UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
---------------------
FORM 10
Amendment No. 1
---------------------
GENERAL FORM FOR REGISTRATION OF SECURITIES Pursuant
to Section 12(b) or (g) of The Securities Exchange Act of 1934
SPICY GOURMET MANUFACTURING, INC.
(Exact name of registrant as specified in its charter)
Delaware 45-2282672
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
7910 Ivanhoe Ave. #414
La Jolla, California 92037
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (858) 459-1133
Registrant's facsimile number, including area code: (858) 459-1103
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock - $0.0001 Par Value
Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND OF THE ISSUER AND ITS PREDECESSOR
Spicy Gourmet Manufacturing, Inc. ("the Company" or "the Issuer") was
organized under the laws of the State of Delaware on December 30, 2010 as part
of the implementation of the Chapter 11 plan of reorganization of Spicy Gourmet
Organics, Inc. ("SGO"), a California corporation.
SGO was incorporated in the State of California in 2006 and was formed to
import specialty, organic spices from South Asia and sell them in the United
States. SGO was under capitalized and sales of its spice products were slow to
develop, possibly due to the current recession. As a result SGO lacked
sufficient cash flow to meet its current obligations and on October 1, 2010 SGO
filed a voluntary petition for bankruptcy under Chapter 11 in the U.S.
Bankruptcy Court for the Central District of California. SGO's plan of
reorganization was confirmed by the Court on November 19, 2010.
The plan of reorganization provided for the acquisition by SGO of a new,
unrelated, retail business and the spin off of all of the various elements of
SGO's spice business (importing, manufacturing, retail sales and wholesale
sales) to four different entities. The plan of reorganization called for the
spin off of SGO's manufacturing business to this Issuer, the incorporation of
this Issuer, and the distribution of shares in this Issuer to the bankruptcy
creditors. The plan required the Issuer to issue 1,180,000 shares of its common
stock and distribute these to SGO's general unsecured creditors, to its
administrative creditors, and to its shareholder. The shares were distributed
pursuant to section 1145 of the U.S. Bankruptcy Code. As stated in the Plan of
Reorganization ordered by the Court, these shares were issued "to enhance the
distribution to creditors," i.e. to enhance their opportunity to recover the
losses they sustained in the SGO bankruptcy. To this end, SGO, by and through
its President, agreed "to use its best efforts to have the shares... publicly
traded on the Over-The-Counter market in order to provide an opportunity for
liquidity to the creditors" (from the Court approved "Disclosure Statement"
describing the Plan of Reorganization). The present filing is a result of this
commitment.
DESCRIPTION OF CURRENT BUSINESS
Prior to the bankruptcy of SGO, the issuer's predecessor designed a hand
held spice mill and arranged for the manufacture of 1,000 of these mills at a
factory in China. The factory in China is not owned by the Issuer, nor is the
Issuer under any obligation to it. The mills were manufactured by the factory in
China and delivered to SGO on a simple contract basis. The Company hopes to
capitalize on this experience and manufacture and sell spice mills to other
retailers of spices and or spice related products. Depending upon the financial
requirements of any orders the Company may develop, the Company's three
directors may finance the order with interest free loans from their own funds to
the Company, or they may seek financing via advance payments from a buyer, loans
from the factory in China, or loans from another source such as a commercial
lender. As of the date hereof, we have not entered into any sales agreement nor
have we identified a potential buyer for our spice mills other than the
successor to SGO. The SGO successor is headed by one of our directors, Dinesh
Perera, and it has indicated a willingness to purchase mills from us when
needed, however its current inventory is such that it does not expect to order
additional mills for at least six months.
It is anticipated that we will incur only nominal expenses in the
implementation of the business plan described herein until such time as we have
an order for the manufacture of spice mills. Because we have limited capital
with which to pay these anticipated expenses, our three directors, Mr. Balaban,
Mr. Masters and Mr. Perera, will pay these charges with their personal funds, as
interest free loans to the Company or as capital contributions.
2
It is our present intent to continue to comply with all of the reporting
requirements under the 1934 Act. Our three directors, Ali Balaban, Daniel
Masters and Dinesh Perera, have orally agreed to provide the necessary funds,
without interest, for the Company to comply with the 1934 Act reporting
requirements, provided that they are officers and directors of the Company when
the obligation is incurred. These officers have not, as of the date hereof, set
a maximum dollar amount that they are willing to provide to the Company.
ITEM 1A. RISK FACTORS
Our business is subject to numerous risk factors, including the following:
1. We have no operating history and no revenues or earnings from operations.
We have no assets other than a small amount of cash. We will, in all
likelihood, sustain operating expenses without corresponding revenues, at least
until we obtain an order for the manufacture and delivery of our spice mills.
This may result in us incurring a net operating loss that will increase
continuously, at least until we negotiate a sale of our products. There is no
assurance that we can find a buyer or our products or, if we do, that the sales
price will be such that we can operate profitably.
2. We may not be able to continue to operate as a going concern.
Our auditor has expressed the opinion that we may not be able to continue
as a going concern. His opinion letter and the notation in the financial
statements indicate that we do not have revenues, significant cash reserves, or
other material assets and that we are relying on advances from stockholders,
officers and directors to meet our limited operating expenses. We may become
insolvent if we are unable to pay our debts in the ordinary course of business
as they become due.
3. Our proposed plan of operation is speculative.
The success of our proposed plan of operation is speculative. Although we
have arranged for the manufacture of products in the past, these products were
sold to a related entity, our former parent. There can be no assurance that we
will be successful in locating other buyers for our products, or that, if we do
find buyers, that we will be able to sell products at a price and in sufficient
quantity to earn a profit or to continue in operation.
4. We face intense competition from other sellers.
We are and will continue to be an insignificant participant in the business
of supplying small hand operated appliances such as spice mills. A large number
of established and well-financed entities are engaged in such sales. Nearly all
such entities have significantly greater financial resources, technical
expertise and managerial capabilities than we have. Many of them have their own
factories and so are able to control their costs when we cannot. There can be no
assurance that we will be able to successfully compete with these large
businesses.
