no revenues earned since inception.
While the Company is attempting to generate sufficient revenues, the Company's
cash position may not be 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 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 financial statements do not include any adjustments that might be necessary
if the Company is unable to continue as a going concern.
NOTE 4 - STOCKHOLDER'S DEFICIT
Common stock includes 50,000 shares authorized at a par value of $1.00, of which
100 have been issued to its Chief President at par value of $1.00 per share or
$100 for compensation at inception on April 11, 2011.
F-32
NOTE 5 - RELATED PARTY TRANSACTIONS
The Company is provided the office space by the president of the Company without
cost. The management determined that such cost is nominal and did not recognize
rent expense in its financial statements.
NOTE 6 - INCOME TAXES
DEFERRED TAX ASSETS
At April 30, 2011, the Company had net operating loss ("NOL") carry-forwards for
Federal income tax purposes of $2,245 that may be offset against future taxable
income through 2031. No tax benefit has been reported with respect to these net
operating loss carry-forwards in the accompanying financial statements because
the Company believes that the realization of the Company's net deferred tax
assets of approximately $763 was not considered more likely than not and
accordingly, the potential tax benefits of the net loss carry-forwards are fully
offset by a valuation allowance of $763.
Deferred tax assets consist primarily of the tax effect of NOL carry-forwards.
The Company has provided a full valuation allowance on the deferred tax assets
because of the uncertainty regarding its realization. The valuation allowance
increased approximately $1,273 for the period ended April 30, 2011.
Components of deferred tax assets at April 30, 2011 are as follows:
Net Deferred Taxes - Non- Current:
Expected income tax benefit from NOL carry-forward $ 763
Less valuation allowance (763)
-------
Deferred tax assets, net of valuation allowance $ --
=======
INCOME TAXES IN THE STATEMENTS OF OPERATIONS
A reconciliation of the federal statutory income tax rate and the effective
income tax rate as a percentage of income before income taxes is as follows:
Federal statutory income tax rate 34.0%
Change in valuation allowance on net (34.0)%
-------
Effective income tax rate 0.0%
=======
NOTE 7 - SUBSEQUENT EVENTS
Management has evaluated all events that occurred after the balance sheet date
through the date when these financial statements were issued to determine if
they must be reported. The Management of the Company has determined that there
were no reportable subsequent events to be disclosed.
F-33
PART II - INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses payable by us in
connection with the issuance and distribution of the securities being registered
hereunder. No expenses will be borne by Selling Security Holder. All of the
amounts shown are estimates, except for the SEC registration fee.
SEC registration fee $ 2,292
Accounting fees and expenses $ 3,000
Legal fees and expenses $30,000
-------
TOTAL $35,292
=======
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
NEVADA LAW
Section 78.7502 of the Nevada Revised Statutes permits a corporation to
indemnify any person who was or is a party or is threatened to be made a party
to any threatened, pending or completed action, suit or proceeding, whether
civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, against
expenses, including attorneys' fees, judgments, fines and amounts paid in
settlement actually and reasonably incurred by him in connection with the
action, suit or proceeding if he:
(a) is not liable pursuant to Nevada Revised Statute 78.138, or
(b) acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation, and, with
respect to any criminal action or proceeding, had no reasonable cause
to believe his conduct was unlawful.
In addition, Section 78.7502 permits a corporation to indemnify any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses, including amounts paid in settlement and attorneys' fees actually and
reasonably incurred by him in connection with the defense or settlement of the
action or suit if he:
(a) is not liable pursuant to Nevada Revised Statute 78.138; or
(b) acted in good faith and in a manner which he reasonably believed to be
in or not opposed to the best interests of the corporation.
To the extent that a director, officer, employee or agent of a corporation has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to above, or in defense of any claim, issue or matter, the
corporation is required to indemnify him against expenses, including attorneys'
fees, actually and reasonably incurred by him in connection with the defense.
Section 78.751 of the Nevada Revised Statutes provides that such indemnification
may also include payment by the Company of expenses incurred in defending a
civil or criminal action or proceeding in advance of the final disposition of
such action or proceeding upon receipt of an undertaking by the person
indemnified to repay such payment if he shall be ultimately found not to be
entitled to indemnification under Section 78.751. Indemnification may be
provided even though the person to be indemnified is no longer a director,
officer, employee or agent of the Company or such other entities.
Section 78.752 of the Nevada Revised Statutes allows a corporation to purchase
and maintain insurance or make other financial arrangements on behalf of any
person who is or was a director, officer, employee or agent of the corporation
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise for any liability asserted against him and liability and
expenses incurred by him in his capacity as a director, officer, employee or
agent, or arising out of his status as such, whether or not the corporation has
the authority to indemnify him against such liability and expenses.
