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EX-5.1 - Global Smoothie Supply, Inc.gss_ex5.htm
EX-10.3 - Global Smoothie Supply, Inc.gss_ex10-3.htm
EX-10.6 - Global Smoothie Supply, Inc.gss_ex10-6.htm
EX-3.2 - Global Smoothie Supply, Inc.gss_ex3-2.htm
EX-3.1 - Global Smoothie Supply, Inc.gss_ex3-1.htm
EX-10.7 - Global Smoothie Supply, Inc.gss_ex10-7.htm
EX-10.1 - Global Smoothie Supply, Inc.gss_ex10-1.htm
EX-10.4 - Global Smoothie Supply, Inc.gss_ex10-4.htm
EX-3.3 - Global Smoothie Supply, Inc.gss_ex3-3.htm
EX-10.8 - Global Smoothie Supply, Inc.gss_ex10-8.htm
EX-10.5 - Global Smoothie Supply, Inc.gss_ex10-5.htm
EX-10.2 - Global Smoothie Supply, Inc.gss_ex10-2.htm
EX-10.11 - Global Smoothie Supply, Inc.gss_ex10-11.htm
EX-10.10 - Global Smoothie Supply, Inc.gss_ex10-10.htm
EX-10.9 - Global Smoothie Supply, Inc.gss_ex10-9.htm
EX-10.12 - Global Smoothie Supply, Inc.gss_ex10-12.htm
EX-10.14 - Global Smoothie Supply, Inc.gss_ex10-14.htm
EX-10.13 - Global Smoothie Supply, Inc.gss_ex10-13.htm
EX-23.1 - Global Smoothie Supply, Inc.gss_ex23.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM S-1
 
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
 
Global Smoothie Supply, Inc.
 
 
Texas
5149
20-2784-176
(State or jurisdiction of incorporation or organization)
(Primary Standard Industrial Classification Code Number)
(I.R.S. Employer Identification No.)
 
 4428 University Boulevard
Dallas, TX 75205
214-769-0836 Fax: 214-521-4749
 
Copies to:
Novi & Wilkin
Attorneys at Law
1325 Airmotive Way, Suite 140
Reno, NV 89502
775-232-1950 Fax: 775-201-8331
 
Approximate date of proposed sale to the public: As soon as practicable after this Registration Statement becomes effective.

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.  [  ] ______________________________
 
If this Form is filed to register securities for an offering to be made on a continuous or delayed basis pursuant to Rule 415 under the Securities Act, please check the following box.  [X]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filed or a smaller reporting company

Large accelerated filer    [   ]
Accelerated filer     [   ]
Non-accelerated filer      [   ]
Smaller reporting company     [X]
 

 
i

 

CALCULATION OF REGISTRATION FEE

Title of Each Class
of Securities to be
Registered
 
Amount to be
Registered
(1)
   
Proposed
Maximum
Offering Price
per Share ($)
   
Proposed Maximum
Aggregate Offering
Price ($)(2)
   
Amount of
Registration
Fee($)
 
                         
Shares of Common
                       
Stock, No par value
   
20,000,000
   
$
0.25
(2)
 
$
5,000,000
   
$
279.00
 
Shares of Common
                               
Stock, No par value
   
 1,626,604
   
$
0.25
(3)
 
$
406,651
   
$
28.99
 
                                 
Total Fee Due
                 
$
5,406,651
   
$
307.99
 

1
Of the 21,626,604 shares registered pursuant to this registration statement, 20,000,000 shares are being offered by the Company, and 1,626,604 shares are being offered by the selling shareholders.
   
2
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act, based upon the fixed price of the shares offered by the Company.
   
3
Estimated solely for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act, based upon the fixed price of the shares offered by the Company.  The Company will derive no financial benefit from the sales of these shares.  The shares will be offered by the selling shareholders at prevailing market prices or privately negotiated prices.

The Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective on such date as the Commission, acting pursuant to said Section 8(a), may determine.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of the Prospectus. Any representation to the contrary is a criminal offense.
 
 
 
 

 
ii

 

Prospectus
Global Smoothie Supply, Inc.

20,000,000 Shares of Common Stock Offered by the Company
at $0.25 per share
 $5,000,000 Aggregate Offering Price

Plus
 
1,626,604 Shares of Common Stock Offered by Selling Shareholders
at prevailing market prices or privately negotiated prices

This is the initial offering of Common Stock of Global Smoothie Supply, Inc. and no public market currently exists for the securities being offered.

Global Smoothie Supply, Inc., a Texas corporation (“GSS” or the “Company”) is offering 20,000,000 shares of its Common Stock at a price of $0.25 per share, on a “self-underwritten” best efforts basis, with no minimum.  The officers and directors of the Company intend to sell the shares on behalf of the Company.  The intended methods of communication include, without limitation, telephone and personal contact.  For more information, see the section entitled “Plan of Distribution” herein.

The proceeds from the sale of the shares offered by the Company, will be payable to the Company.

The offering of shares by the Company will end no later than 180 days from the date of this Prospectus.  If we sell the maximum number of shares prior to 180 days from the date of this Prospectus, the offering will end on or about the date that we sell the maximum number of shares.  If we abandon the offering for any reason prior to 180 days from the date of this Prospectus, we will terminate the offering.

In addition, 1,626,604 shares of Common Stock of the Company are being offered by existing shareholders of the Company.  The Company will derive no financial benefit from the sales of these shares.  The shares will be offered at prevailing market prices or privately negotiated prices.

Officers and directors of the Company and affiliates thereof will not be purchasing any shares offered pursuant to this Prospectus.

Prior to this offering, there has been no public market for the Company’s Common Stock.

Number of Shares
   
Offering Price
   
Underwriting Discounts & Commissions
   
Proceeds to the Company
 
    20,000,000     $ 0.25     $ 0.00     $ 5,000,000  
                         
Proceeds to the Selling Shareholders
 
    1,626,604     $ 0.25     $ 0.00     $ 406,651  

This investment involves a high degree of risk and you should purchase shares only if you can afford a complete loss of your investment.  See the section titled “Risk Factors” beginning on Page 5 of this Prospectus.

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved these securities, or determined if this Prospectus is truthful or complete.  Any representation to the contrary is a criminal offense.
 
GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of its assets and the liquidation of its liabilities in the normal course of business.  However, the Company has generated minimal revenues, has accumulated a deficit of $427,420 through September 30, 2009, and currently lacks sufficient capital to pursue its business plan.  The Company’s auditors have raised substantial doubt about the Company’s ability to continue as a going concern.  The financial statements do not include any adjustments that might result from this uncertainty.

The information in this Prospectus is not complete and may be changed.  The shares of Common Stock of the Company may not be sold until the registration statement (of which this Prospectus is a part) filed with the Securities and Exchange Commission is declared effective.  This Prospectus is not an offer to sell these securities and it is not the solicitation of an offer to buy these securities in any state where the offer or sale is not permitted.

The Company does not plan to use this offering Prospectus before the effective date.

Subject to Completion, Dated _________, 2010

 
1

 

TABLE OF CONTENTS

 
PAGE
3
3
    The Offering
10
5
11
12
13
13
15
15
17
17
17
18
22
25
22
22
22
23
23
24
     Competition
24
24
24
25
25
25
25
25
26
27
41
46
46
49
50
50
50
51
 

 
2

 

Global Smoothie Supply, Inc.
4428 University Blvd
Dallas, TX 75205
214-769-0836

SUMMARY OF PROSPECTUS

You should read the following summary together with the more detailed business information, financial statements and related notes that appear elsewhere in this Prospectus regarding Global Smoothie Supply, Inc.  In this Prospectus, unless the context otherwise denotes, references to “we,” “us” or “our” are to the Company.

GENERAL INFORMATION ABOUT OUR COMPANY
 
The Global Smoothie Supply, Inc. business model contemplates that the Company will generate revenue from three activities:

 
1)
The sale of smoothie blending equipment
 
2)
The sale of the puree to make the smoothies
 
3)
The sale of parts and service for the smoothie blending equipment

Global Smoothie Supply has worked with Blendtec (a division of K-Tec, Inc.) to develop a turnkey smoothie program designed for the convenience store distribution channel as well as other distribution channels.  Our agreement with Blendtec gives GSS the first right to purchase all of Blendtec’s S3 Smoothie Machine production.

The Blendtec S3 Smoothie Machine is a self-serve smoothie machine specially designed for GSS by Blendtec.  The Company couples the S3 Smoothie Machine with other equipment, including an ice machine that mounts to the top of the Blendtec S3 Machine, a backup water heater, a custom cabinet and a puree cart.   The Company’s contractual arrangement with Blendtec contemplates that the Company will purchase the S3 Smoothie Machine from Blendtec, for resale to purchasing accounts.  .

GSS purchases the balance of the components directly from its supplier network and the Company currently has no formal contractual arrangements with those suppliers.  The Company purchases proprietary formulas of the purees developed specially for use with the S3 Blender, directly from its supplier network, for resale to purchasing customers.

Additionally, GSS provides for a fee the installation and service for the smoothie machine and related equipment as an ongoing benefit to purchasing customers.

GSS began receiving revenues from this self-serve smoothie program with the sale of puree and blending equipment to Blockbuster in the 4th Quarter of 2008.  This sale came as the result of Blockbuster contacting GSS, in order to offer Self-Serve Smoothies through Blockbuster’s new in-store beverage bars in Reno, NV and Plano, TX.

On August 10, 2009, GSS entered into a formal testing agreement with 7-Eleven, Inc.  That agreement has expired; however, the parties have agreed verbally to extend the term of the agreement indefinitely and 7-Eleven is continuing to test the equipment in collaboration with the Company. We expect the testing to be completed by the end of the second quarter of 2010.

Founded by David C. Tiller, Donald M. Roberts and Harry B. Ireland, GSS was formed with one goal: to become the dominant provider of fruit puree smoothie systems for the convenience retail and other appropriate distribution channels.  The Company’s self-serve systems are installed in turnkey fashion, are self-cleaning and require minimal attention and maintenance.

Presently, David Tiller, the Company’s CEO, beneficially owns 38,250,000 shares of the outstanding Common Stock of the Company.  Because of such ownership, investors in this offering will have limited control over matters requiring approval by GSS shareholders, including the election of directors.  Assuming that all 20,000,000 shares of this offering are sold, Mr. Tiller would retain 39.2% ownership in the Company’s Common Stock and the officers and directors of the Company would collectively control 77.8% of the Company’s Common Stock.
 

 
3

 


Our smoothie machine manufacturer, Blendtec, is a developer of automated dispensing/blending equipment.  The S3 Smoothie Machine, which is the self-serve smoothie machine designed for GSS by Blendtec, has received Electrical Testing Laboratories (ETL) and National Safety Federation (NSF) certification.

The machine is designed to accommodate easy-to-use modular “bag in box” cased product, the puree.  These puree formulations have been developed exclusively for GSS and are manufactured on our behalf.
 
The flavor line has the capacity for future expansion and modification, with an initial menu that includes multiple fruit-based choices and one coffee-based offering.  GSS plans to promote, install, and maintain the self-serve smoothie machines using a nationwide sales force, brokers, and a network of trained service technicians.

Management believes that an expansion strategy focusing on Convenience Stores and other retail distribution channels would add significant scale to our business model.  These other channels include, but are not limited to,  Fast-Food Restaurants, sports venues, university campuses and high schools, resorts and cruise ships, sports, racquetball, health and country clubs, business and hospital complexes, as well as high-traffic portals such as airports, sea ports, and train and bus stations.

In order for the Company to achieve its annual goals, we believe the following key activities will need to be accomplished and, as this is a “Best Efforts” offering, we have built our “Use of Net Proceeds” based on the following net funding levels:
 
   
At 25% of the Maximum Offering
   
At the Maximum Offering
 
1.    Acquire Office/Warehouse Space
 
$
80,000
   
$
260,000
 
2.    Purchase machines for training/marketing
   
150,250
     
751,250
 
3.    Hire Staff
   
518,294
     
1,784,625
 
4.    Sales and Marketing Activity
   
215,000
     
1,030,000
 
6.    Build Administrative Systems
   
149,500
     
524,125
 
7.    Legal and Professional Services
   
76,656
     
589,700
 
Total Use of Net Proceeds:
 
$
1,189,700
   
$
4,939,700
 

The offering scenarios presented are for illustrative purposes only and the actual amount of net proceeds, if any, may differ.

Because there is no minimum number of shares that must be sold in the offering, we can provide no assurance regarding the amount of capital we will actually raise in the offering. We intend to use the proceeds to improve our capital position, to fund our business plan, and will retain the remainder of any proceeds for working capital and general corporate purposes. We believe a strengthened capital position will provide us with the flexibility to address market conditions. Our management will retain broad discretion in deciding how to allocate the net proceeds of this offering. The precise amounts and timing of our use of the net proceeds will depend upon market conditions and other factors.

The Company is subject to substantially all the risks inherent in the creation of a new business.  As a result of its small size and capitalization and limited operating history, the Company is particularly susceptible to adverse effects of changing economic conditions and consumer tastes, competition, and other contingencies or events beyond the control of the Company.  At this time, the Company has no plans or intentions to be acquired or to merge with an operating company nor do we have plans to enter into a change of control or similar transaction or to change the management of the Company.


 
4

 

THE OFFERING

Securities Being Offered:
20,000,000 Shares of Common Stock, No par value, at a price of $0.25 per share, and an additional 1,626,604 Shares of Common Stock held by 57 selling shareholders at prevailing market prices or privately negotiated prices, for which the Company will receive no financial benefit.
 
Offering Price per Share:
$0.25, for those shares offered by the Company
   
Offering Period:
The shares are being offered by the Company for a period not to exceed 180 days
 
Proceeds to the Company:
$5,000,000 Maximum.  We will not receive proceeds from the sale of the 1,626,604 Shares of Common Stock offered by our selling shareholders.
   