5. We face intense competition from others seeking to have products manufactured
for them in China.
We are and will continue to be an insignificant participant in the business
of arranging the overseas manufacture, especially the Chinese manufacture, of
our products. Because of our small size and probably infrequent orders we will
not be in a position to negotiate especially low prices with a manufacturer.
This inability to insure that we obtain low prices could result in the prices we
charge customers being non-competitive, and this could lead to an inability to
sell our products.
6. Our success is dependent on our officers and directors who have other full
time employment, have limited experience, and will only devote limited time
(part time) to working for the Company, all of which makes our future even more
uncertain.
3
Ali Balaban is the President and a director of the Issuer, Daniel Masters
is the Secretary and Treasurer and a director of the Issuer, and Dinesh Perera
is a director of the Issuer. These are the only offices and directors of the
Company. All three will serve without pay while maintaining other employment. As
of the date hereof, each is devoting no more than two hours per week to the
affairs of the Company, however, each expects to increase that time commitment
from time to time as other obligations permit. Notwithstanding the limited
availability of our directors, loss of the services of any director could
adversely affect development of our business and its likelihood of continuing in
operation.
7. Our officers and directors have limited experience in arranging for the
manufacture of products such as spice mills, making our ability to compete
successfully more uncertain.
Although Dinesh Perera, one of our directors, is currently engaged in the
retail sale of spices and spice mills, our other directors have no similar
experience. Mr. Perera is currently president of Santa Barbara Organic Spice
Company, a company engaged in internet based retail sales of spices and spice
mills. Our President, Ali Balaban, has no direct experience with the spice
business although he has experience in management of consumer product sales
businesses, including business which sell primarily via television infomercials.
Our Secretary/Treasurer, Daniel Masters, is an attorney. This lack of extensive
experience makes our ability to compete more uncertain.
8. Our dependence upon foreign manufacture of our products may subject us to
currency risks.
Because we intend to have our products manufactured in China but sell them
here we are subject to certain risks based on the change in value of currencies
relative to each other. If, for example, the Chinese RMB were to rise in value
relative to the dollar it would increase the price of Chinese products, possibly
making our spice mills too costly to sell. If this were to happen after we had
entered a contract to sell products at a certain dollar price, and another
contract to purchase products at a certain RMB price, we could lose money on the
transaction. This could jeopardize our ability to continue in business.
9. One of our officers is also our principal shareholder and he will be able to
approve all corporate actions without shareholder consent and will control our
Company.
Our principal shareholder, Ali Balaban, currently owns approximately 53.7%
of our Common Stock. Because of this, he will have the controlling vote in all
matters requiring approval by our shareholders, but not requiring the approval
of the minority shareholders. In addition, he is now the Company's President and
one of its three directors. Because he is the majority shareholder, he will be
able to elect all of the members of our board of directors, allowing him to
exercise significant control of our affairs and management. In addition, he may
transact corporate business requiring shareholder approval by written consent,
without soliciting the votes of other shareholders.
10. Our Common Stock may never be publicly traded and holders may have no
ability to sell their shares.
There is no established public trading market for our shares of Common
Stock, and there is no assurance that our Common Stock will be accepted for
quotation on the OTC Bulletin Board or in any other trading system in the
future. There can be no assurance that a market for our Common Stock will be
established or that, if established, a market will be sustained. Therefore, if
you purchase our Common Stock you may be unable to sell the shares. Accordingly,
you should be able to bear the financial risk of losing your entire investment.
4
Only market makers can apply to quote securities. A market maker who
desires to initiate quotations in the OTC Bulletin Board system must complete an
application (Form 211) (unless an exemption is applicable) and by doing so, will
have to represent that it has satisfied all applicable requirements of the
Securities and Exchange Commission Rule 15c2-11 and the filing and information
requirements promulgated under the Financial Industry Regulatory Authority
("Finra") Bylaws. The OTC Bulletin Board will not charge us a fee for being
quoted on the service. Finra rules prohibit market makers from accepting any
remuneration in return for quoting issuers' securities on the OTC Bulletin Board
or any similar medium. Finra will review the market maker's application (unless
an exemption is applicable). If cleared, it cannot be assumed by any investor
that any federal, state or self-regulatory requirements other than certain Finra
rules and Rule 15c2-11 have been considered by Finra. Furthermore, the clearance
should not be construed by any investor as indicating that Finra, the Securities
and Exchange Commission, or any state securities commission has passed upon the
accuracy or adequacy of the documents contained in the submission.
The OTC Bulletin Board is a market maker or dealer-driven system offering
quotation and trading reporting capabilities - a regulated quotation service -
that displays real-time quotes, last-sale prices, and volume information in OTC
equity securities. The OTC Bulletin Board securities are not listed and traded
on the floor of an organized national or regional stock exchange. Instead, OTC
Bulletin Board securities transactions are conducted through a telephone and
computer network connecting market makers or dealers in stocks.
11. If our Common Stock does not meet blue sky resale requirements, certain
shareholders may be unable to resell our Common Stock.
The resale of Common Stock must meet the blue sky resale requirements in
the states in which the proposed purchasers reside. If we are unable to qualify
the Common Stock and there is no exemption from qualification in certain states,
the holders of the Common Stock or the purchasers of the Common Stock may be
unable to sell them.
12. Our shareholders may face significant restrictions on the resale of our
Common Stock due to state "blue sky" laws.
There are state regulations that may adversely affect the transferability
of our Common Stock. We have not registered our Common Stock for resale under
the securities or "blue sky" laws of any state. We may seek qualification or
advise our shareholders of the availability of an exemption. We are under no
obligation to register or qualify our Common Stock in any state or to advise the
shareholders of any exemptions.
Current shareholders, and persons who desire to purchase the Common Stock
in any trading market that may develop in the future, should be aware that there
might be significant state restrictions upon the ability of new investors to
purchase the Common Stock.