Other financial arrangements made by the corporation pursuant to Section 78.752
may include the following:
II-1
(a) the creation of a trust fund;
(b) the establishment of a program of self-insurance;
(c) the securing of its obligation of indemnification by granting a
security interest or other lien on any assets of the corporation; and
(d) the establishment of a letter of credit, guaranty or surety
No financial arrangement made pursuant to Section 78.752 may provide protection
for a person adjudged by a court of competent jurisdiction, after exhaustion of
all appeals, to be liable for intentional misconduct, fraud or a knowing
violation of law, except with respect to the advancement of expenses or
indemnification ordered by a court.
Any discretionary indemnification pursuant to NRS 78.7502, unless ordered by a
court or advanced pursuant to an undertaking to repay the amount if it is
determined by a court that the indemnified party is not entitled to be
indemnified by the corporation, may be made by the corporation only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances. The
determination must be made:
(a) by the stockholders;
(b) by the board of directors by majority vote of a quorum consisting of
directors who were not parties to the action, suit or proceeding;
(c) if a majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding so orders, by independent
legal counsel in a written opinion, or
(d) if a quorum consisting of directors who were not parties to the
action, suit or proceeding cannot be obtained, by independent legal
counsel in a written opinion.
CHARTER PROVISIONS AND OTHER ARRANGEMENTS OF THE REGISTRANT
Pursuant to the provisions of Nevada Revised Statutes, the Registrant has
adopted the following indemnification provisions in its Bylaws for its directors
and officers:
The Company shall indemnify, to the maximum extent permitted by the law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative, except an action by or in the right
of the Company, by reason of the fact that such person is or was a director,
officer, employee, or agent of the Company, or is or was serving at the request
of the Company as a director, officer, employee, or agent of another company,
partnership, joint venture, trust, or other enterprise, against expenses,
including attorneys' fees, judgments, fines, and amounts paid in settlement
actually and reasonably incurred by such person in connection with such action,
suit, or proceeding if such person acted in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the Company, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe such person's conduct was unlawful. The termination
of any action, suit or proceeding by judgment, order, settlement, conviction, or
upon a plea of NO LO CONTENDERE or its equivalent, shall not, of itself, create
a presumption that the person did not act in good faith and in a manner which
such person reasonably believed to be in or not opposed to the best interests of
the Company, and that, with respect to any criminal action or proceeding, such
person had reasonable cause to believe that his conduct was unlawful.
The Company shall indemnify, to the maximum extent permitted by the law, any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
Company to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee, or agent of the Company, or is
or was serving at the request of the Company as a director, officer, employee or
agent of another company, partnership, joint venture, trust, or other enterprise
against expenses, including attorneys' fees, actually and reasonably incurred by
such person in connection with the defense or settlement of such action or suit
if such person acted in good faith and in a manner which such person reasonably
believed to be in or not opposed to the best interests of the Company, but no
indemnification shall be made in respect of any claim, issue or matter as to
which such person has been adjudged to be liable for negligence or misconduct in
the performance of such person's duty to the Company unless and only to the
extent that the court in which such action or suit was brought determines upon
application that, despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably entitled to
indemnity for such expenses as the court deems proper.
To the extent that a director, officer, employee or agent of the Company has
been successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in the prior two paragraphs, or in defense of any claim,
issue or matter therein, such person shall be indemnified by the Company against
II-2
expenses, including attorneys' fees, actually and reasonably incurred by such
person in connection with such defense. Any indemnification under the prior two
paragraphs, unless ordered by a court, shall be made by the Company only as
authorized in the specific case upon a determination that indemnification of the
director, officer, employee or agent is proper in the circumstances because such
person has met the applicable standard of conduct set forth in the prior two
paragraphs. Such determination shall be made:
(i) by the stockholders;
(ii) by the board of directors by majority vote of a quorum consisting of
directors who were not parties to such act, suit or proceeding;
(iii) if such a quorum of disinterested directors so orders, by independent
legal counsel in a written opinion; or
(iv) if such a quorum of disinterested directors cannot be obtained, by
independent legal counsel in a written opinion.
Expenses incurred in defending a civil or criminal action, suit or proceeding
may be paid by the Company in advance of the final disposition of such action,
suit or proceeding as authorized by the board of directors unless it is
ultimately determined that such director, officer, employee or agent is not
entitled to be indemnified by the Company as authorized in the Bylaws or as
provided by law.