Use of Proceeds:
We intend to use the proceeds to continue/expand operations
   
Number of Shares Outstanding
 
Before the Offering:
77,626,604
   
Number of Shares Outstanding
 
After the Offering:
97,626,604

Our officers, directors, control persons, and/or affiliates do not intend to purchase any shares in this offering.  There is no required minimum number of shares to be purchased.
 
RISK FACTORS

RISKS ASSOCIATED WITH OUR COMPANY:

Investment in the securities offered hereby involves certain risks and is suitable only for investors of substantial financial means.  Prospective investors should carefully consider the following risk factors in addition to the other information contained in this Prospectus, before making an investment decision concerning the Common Stock.

The Company is subject to the risks inherent in the creation of a new business.

The Company is subject to substantially all the risks inherent in the creation of a new business.  As a result of its small size and capitalization and limited operating history, the Company is particularly susceptible to adverse effects of changing economic conditions and consumer tastes, competition, and other contingencies or events beyond the control of the Company.  It may be more difficult for the Company to prepare for and respond to these types of risks and the risks described elsewhere in this Prospectus than for a company with an established business and operating cash flow.  If the Company is not able to manage these risks successfully, the Company’s operations could be negatively impacted.  Due to changing circumstances, the Company may be forced to change dramatically, or even terminate, its planned operations.

Changes in consumer preferences and discretionary spending may have a material adverse effect on our revenue, results of operations and financial condition.

Our success depends, in part, upon the popularity of our products and our ability to develop new smoothie and coffee beverages that appeal to consumers.  Shifts in consumer preferences away from our products, our inability to develop new products that appeal to consumers, or changes in our product mix that eliminate items popular with some consumers could harm our business.  Also, our success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions and the availability of discretionary income.  Accordingly, we may experience declines in revenue during economic downturns or during periods of uncertainty, similar to those which followed the terrorist attacks on the United States.  Any material decline in the amount of discretionary spending could have a material adverse effect on our sales, results of operations, business and financial condition.

 
5

 

Fluctuations in various fruit, juice, puree, coffee, packaging and supply costs, particularly fruit and coffee, could adversely affect our operating results.

The prices of fruit and coffee, which are the main products in our puree offerings, can be highly volatile.  Fruit of the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. Supplies and prices of the various products that we use to prepare our puree offerings can be affected by a variety of factors, such as weather, seasonal fluctuations, demand, politics and economics in the producing countries.  An increase in pricing of any fruit that we use in our products could have a significant adverse effect on our profitability.   Fruit price increased in fiscal year 2005 when orange prices rose nearly 500% for nearly four months after several hurricanes made landfall in Florida.  In addition, higher diesel prices have, in some cases, resulted in the imposition of surcharges on the delivery of commodities to distributors.  Additionally, higher diesel and gasoline prices may affect our supply costs and may affect our sales going forward.  To help mitigate the risks of volatile commodity prices and to allow greater predictability in pricing, we hope to enter into fixed price or to-be-fixed priced purchase commitments for a portion of our fruit and coffee requirements.  We cannot assure you that these activities will be successful or that they will not result in our paying substantially more for our fruit and coffee supply than would have been required absent such activities.  We do not presently have any multi-year pricing agreements (with fixed processing costs), and none with guaranteed volume commitments.

Litigation and publicity concerning product quality, health and other issues, could result in liabilities and also cause customers to avoid our products, which could adversely affect our results of operations, business and financial condition.

Beverage and food service businesses can be adversely affected by litigation and complaints from customers or government authorities resulting from food and beverage quality, illness, injury or other health concerns or operating issues stemming from retail locations.  Adverse publicity about these allegations may negatively affect us, regardless of whether the allegations are true, by discouraging customers from buying our products.  We could also incur significant liabilities, if a lawsuit or claim results in a decision against us, and the related litigation costs, regardless of the result.

Beverage and food safety concerns and instances of food-borne illnesses could harm our customers, result in negative publicity and cause the temporary closure of some customers’ stores and, in some cases, could adversely affect the price and availability of fruits, any of which could harm our brand reputation, result in a decline in sales or an increase in costs.

We cannot guarantee that controls and training will be fully effective in preventing all beverage-borne illnesses. Furthermore, reliance on third-party suppliers and distributors increases the risk that food-borne illness incidents (such as E. coli, Hepatitis A, Salmonella, or Listeria) could occur outside of our control and at multiple locations.

Instances of food-borne illnesses, whether real or perceived, and whether at our customers’ stores or those of our competitors, could harm consumers and otherwise result in negative publicity about the Company or the products we serve, which could adversely affect sales.  If there is an incident involving customers’ C-stores and other approved channels serving contaminated products, consumers may be harmed, our sales may decrease and our brand name may be impaired.  If consumers become ill from food-borne illnesses, we could be forced to temporarily suspend some operations.  If we react to negative publicity by changing our products or other key aspects of the GSS experience, we may lose customers who do not accept those changes, and may not be able to attract enough new customers to produce the revenue needed to make our operations profitable.  In addition, we may have different or additional competitors for our intended consumers as a result of making any such changes and may not be able to compete successfully against those competitors.  Food safety concerns and instances of food-borne illnesses and injuries caused by food contamination have in the past, and could in the future, adversely affect the price and availability of affected ingredients and cause consumers to shift their preferences, particularly if we choose to pass any higher ingredient costs along to consumers.  As a result, our costs may increase and our sales may decline.  A decrease in customer traffic as a result of these health concerns or negative publicity, or as a result of a change in our products or the smoothie experience or a temporary suspension of any of our customer operations, could materially harm our business.
 
Any failure to maintain adequate general liability, commercial, and product liability insurance could subject us to significant losses of income.

We currently carry general liability, product liability, and commercial insurance, and believe such insurance to be adequate. However, there can be no assurance that such coverage will be adequate to cover any claim that may be filed. A judgment significantly in excess of our insurance coverage for any claims could materially and adversely affect our financial condition or results of operations.

 
6

 

The planned increase in the number of our customers’ stores may make our future results unpredictable.

Our future results depend on various factors, including successful selection of new markets, market acceptance of the GSS product and service offerings, consumer recognition of the quality of our products and willingness to pay our prices (which reflect our often higher ingredient costs,) the quality and performance of the GSS blending equipment and general economic conditions.  In addition, as with the experience of other retail food and beverage concepts which have tried to expand nationally, we may find that the GSS product and service offerings have limited or no appeal to customers in new markets or we may experience a decline in the popularity of the GSS product and service offerings.  Newly opened customers’ stores may not succeed, future markets may not be successful, and average store revenue may not meet expectations.

Our revenue growth rate depends primarily on our ability to satisfy C-store, Other Relevant Channels and end-customer demands, identify suppliers of various fruit and services and to coordinate those suppliers, all subject to many unpredictable factors.

We may not be able to identify and maintain the necessary relationships with suppliers of product and services as planned.  We may experience shortages of fruit product and blending equipment, and experience delays in deliveries of such fruit product and blending equipment.  Delays or failures in deliveries of fruit smoothie supplies or blending equipment could materially and adversely affect our growth strategy and expected results.  As we supply more customers’ stores, our rate of expansion relative to the size of such store base will decline.  Our ability to execute our business plan also depends on other factors, including:

1.
negotiating distribution agreements and equipment leases with acceptable terms;
2.
hiring and training qualified installation personnel in local markets;
3.
managing marketing and development costs at affordable levels;
4.
cost and availability of labor;
5.
cost and availability of blending equipment;
6.
the availability of, and our ability to obtain, adequate supplies of ingredients that meet our quality standards;
7.
securing required governmental approvals (including sanitary, equipment safety and other permits) in a timely manner; and
8.
the impact of inclement weather, natural disasters and other calamities, as well as the adverse localized effects of global climate change.

A failure to manage our growth effectively could harm our business and operating results.

Our plans call for a significant increase in the number of self-serve smoothie machines installed into the GSS customer base.  Product supply and equipment installation systems, financial and management controls and information systems may be inadequate to support our expansion.  Managing our growth effectively will require us to continue to enhance these systems, procedures and controls and to hire, train and retain management and staff. We may not respond quickly enough to the changing demands that our expansion will impose on our management, employees and existing infrastructure.  We also place a lot of importance on our culture, which we believe will be an important contributor to our success.  As we grow, however, we may have difficulty maintaining our culture or adapting it sufficiently to meet the needs of our operations.  Our failure to manage our growth effectively could harm our business and operating results.

New customers’ stores’ sales of our products may not be profitable, and the increases in average store revenue and comparable store revenue that we expect may not be achieved.

We expect our new customers’ stores to have an initial ramp-up period during which they generate revenue and profit below the levels at which we or they expect them to normalize.  This is in part due to the time it takes to build a customer base in a new product, as well as higher fixed costs relating to start-up inefficiencies that are typical of introduction of new products.  Our ability to service and supply new customers’ stores profitably and increase average store revenue and comparable store revenue will depend on many factors, some of which are beyond our control, including:

1.
executing our vision effectively;
2.
initial sales performance of new product;
3.
competition, either from our competitors in the smoothie industry, other C-stores and other competitors;
4.
changes in consumer preferences and discretionary spending;
5.
consumer understanding and acceptance of the fruit puree smoothie experience;
6.
road construction and other factors limiting access to C-stores and other approved channels;
7.
general economic conditions, which can affect store traffic, local labor costs and prices we pay for the ingredients, equipment and other supplies we use; and
8.
changes in government regulation.

 
7

 

Our quarterly operating results may fluctuate significantly and could fall below the expectations of investors due to various factors.

Our quarterly operating results may fluctuate significantly because of various factors, including:

1.
the impact of inclement weather, natural disasters and other calamities;
2.
unseasonably cold or wet weather conditions;
3.
the timing of new store openings and related revenue and expenses;
4.
profitability of our customers’ smoothie operation, especially in new markets;
5.
changes in customers’ comparable store sales and consumer visits, including as a result of the introduction of new product items;
6.
variations in general economic conditions, including those relating to changes in diesel and gasoline prices;
7.
negative publicity about the ingredients we use or the occurrence of food-borne illnesses or other problems at our customers’ stores;
8.
changes in consumer preferences and discretionary spending;
9.
increases in infrastructure costs; and
10.
fluctuations in supply prices.

Because of these factors, results for any one quarter are not necessarily indicative of results to be expected for any other quarter or for any year.  Average customers’ store revenue or comparable store revenue in any particular future period may decrease.  In the future, our operating results may fall below the expectations of investors.  In that event, the value of our Common Stock would likely decrease.

Our customers and suppliers could take actions that harm our reputation and reduce our profits.

Customers and suppliers are separate entities and are not our employees or agents.  Further, we do not exercise control over the day-to-day operations of our customers and suppliers.  Any operational shortcomings of our customers and suppliers are likely to be attributed to our system-wide operations and could adversely affect our reputation and have a direct negative impact on our profits.

Our revenue is subject to volatility based on weather and varies by season.

Seasonal factors could also cause our revenue to fluctuate from quarter to quarter.  Our revenue may be lower during the winter months and the holiday season and during periods of inclement weather and higher during the spring, summer and fall months.  Our revenue will likely also vary from quarter to quarter as a result of the number of trading days, that is, the number of days in a quarter when stores are open.

We could face liability from our customers, suppliers or government agencies.

A customer, supplier or government agency may bring legal action against us based on the customer/ supplier relationships.  Various state and federal laws govern our relationship with customers and suppliers.  If we fail to comply with these laws, we could be liable for damages to customers or suppliers, and fines or other penalties.  Expensive litigation with our customers/suppliers or government agencies may adversely affect both our profits and relations with our customer/suppliers.

Litigation could adversely affect us by distracting management, increasing our expenses or subjecting us to material money damages and other remedies.

Our customers could file complaints or lawsuits against us alleging that we are responsible for some illness or injury their customers suffered at or after a visit to their stores, or that we have problems with food quality or operations.  We are also subject to a variety of other claims arising in the ordinary course of our business, including personal injury claims, contract claims and claims alleging violations of federal and state law regarding workplace and employment matters, discrimination and similar matters, and we could become subject to class action or other lawsuits related to these or different matters in the future.  Regardless of whether any claims against us are valid, or whether we are ultimately held liable, claims may be expensive to defend and may divert time and money away from our operations and hurt our performance.  A judgment significantly in excess of our insurance coverage for any claims could materially and adversely affect our financial condition or results of operations.  Any adverse publicity resulting from these allegations may also materially and adversely affect our reputation or prospects, which in turn could adversely affect our results.  The food and beverage services industry has been subject to a growing number of claims based on the nutritional content of food products they sell and disclosure and advertising practices.  We may also be subject to this type of proceeding in the future and, even if not, publicity about these matters (particularly directed at C-stores and other approved channels, the quick-service and fast-casual segments of the industry) may harm our reputation or prospects and adversely affect our results.

 
8

 

We are exposed to increased costs and risks associated with compliance with changing laws, regulations and standards in general, and specifically with increased and new regulation of corporate governance and disclosure standards.

We expect to spend an increased amount of management time and external resources to comply with existing and changing laws, regulations and standards in general, and specifically relating to corporate governance under the Sarbanes-Oxley Act of 2002.  In particular, Section 404 of the Sarbanes-Oxley Act of 2002 requires management to annually review and evaluate all of our internal control systems, and file attestations of the effectiveness of these systems by our management and by our independent auditors.  This process may require us to hire additional personnel and use outside advisory services and result in additional accounting and legal expenses.  If in the future our chief executive officer, chief financial officer or independent auditors determine that our controls over financial reporting are not effective as defined under Section 404, investor perceptions may be adversely affected and could cause a decline in the value of our stock.  If our independent auditors are unable to provide an unqualified attestation of management’s assessment of our internal control over financial reporting, or disclaim an ability to issue an attestation, it could result in a loss of investor confidence in our financial reports, adversely affect our stock value and our ability to access the capital markets or borrow money.  Failure to comply with other existing and changing laws, regulations and standards could also adversely affect the Company.