Blue sky laws, regulations, orders, or interpretations place limitations on
offerings or sales of securities by where such securities represent "cheap
stock" previously issued to promoters or others. Our officers received stock at
a price of $.0005 for each share, and may be deemed to hold "cheap stock." These
limitations typically provide, in the form of one or more of the following
limitations, that such securities are:
(a) Not eligible for sale under exemption provisions permitting sales
without registration to accredited investors or qualified purchasers;
(b) Not eligible for the transaction exemption from registration for
non-issuer transactions by a registered broker-dealer;
(c) Not eligible for registration under the simplified small corporate
offering registration (SCOR) form available in many states;
(d) Not eligible for the "solicitations of interest" exception to
securities registration requirements available in many states;
(e) Not permitted to be registered or exempted from registration, and thus
not permitted to be sold in the state under any circumstances.
5
Virtually all 50 states have adopted one or more of these limitations, or
other limitations or restrictions affecting the sale or resale of "cheap stock"
issued to promoters or others. Specific limitations on such offerings have been
adopted in:
Alaska Arkansas California Delaware Florida Georgia
Idaho Indiana Nebraska Nevada New Mexico Ohio
Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota
Tennessee Texas Utah Vermont Washington
Any secondary trading market which may develop, may only be conducted in
those jurisdictions where an applicable exemption is available or where the
shares have been registered.
13. Our Common Stock will be subject to significant restriction on resale due to
federal penny stock restrictions.
The Securities and Exchange Commission has adopted rules that regulate
broker or dealer practices in connection with transactions in penny stocks.
Penny stocks generally are equity securities with a price of less than $5.00
(other than securities registered on certain national securities exchanges or
quoted on the Nasdaq system, provided that current price and volume information
with respect to transactions in such securities is provided by the exchange
system). The penny stock rules require a broker or dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document prepared by the Securities and Exchange
Commission that provides information about penny stocks and the nature and level
of risks in the penny stock market. The broker or dealer also must provide the
customer with bid and offer quotations for the penny stock, the compensation of
the broker or 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 penny stock rules also require that prior to a
transaction in a penny stock not otherwise exempt from such rules, the broker or
dealer must make a special written determination that a penny stock is a
suitable investment for the purchaser and receive the purchaser's written
agreement to the transaction.
These disclosure requirements will have the effect of reducing the level of
trading activity in any secondary market for our stock, and accordingly,
shareholders of our Common Stock will find it difficult to sell their
securities, if at all.
ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The Company was organized on December 30, 2010 and therefore no significant
historical financial information exists. The Company's statement of operations
for the period from December 30, 2010 (inception) through December 31, 2011
reflects the following:
Revenues $ 0
Expenses 118
-----
Profit (Loss) $(118)
=====
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
1) Liquidity: The Company had $5,000 in cash and no other liquid assets at
December 31, 2011. It is anticipated that we will incur nominal expenses in the
implementation of the business plan described herein. Because we have limited
cash with which to pay these anticipated expenses, the directors of the Company
have agreed to pay these charges with their personal funds, as interest free
loans to the Company or as capital contributions. However, this is a voluntary
agreement; our three directors are not contractually obligated to pay these
expenses. No loans have been made as of the date hereof.
6
2) Capital Resources: As noted above, the Company has limited capital
resources but will rely upon interest free loans or capital contributions from
our three directors to meet its needs.
3) Results of Operations: As noted above, the Company was recently
organized and has conducted no operations other than organizational efforts and
the preparation of this Form 10 and the audit of its financial statements.
4) Off-Balance Sheet Arrangements: The Company has no off balance sheet
arrangements.
INFORMATION ABOUT MARKET RISK
The Company is not currently subject to fluctuations in interest rates,
currency exchange rates, or other financial market risks, however, as noted in
Risk Factor 8 above, we may become subject to fluctuations in currency exchange
rates if we contract for manufacture or delivery of products in another currency
and carry this as a payable or receivable rather than paying or accepting
payment at the time the contract is entered. Our three directors have agreed to
extend loans to the Company as needed to meet obligations, however these will be
interest free. As of the date of this filing, the Company has not made any
sales, purchases, or commitments with foreign entities which would expose it to
currency risks.
ITEM 3. DESCRIPTION OF PROPERTY
We presently utilize minimal space at 7910 Ivanhoe Avenue, No. 414, La
Jolla, California. This space is provided to the Company by our Secretary on a
rent free basis, and it is anticipated that this arrangement will remain until
such time as the Company requires dedicated office space. Management believes
that this arrangement will meet the Company's needs for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth the security and beneficial ownership for
each class of our equity securities for any person who is known to be the
beneficial owner of more than five (5%) percent of the Company.
Amount and
Nature of
Title Name and Address of Beneficial Percent
of Class Beneficial Owner Owner of Class
-------- ---------------- ----- --------
Common Ali Balaban 6,000,000 53.7%
Ayazaga Maslak Yolu No: 5/A Kat: 3
Maslak, Sisli 34396 Istanbul-TURKEY
Common Daniel Masters 4,000,000 35.8%
7910 Ivanhoe Ave., #414
La Jolla, CA 92037
The remaining 1,180,000 shares of the Company's outstanding common stock are
held by 48 persons, no one of which is known to be the beneficial owner of five
percent (5%) or more of the Company's common shares. There are, as of the date
hereof, a total of 11,180,000 common shares issued and outstanding and no
preferred shares issued or outstanding.
7
(B) SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the ownership for each class of equity
securities of the Company owned beneficially and of record by all of our
directors and officers.