The indemnification provided by the Bylaws:
(i) does not exclude any other rights to which a person seeking
indemnification may be entitled under any bylaw, agreement, vote of
stockholders, or disinterested directors or otherwise, both as to
action in such person's official capacity and as to action in another
capacity while holding such office; and
(ii) shall continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the
heirs, executors, and administrators of such a person.
The Company may purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Company, or is or as
serving at the request of the Company as a director, officer, employee, or agent
of another company, partnership, joint venture, trust, or other enterprise
against any liability asserted against such person and incurred by such person
in any such capacity, or arising out of such person's status as such, whether or
not the Company would have the power to indemnify such person against such
liability under the provisions of the Bylaws.
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
PROMISSORY NOTES
On February 14, 2011 we issued a convertible promissory note in the principal
amount of $250,000 to Vantage Associates SA ("Vantage") and on June 23, 2011, we
issued an additional convertible promissory note to Vantage in the principal
amount of $100,000 (the "Notes"). The Notes are convertible into shares of the
Company's common stock upon the closing by the Company of an equity financing
yielding aggregate gross proceeds of at least $100,000. The Notes will convert
at the price per share of the securities issued in such financing. The Notes
were issued in reliance upon exemption from registration under the Securities
Act pursuant to Regulation S thereof.
SHARE EXCHANGE TRANSACTION
In connection with the Share Exchange Transaction, on June 23, 2011 we issued a
total of 12,000,000 shares of our common stock in exchange for 100% of the
issued and outstanding common stock of BVI. The common stock was issued in
reliance upon exemption from registration under the Securities Act pursuant to
Rule 506 of Regulation D thereof, and comparable exemptions under state
securities laws. The common stock was issued to "accredited investors," as such
term is defined in Rule 501(a) under the Securities Act, based upon
representations made by such investor.
SALE OF COMMON STOCK AND ADDITIONAL PROMISSORY NOTES
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 "October 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,
II-3
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"). 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.
On January 16, 2012, we raised $250,000 from the proceeds of a convertible note
(the "January Note" and together with the October Note and November Note, the
"Notes"). The January 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 January 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 October Shares and the 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.
ITEM 16. EXHIBIT INDEX
The following exhibits are included as part of this registration statement by
reference:
Number Description
------ -----------
2.1 Share Exchange Agreement, dated June 23, 2011 (incorporated by
reference to Exhibit 2.1 of the Registrant's Current Report on Form 8-K
filed on June 29, 2011)
3.1 Articles of Incorporation of the Registrant, dated May 18, 2007,
including all amendments to date (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)
3.2 Amended and Restated Bylaws of the Registrant, as amended, dated March
18, 2011 (incorporated by reference to Exhibit 3.2 of the Registrant's
Current Report on Form 8-K filed on March 22, 2011)
4.1 Specimen Common Stock Certificate (incorporated by reference to Exhibit
4.1 of the Registrant's Registration Statement on Form S-1 filed on
July 16, 2008)
5.1 Opinion of Greenberg Traurig, LLP*
10.1 Equity Purchase Agreement, dated January 26, 2012 (incorporated by
reference to Exhibit 10.1 of the Registrant's Current Report on Form
8-K filed January 30, 2012)
10.2 Registration Rights Agreement, dated January 26, 2012 (incorporated by
reference to Exhibit 10.1 of the Registrant's Current Report on Form
8-K filed January 30, 2012)
10.3 Stock Purchase Agreement, dated October 6, 2011 (incorporated by
reference to Exhibit 10.1 of the Registrant's Quarterly Report on Form
10-Q filed November 21, 2011)
10.4 Form of Convertible Promissory Note (incorporated by reference to
Exhibit 10.2 of the Registrant's Quarterly Report on Form 10-Q filed
November 21, 2011)
II-4
10.5 Agribusiness Development Agreement, dated July 16, 2011 (incorporated
by reference to Exhibit 10.1 of the Registrant's Current Report on Form
8-K filed October 18, 2011)
10.6 Management and Off-Take Agreement, dated November 1, 2011 (incorporated
by reference to Exhibit 10.1 of the Registrant's Current Report on Form
8-K filed October 31, 2011)
10.7 Convertible Promissory Note, with Vantage Associates SA, dated February
14, 2011 (incorporated by reference to Exhibit 10.4 of the Registrant's
Current Report on Form 8-K filed on June 29, 2011)
10.8 Convertible Promissory Note, with Vantage Associates SA, dated June 23,
2011 (incorporated by reference to Exhibit 10.5 of the Registrant's
Current Report on Form 8-K filed on June 29, 2011)
10.9 Supply Agreement with PureCircle Sdn Bhd, dated February 20, 2009