RISKS ASSOCIATED WITH THIS OFFERING

PURCHASERS IN THIS OFFERING WILL HAVE LIMITED CONTROL OVER DECISION MAKING BECAUSE DAVID C. TILLER, THE COMPANY’S CEO AND ITS OFFICERS AND DIRECTORS WILL CONTROL NOT LESS THAN 77.8% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK.

Presently, David Tiller, the Company’s CEO, beneficially owns 38,250,000 shares of the outstanding Common Stock of the Company.  Because of such ownership, investors in this offering will have limited control over matters requiring approval by GSS shareholders, including the election of directors.  Assuming that all 20,000,000 shares of the Company’s offering are sold, Mr. Tiller would retain 39.2% ownership in the Company’s Common Stock and the officers and directors of the Company would collectively control 77.8% of the Company’s Common Stock.  Such concentrated control may also make it difficult for GSS stockholders to receive a premium for their shares of GSS in the event the Company enters into transactions which require stockholder approval.  In addition, certain provisions of Texas state law could have the effect of making it more difficult or more expensive for a third party to acquire, or of discouraging a third party from attempting to acquire control of the Company.  For example, Texas law provides that a majority of the stockholders is required to remove a director, which may make it more difficult for a third party to gain control of the Company.  This concentration of ownership limits the power to exercise control by the minority shareholders.

INVESTORS MAY LOSE THEIR ENTIRE INVESTMENT IF GSS FAILS TO IMPLEMENT ITS BUSINESS PLAN.

The Company expects to face substantial risks, uncertainties, expenses, and difficulties because it is a development-stage company.  GSS was formed in Texas on February 17, 2005.  The Company has no demonstrable operations record of substance upon which investors can evaluate the Company’s business and prospects.  GSS prospects must be considered in light of the risks, uncertainties, expenses and difficulties frequently encountered by companies in their early stages of development.  The Company cannot guarantee that it will be successful in accomplishing its objectives.

As of the date of this Prospectus, the Company has had only limited operations and has generated minimal revenues.  Considering these facts, the Company’s independent auditors have expressed substantial doubt about the Company’s ability to continue as a going concern, as reflected in the independent auditors’ report to the financial statements included in this Prospectus.  In addition, the Company’s lack of operating capital could negatively affect the value of its Common Stock and could result in the loss of your entire investment.
 
THE REPORT OF OUR INDEPENDENT AUDITORS INDICATES UNCERTAINTY CONCERNING OUR ABILITY TO CONTINUE AS A GOING CONCERN AND THIS MAY IMPAIR OUR ABILITY TO RAISE CAPITAL TO FUND OUR BUSINESS PLAN.
 
Our independent auditors have raised substantial doubt about our ability to continue as a going concern.  We cannot assure you that this will not impair our ability to raise capital on attractive terms.  Additionally, we cannot assure you that we will ever achieve significant revenues and therefore remain a going concern.

 
9

 


COMPETITORS WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.
 
We compete with many well-established companies in the food and beverage services industry on the basis of taste, quality and price of product offered, and customer service.  Aggressive pricing by our competitors or the entrance of new competitors into our markets could reduce our revenue and profit margins.
 
GSS MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE UNAVAILABLE.

The Company has limited capital resources.  To date, the Company has funded its operations from limited funding and has not generated sufficient cash from operations to be profitable or to maintain sufficient inventory.  Unless the Company begins to generate sufficient revenues to finance operations as a going concern, the Company may experience liquidity and solvency problems.  Such liquidity and solvency problems may force the Company to cease operations if additional financing is not available.  No known alternative resources of funds are available to the Company in the event it does not have adequate proceeds from this offering.

THE COSTS TO MEET OUR REPORTING AND OTHER REQUIREMENTS AS A PUBLIC COMPANY, ARISING OUT OF COMPLIANCE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE SARBANES-OXLEY ACT OF 2002, AND OTHER REGULATIONS WILL BE SUBSTANTIAL AND MAY RESULT IN US HAVING INSUFFICIENT FUNDS TO EXPAND OUR BUSINESS OR EVEN TO MEET ROUTINE BUSINESS OBLIGATIONS.

If we become a public entity, subject to the reporting requirements of the Securities Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and other regulations, we will incur substantial and ongoing expenses associated with professional fees for accounting, legal and a host of other expenses for annual reports and proxy statements. These costs may result in us having insufficient funds to expand our business or even to meet routine business obligations.

WE MAY HAVE DIFFICULTY IN ATTRACTING AND RETAINING MANAGEMENT AND OUTSIDE INDEPENDENT MEMBERS TO OUR BOARD OF DIRECTORS AS A RESULT OF THEIR CONCERNS RELATING TO THEIR INCREASED PERSONAL EXPOSURE TO LAWSUITS AND STOCKHOLDER CLAIMS BY VIRTUE OF HOLDING THESE POSITIONS IN A PUBLICLY-HELD COMPANY.

The directors and management of publicly traded corporations are increasingly concerned with the extent of their personal exposure to lawsuits and stockholder claims, as well as governmental and creditor claims which may be made against them, particularly in view of recent changes in laws imposing additional duties, obligations and liabilities on management and directors.  Due to these perceived risks, directors and management are also becoming increasingly concerned with the availability of directors and officers’ liability insurance to pay on a timely basis the costs incurred in defending such claims.  Directors and officers’ liability insurance has recently become much more expensive and difficult to obtain.  If we are unable to provide directors and officers’ liability insurance at affordable rates or at all, it may become increasingly more difficult to attract and retain qualified outside directors to serve on our board of directors.

We may lose potential independent board members and management candidates to other companies that have greater directors and officer’s liability insurance to insure them from liability or to companies that have revenues or have received greater funding to date, which can offer more lucrative compensation packages.  The fees of directors are also rising in response to their increased duties, obligations, and liabilities as well as increased exposure to such risks.  As a company with a limited operating history and limited resources, we will have a more difficult time attracting and retaining management and outside independent directors than a more established company due to these enhanced duties, obligations and liabilities.

WE MAY NOT ACHIEVE RESULTS SIMILAR TO THE FINANCIAL PROJECTIONS IN THIS REGISTRATION.

Any projections and related assumptions discussed in this registration were based on information about circumstances and conditions existing as of the date of this Prospectus.  The projections and estimated financial results are based on estimates and assumptions that are inherently uncertain and, though considered reasonable by us, are subject to significant business, economic, and competitive uncertainties and contingencies, all of which are difficult to predict and many of which are beyond our control.  Accordingly, there can be no assurance that the projected results will be realized or that actual results will not be significantly lower than projected.  We do not intend to update the projections.  The inherent uncertainties in results increase materially for years closer to the end of the projected period.  Neither we nor any other person or entity assumes any responsibility for the accuracy or validity of the projections.

 
10

 

OUR DIRECTORS HAVE THE RIGHT TO AUTHORIZE THE ISSUANCE OF ADDITIONAL SHARES OF OUR COMMON STOCK.

Our directors, within the limitations and restrictions contained in our articles of incorporation and without further action by our stockholders, have the authority to issue additional shares of Common Stock from time to time.  We do not intend to issue additional shares of Common Stock, beyond the number of shares contemplated for issuance in this offering, at the present time.  Any additional issuance of shares of Common Stock could adversely affect the rights of holders of our Common Stock.

YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR THE COMPANY’S COMMON STOCK.

There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained.  A broker-dealer potentially serving as market maker for the Company’s Common Stock must file an application with FINRA in order to be able to quote the shares of our Common Stock on the Over the Counter Bulletin Board (“OTCBB”). The Company is seeking out a market maker to have our Common Stock quoted on the OTCBB.  The OTCBB is not a listing service or exchange, but is instead a dealer quotation service for subscribing members.  There can be no assurance that the market maker’s application will be accepted by FINRA, nor can we accurately predict the time period that the application will require.  If for any reason our Common Stock is not quoted on the OTCBB or a public trading market does not otherwise develop, purchasers of the shares of the Company’s Common Stock may have difficulty selling their Common Stock should they desire to do so.  No market makers have committed to becoming market makers for our Common Stock at this time and none may do so.

If the Company’s Common Stock becomes tradable, the trading price of our Common Stock could be subject to wide fluctuations in response to various events or factors, many of which will be beyond the Company’s control.  In addition, the stock market may experience extreme price and volume fluctuations, which, without a direct relationship to the operating performance, may affect the market price of the Company’s Common Stock.

INVESTORS IN THIS OFFERING WILL BEAR A SUBSTANTIAL RISK OF LOSS DUE TO IMMEDIATE AND SUBSTANTIAL DILUTION

The principal shareholder of GSS, David C. Tiller, who also serves as its CEO, owns 38,250,000 restricted shares of the Company’s Common Stock.  Upon the sale of the Common Stock offered hereby, the investors in this offering will experience an immediate and substantial “dilution.”  Therefore, the investors in this offering will bear a substantial portion of the risk of loss.  Additional sales of the Company’s Common Stock in the future could result in further dilution.  Please refer to the section entitled “DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES” herein.

ALL OF GSS’ CURRENTLY ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ARE RESTRICTED SHARES UNDER RULE 144 OF THE SECURITIES ACT.  WHEN THESE SHARES BECOME ELIGIBLE FOR SALE AND ARE SOLD IN THE OPEN MARKET, THE PRICE OF GSS COMMON STOCK COULD BE ADVERSELY AFFECTED.

All of the presently outstanding shares of Common Stock, aggregating 77,626,604 shares of Common Stock, are “restricted securities” as defined under Rule 144 promulgated under the Securities Act and may only be sold pursuant to an effective registration statement or an exemption from registration, if available.  Rule 144 is an exemption that generally provides that a person who has satisfied a holding period for such restricted securities may sell, within any three month period (provided the company is current in its reporting obligations under the Exchange Act), subject to certain manner of resale provisions, an amount of restricted securities which does not exceed the greater of 1% of a company’s outstanding Common Stock or the average weekly trading volume in such securities during the four calendar weeks prior to such sale.  The Company currently has one shareholder who owns 38,250,000 restricted shares and three others who own 37,750,000 restricted shares of the outstanding Common Stock.  When these shares become unrestricted and available for sale, the sale of these shares by these individuals, whether pursuant to Rule 144 or otherwise, may have an immediate negative effect upon the price of the Company’s Common Stock in any market that might develop.


 
11

 

GSS IS SELLING THE SHARES OFFERED IN THIS PROSPECTUS WITHOUT AN UNDERWRITER AND MAY NOT BE ABLE TO SELL ANY OF THE SHARES OFFERED HEREIN.

The Company’s officers and directors are offering the Common Stock on a best-efforts basis on the Company’s behalf.  There is no broker-dealer retained as an underwriter and no broker-dealer is under any obligation to purchase any Common Stock.  There are no firm commitments to purchase any of the shares in this offering.  Consequently, there is no guarantee that the Company is capable of selling all, or any, of the Common Stock offered hereby.

IF IN THE FUTURE WE ARE TRADING ON THE OTCBB AND WE FAIL TO REMAIN CURRENT ON OUR PUBLIC COMPANY REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTCBB, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.

Companies trading on the OTCBB must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCBB.  If we fail to remain current on our reporting requirements, we could be removed from the OTCBB.  As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained.   If for any reason our Common Stock is not quoted on the Over The Counter Bulletin Board or a public trading market does not otherwise develop, purchasers of the shares may have difficulty selling their Common Stock should they desire to do so.  No market makers have committed to becoming market makers for our Common Stock and none may do so.

DIVIDEND RISK

At present, we are not in a financial position to pay dividends on our Common Stock and future dividends will depend on our profitability.  Investors are advised that until such time the return on our Common Stock is restricted to an appreciation in the share price.

OUR COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SECURITIES AND EXCHANGE COMMISSION, AND THE TRADING MARKET IN OUR COMMON STOCK IS LIMITED, WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE INVESTMENT VALUE OF OUR STOCK.

Our shares of Common Stock are “penny stocks” because they are not registered on a national securities exchange or listed on an automated quotation system sponsored by a registered national securities association, pursuant to Rule 3a51-1(a) under the Exchange Act.  For any transaction involving a penny stock, unless exempt, the rules require:

·
That a broker or dealer approve a person’s account for transactions in penny stocks; and
·
That the broker or dealer receives from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased.

The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prescribed by the Securities and Exchange Commission relating to the penny stock market, which sets forth the basis on which the broker or dealer made the suitability determination.  Additionally, the broker or dealer must receive a signed, written agreement from the investor prior to the transaction.

·
Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.  This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock.
·
Disclosure also has to be made about the risks of investing in penny stocks in both public offerings and in secondary trading, the 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.

 
12

 

Generally, brokers may be less willing to execute transactions in securities subject to the “penny stock” rules.  This may make it more difficult for investors to dispose of our Common Stock and cause a decline in the market value of our stock.

THE MARKET FOR PENNY STOCKS HAS SUFFERED IN RECENT YEARS FROM PATTERNS OF FRAUD AND ABUSE.

Stockholders should be aware that, according to SEC Release No. 34-29093, the market for penny stocks has suffered in recent years from patterns of fraud and abuse.  Such patterns include:

·
Control of the market for the security by one or a few broker-dealers that are often related to the promoter or issuer;
·
Manipulation of prices through prearranged matching of purchases and sales and false and misleading press releases;
·
Boiler room practices involving high-pressure sales tactics and unrealistic price projections by inexperienced salespersons;
·
Excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and
·
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 consequential 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 volatility of our share price.