Amount and
Nature of
Title Name and Address of Beneficial Percent
of Class Beneficial Owner Owner of Class
-------- ---------------- ----- --------
Common Ali Balaban 6,000,000 53.7%
President & Director
Ayazaga Maslak Yolu No: 5/A Kat: 3
Maslak, Sisli 34396 Istanbul-TURKEY
Common Daniel Masters 4,000,000 35.8%
Secretary, Treasurer & Director
7910 Ivanhoe Ave., #414
La Jolla, CA 92037
Common Dinesh Perera 100,000 0.9%
Director
67 Alameda Padre Serra
Santa Barbara, CA 93103
Common All Officers and 10,100,000 90.34%
Directors as a Group
(three [3] individuals)
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Our directors and officers (and promoters, affiliates and control persons)
are as follows:
Name Age Position
---- --- --------
Ali Balaban 43 President/Director
Daniel Masters 66 Secretary/Treasurer/Director
Dinesh Perera 52 Director
The above listed officers and directors will serve until the next annual
meeting of the shareholders or until their death, resignation, retirement,
removal, or disqualification, or until their successors have been duly elected
and qualified. Vacancies in the existing Board of Directors are filled by
majority vote of the remaining Directors. Officers of the Company serve at the
will of the Board of Directors. There are no agreements or understandings for
any officer or director to resign at the request of another person and no
officer or director is acting on behalf of or will act at the direction of any
other person.
RESUMES
Ali Balaban, age 43, is President and a Director of the Company. Since 2010
he has been a Director of Yonja Group A.S., the acquirer of Spicy Gourmet
Organics, Inc. (SGO) under SGO's bankruptcy plan of reorganization. Yonja sells
European and U.S. food supplements and beauty products in Turkey. Mr. Balaban
oversees project development at Yonja. Since 2000 he has also been the Chief
Financial Officer of Homedrom Direct Response TV International, a retailer of
consumer products through direct response television advertising in several
European and Asian countries including Germany, Turkey, Ukraine, Kazakhstan,
Georgia, Azerbaijan, and Cyprus. Since 2009 he has also been the Managing
Director of Unite Technologies, a Ukraine based business which provides IT
management services to major GSM (cell phone) network operators and call centers
8
in Easter European countries. Mr. Balaban currently serves as a consultant on
European Union policies and programs for IT, especially the E-Content and Sixth
Framework Programs which offer grants and funds for European IT companies. Prior
to 2000 Mr. Balaban was an executive at a leading software outsourcing company
and at an apparel manufacturer. He earned his BA in Business Administration and
his MA in Strategy from Universite Paul Valery in Montpellier, France and an MBA
in International Business from UCLA.
Daniel Masters, age 66, is Secretary, Treasurer, and a Director of the
Company. He is also an attorney practicing business law with an emphasis on
corporate reorganizations. Before establishing his current law practice in 2002,
Mr. Masters served as an independent investment banker and corporate finance
consultant from 1990 to 2002. Between 1978 and 1989 he worked as an investment
banker with L.F. Thompson & Co. and at Capital Technology Group; as Vice
President for Finance with the Trilon Group, a private holding company with over
a billion dollars in assets; and as President of Golden Gate Capital, a venture
capital group. Prior to 1978 Mr. Masters held positions as a legislative aid on
the staff of the U.S. Congress and as executive assistant to the President of
the University of California. Mr. Masters received his Bachelor of Arts Degree
(A.B.) from Harvard University and a Juris Doctorate (J.D.) from Thomas
Jefferson School of Law where he served on the Editorial Board of the Law
Review.
Dinesh Perera, age 52, was the President of Spicy Gourmet Organics Inc.
(SGO) from 2006 until 2010. SGO filed a petition for bankruptcy under Chapter 11
in 2010 and the confirmed plan of reorganization provided for the incorporation
of this Issuer. He has been a Director of the Issuer since it was established on
December 30, 2010. He is also the President of Santa Barbara Organic Spice
Company, Inc., a retailer of organic spices, which he formed in December, 2010.
From 2000 to 2005 he was the manager of the Arati Store in New York, a retailer
of health foods, herbal supplements, books, and related products. From 1996 to
2000 he owned and managed a business which sold sunglasses wholesale to stores
in California, Hawaii, and Texas. From 1986 to 1996 he was an independent auto
insurance agent in California, and from 1978 to 1986 he worked as an engineer
with British Aerospace Corp. in London. Mr. Perera attended an aerospace trade
school in Britain and Santa Monica College in California.
OTHER OFFERINGS
Daniel Masters is currently President and a Director of MedBook World, Inc.
and of Three Shades For Everybody, Inc. MedBook World is currently a shell
company, and Three Shades For Everybody was formerly a shell company but is
currently in the business of selling art and collectibles. It's primary asset is
a collection of signed, numbered, lithographs by actor Red Skelton valued at
$9,885. Neither Mr. Balaban nor Mr. Perera are currently directors or officers
of any other publicly traded companies or SEC registrants.
CONFLICTS OF INTEREST
As noted above, Mr. Perera is in the business of selling organic spices and
related products including spice mills to the public via the internet. Because
the Company expects to manufacture spice mills for sale on a wholesale basis the
Company believes that no conflict of interest exists. Mr. Balaban also works
with companies which sell products to the public on a retail basis and the
Company believes that no conflict of interest exists. Mr. Masters is an officer
and director of two other companies and represents other businesses as an
attorney however these companies are in unrelated businesses and Mr. Masters
believes that there is no conflict of interest.
The officers and directors are, so long as they are officers or directors
of the Company, subject to the restriction that all opportunities contemplated
by the Company's plan of operation which come to their attention, either in the
performance of their duties or in any other manner, will be considered
opportunities of, and be made available to the Company. A breach of this
requirement will be a breach of the fiduciary duties of the officer or director.
9
However, all directors may still individually take advantage of opportunities if
the Company should decline to do so.
Also as noted above, all three of the Company's directors have other
employment and, therefore, there is a potential conflict of interest in the time
which the officers and directors devote to this Company and to their other
employment. We do not currently have an agreement as to the amount of time that
will be devoted to the Company's affairs, however our three directors have
stated that they will devote such time as they believe necessary to seeking out
potential buyers of the Company's products and arranging for their manufacture
and importation.