(incorporated by reference to Exhibit 10.1 of the Registrant's Current
Report on Form 8-K filed on June 29, 2011)
10.10 Supply Agreement with Asia Stevia Investment Development Company Ltd,
dated April 12, 2011 (incorporated by reference to Exhibit 10.2 of the
Registrant's Current Report on Form 8-K filed on June 29, 2011)
10.11 Supply Agreement with Stevia Ventures Corporation, dated April 12, 2011
(incorporated by reference to Exhibit 10.3 of the Registrant's Current
Report on Form 8-K filed on June 29, 2011)
10.12 Letter of Intent, dated February 14, 2011 (incorporated by reference to
Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed on
February 18, 2011)
10.13 The Minutes for Land Transferring Agreement for New Crop Plants
Variety, dated December 14, 2011 (incorporated by reference to Exhibit
10.4 of the Registrant's Quarterly Report on Form 10-Q filed on
February 17, 2012)
10.14 Supply Agreement with Guangzhou Health China Technology Development
Company Limited, dated February 21, 2012 (incorporated by reference to
Exhibit 10.1 of the Registrant's Current Report on Form 8-K filed on
February 27, 2012)
10.15 Cooperative Agreement with Guangzhou Health China Technology
Development Company Limited, dated February 21, 2012 (incorporated by
reference to Exhibit 99.1 of the Registrant's Current Report on Form
8-K filed on February 27, 2012)
21 Stevia Ventures International Ltd., a company organized under the laws
of the British Virgin Islands
23.1 Consent of Li & Company, PC*
23.2 Consent of Greenberg Traurig, LLP (filed as part of Exhibit 5.1)*
24 Power of Attorney (included in signature page)*
101 Interactive Data File+
----------
* Filed Herewith
+ To be filedd by amendment.
II-5
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes to:
(A) RULE 415 OFFERING:
1. To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
i. To include any prospectus required by section 10(a)(3) of the
Securities Act of 1933;
ii. To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a
fundamental change in the information set forth in the registration statement.
Notwithstanding the foregoing, any increase or decrease in volume of securities
offered (if the total dollar value of securities offered would not exceed that
which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus
filed with the Commission pursuant to Rule 424(b) (ss. 230.424 of this chapter)
if, in the aggregate, the changes in volume and price represent no more than 20%
change in the maximum aggregate offering price set forth in the "Calculation of
Registration Fee" table in the effective registration statement.
iii. To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
Provided, however, that:
(A) Paragraphs (a)(1)(i) and (a)(1)(ii) of this section do not apply if the
registration statement is on Form S-8 (ss. 239.16b of this chapter), and the
information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by
the registrant pursuant to section 13 or section 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m or 78o(d)) that are incorporated by
reference in the registration statement; and
(B) Paragraphs (a)(1)(i), (a)(1)(ii) and (a)(1)(iii) of this section do not
apply if the registration statement is on Form S-3 (ss. 239.13 of this chapter)
or Form F-3 (ss. 239.33 of this chapter) and the information required to be
included in a post-effective amendment by those paragraphs is contained in
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the registration statement, or is contained in a
form of prospectus filed pursuant to Rule 424(b) (ss. 230.424(b) of this
chapter) that is part of the registration statement.
(C) Provided further, however, that paragraphs (a)(1)(i) and (a)(1)(ii) do
not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 (ss. 239.11 of this chapter) or Form S-3 (ss. 239.13 of
this chapter), and the information required to be included in a post-effective
amendment is provided pursuant to Item 1100(c) of Regulation AB (ss.
229.1100(c)).
2. That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
3. To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of the
offering.
4. If the registrant is a foreign private issuer, to file a post-effective
amendment to the registration statement to include any financial statements
required by "Item 8.A. of Form 20-F (17 CFR 249.220f)" at the start of any
delayed offering or throughout a continuous offering. Financial statements and
information otherwise required by Section 10(a)(3) of the Act need not be
furnished, provided that the registrant includes in the prospectus, by means of
a post-effective amendment, financial statements required pursuant to this
paragraph (a)(4) and other information necessary to ensure that all other
information in the prospectus is at least as current as the date of those
financial statements. Notwithstanding the foregoing, with respect to
registration statements on Form F-3 (ss.239.33 of this chapter), a
post-effective amendment need not be filed to include financial statements and
information required by Section 10(a)(3) of the Act or ss.210.3-19 of this
chapter if such financial statements and information are contained in periodic
reports filed with or furnished to the Commission by the registrant pursuant to
section 13 or section 15(d) of the Securities Exchange Act of 1934 that are
incorporated by reference in the Form F-3.