SHARES ELIGIBLE FOR FUTURE SALE BY OUR CURRENT STOCKHOLDERS MAY ADVERSELY AFFECT OUR STOCK PRICE.

To date,  we have had no trading volume in our Common Stock.  As long as this condition continues, the sale of a significant number of shares of Common Stock at any particular time could be difficult to achieve at the market prices prevailing immediately before such shares are offered.  In addition, sales of substantial amounts of Common Stock, under Securities and Exchange Commission Rule 144 or otherwise, could adversely affect the prevailing market price of our Common Stock and could impair our ability to raise capital at that time through the sale of our securities.

SOURCES OF AND AVAILABILITY OF PRODUCTS

We are primarily dependent upon sole suppliers for our fruit and coffee puree and sole suppliers for the GSS blending equipment.

Sole supplier arrangements subject us to enhanced business risk.  If any sole supplier has operational problems or ceases providing product, equipment or distribution of products available to us, or if such blender equipment substantially malfunctions, our operations could be adversely affected.

We may face difficulties entering into new or modified arrangements with existing or new suppliers or new service providers.

As we expand our operations, we may have to seek new and/or additional suppliers and service providers or enter into new arrangements with existing ones, and we may encounter difficulties or be unable to negotiate pricing or other terms as favorable as those we initially enjoy, which could harm our business and operating results.

DEPENDENCE ON ONE OR A FEW MAJOR CUSTOMERS

Although our initial target markets are the convenience stores in the US, in addition to other relevant channels, early on we may be dependent on one or only a few customers.  To consolidate and contain costs, our initial strategy is to concentrate on just a few of the nation’s largest convenience store chains.
 

 
13

 

PATENTS AND TRADEMARKS

The Company currently has no registered patents.

GOVERNMENT AND INDUSTRY REGULATION

We are subject to various federal, state and local regulations.  Our products and equipment are subject to state and local regulation by health, sanitation, food and workplace safety and other agencies.  We may experience material difficulties or failures in obtaining the necessary licenses or approvals for new products and equipment, which could delay planned execution of our business plan.  Our operations are also subject to the U.S. Fair Labor Standards Act, which governs such matters as minimum wages, overtime and other working conditions, along with the U.S. Americans with Disabilities Act, family leave mandates and a variety of similar laws enacted by the states that govern these and other employment law matters.  In addition, federal proposals to introduce a system of mandated health insurance and flexible work time and other similar initiatives could, if implemented, adversely affect our operations.  In recent years, there has been an increased legislative, regulatory and consumer focus on nutrition and advertising practices in the food industry.  Establishments operating in C-stores and other approved channels, the quick-service, and fast-casual segments have been a particular focus.  As a result, we may in the future become subject to initiatives in the area of nutrition disclosure or advertising, such as requirements to provide information about the nutritional content of our products, which could increase our expenses.

RESEARCH AND DEVELOPMENT ACTIVITIES
 
Our Research & Development has been conducted with participation by the Company, Management at 7-Eleven, Inc., K-Tec, Inc. (Blendtec,) and others to assure our product offerings align most closely with the requirements of 7-Eleven and the needs of our initial target convenience store market.  However, this does not guarantee this chain will purchase the Company’s programs or products or participate in the future.  GSS entered into a testing agreement with 7-Eleven dated August 10, 2009, which is now expired. However, the parties have agreed verbally to extend the terms of the agreement indefinitely. We expect the testing to be completed by the end of the second quarter of 2010.

ENVIRONMENTAL LAWS

Company operations currently have no material effect on the environment.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Prospectus contains forward-looking statements about the Company’s business, financial condition, and prospects that reflect GSS management’s assumptions and beliefs based on information currently available.  The Company can give no assurance that the expectations indicated by such forward-looking statements will be realized.  If any of the Company assumptions should prove incorrect, or if any of the risks and uncertainties underlying such expectations should materialize, the actual results may differ materially from those indicated by the forward-looking statements.

The key factors that are not within the Company’s control and that may have a direct bearing on operating results include, but are not limited to, the Company’s ability to establish a customer base, managements’ ability to raise capital in the future, the retention of key employees and changes in the regulation of the industry in which the Company functions.

There may be other risks and circumstances that management may be unable to predict to sustain operations.  When used in this Prospectus, words such as “believes,” “expects,” “intends,” “plans,” “anticipates,” “estimates” and similar expressions are intended to identify and qualify forward-looking statements, although there may be certain forward-looking statements not accompanied by such expressions.

 
14

 

USE OF NET PROCEEDS

In the first 12 months, the projected use of funds has been forecasted and prioritized as follows:

   
At 25% Maximum Offering
   
At 50% Maximum Offering
   
At 75% Maximum Offering
   
At the Maximum Offering
 
 Compensation
    518,294       1,151,588       1,671,538       1,784,625  
 Total G & A Compensation
    518,294       1,151,588       1,671,538       1,784,625  
                                 
 Legal / Professional Expense
    76,656       213,613       350,569       589,700  
 Insurance
    50,000       50,000       50,000       75,000  
 Travel & Entertainment Expense
    70,000       125,000       200,000       450,000  
                                 
 Rent and Utilities
    50,000       50,000       75,000       100,000  
 Office Expenses
    12,500       25,000       37,500       50,000  
 Training Expense
    30,000       60,000       90,000       120,000  
                                 
 Total General & Administration
    289,156       523,613       803,069       1,384,700  
                                 
 Sales & Marketing Expense
    145,000       290,000       435,000       580,000  
                                 
 Plant and Equipment
                               
 Furniture and Fixtures
    30,000       60,000       90,000       120,000  
 Marketing & Training Center
    -       -       30,000       40,000  
 Machines
    145,250       290,500       435,750       726,250  
 Shipping & Installation
    5,000       10,000       15,000       25,000  
 Other
    10,000       20,000       68,344       91,125  
 Plant and Equipment
    190,250       380,500       639,094       1,002,375  
 Data systems
    47,000       94,000       141,000       188,000  
 Capital Expenditures
    237,250       474,500       780,094       1,190,375  
                                 
 Total Startup Capital Needs
    1,189,700       2,439,700       3,689,700       4,939,700  

Without realizing the offering proceeds, the Company will not be able to continue with planned operations and implement its business plan.

The offering scenarios presented are for illustrative purposes only and the actual amount of proceeds, if any, may differ.
 
Because there is no minimum number of shares that must be sold in the offering, we can provide no assurance regarding the amount of capital we will actually raise in the offering. We intend to use the proceeds to improve our capital position, to fund our business plan, and to retain the remainder of any proceeds for working capital and general corporate purposes. We believe a strengthened capital position will provide us with the flexibility to address market conditions. Our management will retain broad discretion in deciding how to allocate the net proceeds of this offering. The precise amounts and timing of our use of the net proceeds will depend upon market conditions and other factors.

Please refer to the section entitled “Management’s Discussion and Analysis” (MD&A) for further information.


 
15

 

DETERMINATION OF OFFERING PRICE

The offering price of the Common Stock has been arbitrarily determined and bears no relationship to any objective criterion of value.  The price does not bear any relationship to the Company’s assets, book value, historical earnings, or net worth.

DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES

“Dilution” represents the difference between the offering price of the shares of Common Stock and the net book value per share of Common Stock immediately after completion of the offering.  “Net Tangible Book Value” is the amount that results from subtracting total liabilities and intangible assets from total assets.  In this offering, the level of dilution is increased as a result of the relatively low book value of the Company’s issued and outstanding stock.  Please refer to the section entitled “Certain Transactions,” herein, for more information.  The Company’s net book value on September 30, 2009, was $116,209.  Assuming all the shares offered are sold and, in effect, the Company receives the maximum estimated proceeds of this offering, the Company’s net book value will be approximately $.00119 per share.  Therefore, any investor will incur an immediate and substantial dilution of approximately $.24881 per share while the Company’s present stockholders will receive an increase of $.24881 per share in the net tangible book value of the shares that they hold.  This will result in 99% dilution for purchasers of stock in this offering.
 
The following table summarizes the per share dilution as of February 9, 2010:

Public offering price per share
 
$
0.25
 
     Net tangible book value per share before this offering
 
$
0.0015
 
     Increase per share attributable to new investors
 
$
0.24881
 
Adjusted net tangible book value per share after this offering
 
$
0.00119
 
Dilution per share to new investors
 
$
0.24881
 
Percentage dilution
   
99%
 

The following tables set forth for the maximum number of shares offered hereby as of February 9, 2010, (i) the number of shares of Common Stock purchased from the Company, the total consideration paid to the Company and the average price per share paid by the current shareholders, and (ii) the number of shares of Common Stock offered by the Company and total consideration to be paid by new investors in this offering at an offering price of $0.25 per share.
 
 
Shares Purchased
 
Total Consideration
 
Per
 
Number
Percent
 
Amount
 
Share
Current shareholders
77,626,604
79%
 
  $
406,651
 
0.005
New investors
20,000,000
21%
 
  $
5,000,000
 
0.250
Total
97,626,604
100%
 
  $
5,406,651
 
 0.055
 
The following dilution table is if only 25% of the Offering is sold as of February 9, 2010
 
   
Shares Purchased
   
Total Consideration
   
Per
   
Number
   
Percent
   
Amount
   
Share
Current shareholders
    77,626,604       94 %   $ 406,651       0.005  
New investors
    5,000,000       6 %   $ 1,250,000       0.250  
Total
    82,626,604       100 %   $ 1,656,651       0.02  
 

 
16

 

SELLING SHAREHOLDERS

The following table sets forth the shares beneficially owned, as of February 9, 2010, by the selling shareholders prior to the offering contemplated by this Prospectus, the number of shares each selling security holder is offering by this Prospectus and the number of shares which each would own beneficially if all such offered shares are sold.

Beneficial ownership is determined in accordance with Securities and Exchange Commission rules.  Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or direct the voting of the security, or investment power, which includes the power to dispose of, or to direct the disposition of, the security.  The person is also deemed to be a beneficial owner of any security of which that person has a right to acquire beneficial ownership within 60 days.  Under the Securities and Exchange Commission rules, more than one person may be deemed to be a beneficial owner of the same securities, and a person may be deemed to be a beneficial owner of securities as to which he or she may not have any pecuniary beneficial interest.  Except as noted below, each person has sole voting and investment power.

None of the selling shareholders is a registered broker-dealer or an affiliate of a registered broker-dealer.  Each of the selling shareholders has acquired his, her or its shares pursuant to a private placement solely for investment and not with a view to or for resale or distribution of such securities.  The shares were offered and sold to the selling shareholders at a purchase price of $0.15 per share in a private placement, pursuant to the exemption from the registration under the Securities Act provided by section 4(2) of the Securities Act and Regulation D.  None of the selling shareholders are affiliates or controlled by our affiliates and none of the selling shareholders are now or were at any time in the past an officer or Director of the Company or of any of our predecessors or affiliates.  None of the selling shareholders has had any material relationship with the Company within the past three years.

The percentages below are calculated based on 97,626,604 shares of our Common Stock issued and outstanding.  We do not have any outstanding options, warrants or other securities presently exercisable for or convertible into shares of our Common Stock.

   
Name of Selling Stockholder, Position, Office or Material Relationship with Company
 
Common Stock Owned by the Selling Stockholder2
   
Total Shares to be Registered Pursuant to this Offering and Percent of Common Stock Before Offering
   
Number of Shares Owned by Selling Stockholder After Offering and Percent of Total Issued and Outstanding1
 
  1  
Susan M. Aldridge (Family #27)
    10,000       10,000 *     0 *
  2  
John Bateman (Friend #108)
    10,000       10,000 *     0 *
  3  
John L. Belsito (Friend #51)
    33,334       33,334 *     0 *
  4  
Nancy C. Blackmore (Friend #55)
    20,000       20,000 *     0 *
  5  
George Thomas  Bohannon (Friend #75)
    20,000       20,000 *     0 *
  6  
Yvonne  Britt (Friend #2)
    10,000       10,000 *     0 *
  6  
Tee Chan (Friend #NA)
    20,000       20,000 *     0 *
  7  
Tee Chan (Friend #17)
    20,000       20,000 *     0 *
  7  
Tee Chan (Friend #NA)
    20,000       20,000 *     0 *
  7  
Tee Chan (Friend #NA)
    20,000       20,000 *     0 *
  7  
Tee Chan (Friend #NA)
    40,000       40,000 *     0 *
  8  
Kay Cole (Friend #48)
    20,000       20,000 *     0 *
  9  
 Cone Family Trust (Friend #28)
    10,000       10,000 *     0 *
  9  
 Cone Family Trust (Friend #NA)
    10,000       10,000 *     0 *
  10  
Duncan and John Crabtree-Ireland as JTWROS (Family #52)
    10,000       10,000 *     0 *
  11  
Friley S. Davidson (Friend #68)
    30,000       30,000 *     0 *
  11  
Friley Davidson (Friend #NA)
    30,000       30,000 *     0 *
  12  
Yvonne D. Doty (Friend #37)
    10,000       10,000 *     0 *
  13  
John William Gardner (Friend #31)
    10,000       10,000 *     0 *
  14  
Gregory George (Friend #45)
    35,000       35,000 *     0 *
  15  
Timothy J. and Amy M. Graver (Family #97)
    10,000       10,000 *     0 *
  16  
Jeanie Green (Friend #83)
    10,000       10,000 *     0 *


 
17

 