ITEM 6. EXECUTIVE COMPENSATION
None of our three directors has received any compensation for services
rendered to the Company since its inception, nor are there any agreements in
place or contemplated to provide compensation to any officer or director.
We have no retirement, pension, profit sharing, stock option or insurance
programs or other similar programs for the benefit of our officers and
directors, and we have no employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other transactions or
relationships required to be disclosed. There are no promoters except to the
extent the three Directors of the Company may be considered to be promoters
because of their involvement with the bankruptcy plan of reorganization calling
for the creation of this Issuer and because of their ownership of shares in the
Issuer.
The two officers of the Company have agreed to provide the necessary funds,
without interest, for the Company to comply with the 1934 Act provided that the
lender is an officer of the Company when the obligation is incurred. All
advances are interest-free and there is no contractual obligation requiring the
two officers to provide these funds.
ITEM 8. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS
(A) MARKET PRICE
There is no trading market for our Common Stock at present and there has
been no trading market to date. We do not have a trading symbol. There is no
assurance that a trading market will ever develop or, if such a market does
develop, that it will continue. The Company intends to request a broker-dealer
to make application to Finra to have the Company's securities traded on the OTC
Bulletin Board System or published, in print and electronic media, or either, in
the Pink Sheets, LLC ("Pink Sheets"), however there is no assurance that a
broker-dealer will agree to make such application or, if one does, that Finra
will provide us with a symbol.
The Securities and Exchange Commission adopted Rule 15g-9, which
established the definition of a "penny stock," for purposes relevant to the
Company, as any equity security that has a market price of less than $5.00 per
share or with an exercise price of less than $5.00 per share, subject to certain
exceptions. For any transaction involving a penny stock, unless exempt, the
rules require: (i) that a broker or dealer approve a person's account for
transactions in penny stocks; and (ii) the broker or dealer receive from the
investor a written agreement to the transaction, setting forth the identity and
quantity of the penny stock to be purchased. In order to approve a person's
account for transactions in penny stocks, the broker or dealer must (i) obtain
financial information and investment experience and objectives of the person;
10
and (ii) make a reasonable determination that the transactions in penny stocks
are suitable for that person and that person has sufficient knowledge and
experience in financial matters to be capable of evaluating the risks of
transactions in penny stocks. The broker or dealer must also deliver, prior to
any transaction in a penny stock, a disclosure schedule prepared by the
Commission relating to the penny stock market, which, in highlight form, (i)
sets forth the basis on which the broker or dealer made the suitability
determination; and (ii) that the broker or dealer received a signed, written
agreement from the investor prior to the transaction. Disclosure also has to be
made about the risks of investing in penny stock in both public offering and in
secondary trading, and about commissions payable to both the broker-dealer and
the registered representative, current quotations for the securities and the
rights and remedies available to an investor in cases of fraud in penny stock
transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the
limited market in penny stocks. It is likely that our stock, if it trades at
all, will be considered a penny stock, and the rules noted above will apply. As
a result, a shareholder may find it more difficult to dispose of, or to obtain
accurate quotations as to the market value of, the Company's securities.
(B) HOLDERS
There are fifty (50) shareholders of record of the Company's Common Stock.
Forty-eight (48) of these shareholders received their shares as a result of the
bankruptcy of Spicy Gourmet Organics, Inc. (SGO). In that case the Bankruptcy
Court for the Central District of California ordered certain shares of the
Company's stock to be distributed to the creditors of SGO. The shares were
distributed under an exemption from registration provided by Section 1145 of
Title 11 of the U.S. Code (the Bankruptcy Code).
(C) DIVIDENDS
The Company has not paid any cash dividends to date, and has no plans to do
so in the immediate future.
(D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The Company has not authorized the issuance of any securities under any
compensation plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES
(A) SECURITIES ISSUED IN BANKRUPTCY
1,180,000 shares of our common stock were distributed to 48 shareholders by
order of the U.S. Bankruptcy Court for the Central District of California as
part of the confirmed Plan of Reorganization of Spicy Gourmet Organics, Inc.
(the "Debtor"). The Debtor was engaged in various phases of the spice business
including the import of spices from South Asia into the U.S. The Court ordered
the incorporation of the Issuer, the assignment to it of the spice import aspect
of the Debtor's business, and ordered the Issuer's securities to be distributed
to creditors of the Debtor in partial satisfaction of their claims against the
Debtor and in order to enhance the creditors' opportunity for recovery.
5,000,000 warrants to purchase shares of our common stock were also
distributed to creditors of the Debtor as part of the confirmed Plan of
Reorganization. The warrants consist of 1,000,000 "A Warrants" each convertible
into one share of common stock at an exercise price of $3.00; 1,000,000 "B
Warrants" each convertible into one share of common stock at an exercise price
of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock
at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one
share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants"
each convertible into one share of common stock at an exercise price of $7.00.
All warrants are currently exercisable and may be exercised at any time prior to
November 19, 2015.
11
The issuance of the 1,180,000 shares of common stock and the 5,000,000
warrants to purchase a total of 5,000,000 shares of common stock were issued in
exchange for claims against the estate of the Debtor and were exempt from
registration under the Securities Act of 1933, as amended, because they were
issued under section 1145 of the Bankruptcy Code (Title 11 of the U.S. Code). In
addition, we may have also relied upon section 3(a)(7) of the Securities Act of
1933 as a transaction ordered by a court as part of a bankruptcy reorganization.
(B) SECURITIES ISSUED IN A PRIVATE PLACEMENT
On June 30, 2011 the Company issued 10,000,000 restricted shares of its
common stock to its two officers, 6,000,000 shares to its President, Ali
Balaban, and 4,000,000 shares to its Secretary/Treasurer, Daniel Masters, all at
$0.0005 per share, for total consideration of $5,000. We relied upon Section
4(2) of the Securities Act of 1933, as amended for the above issuance. We
believed that Section 4(2) was available because:
- The issuance involved no underwriter, underwriting discounts or
commissions;
- We placed restrictive legends on all certificates issued;
- No sales were made by general solicitation or advertising;
- Sales were made only to accredited investors.