5. That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
II-6
i. If the registrant is relying on Rule 430B (ss.230.430B of this
chapter):
(A) Each prospectus filed by the registrant pursuant to Rule
424(b)(3) (ss.230.424(b)(3) of this chapter) shall be deemed to be
part of the registration statement as of the date the filed prospectus
was deemed part of and included in the registration statement; and
(B) Each prospectus required to be filed pursuant to Rule
424(b)(2), (b)(5), or (b)(7) (ss.230.424(b)(2), (b)(5), or (b)(7) of
this chapter) as part of a registration statement in reliance on Rule
430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) (ss.230.415(a)(1)(i), (vii), or (x) of this chapter) for
the purpose of providing the information required by section 10(a) of
the Securities Act of 1933 shall be deemed to be part of and included
in the registration statement as of the earlier of the date such form
of prospectus is first used after effectiveness or the date of the
first contract of sale of securities in the offering described in the
prospectus. As provided in Rule 430B, for liability purposes of the
issuer and any person that is at that date an underwriter, such date
shall be deemed to be a new effective date of the registration
statement relating to the securities in the registration statement to
which that prospectus relates, and the offering of such securities at
that time shall be deemed to be the initial bona fide offering
thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or
made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract
of sale prior to such effective date, supersede or modify any
statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such
document immediately prior to such effective date; or
ii. If the registrant is subject to Rule 430C (ss.230.430C of this
chapter), each prospectus filed pursuant to Rule 424(b) as part of a
registration statement relating to an offering, other than registration
statements relying on Rule 430B or other than prospectuses filed in reliance on
Rule 430A (ss.230.430A of this chapter), shall be deemed to be part of and
included in the registration statement as of the date it is first used after
effectiveness. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a
document incorporated or deemed incorporated by reference into the registration
statement or prospectus that is part of the registration statement will, as to a
purchaser with a time of contract of sale prior to such first use, supersede or
modify any statement that was made in the registration statement or prospectus
that was part of the registration statement or made in any such document
immediately prior to such date of first use.
6. That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of the
securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities to
the purchaser, if the securities are offered or sold to such purchaser by means
of any of the following communications, the undersigned registrant will be a
seller to the purchaser and will be considered to offer or sell such securities
to such purchaser:
i. Any preliminary prospectus or prospectus of the undersigned
registrant relating to the offering required to be filed pursuant to Rule 424
(ss.230.424 of this chapter);
ii. Any free writing prospectus relating to the offering prepared by
or on behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
iii. The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or its
securities provided by or on behalf of the undersigned registrant; and
iv. Any other communication that is an offer in the offering made by
the undersigned registrant to the purchaser.
II-7
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the registrant
has duly caused this registration statement to be signed on its behalf by the
undersigned, thereunto duly authorized in the City of Indianapolis, State of
Indiana, on February 27, 2012
STEVIA CORP.
a Nevada corporation
Dated: February 27, 2012 /s/ George Blankenbaker
---------------------------------------
By: George Blankenbaker
Its: President, Secretary, Treasurer and
Director
(Principal Executive Officer, Principal
Financial Officer and Principal
Accounting Officer)
SIGNATURES AND POWER OF ATTORNEY
KNOWN ALL PERSONS BY THESE PRESENT, that each person whose signature
appears below appoints Mr. George Blankenbaker as his true and lawful
attorney-in-fact and agent, with full power of substitution, for him and in his
name, place and stead, to sign any amendment (including post-effective
amendments) to this registration statement, and to file the same, with all
exhibits thereto, and other documents in connection therewith, with the
Securities and Exchange Commission, granting unto said attorney-in-fact and
agent, full power and authority to do and perform each and every act and thing
requisite and necessary to be done in connection therewith, as fully to all
intents and purposes as he may do in person, hereby ratifying and confirming all
that said attorney-in-fact and agent or any of them, or of his/her substitutes,
may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated:
Dated: February 27, 2012 /s/ George Blankenbaker
---------------------------------------
George Blankenbaker
President, Secretary, Treasurer and
Director (Principal Executive Officer,
Principal Financial Officer and
Principal Accounting Officer)
Dated: February 27, 2012 /s/ Pablo Erat
---------------------------------------
Pablo Erat
Director
Dated: February 27, 2012 /s/ Rodney L. Cook
---------------------------------------
Rodney L. Cook
Director
II-8