  16  
Jeanie Green (Friend #NA)
    56,667       56,667 *     0 *
  17  
Harriet Halsell (Friend #67)
    10,000       10,000 *     0 *
  18  
Edward F. Halsell, Jr. (Friend #18)
    20,000       20,000 *     0 *
  19  
Thane Hayhurst (Friend #44)
    42,001       42,001 *     0 *
  20  
Shirley James (Friend #61)
    10,000       10,000 *     0 *
  21  
Paul M. Kester (Friend #64)
    33,334       33,334 *     0 *
  21  
Paul M. Kester (Friend #NA)
    6,667       6,667 *     0 *
  22  
Michael J. Kilhoffer (Friend #121)
    70,000       70,000 *     0 *
  22  
Gregory N. Kilhoffer (Friend #NA)
    30,000       30,000 *     0 *
  23  
Gregory Kilhoffer (Friend #19)
    16,000       16,000 *     0 *
  23  
Gregory Kilhoffer (Friend #NA)
    14,000       14,000 *     0 *
  23  
Gregory Kilhoffer (Friend #NA)
    20,000       20,000 *     0 *
  23  
Patrick King (Friend #NA)
    10,000       10,000 *     0 *
  24  
Patrick King (Friend #20)
    10,000       10,000 *     0 *
  24  
Patrick King (Friend #NA)
    10,000       10,000 *     0 *
  24  
Patrick King (Friend #NA)
    10,000       10,000 *     0 *
  25  
Judith N. Kline (Family #58)
    10,000       10,000 *     0 *
  26  
Rodger D. Kobes (Friend #5)
    10,000       10,000 *     0 *
  27  
Michael Kutner (Friend #113)
    10,000       10,000 *     0 *
  27  
Michael Kutner (Friend #NA)
    10,000       10,000 *     0 *
  28  
 Lynette Felder Tiller Protection Trust (Family #81)
    34,000       34,000 *     0 *
  29  
Tom Malin (Friend #71)
    10,000       10,000 *     0 *
  30  
Robert Manza (Friend #14)
    35,000       35,000 *     0 *
  31  
David F. Martineau (Friend #21)
    20,000       20,000 *     0 *
  32  
Audrey W. May (Friend #6)
    10,000       10,000 *     0 *
  33  
Lynn and Allan McBee (Friend #41)
    10,000       10,000 *     0 *
  34  
Thomas E. McCullough (Friend #7)
    30,000       30,000 *     0 *
  35  
Bethany Moffett (Family #34)
    10,000       10,000 *     0 *
  35  
Edward P. Oakley (Friend #NA)
    20,000       20,000 *     0 *
  36  
Edward P. Oakley (Friend #22)
    20,000       20,000 *     0 *
  36  
Edward P. Oakley (Friend #NA)
    20,000       20,000 *     0 *
  36  
Edward P. Oakley (Friend #NA)
    20,000       20,000 *     0 *
  36  
Edward P. Oakley (Friend #NA)
    40,000       40,000 *     0 *
  37  
M. Anne O'Connell (Friend #72)
    10,000       10,000 *     0 *
  38  
Joetta Phillips (Family #77)
    10,000       10,000 *     0 *
  39  
Marshall Prichard (Friend #109)
    10,000       10,000 *     0 *
  40  
Julia M. Prichard (Friend #110)
    10,000       10,000 *     0 *
  41  
Demetrius B. Roberts (Family #8)
    13,933       13,933 *     0 *
  42  
Natalie D. Roberts (Family #9)
    10,000       10,000 *     0 *
  43  
Emily Roberts-Bernau (Family #36)
    10,000       10,000 *     0 *
  44  
 Ron Adams and Tim Ronan (Friend #40)
    50,000       50,000 *     0 *
  45  
Patricia Salvaggio (Friend #120)
    10,000       10,000 *     0 *
  45  
Patricia Salvaggio (Friend #NA)
    10,000       10,000 *     0 *
  46  
Charles F. Salvaggio (Friend #23)
    10,000       10,000 *     0 *
  46  
Charles F. Salvaggio (Friend #NA)
    10,000       10,000 *     0 *
  46  
Charles F. Salvaggio (Friend #NA)
    10,000       10,000 *     0 *
  46  
Charles F. Salvaggio (Friend #NA)
    20,000       20,000 *     0 *
  47  
Stephen L. Shepherd (Friend #56)
    10,000       10,000 *     0 *
  48  
Jo Ann Sloan (Friend #94)
    10,000       10,000 *     0 *
  49  
Suzanne Slonim (Friend #10)
    20,000       20,000 *     0 *
  50  
Donald Soloman (Friend #119)
    10,000       10,000 *     0 *
  51  
Jyri Strandman (Friend #86)
    200,000       200,000 *     0 *
  52  
Jan Strimple (Friend #76)
    10,000       10,000 *     0 *
  53  
MeLissa Tambourine-Natale (Family #35)
    10,000       10,000 *     0 *
  54  
W. J. & Martha J. Tiller (Family #11)
    20,000       20,000 *     0 *
  55  
Bryan  Walker (Friend #78)
    13,334       13,334 *     0 *
  56  
Clyde James White (Friend #82)
    20,000       20,000 *     0 *
  57  
Robert B. Yudkin (Friend #57)
    13,334       13,334 *     0 *
                               
     
TOTAL Selling Shareholders' Shares:
    1,626,604       1,626,604       0  
  *     Less than 1%

 
1)
Assumes all of the shares of Common Stock offered are sold, and 97,626,604 shares of Common Stock are issued and outstanding.

 
2)
Beneficial ownership is determined in accordance with SEC rules and generally includes voting or investment power with respect to securities.  
 
We may require the selling shareholders to suspend the sales of the securities offered by this Prospectus upon the occurrence of any event that makes any statement in this Prospectus, or the related registration statement, untrue in any material respect or that requires the changing of statements in these documents in order to make statements in those documents not misleading.  We will file a post-effective amendment to this registration statement to reflect any material changes to this Prospectus.

 
18

 

PLAN OF DISTRIBUTION
 
The Company intends to have the Common Stock quoted on the Over the Counter Bulletin Board upon completion of the offering.

There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained.  A broker-dealer potentially serving as market maker for the Company’s Common Stock must file an application with FINRA in order to be able to quote the shares of our Common Stock on the Over the Counter Bulletin Board (“OTCBB”). The Company is seeking out a market maker to have our Common Stock quoted on the OTCBB.  The OTCBB is not a listing service or exchange, but is instead a dealer quotation service for subscribing members.  There can be no assurance that the market maker’s application will be accepted by FINRA, nor can we accurately predict the time period that the application will require.  If for any reason our Common Stock is not quoted on the OTCBB or a public trading market does not otherwise develop, purchasers of the shares of the Company’s Common Stock may have difficulty selling their Common Stock should they desire to do so.  No market makers have committed to becoming market makers for our Common Stock at this time and none may do so.  See “Risk Factors -- YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR THE COMPANY’S COMMON STOCK” and  “Risk Factors -- IF IN THE FUTURE WE ARE TRADING ON THE OTCBB AND WE FAIL TO REMAIN CURRENT ON OUR PUBLIC COMPANY REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTCBB, WHICH WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.”

Companies trading on the OTCBB must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCBB.  If we fail to remain current on our reporting requirements, we could be removed from the OTCBB.  As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.
 
SHARES OFFERED BY THE COMPANY IN THIS OFFERING WILL BE SOLD BY OUR OFFICERS AND DIRECTORS
 
This is a self-underwritten offering with no minimum sale requirement.  Our officers and directors will sell the shares directly to the public, with no commission or other remuneration payable to them for any shares that are sold by them.  There are no plans or arrangements to enter into any contracts or agreements to sell the shares with a broker or dealer.  Mr. Tiller and our other officers and directors will sell the shares and intend to offer them to friends, family members and business acquaintances.  In offering the securities on our behalf, they will rely on the safe harbor from broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange Act of 1934.
 
Rule 3a4-1 sets forth those conditions under which a person associated with an Issuer may participate in the offering of the Issuer’s securities and not be deemed to be a broker-dealer.  Those conditions are as follows:
 
a.           Our officers and directors are not subject to a statutory disqualification, as that term is defined in Section 3(a)(39) of the Act, at the time of their participation; and

b.           Our officers and directors will not be compensated in connection with their participation by the payment of commissions or other remuneration based either directly or indirectly on transactions in securities; and

c.           Our officers and directors are not, nor will they be at the time of their participation
in the offering, an associated person of a broker-dealer; and

d.           Our officers and directors meet the conditions of paragraph (a)(4)(ii) of Rule 3a4-1 of the Exchange Act, in that they (A) primarily perform, or intend primarily to perform at the end of the offering, substantial duties for or on behalf of our Company, other than in connection with transactions in securities; and (B) are not a broker or dealer, or have been associated person of a broker or dealer, within the preceding twelve months; and (C) have not participated in selling and offering securities for any Issuer more than once every twelve months other than in reliance on Paragraphs (a)(4)(i)  and (a)(4)(iii).

Our officers, directors, control persons and affiliates of same do not intend to purchase any shares in this offering.

 
19

 


We are bearing all costs relating to the registration of the shares of Common Stock offered by the Company.
 
TERMS OF THE COMPANY’S OFFERING
 
The shares will be sold at the fixed price of $0.25 per share until the completion of this offering.  There is no minimum amount of subscription required per investor, and subscriptions, once received, are irrevocable.
 
This offering will commence on the date of this Prospectus and continue for a period not to exceed 180 days.
 
SALES BY SELLING SHAREHOLDERS
 
The selling shareholders also may sell up to 1,626,604 shares of Common Stock at prevailing market prices or privately negotiated prices, once shares of our Common Stock are quoted on the OTCBB, or listed for trading or quoted on any other public market.
 
The selling shareholders may sell some or all of their Common Stock in one or more transactions, including block transactions once shares of GSS Common Stock are quoted on the OTCBB:

·
on such public markets as the Common Stock may be trading;
·
in privately negotiated transactions; or
·
in any combination of these methods of distribution.

The sales price to the public may be:

·
$0.25 as in this offering
·
the market price prevailing at the time of sale;
·
a price related to such prevailing market price; or
·
such other price as the selling shareholders determine.

The selling shareholders will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the Common Stock.
 
The selling shareholders must comply with the requirements of the Securities Act and the Exchange Act in the offer and sale of the Common Stock.  In particular, during such times as the selling shareholders may be deemed to be engaged in a distribution of the Common Stock, and therefore be considered an underwriter, they must comply with applicable laws and may, among other things:

·
not engage in any stabilization activities in connection with our Common Stock;
·
furnish each broker or dealer through which common stock may be offered, such copies of this Prospectus, as amended from time to time, as may be required by such broker or dealer; and
·
not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Exchange Act.

None of the selling shareholders will engage in any electronic offer, sale, or distribution of the shares.  Further, neither we nor any of the selling shareholders have any arrangements with a third party to host or access our Prospectus on the Internet.
 
The selling shareholders and any underwriters, dealers or agents that participate in the distribution of our Common Stock may be deemed underwriters, and any commissions or concessions received by any such underwriters, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act.  Shares may be sold from time to time by the selling shareholders in one or more transactions at a fixed offering price, which may be changed, or at any varying prices determined at the time of sale or at negotiated prices.  We may indemnify any underwriter against specific civil liabilities, including liabilities under the Securities Act.
 
DEPOSIT OF OFFERING PROCEEDS FROM THE COMPANY’S OFFERING

This is a “best effort,” offering and, as such, we will be able to spend any of the proceeds.  The funds will be transferred to our business account for use in the implementation of our business plans


 
20

 

PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION

If you decide to subscribe for any shares in this offering, you will be required to execute a Subscription Agreement and tender it, together with a check or certified funds to us.  Subscriptions, once received by the Company, are irrevocable.  All checks for subscriptions should be made payable to the Company.  There is no minimum purchase requirement.

DESCRIPTION OF SECURITIES

COMMON STOCK
 
Our authorized capital stock consists of 100,000,000 shares of Common Stock, no par value per share.  The holders of Common Stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders and do not have cumulative voting rights. Upon liquidation, dissolution or winding up of the Company, holders of Common Stock will be entitled to share ratably in all of the Company’s assets that are legally available for distribution, after payment of all debts and other liabilities. The holders of the Common Stock have no preemptive, subscription, redemption or conversion rights.

The board of directors of the corporation is granted authority to, from time to time (1) establish by resolution one or more series of unissued shares of the class of preferred stock by specifying the designations, preferences, limitations, and relative rights, including voting rights, of the series to be established and (2) issue shares of the series of preferred stock so established.   However, GSS’ Board of Directors has no present intention of authorizing the issuance of preferred stock by the Company.”

NON-CUMULATIVE VOTING

Holders of shares of our Common Stock do not have cumulative voting rights, which means that the holders of more than 50% of the outstanding shares, voting for the election of directors, can elect all of the directors to be elected, if they so choose, and, in such event, the holders of the remaining shares will not be able to elect any of our directors.  After this offering is completed, the present stockholders will own 79.4% of our outstanding shares and the purchasers in this offering will own 20.6%.

DIVIDEND POLICY

The Company does not anticipate paying dividends on the Common Stock at any time in the foreseeable future.  The Company’s Board of Directors currently plans to retain earnings for the development and expansion of the Company’s business.  Any future determination as to the payment of dividends will be at the discretion of the Board of Directors of the Company and will depend on a number of factors including future earnings, capital requirements, financial conditions and such other factors as the Board of Directors may deem relevant.

INTERESTS OF NAMED EXPERTS AND COUNSEL

None of the below described experts or counsel have been hired on a contingent basis and none of them will receive a direct or indirect interest in the Company.
 
Our audited financial statements for the periods ended December 31, 2007(audit), December 31, 2008 (audit), and September 30, 2009 (reviewed), included in this Prospectus have been audited/reviewed by the firm of Seale & Beers, CPAs, LLC. We include the financial statements in reliance on their report, given upon their authority as experts in accounting and auditing.
 
The Law Offices of Novi & Wilkin has passed upon the validity of the shares being offered and certain other legal matters and is representing us in connection with this offering.
 