In connection with the above transactions, we provided the following to the
investor:
- Access to all our books and records.
- Access to all material contracts and documents relating to our
operations.
- The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's authorized capital stock consists of 100,000,000 Common
Shares, par value $0.0001 per share, and 20,000,000 Preferred Shares, par value
$0.0001 per share. We have no other class of equity securities authorized, and
we have no debt securities presently authorized. We have 11,180,000 Common
Shares issued and outstanding as of the date of this filing and no Preferred
Shares issued and outstanding as of the date of this filing. We also have
warrants outstanding which are convertible into an additional 5,000,000 Common
Shares. The warrants are currently exercisable and may be exercised at any time
prior to November 19, 2015.
All shares of our Common Stock have equal voting rights and, when validly
issued and outstanding, are entitled to one vote per share in all matters to be
voted upon by shareholders. The shares of Common Stock have no preemptive,
subscription, conversion or redemption rights and may be issued only as
fully-paid and non-assessable shares. Cumulative voting in the election of
directors is not permitted, which means that the holders of a majority of the
issued and outstanding shares of Common Stock represented at any meeting at
which a quorum is present will be able to elect the entire Board of Directors if
they so choose and, in such event, the holders of the remaining shares of Common
Stock will not be able to elect any directors. In the event of liquidation of
the Company, each shareholder is entitled to receive a proportionate share of
the Company's assets available for distribution to shareholders after the
payment of liabilities and after distribution in full of preferential amounts,
if any. All shares of the Company's Common Stock issued and outstanding are
fully-paid and non-assessable. Holders of the Common Stock are entitled to share
pro rata in dividends and distributions with respect to the Common Stock, as may
be declared by the Board of Directors out of funds legally available therefor.
Our Board of Directors is authorized to issue our Preferred Stock in series and
to fix the designation, powers, preferences, and rights of the shares of each
such series and the qualifications, limitations, or restrictions thereof.
12
In addition to the 11,180,000 Common Shares which we currently have
outstanding there are 5,000,000 warrants outstanding, each of which is
convertible into one share of our Common Stock. These consist of 1,000,000 "A
Warrants" each convertible in to one share of common stock at an exercise price
of $3.00; 1,000,000 "B Warrants" each convertible in to one share of common
stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible in
to one share of common stock at an exercise price of $5.00; 1,000,000 "D
Warrants" each convertible in to one share of common stock at an exercise price
of $6.00; and 1,000,000 "E Warrants" each convertible in to one share of common
stock at an exercise price of $7.00. All of the warrants are currently
exercisable; they will expire if unexercised on November 19, 2015 unless
extended by vote of the Board of Directors. All of these warrants were issued to
creditors of Spicy Gourmet Organics, Inc. (SGO) by order of the Bankruptcy Court
as part of the Chapter 11 Plan of Reorganization of SGO. The warrants were
distributed under an exemption from registration provided by Section 1145 of
Title 11 of the U.S. Code.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except for acts or omissions which involve intentional misconduct, fraud or
known violation of law, there shall be no personal liability of a director or
officer to the Company, or to its stockholders for damages for breach of
fiduciary duty as a director or officer. The Company may indemnify any person
for expenses incurred, including attorneys fees, in connection with their good
faith acts if they reasonably believe such acts are in and not opposed to the
best interests of the Company and for acts for which the person had no reason to
believe his or her conduct was unlawful. The Company may indemnify the officers
and directors for expenses incurred in defending a civil or criminal action,
suit or proceeding as they are incurred in advance of the final disposition of
the action, suit or proceeding, upon receipt of an undertaking by or on behalf
of the director or officer to repay the amount of such expenses if it is
ultimately determined by a court of competent jurisdiction in which the action
or suit is brought that such person is not fairly and reasonably entitled to
indemnification for such expenses.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to officers, directors or persons
controlling the Company pursuant to the foregoing, we have been informed that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act of 1933, as amended,
and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's audited financial statements are attached hereto.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
There are no disagreements with the findings of our accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
The Company's audited financial statements as of December 31, 2011 and 2010
are filed herewith.
Exhibit:
2.1 Plan of Reorganization Filed herewith
3.1 Articles of Incorporation Filed herewith
3.2 Bylaws Filed herewith
4.1 Form of "A" Warrant Agreement Filed herewith
4.2 Form of "B" Warrant Agreement Filed herewith
4.3 Form of "C" Warrant Agreement Filed herewith
4.4 Form of "D" Warrant Agreement Filed herewith
4.5 Form of "E" Warrant Agreement Filed herewith
23.1 Consent of Stan J. H. Lee, CPA Filed herewith
13
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act
of 1934, the Registrant has duly caused this registration statement to be signed
on its behalf by the undersigned, thereunto duly authorized.
Date: March 14, 2012 SPICY GOURMET MANUFACTURING, INC.
By: /s/ Ali Balaban
---------------------------------------
Ali Balaban
President, CEO and Director
By: /s/ Daniel Masters
---------------------------------------
Daniel Masters
CFO, Secretary, and Director
14
SPICY GOURMET MANUFACTURING, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 2011 and 2010
CONTENTS
Independent Auditors' Report F-2
Balance Sheet - Assets and Liabilities and Stockholders' Equity F-3
Statement of Operations F-4
Statement of Changes in Stockholders' Equity F-5
Statement of Cash Flows F-6
Notes to Financial Statements F-7
F-1
Stan J.H. Lee, CPA
2160 North Central Rd. Suite 203 * Fort Lee * NJ 07024
P.O. Box 436402 * San Diego * CA 92143-9402
619-623-7799 * Fax 619-564-3408 * E-mail) stan2u@gmail.com
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
We have audited the accompanying balance sheet of SPICY GOURMET MANUFACTURING
INC. as of December 31, 2011 and 2010 and the related statements of operations,
shareholders' deficit and cash flows for the period from December 30, 2010
(inception) to December 31, 2010 and calendar year ended December 31, 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 audits 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 amounts and disclosures in the combined
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 audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Spicy Gourmet Manufacturing,
Inc. as of December 31, 2011 and 2010, and the results of its operation and its
cash flows for the aforementioned periods in conformity with U.S. generally
accepted accounting principles.
The financial statements have been prepared assuming that the Company will
continue as a going concern. As discussed in the note 3 to the financial
statements, the Company has not established any source of revenue to cover its
operating costs, and losses from operations raise substantial doubt about its
ability to continue as a going concern. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Stan J.H, Lee, CPA
----------------------------------
Stan J.H. Lee, CPA
March 13, 2012
Fort Lee, NJ
Registered with the Public Company Accounting Oversight Board
Member of New Jersey Society of Certified Public Accountants
Registered with Canadian Public Accountability Board
F-2
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
BALANCE SHEET
As of As of
December 31, December 31,
2011 2010
-------- --------
ASSETS
ASSETS
Cash $ 5,000 $ --
-------- --------
TOTAL ASSETS $ 5,000 $ --
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
TOTAL LIABILITIES $ -- $ --
-------- --------
STOCKHOLDERS' EQUITY (DEFICIT)
Preferred stock, $0.0001 par value:
20,000,000 shares authorized, no shares issued
and outstanding as of December 31, 2011 and 2010 -- --
Common stock, $0.0001 par value:
100,000,000 shares authorized,
1,180,000 shares issued and outstanding as of
December 31, 2010 118
11,180,000 shares issued and outstanding as of
December 31, 2011 1,118
Additional paid in capital 4,000 --
Deficit accumulated during the development stage (118) (118)
-------- --------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 5,000 --
-------- --------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 5,000 $ --
======== ========
See Notes to Financial Statements
F-3
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
From Inception
December 30, 2010
Period Ended Period Ended through
December 31, December 31, December 31,
2011 2010 2011
---------- ---------- ----------
REVENUE $ -- $ -- $ --
---------- ---------- ----------
TOTAL REVENUE -- -- --
EXPENSES
Organizational expenses -- 118 118
General & Admin expenses -- -- --
---------- ---------- ----------
OPERATING EXPENSES -- 118 118
---------- ---------- ----------
Other Income (Expense) -- -- --
---------- ---------- ----------
NET INCOME (LOSS) $ -- $ (118) $ (118)
========== ========== ==========
Basic and diluted earning
(Loss) per Share $ (0.000) $ (0.000)
---------- ----------
Weighted average number of common shares
outstanding - Basic and Diluted 6,200,163 590,000
---------- ----------
See Notes to Financial Statements
F-4
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
From inception, December 30, 2010, to December 31, 2011
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Common Stock Issued Per Court
Order December 30, 2010 1,180,000 $ 118 $ 0 $ 0 $ 118
Net loss for Period Ended
December 31, 2010 -- -- -- (118) (118)
---------- ------- ------- ------- -------
Balance, December 31, 2010 1,180,000 118 0 (118) 0
Common Stock Issued to Officers
June 30, 2011 at $0.0005 per
share in cash 10,000,000 1,000 4,000 -- 5,000
Net loss for period Ended
December 31, 2011 -- -- -- -- --
---------- ------- ------- ------- -------
Balance, December 31, 2011 11,180,000 $ 1,118 $ 4,000 $ (118) $ 5,000
========== ======= ======= ======= =======
See Notes to Financial Statements
F-5
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
From Inception
December 30, 2010
Period Ended Period Ended through
December 31, December 31, December 31,
2011 2010 2011
-------- -------- --------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $ -- $ (118) $ (118)
Adjustments to reconcile net income (loss)
to net cash (used in) operations -- -- --
-------- -------- --------
NET CASH PROVIDED BY (USED IN) OPERATIONS -- (118) (118)
-------- -------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES -- -- --
-------- -------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Common Stock Issuance For Cash 5,000 -- 5,000
Common Stock Issuance For Expense -- 118 118
-------- -------- --------
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,000 118 5,118
-------- -------- --------
NET INCREASE (DECREASE) 5,000 -- --
-------- -------- --------
CASH BEGINNING OF PERIOD -- -- --
-------- -------- --------
CASH END OF PERIOD $ 5,000 $ -- $ --
======== ======== ========
NON-CASH INVESTING AND FINANCING ACTIVITIES
Common stock issued per Bankruptcy Court Order $ -- $ 118 $ 118
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Interest paid $ -- $ -- $ --
-------- -------- --------
Income taxes paid $ -- $ -- $ --
-------- -------- --------
See Notes to Financial Statements
F-6
SPICY GOURMET MANUFACTURING, INC.
(A Development Stage Company)
Notes to Financial Statements
December 31, 2011 and 2010
NOTE 1. NATURE AND BACKGROUND OF BUSINESS
Spicy Gourmet Manufacturing, Inc. ("the Company" or "the Issuer") was organized
under the laws of the State of Delaware on December 30, 2010. The Company was
established as part of the Chapter 11 reorganization of Spicy Gourmet Organics,
Inc. ("SGO"). Under SGO's Plan of Reorganization, as confirmed by the U.S.
Bankruptcy Court for the Central District of California, the Company was
incorporated to: (1) receive and own any interest which SGO had in the
manufacturing of spice mills and similar products; and (2) issue shares of its
common stock to SGO's general unsecured creditors, to its administrative
creditors, and to its shareholder. The Company has been in the development stage
since its formation and has not yet realized any revenues from its planned
operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a December 31 year-end.
BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY
The Company is a development stage company as defined by ASC 915-10-05,
"Development Stage Entity." 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 development stage activities.
b. BASIC EARNINGS PER SHARE
The Company computes net income (loss) per share in accordance with the FASB
Accounting Standards Codification ("ASC"). The ASC specifies the computation,
presentation and disclosure requirements for earnings (loss) per share for
entities with publicly held common stock.