DESCRIPTION OF OUR BUSINESS

GENERAL INFORMATION ABOUT OUR COMPANY
 
The Global Smoothie Supply, Inc. business model contemplates that the Company will generate revenue from three activities:

 
1)
The sale of smoothie blending equipment
 
2)
The sale of the puree to make the smoothies
 
3)
The sale of parts and service for the smoothie blending equipment

 
21

 

Global Smoothie Supply has worked with Blendtec to develop a turnkey smoothie program designed for the convenience store channel as well as other channels.  Our agreement with Blendtec, among other things, gives GSS the first right to purchase all of Blendtec’s S3 Smoothie Blender production., unless the Company declines to purchase such production.

The Blendtec S3 Smoothie Machine is a self-serve smoothie machine specially designed for GSS by Blendtec.  The Company couples the S3 Smoothie Machine with other equipment, including an ice machine that mounts to the top of the Blendtec S3 Machine, a backup water heater, a custom cabinet and a puree cart.   The Company’s contractual arrangement with Blendtec contemplates that the Company will purchase the S3 Smoothie Machine from Blendtec, for resale to purchasing accounts.  .

GSS purchases the balance of the components directly from its supplier network and the Company currently has no formal contractual arrangements with those suppliers.  The Company purchases proprietary formulas of the purees developed specially for use with the S3 Blender, directly from its supplier network, for resale to purchasing customers.

Additionally, GSS provides for a fee the installation and service for the smoothie machine and related equipment as an ongoing benefit to purchasing customers.

Our practice is to purchase inventory as close to customers’ time of need as possible.  This practice has allowed GSS to carry minimal inventory.

The Global Smoothie Supply initial route-to-market focus will be against chain convenience stores.  GSS will use a direct sales force as well as national convenience store brokers to secure business with chain convenience stores.

 
1)
GSS and its brokers will develop a target list of convenience stores to pursue.   We will work jointly to secure appointments and market the blending equipment, bag-in-box puree, and attendant services to these target accounts.
 
2)
GSS will attend and present the S3 blender and our turnkey smoothie program at various industry trade shows to introduce our turnkey smoothie program to these various trades.
 
3)
Following the sale of equipment and puree, GSS intends to offer various marketing programs to develop our turnkey smoothie program with GSS customers.  These programs will include, among other things, sampling programs, price promotions, and advertising and public relations programs.

Upon completion of our public offering, our specific goal is to profitably sell and market our turnkey self -serve smoothie program.  We intend to accomplish the foregoing through the following milestones over the next 12 month period:

Complete our public offering.  We believe this could take up to 180 days from the date of this Prospectus.  These costs are estimated at $60,300.

After completing the offering, we will begin to hire a staff focused against sales, marketing and operations.  We believe it will take approximately 12 months to complete hiring all staff; however, acquiring and retaining talent will be an ongoing effort of the Company.  The estimated cost for the first 12 months is $1,784,625

The Company, immediately after funding, will attempt to rent appropriate office space and build the proper administrative systems to manage the business effectively.  We expect this process to take approximately 12 months.  Estimated costs are $784,125.

As funds from the offering become available, the Company will begin acquiring equipment inventory for the purposes of reselling this equipment to purchasing accounts.  Additionally the Company will begin a training program for employees to ensure all employees are knowledgeable about our product, equipment, competition and our potential customers.  These programs will be ongoing; however, our estimated costs for the first 12 months of operations are $751,250.

Since sales and marketing behind our turnkey self-serve smoothie program is critical, we will activate sales and marketing programs immediately after funding.  These programs will include, among other things, local media, point-of-sale programs, introductory price promotions, attendance at trade shows, website development, and on-line marketing programs.  Because of their importance, the sales and marketing programs will be ongoing.  Estimated cost for the first 12 months is $1,030,000.

 
22

 


Because of the complexity of being a publicly traded Company, we have budgeted a significant amount of money to perform the activities necessary to remain compliant with all applicable laws and regulations.  This includes the hiring of outside professionals and expert consultants to advise us in our activities.  These will be ongoing costs.  Estimated costs for the first 12 months are $589,700.

These activities and milestones are reflective of the Company raising 100% of our offering.  In the event we are unsuccessful in raising 100% of our offering, we will scale back our operation as outlined in the various use of proceeds examples.

Because there is no minimum number of shares that must be sold in the offering, we can provide no assurance regarding the amount of capital we will actually raise in the offering. We intend to use the proceeds to improve our capital position, to fund our business plan, and to retain the remainder of any proceeds for general corporate purposes. We believe a strengthened capital position will provide us with the flexibility to address market conditions. Our management will retain broad discretion in deciding how to allocate the net proceeds of this offering. The precise amounts and timing of our use of the net proceeds will depend upon market conditions and other factors.

INDUSTRY BACKGROUND
 
The market for self-serve smoothies is well-defined. There were 144,875 convenience stores in the United States in 2008 and, according to Convenience Store Decisions*, http://www.csdecisions.com/article/7125, a resource for the food services industry, these stores accounted for nearly $174 billion in in-store sales.  We believe this represents a great opportunity for the GSS self-serve smoothie program.
 
According to Mintel research*, the market for health-conscious products continues to grow rapidly. In 2006, smoothie makers raked in more than $2 billion from made-to-order and packaged smoothies, up more than 80 percent in the years 2001-2006.  Smoothies have quickly become part of the American landscape, with more than 4,000 retail locations reported in the U.S. in 2006, and with more than half of Mintel respondents in the 18 to 34 year-old range reporting that they had a smoothie in the last month. “Consumers are attracted to smoothies because they are seen as a healthier option to most sweets and on-the-go meals,” said David Lockwood, director of Mintel Reports. “Now that the smoothie market is a proven success, companies are being pushed to the next level — extreme differentiation. Similar to the coffee market, smoothie companies need to continue developing innovative flavors and additives to keep consumers engaged in the market, but also should consider expanding the menu as some chains have done with sandwiches or coffee.”
__________________________
*  http://www.foodprocessing.com/industrynews/2007/026.html.

The smoothie industry’s new offerings are using emerging flavors, such as açaí and green tea, and hybrids of smoothies with other drink types. New nutrient “boosts” feed consumer need for evolving offerings as well. Smoothie companies have also remained on track with current food trends, utilizing “all-natural,” low-calorie and other key buzz properties to build sales.
 
“The flavor combinations and possibilities are endless with the smoothie market,” said Lockwood. “With functional foods and beverages having a strong marketplace advantage, smoothies are in position to dominate the healthy beverages category. Smoothies are seen as a pleasant health treat, and this will continue to take the category far.” In contrast with yogurt drinks, 39 percent of Mintel respondents agreed or strongly agreed that “smoothies are healthier than drinks made with yogurt.” Similarly, more than half of consumers agreed or strongly agreed that “smoothies taste better than yogurt drinks,” with yogurts getting only 15 percent.
 
*All facts and statistics presented in this Industry Background section are from Convenience Store Decisions and foodprocessing.com.  These reports and studies are publicly available without cost or at a nominal expense. GSS has not commissioned any of these reports.
 
On August 10, 2009, GSS entered into a formal testing agreement with 7-Eleven, Inc.  That agreement has expired; however, the parties have agreed verbally to extend the term of the agreement indefinitely and 7-Eleven is continuing to test the equipment in collaboration with the Company. We expect the testing to be completed by the end of the second quarter of 2010.  The Company is hopeful that a successful test with 7-Eleven, Inc. will result in a more substantive commitment on the part of 7-Eleven, Inc., and a rollout of the Company’s business concept to other convenience store chains.
 

 
23

 

PRINCIPAL PRODUCTS AND THEIR MARKETS

The GSS idea is simple: to transform the fruit puree smoothie market by offering consumers a new approach -- a “grab-and-go” convenience store alternative.  Therefore, the GSS smoothie machine is tailored to the Convenience Store (C-store) environment.
 
Our manufacturer, Blendtec, is a developer of automated dispensing/blending equipment.  The self-serve smoothie machine designed for GSS by Blendtec has Electrical Testing Laboratories (ETL) and National Safety Federation (NSF) certification.

DISTRIBUTION METHODS

The machine is designed to accommodate easy-to-use modular “bag in box” cased product, the puree.  These puree formulations have been developed and co-branded exclusively for GSS, and are manufactured and distributed on our behalf.

The flavor line has the capacity for future expansion and modification, with an initial menu that includes multiple fruit-based choices and one coffee-based offering.  GSS hopes to promote, install, and maintain the machines using a nationwide sales force and a network of trained service technicians.

Management believes that an expansion strategy focusing on Convenience Stores and other channels would provide a great degree of quality and add significant scale to our business model.  We intend to follow a strategy of expanding store locations in existing markets.  We will grow our concept and brand through several channels, including C-stores and other retail channels.  These other channels would include Fast-Food Restaurants, sports venues, university campuses and high schools, resorts and cruise ships, sports, racquetball, health and country clubs, business and hospital complexes, as well as any high-traffic portals, like airports, sea ports, and train and bus stations.

STATUS OF ANY PUBLICLY ANNOUNCED PRODUCTS
 
None at this time
 
 
To the best of the Company’s knowledge, there currently are no other companies offering self-service smoothies from smoothie machines that are both self-cleaning and self-sanitizing.  Consequently, the Company will effectively be establishing a new niche market for this smoothie machine and the related services offered by the Company.

Of the myriad companies offering smoothies throughout the U.S., including smoothie shops and other retail smoothie outlets, no one provider is dominant in the industry.  The Company will not seek to open any retail shops, but rather will seek to place its smoothie machines into businesses that would become dominant in their respective markets.  The Company considers cost, quality and convenience to be major factors in an individual’s selection of retail outlets from which to buy smoothies, and using those metrics, the Company’s S3 Smoothie Machine is anticipated to help the Company’s customers establish a dominant presence in their respective markets.

PATENTS AND TRADEMARKS

The Company currently has no registered patents.

GOVERNMENT AND INDUSTRY REGULATION

We are subject to various federal, state and local regulations.  Our products and equipment are subject to state and local regulation by health, sanitation, food and workplace safety and other agencies.  We may experience material difficulties or failures in obtaining the necessary licenses or approvals for new products and equipment, which could delay planned execution of our business plan.  Our operations are also subject to the U.S. Fair Labor Standards Act, which governs such matters as minimum wages, overtime and other working conditions, along with the U.S. Americans with Disabilities Act, family leave mandates and a variety of similar laws enacted by the states that govern these and other employment law matters.  In addition, federal proposals to introduce a system of mandated health insurance and flexible work time and other similar initiatives could, if implemented, adversely affect our operations.  In recent years, there has been an increased legislative, regulatory and consumer focus on nutrition and advertising practices in the food industry.  Establishments operating in C-stores and other approved channels, the quick-service, and fast-casual segments have been a particular focus.  As a result, we may in the future become subject to initiatives in the area of nutrition disclosure or advertising, such as requirements to provide information about the nutritional content of our products, which could increase our expenses.

 
24

 


RESEARCH AND DEVELOPMENT ACTIVITIES

Our Research & Development has been conducted with participation by the Company, Management at 7-Eleven, Inc, K-Tec, Inc. (Blendtec) and others to assure our product offerings align most closely with the requirements of 7-Eleven and the needs of our initial target convenience store market.  However, these research and development efforts do not guarantee 7-Eleven will purchase the Company’s programs or products or participate in the future.  GSS entered into a testing agreement with 7-Eleven dated August 10, 2009, which is now expired. However, the parties have agreed verbally to extend the terms of the agreement indefinitely. We expect the testing to be completed by the end of the second quarter of 2010.


Company operations currently have no material effect on the environment.

EMPLOYEES AND EMPLOYMENT AGREEMENTS

David C. Tiller, Donald M. Roberts, Harry B. Ireland and John W. Gohsman have employment agreements.
 
STATUS OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS

None at this time

DESCRIPTION OF PROPERTY

The Company currently maintains one showroom located at 1444 Oak Lawn in Dallas, TX, on a month-to-month rental arrangement.

LEGAL PROCEEDINGS

There are no lawsuits filed or pending against the Company by others, and no lawsuits filed or pending against others by the Company.  There are no contingencies, sureties or guaranties in existence.
  
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
 
YOU MAY NOT BE ABLE TO SELL YOUR SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR THE COMPANY’S STOCK.

The Company intends to have the Common Stock quoted on the Over the Counter Bulletin Board upon completion of the offering.

There is currently no established public trading market for our securities and an active trading market in our securities may not develop or, if developed, may not be sustained.  A broker-dealer potentially serving as market maker for the Company’s Common Stock must file an application with FINRA in order to be able to quote the shares of our Common Stock on the Over the Counter Bulletin Board (“OTCBB”). The Company is seeking out a market maker to have our Common Stock quoted on the OTCBB.  The OTCBB is not a listing service or exchange, but is instead a dealer quotation service for subscribing members.  There can be no assurance that the market maker’s application will be accepted by FINRA, nor can we accurately predict the time period that the application will require.  If for any reason our Common Stock is not quoted on the OTCBB or a public trading market does not otherwise develop, purchasers of the shares of the Company’s Common Stock may have difficulty selling their Common Stock should they desire to do so.  No market makers have committed to becoming market makers for our Common Stock at this time and none may do so.

Companies trading on the OTCBB must be reporting issuers under Section 12 of the Exchange Act, and must be current in their reports under Section 13 of the Exchange Act, in order to maintain price quotation privileges on the OTCBB.  If we fail to remain current on our reporting requirements, we could be removed from the OTCBB.  As a result, the market liquidity for our securities could be adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.


 
25

 

STOCK TRANSFER AGENT
 
Securities Transfer Corporation
2591 Dallas Pkwy., Ste 102
Frisco, TX 75034
Phone: 972-963-0001
Fax: 469-633-0088
www.stctransfer.com

REPORTS

We are subject to certain reporting requirements and will furnish annual financial reports to our stockholders, certified by our independent accountants, and will furnish un-audited quarterly financial reports in our quarterly reports filed electronically with the SEC.  All reports and information filed by us can be found at the SEC website, www.sec.gov.

Our fiscal year end is December 31.  We intend to provide financial statements audited by an Independent Registered Accounting Firm (PCOAB) to our shareholders in our annual reports.  The audited financial statements at December 31, 2007, December 31, 2008, and the reviewed financials for the 9 months ended September 30, 2009 immediately follow.


 
 

 










 
26

 


SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED AUDITORS
www.sealebeers.com

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Global Smoothie Supply, Inc.

We have audited the accompanying restated balance sheets of Global Smoothie Supply, Inc. as of December 31, 2008 and December 31, 2007, and the related restated statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2008 and December 31, 2007. These financial statements are the responsibility of the Company’s management.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conduct our audits in accordance with standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement.  An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements.  An audit also includes assessing the accounting principles used and significant estimates 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 Global Smoothie Supply, Inc.  as of December 31, 2008 and December 31, 2007, and the related statements of operations, stockholders’ equity (deficit) and cash flows for the years ended December 31, 2008 and December 31, 2007, 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 7 to the financial statements, the Company has had an accumulated deficit of $1,007, which raises substantial doubt about its ability to continue as a going concern.  Management’s plans concerning these matters are also described in Note 7.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

/s/ Seale and Beers, CPAs

Seale and Beers, CPAs
Las Vegas, Nevada
January 6, 2010  -  Robert Seale 1/6/10


50 S. Jones Blvd. Suite 202 Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351
 
 
27

 

GLOBAL SMOOTHIE SUPPLY, INC.
BALANCE SHEET

   
December 31,
 
   
2008
   
2007
 
   
Restated
 
ASSETS
           
             
Current Assets
           
Cash
  $ 6,848     $ 386  
Accounts Receivable
    4,118       -  
Vertex Factoring Holding Account
    31,660       -  
Total Current Assets
  $ 42,626     $ 386  
                 
Fixed Assets
               
Furniture and Equipment
  $ 2,163     $ -  
    Accumulated Depreciation
    (433 )     -  
Total Net Fixed Assets
  $ 1,730     $ -  
                 
Total Assets
  $ 44,356     $ 386  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
                 
Liabilities
               
Accounts Payable to Non Related Parties
  $ 12,922     $ -  
Accounts Payable to Related Parties
    620       -  
Payroll Liabilities
    8,000       -  
Warranty Liability
    9,600       -  
Sales Tax Payable
    9,727       -  
Total Current Liabilities
  $ 40,869     $ -  
                 
Total Liabilities
  $ 40,869     $ -  
                 
Stockholders' Equity
               
Total Common Shares Authorized 100,000,000
               
Common Stock issued at zero par as of
               
12/31/2008: 50,000,000;
               
12/31/2007: 50,000,000
               
Paid In Capital
  $ 4,494     $ -  
Retained Earnings
    (1,007 )     386  
Total Stockholders Equity
  $ 3,488     $ 386  
                 
Total Liabilities and Stockholders' Equity
  $ 44,356     $ 386  

The accompanying notes are an integral part of these statements.

 
28

 

GLOBAL SMOOTHIE SUPPLY, INC.
INCOME STATEMENT

   
Year Ended
 
   
December 31
 
   
2008
   
2007
 
   
Restated
 
Revenue
           
Machine Revenue
  $ 155,200     $ -  
Puree Revenue
    11,746       4,645  
Service Revenue
    -       -  
Parts Revenue
    -       174  
Shipping Revenue
    3,600       -  
Total Revenue
  $ 170,546     $ 4,819  
                 
Cost of Goods Sold
    125,897       3,946  
                 
Gross Margin
    44,649       873  
                 
Expenses
               
Advertising and Promotion
    5,765       675  
Total Payroll Expenses
    8,000       -  
Office, Administrative & Miscellaneous Expense
    7,824       -  
Rent Expense
    14,300       -  
Travel Expense
    5,112       -  
Depreciation Expense
    433       -  
Income from Operations
    3,215       198  
Interest Expense
    4,608       -  
Net (Loss) Income
  $ (1,393 )   $ 198  
                 
(Loss) Earnings per Common Share
               
Basic and Diluted
    **       **  
                 
Weighted average common shares outstanding:
               
Basic and Diluted
    50,000,000       50,000,000  
 
** - Less than $.01 per share


The accompanying notes are an integral part of these notes

 
29

 

GLOBAL SMOOTHIE SUPPLY, INC.
 SHAREHOLDER EQUITY

   
Common Stock
   
Paid in
   
Retained
   
Total
 
   
Shares
   
Amount
   
Capital
   
Earnings (Deficit)
   
Equity
 
Balance, December 31, 2006
    50,000,000     $ -     $ -     $ 188     $ 188  
      Net  Income (Loss)
                            198       198  
Balance, December 31, 2007
    50,000,000       -       -       386       386  
     Founder Capital Contribution
            -       4,494       -       4,494  
     January 2008 through September 2008
                                       
     Net  Income (Loss)
                            (1,393 )     (1,393 )
Balance, December 31, 2008
    50,000,000     $ -     $ 4,494     $ (1,007 )   $ 3,488  
 
 




The accompanying notes are an integral part of these statements.

 
30

 

GLOBAL SMOOTHIE SUPPLY, INC.
CONSOLIDATED FINANCIALS

   
Year Ended
 
   
December 31,
 
   
2008
   
2007
 
   
Restated
 
Operating Activities
     
Net Income/(Loss)
  $ (1,393 )   $ 198  
Adjustments to Reconcile Net (Loss) to Net Cash Used by Operating Activities
               
Change in Accounts Receivable
    (4,118 )        
Change in Inventory Asset
               
Change in Vertex Holding Account
    (31,660 )        
Change in Accounts Payable
    12,922          
Change in Payroll Liabilities
    8,000          
Change  in Sales Tax Payable
    9,727          
Change Warranty Liability
    9,600          
Depreciation
    433          
Net Cash Provided by (Used) in Operating Activities
  $ 3,510     $ 198  
                 
INVESTING ACTIVITIES
               
Purchase of Furniture and Equipment
    (2,163 )     -  
Net cash used in Investing Activities
  $ (2,163 )   $ -  
                 
FINANCING ACTIVITIES
               
Related Party Accounts Payable
    620          
Paid In Capital
    4,494          
Cash Provided by Financing Activities
  $ 5,115     $ -  
                 
Net Increase in Cash
  $ 6,461     $ 198  
                 
Cash, Beginning of Period
  $ 386     $ 188  
                 
Cash, End of Period
  $ 6,848     $ 386  
                 
                 
Supplemental Information:
               
Interest / Factoring Fees Paid
  $ 4,608     $ -  
Income Taxes Paid
  $ -     $ -  


The accompanying notes are an integral part of these statements.

 
31

 

GLOBAL SMOOTHIE SUPPLY, INC.

NOTES TO FINANCIAL STATEMENTS
For Years Ending 12/31/2008 and 12/31/2007


NOTE 1.  GENERAL ORGANIZATION AND BUSINESS

Global Smoothie Supply, Inc (the Company) was incorporated February 17, 2005, under the laws of the State of Texas.  The Company is engaged in the beverage business and sells beverage machines. The Company’s fiscal year ends on December 31.

From its inception and due to limited operations, Global Smoothie Supply, Inc elected to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code.

NOTE  2.  SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

Accounting Basis

These financial statements are prepared on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America.

Cash and Cash Equivalents

For the purpose of the statement of cash flows, cash equivalents include all highly liquid investments with maturity of three months or less.

Earnings (Loss) per Share

The basic earnings (loss) per share are calculated by dividing the Company’s net income available to common shareholders by the weighted average number of common shares outstanding during the year. The diluted earnings (loss) per share are calculated by dividing the Company’s net income (loss) available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted as of the first of the year for any potentially dilutive debt or equity. There are no diluted shares outstanding.

Dividends

The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during the period shown.

Receivables

As of 12/31/08, no allowance for doubtful accounts exists because as of the date of filing all debts have been fully settled.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the 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 revenue and expenses during the reporting period. Actual results could differ from those estimates.

Net Income Per Common Share

Net income (loss) per common share is computed based on the weighted average number of common shares outstanding and common stock equivalents, if not anti-dilutive.  The Company has not issued any potentially dilutive common shares.

 
32

 

Revenue and Cost Recognition

We recognize revenue at the time the products are shipped to customers or third parties. In the future, we expect to perform services under service contracts revenue will be recognized upon the completion of the services on specified machines. We follow EITF Issue 00-10, “Accounting for Shipping and Handling Fees and Costs” (Issue 00-10). Issue 00-10 requires that all amounts billed to customers related to shipping and handling should be classified as revenues. Our product costs include amounts for shipping and handling, therefore, we charge our customers shipping and handling fees at the time the products are shipped or when services are performed. The cost of shipping products to the customer is recognized at the time the products are shipped to the customer and our policy is to classify them as shipping expenses. The cost of shipping products to the customer is classified as shipping expense.

Staff Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB 101) and Staff Accounting Bulletin No. 104, Revenue Recognition, corrected copy (SAB 104) address certain criteria for revenue recognition. SAB 101 and SAB 104 outline the criteria that must be met to recognize revenue and provides guidance for disclosures related to revenue recognition policies. Our revenue recognition policies comply with the guidance contained in SABs 101 and 104.

Inventories

Inventories are stated at the lower of cost or market value. Cost for inventory is based on an average cost method. Reserves for excess and obsolete inventories are based on an assessment of slow-moving and obsolete inventories, determined by historical usage and demand.  As of 12/31/2008 and 12/31/2007 the Company held in inventory $0 and $0, respectively.

Depreciation

Depreciation used is 200DB, 5 yrs depreciation, ½ yr in year of acquisition, salvage value is none.

NOTE 3.  INCOME TAXES:

The Company provides for income taxes under Statement of Financial Accounting Standards No. 109, Accounting for Income Taxes. SFAS No. 109 requires the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect currently.

SFAS No. 109 requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized. In the Company’s opinion, it is uncertain whether they will generate sufficient taxable income in the future to fully utilize the net deferred tax asset.

Global Smoothie Supply has elected to be taxed under Subchapter S of Chapter 1 of the Internal Revenue Code, tax liability is held by the individual stockholders proportionate to their ownership percentages.

NOTE 4.  STOCKHOLDERS’ EQUITY

Common Stock

At the time of inception 1,000 shares were authorized and all 1,000 shares were issued. On December 26, 2006, the number of authorized shares was increased to 50,000,000 and the Company issued a stock split of 20,000:1, with the 1,000 shares outstanding being exchanged for 20,000,000.  On 12/31/2008, 20,000,000 shares were outstanding. On March 19, 2009, the number of authorized shares was increased to 100,000,000 and the Company issued a stock split of 5:2, with the 20,000,000 shares outstanding being exchanged for 50,000,000.  This March 19, 2009, stock split is being applied retroactively to the financial statements.

In 2008, the Company received an infusion of $4,494 of cash and paid in expense from its founders group. The amount is a combination of cash paid in by founders group, as well as expenses incurred by them personally on behalf of the Company and submitted for inclusion in the capitalization of the business. The expenses and cash infusion occurred in the time periods from inception and to the period prior to the 4th quarter of 2008.


 
33

 

NOTE 5.  RELATED PARTY TRANSACTIONS

The officers and directors of the Company are involved in other business activities and may, in the future, become involved in other business opportunities that become available.  They may face a conflict in selecting between the Company and other business interests. The Company has not formulated a policy for the resolution of such conflicts.

Any amounts in Accounts Payable to Related Parties are for reimbursable expenses including but not limited to travel expenses, postage, purchased office supplies, and miscellaneous expenses.

NOTE  6.  WARRANTY COSTS

The Company's financial statements reflect accruals for potential warranty claims based on the Company's best estimation. Estimated product warranty costs are accrued at the time products are sold. At the current time, we provide a 3 year limited warranty on the machines we sell. Our manufacturer has taken the position of warranting the machines for the 1st year and Global Smoothie Supply covers the warranty for the 2nd and 3rd years.

Accordingly, we have reserved amounts for those potential warranty claims. As of 12/31/2008, those amounts stood at $9,600. To date, no warranty claims have been made against these amounts.

The need for additional reserves is not known at this time. We do not have sufficient historical knowledge as to determine whether our estimates are correct. As we develop additional experience, our liability may change and these reserves may be adjusted to meet the additional warranty costs.

NOTE  7.  GOING CONCERN

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in the notes to the financial statements, the Company has established a limited source of revenue. As of December 31st, 2008, the Company has an accumulated deficit of $1,007. This raises substantial doubt about the Company’s ability to continue as a going concern.  Without realization of additional capital, it would be unlikely for the Company to continue as a going concern.  The financial statements do not include any adjustments that might result from this uncertainty.
 
The Company’s activities to date have been supported by equity financing and initial preliminary sales.  Management continues to seek funding from its shareholders and other qualified investors to pursue its business plan.  In the alternative, the Company may be amenable to a sale, merger or other acquisition in the event such transaction is deemed by management to be in the best interests of the shareholders. 
 
NOTE  8.  CONCENTRATIONS OF RISKS

Cash Balances

The Company maintains its cash in institutions insured by the Federal Deposit Insurance Corporation (FDIC).  This government corporation insured balances up to $100,000 through October 13, 2008.  As of October 14, 2008, all non-interest bearing transaction deposit accounts at an FDIC-insured institution, including all personal and business checking deposit accounts that do not earn interest, are fully insured for the entire amount in the deposit account.  This unlimited insurance coverage is temporary and will remain in effect for participating institutions until December 31, 2009.