Basic net earnings (loss) per share amounts are computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding.
Diluted earnings (loss) per share are the same as basic earnings (loss) per
share due to the lack of dilutive items in the Company.
c. ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
d. CASH and CASH EQUIVALENT
For the Balance Sheet and Statements of Cash Flows, all highly liquid
investments with maturity of three months or less are considered to be cash
equivalents.
F-7
e. REVENUE RECOGNITION
The Company recognizes revenues and the related costs when persuasive evidence
of an arrangement exists, delivery and acceptance has occurred or service has
been rendered, the price is fixed or determinable, and collection of the
resulting receivable is reasonably assured. Amounts invoiced or collected in
advance of product delivery or providing services are recorded as deferred
revenue. The Company accrues for warranty costs, sales returns, bad debts, and
other allowances based on its historical experience.
f. STOCK-BASED COMPENSATION
The Company records stock-based compensation in accordance with the FASB
Accounting Standards Classification using the fair value method. 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. Equity instruments issued to employees
and the cost of the services received as consideration are measured and
recognized based on the fair value of the equity instruments issued.
g. INCOME TAXES
Income taxes are provided in accordance with the FASB Accounting Standards
Classification. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss carry
forwards. Deferred tax expense (benefit) results from the net change during the
year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
h. IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company's results of
operations, financial position, or cash flow.
NOTE 3. GOING CONCERN
The Company's financial statements are prepared in accordance with generally
accepted accounting principles applicable to a going concern. This contemplates
the realization of assets and the liquidation of liabilities in the normal
course of business. Currently, the Company does not have significant cash or
other material assets, nor does it have operations or a source of revenue
sufficient to cover its operation costs and allow it to continue as a going
concern. The officers and directors have committed to advancing certain
operating costs of the Company.
NOTE 4. STOCKHOLDERS' EQUITY COMMON STOCK
The authorized share capital of the Company consists of 100,000,000 shares of
common stock with $0.0001 par value, and 20,000,000 shares of preferred stock
also with $0.0001 par value. No other classes of stock are authorized.
COMMON STOCK: As of December 31, 2011, there were a total of 11,180,000 common
shares issued and outstanding and as of December 31, 2010 there were a total of
1,180,000 common shares issued and outstanding.
The Company's first issuance of common stock, totaling 1,180,000 shares, took
place on December 30, 2010 pursuant to the Chapter 11 Plan of Reorganization
confirmed by the U.S. Bankruptcy Court in the matter of Spicy Gourmet Organics,
Inc. ("SGO"). The Court ordered the distribution of shares in Organic Spice
Imports, Inc. to all general unsecured creditors of SGO, with these creditors to
F-8
receive their PRO RATA share (according to amount of debt held) of a pool of
80,000 shares in the Company. The Court also ordered the issuance of 100,000
shares in the Company to the sole shareholder of SGO. The Court also ordered the
distribution of 1,000,000 shares in the Company to the administrative creditors
of SGO; these creditors received one share of common stock in the Company for
each $0.05 of SGO's administrative debt which they held.
The Court also ordered the distribution of warrants in the Company to all
administrative creditors of SGO, with these creditors to receive five warrants
in the Company for each $0.05 of SGO's administrative debt which they held.
These creditors received an aggregate of 5,000,000 warrants consisting of
1,000,000 "A Warrants" each convertible into one share of common stock at an
exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share
of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each
convertible into one share of common stock at an exercise price of $5.00;
1,000,000 "D Warrants" each convertible into one share of common stock at an
exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one
share of common stock at an exercise price of $7.00. All warrants are
exercisable at any time prior to November 19, 2015. This warrant distribution
also took place on December 30, 2010.
On June 30, 2011 the Company's two officers acquired a total of 10,000,000
common shares from the Issuer in a private placement. The shares were purchased
at the price of $0.0005 per share for a total of $5,000.
As a result of these issuances there were a total 11,180,000 common shares
issued and outstanding, and a total of 5,000,000 warrants to acquire common
shares issued and outstanding, at December 31, 2011.
PREFERRED STOCK: The authorized share capital of the Company includes 20,000,000
shares of preferred stock with $0.0001 par value. As of December 31, 2011 no
shares of preferred stock had been issued and no shares of preferred stock were
outstanding.
NOTE 5. INCOME TAXES
The Company has had no business activity and made no U.S. federal income tax
provision since its inception on December 30, 2010.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer of
the corporation provides office services without charge. Such costs are
immaterial to the financial statements and accordingly, have not been reflected
therein. The officers and directors for the Company are involved in other
business activities and may, in the future, become involved in other business
opportunities. If a specific business opportunity becomes available, such
persons may face a conflict in selecting between the Company and their other
business interests. The Company has not formulated a policy for the resolution
of such conflicts.
NOTE 7. WARRANTS AND OPTIONS
On December 30, 2010 (inception), the Company issued 5,000,000 warrants
exercisable into 5,000,000 shares of the Company's common stock. These warrants
were issued per order of the U.S. Bankruptcy Court in the matter of Spicy
Gourmet Organics, Inc. ("SGO") to the administrative creditors of SGO. These
creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A
Warrants" each convertible into one share of common stock at an exercise price
of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock
at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one
share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each
convertible into one share of common stock at an exercise price of $6.00; and
1,000,000 "E Warrants" each convertible into one share of common stock at an
exercise price of $7.00. All warrants are exercisable at any time prior to
F-9
November 19, 2015. As of the date of this report, no warrants have been
exercised.
NOTE 8. COMMITMENT AND CONTIGENTCY
There is no commitment or contingency to disclose during the period ended
December 31, 2011 and 2010.
NOTE 9. SUBSEQUENT EVENTS
The Company has performed an evaluation of subsequent events in accordance with
ASC Topic 855 and the Company is not aware of any subsequent events which would
require recognition or disclosure in the financial statements.
F-10