All other deposit accounts at FDIC-insured institutions are insured up to at least $250,000 per depositor until December 31, 2009.  On January 1, 2010, FDIC deposit insurance for all deposit accounts, except for certain retirement accounts, will return to at least $100,000 per depositor.  Insurance coverage for certain retirement accounts, which include all IRA deposit accounts, will remain at $250,000 per depositor.

 
NOTE  9.  ADVERTISING AND PROMOTION COSTS

The Company’s policy regarding advertising and promotion is to expense advertising when incurred. The Company incurred $5,765 in advertising and promotion costs for the period ending 12/31/2008.


 
34

 

NOTE  10.  FACTORING ACCOUNTS RECEIVABLE
 
On October 10, 2008, the Company entered in to a one year agreement with Vertex Financial, LTD (Vertex) to purchase the Company’s receivables with full recourse. As of 12/31/2008, all factored receivables had been satisfied with Vertex, and Vertex owed the Company $31,660. As of the period ending 6/30/2009 Vertex had satisfied all accounts with the Company.

The agreement has set a monthly minimum discount fee. The contract would be considered minimally fulfilled at a point where the Company factored and/or paid the equivalent of the monthly minimum amount for a year. This minimum amount does not preclude the factoring of invoices above this minimum amount. During the period ending 12/31/2008 and 6/30/2009 the Company paid $4,608 and $3,421 in factoring fees, respectively. All minimum obligations per the agreement have been met by the end of the period ending 6/30/2009. All factoring fees are treated as interest expense and factoring expenses (i.e. cost of credit reports, wire fees, etc) are accounted for in Banking and Miscellaneous Expense.

The Company accounts for Factored Accounts Receivable in compliance with ASC 860.

NOTE  11.  THE EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
 
Recent Accounting Pronouncements

June 2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial Assets—an amendment of FASB Statement No. 140” (“SFAS 166”).

The provisions of SFAS 166, in part, amend the derecognition guidance in FASB Statement No. 140, eliminate the exemption from consolidation for qualifying special-purpose entities and require additional disclosures. SFAS 166 is effective for financial asset transfers occurring after the beginning of an entity’s first fiscal year that begins after November 15, 2009. The Company does not expect the provisions of SFAS 166 to have a material effect on the financial position, results of operations or cash flows of the Company.

 In June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No. 46(R) (“SFAS 167”). SFAS 167 amends the consolidation guidance applicable to variable interest entities. The provisions of SFAS 167 significantly affect the overall consolidation analysis under FASB Interpretation No. 46(R).
SFAS 167 is effective as of the beginning of the first fiscal year that begins after November 15, 2009. SFAS 167 will be effective for the Company beginning in 2010. The Company does not expect the provisions of SFAS 167 to have a material effect on the financial position, results of operations or cash flows of the Company.

In June 2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles – a replacement of FASB Statement No. 162” (“SFAS No. 168”). Under SFAS No. 168 the “FASB Accounting Standards Codification” (“Codification”) will become the source of authoritative U. S. GAAP to be applied by nongovernmental entities.  Rules and interpretive releases of the Securities and Exchange Commission (“SEC”) under authority of federal securities laws are also sources of authoritative GAAP for SEC registrants. SFAS No. 168 is effective for financial statements issued for interim and annual periods ending after September 15, 2009.  On the effective date, the Codification will supersede all then-existing non-SEC accounting and reporting standards. All other non-grandfathered non-SEC accounting literature not included in the Codification will become non-authoritative. SFAS No. 168 is effective for the Company’s interim quarterly period beginning July 1, 2009. The Company does not expect the adoption of SFAS No. 168 to have an impact on the financial statements.

In June 2009, the Securities and Exchange Commission’s Office of the Chief Accountant and Division of Corporation Finance announced the release of Staff Accounting Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds portions of the interpretive guidance included in the Staff Accounting Bulletin Series in order to make the relevant interpretive guidance consistent with current authoritative accounting and auditing guidance and Securities and Exchange Commission rules and regulations. Specifically, the staff is updating the Series in order to bring existing guidance into conformity with recent pronouncements by the Financial Accounting Standards Board, namely, Statement of Financial Accounting Standards No. 141 (revised 2007), Business Combinations, and Statement of Financial Accounting Standards No. 160, Non-controlling Interests in Consolidated Financial Statements. The statements in staff accounting bulletins are not rules or interpretations of the Commission, nor are they published as bearing the Commission's official approval. They represent interpretations and practices followed by the Division of Corporation Finance and the Office of the Chief Accountant in administering the disclosure requirements of the Federal securities laws.

 
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In April 2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about Fair Value of Financial Instruments. This FSP amends FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments, to require disclosures about fair value of financial instruments for interim reporting periods of publicly traded companies as well as in annual financial statements. This FSP also amends APB Opinion No. 28, Interim Financial Reporting, to require those disclosures in summarized financial information at interim reporting periods. This FSP shall be effective for interim reporting periods ending after June 15, 2009. The Company does not have any fair value of financial instruments to disclose.

In April 2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and Presentation of Other-Than-Temporary Impairments.
This FSP amends the other-than-temporary impairment guidance in U.S. GAAP for debt securities to make the guidance more operational and to improve the presentation and disclosure of other-than-temporary impairments on debt and equity securities in the financial statements. The FSP does not amend existing recognition and measurement guidance related to other-than-temporary impairments of equity securities. The FSP shall be effective for interim and annual reporting periods ending after June 15, 2009. The Company currently does not have any financial assets that are other-than-temporarily impaired.

In April 2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, to address some of the application issues under SFAS 141(R). The FSP deals with the initial recognition and measurement of an asset acquired or a liability assumed in a business combination that arises from a contingency provided the asset or liability’s fair value on the date of acquisition can be determined. When the fair value can-not be determined, the FSP requires using the guidance under SFAS No. 5, Accounting for Contingencies, and FASB Interpretation (FIN) No. 14, Reasonable Estimation of the Amount of a Loss.

This FSP was effective for assets or liabilities arising from contingencies in business combinations for which the acquisition date is on or after January 1, 2009. The adoption of this FSP has not had a material impact on our financial position, results of operations, or cash flows during the six months ended June 30, 2009.

In April 2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume and Level of Activity for the Asset or Liability Have Significantly Decreased and Identifying Transactions That Are Not Orderly” (“FSP FAS 157-4”).  FSP FAS 157-4 provides guidance on estimating fair value when market activity has decreased and on identifying transactions that are not orderly.  Additionally, entities are required to disclose in interim and annual periods the inputs and valuation techniques used to measure fair value.  This FSP is effective for interim and annual periods ending after June 15, 2009.  The Company does not expect the adoption of FSP FAS 157-4 will have a material impact on its financial condition or results of operation.

In October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS 157-3”), which clarifies application of SFAS 157 in a market that is not active.  FSP FAS 157-3 was effective upon issuance, including prior periods for which financial statements have not been issued.  The adoption of FSP FAS 157-3 had no impact on the Company’s results of operations, financial condition or cash flows.

In December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures by Public Entities (Enterprises) about Transfers of Financial Assets and Interests in Variable Interest Entities.”  This disclosure-only FSP improves the transparency of transfers of financial assets and an enterprise’s involvement with variable interest entities, including qualifying special-purpose entities.  This FSP is effective for the first reporting period (interim or annual) ending after December 15, 2008, with earlier application encouraged.  The Company adopted this FSP effective January 1, 2009.  The adoption of the FSP had no impact on the Company’s results of operations, financial condition or cash flows.

In December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”).  FSP FAS 132(R)-1 requires additional fair value disclosures about employers’ pension and postretirement benefit plan assets consistent with guidance contained in SFAS 157.  Specifically, employers will be required to disclose information about how investment allocation decisions are made, the fair value of each major category of plan assets and information about the inputs and valuation techniques used to develop the fair value measurements of plan assets. This FSP is effective for fiscal years ending after December 15, 2009.  The Company does not expect the adoption of FSP FAS 132(R)-1 will have a material impact on its financial condition or results of operation.

 
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In September 2008, the FASB issued exposure drafts that eliminate qualifying special purpose entities from the guidance of SFAS No. 140, “Accounting for Transfers and Servicing of Financial  Assets and  Extinguishments of Liabilities,” and  FASB  Interpretation 46 (revised December 2003), “Consolidation of  Variable  Interest Entities − an interpretation of ARB  No. 51,” as well as other modifications.  While the proposed revised pronouncements have not been finalized and the proposals are subject to further public comment, the Company anticipates the changes will not have a significant impact on the Company’s financial statements.  The changes would be effective March 1, 2010, on a prospective basis.

In June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining Whether Instruments Granted in Share-Based Payment Transactions Are Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether instruments granted in share-based payment transactions are participating securities prior to vesting, and therefore need to be included in the computation of earnings per share under the two-class method as described in FASB Statement of Financial Accounting Standards No. 128, “Earnings per Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal years beginning on or after December 15, 2008 and earlier adoption is prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe that FSP EITF 03-6-1 would have material effect on our consolidated financial position and results of operations if adopted.

 In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163, “Accounting for Financial Guarantee Insurance Contracts-and interpretation of FASB Statement No. 60”.  SFAS No. 163 clarifies how Statement 60 applies to financial guarantee insurance contracts, including the recognition and measurement of premium revenue and claims liabilities. This statement also requires expanded disclosures about financial guarantee insurance contracts. SFAS No. 163 is effective for fiscal years beginning on or after December 15, 2008, and interim periods within those years. SFAS No. 163 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162, “The Hierarchy of Generally Accepted Accounting Principles”.  SFAS No. 162 sets forth the level of authority to a given accounting pronouncement or document by category. Where there might be conflicting guidance between two categories, the more authoritative category will prevail. SFAS No. 162 will become effective 60 days after the SEC approves the PCAOB’s amendments to AU Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on the Company’s financial position, statements of operations, or cash flows at this time.

In March 2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities—an amendment of FASB Statement No. 133.  This standard requires companies to provide enhanced disclosures about (a) how and why an entity uses derivative instruments, (b) how derivative instruments and related hedged items are accounted for under Statement 133 and its related interpretations, and (c) how derivative instruments and related hedged items affect an entity’s financial position, financial performance, and cash flows. This Statement is effective for financial statements issued for fiscal years and interim periods beginning after November 15, 2008, with early application encouraged. The Company has not yet adopted the provisions of SFAS No. 161, but does not expect it to have a material impact on its consolidated financial position, results of operations or cash flows.
 
NOTE 12 .   SUBSEQUENT EVENTS
 
On June 11, 2009, the Board of Directors of the Company awarded a grant of stock to Mssrs. Tiller, Roberts, Ireland, and Gohsman totaling 26,000,000 shares. One third of the shares will be relieved of restriction of sale on the 2nd, 3rd, and 4th anniversary of the award respectively. These shares are awarded immediately, but may be rescinded per the plan if certain conditions are not met.

Global Smoothie Supply, Inc has begun the process of raising additional capital through the sales of unregistered shares. Through December 15, 2009, the company has sold 1,456,604 shares of stock.

Additional sales of shares may be pursued upon registration of the stock of the Company.

During the period ending 6/30/2009 the Company paid $2,844 in factoring fees. All minimum obligations per the  Vertex agreement have been met by the end of the period ending 6/30/2009.

In the first Quarter of 2009, Global Smoothie Supply, Inc. petitioned the IRS to be taxed as a C Corporation. This change was made to accommodate the needs of current and future shareholders.

 
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NOTE 13.  RESTATEMENT

The Company has restated its previously issued 2008 and 2007 financial statements for matters related to the following previously reported items: cash, depreciation policy, liabilities, paid in capital, sales and expenses. The accompanying financial statements for 2008 and 2007 have been restated to reflect the corrections.
           
The following is a summary of the restatements for 2008:

Decrease in Accumulated Depreciation
  $ 703  
Increase in Net Fixed Assets
    703  
Increase in Accounts Payable
    2,033  
Increase in Paid In Capital
    2,708  
Decrease in Retained Earnings
    4,039  
Increase in Sales Revenue
    1,228  
Increase in Cost of Goods Sold
    423  
Increase in Expenses
    5,230  
Decrease in Net Income
    4,425  

The effect on the Company’s previously issued 2008 financial statements is summarized as follows:

Balance Sheet as of December 31, 2008

   
Previously Reported
   
Increase (Decrease)
   
Restated
 
Fixed Assets
  $ 1,027     $ 703     $ 1730  
Total Assets
    43,653       703       44,356  
Accounts Payable
    11,509       2,033       13,542  
Paid In Capital
    1,786       2,708       4,494  
Stockholders’ Equity:
                       
      Retained Earnings—
             December 31, 2007
    0       386       386  
      Net Income (Loss) for 2008
    3,032       (4,425 )     (1,393 )
      Retained Earnings—
             December 31, 2007
    3,032       (4039 )     (1007 )
Total Liabilities and
      Stockholders’ Deficit
    43,653       703       44,356  
           
Statement of Operations for the Year Ended December 31, 2008

   
Previously Reported
   
Increase (Decrease)
   
Restated
 
Net Sales
  $ 169,318     $ 1,228     $ 170,546  
Cost of Sales
    125,474       423       125,897  
Gross Profit
    43,844       805       44,649  
Office, Admin, & Misc. Expense
    5,791       2,033       7,824  
Rent Expense
    10,400       3,900       14,300  
Net Income (Loss)
    3,032       (4,425 )     (1,393 )


 
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The following is a summary of the restatements for 2007:

<
Increase in cash as of the balance sheet date
  $ 386  
Increase in Sales Revenue
    4,819  
Increase in Cost of Goods Sold
    3,946  
Increase in Expenses
    675  
Increase in Net Income
    198  
Increase in Retained Earnings