Attached files
file | filename |
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EX-21 - Cono Italiano, Inc. | v188082_ex21.htm |
EX-32.1 - Cono Italiano, Inc. | v188082_ex32-1.htm |
EX-31.1 - Cono Italiano, Inc. | v188082_ex31-1.htm |
EX-32.2 - Cono Italiano, Inc. | v188082_ex32-2.htm |
EX-31.2 - Cono Italiano, Inc. | v188082_ex31-2.htm |
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
DC 20549
FORM
10-K
Amendment
No. 1
x
|
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended: December 31,
2009
¨
|
TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT OF
1934
|
For the
transition period from _________ to _________
Commission
File Number: 000-51388
Cono Italiano,
Inc.
(Exact
Name of Registrant as Specified in its Charter)
Nevada
|
84-1665042
|
|
(State of other jurisdiction of
|
(IRS Employer Identification
|
|
incorporation or organization)
|
Number)
|
10
Main Street
Keyport,
NJ 07735
(Address of principal executive offices)
866-515-7069
(Registrant’s telephone number)
Securities registered pursuant to Section
12(b) of the Exchange Act: None
Securities
registered pursuant to Section 12(g) of the Exchange Act: Common Stock, par
value $.001 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or 15(d) of the Exchange Act. Yes ¨ No x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the preceding 12 months
(or for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirements for the past 90
days. Yes x No
¨
Indicate
by check mark whether the registrant has submitted electronically and posted on
its corporate Web site, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this
chapter) during the preceding 12 months (or for such shorter period that the
registrant was required to submit and post such files).
Yes ¨ No ¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K: ¨
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large Accelerated Filer
|
¨
|
Accelerated Filer
|
¨
|
Non-Accelerated Filer
|
¨
|
Smaller Reporting Company
|
x
|
Indicate by check mark whether the registrant is a
shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter: $1,164,270 at June 30, 2009.
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date: The Issuer had 81,880,988 shares of
Common Stock, par value $.001, outstanding as of April 14,
2010.
Explanatory Note: This
Amendment Number 1 to the Annual Report on Form 10-K for the period ended
December 31, 2009 (this “Amendment”) for Cono Italiano, Inc. (the “Company”) has
been filed in response to comments received by the Company from the U.S.
Securities and Exchange Commission. All disclosures herein refer to the fiscal
period ended December 31, 2009 except as otherwise indicated.
TABLE
OF CONTENTS
ITEM
1: BUSINESS
|
4
|
ITEM
1A: RISK FACTORS
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8
|
ITEM
1B: UNRESOLVED STAFF COMMENTS
|
14
|
ITEM
2: PROPERTIES
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14
|
ITEM
3: LEGAL PROCEEDINGS
|
14
|
ITEM
4: RESERVED
|
14
|
ITEM
5: MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
|
15
|
ITEM
6: SELECTED FINANCIAL DATA
|
15
|
ITEM
7: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
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16
|
ITEM
7A: QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK
|
20
|
ITEM
8: FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
F-1
|
ITEM
9: CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
|
21
|
ITEM
9A: CONTROLS AND PROCEDURES
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21
|
ITEM
9B: OTHER INFORMATION
|
22
|
ITEM
10: DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
23
|
ITEM
11: EXECUTIVE COMPENSATION
|
24
|
ITEM
12: SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
|
28
|
ITEM
13: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
29
|
ITEM
14: PRINCIPAL ACCOUNTING FEES AND SERVICES
|
31
|
ITEM
15: EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
|
32
|
SIGNATURES
|
36
|
2
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
The
following cautionary statements identify important factors that could cause our
actual results to differ materially from those projected in forward-looking
statements made in this Annual Report on Form 10-K (this “Report”) and in other
reports and documents published by us from time to time. Any statements about
our beliefs, plans, objectives, expectations, assumptions, future events or
performance are not historical facts and may be forward-looking. These
statements are often, but not always, made through the use of words or phrases
such as “believes,” “will likely result,” “are expected to,” “will continue,”
“is anticipated,” “estimated,” “intend,” “plan,” “projection,” “outlook” and the
like, constitute “forward-looking statements” within the meaning of Section 27A
of the Securities Act of 1933, as amended, and Section 21E of the Securities
Exchange Act of 1934, as amended (the “Exchange Act”). However, as we issue
“penny stock,” as such term is defined in Rule 3a51-1 promulgated under the
Exchange Act, we are ineligible to rely on these safe harbor provisions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
our Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned to carefully read all “Risk Factors”
set forth under Item 1A and not to place undue reliance on any forward-looking
statements. We disclaim any obligation to update any such factors or to announce
publicly the results of any revisions of the forward-looking statements
contained or incorporated by reference herein to reflect future events or
developments, except as required by the Exchange Act. New factors emerge from
time to time, and it is not possible for us to predict which will arise or to
assess with any precision the impact of each factor on our business or the
extent to which any factor, or combination of factors, may cause actual results
to differ materially from those contained in any forward-looking
statements.
Unless
otherwise provided in this Report, references to the “Company,” the
“Registrant,” the “Issuer,” “we,” “us,” and “our” refer to Cono Italiano,
Inc.
3
PART
I
ITEM 1:
|
BUSINESS
|
Introduction
The
Company was incorporated in the State of Nevada on September 9, 2004 as Arch
Management Services Inc. A change of control of the Company occurred on June 5,
2006 and the Company changed its name from “Arch Management Services Inc.” to
“Tiger Ethanol International Inc.” on November 24, 2006. On February
11, 2008 the Company changed its name to “Tiger Renewable Energy Ltd.” Another
change of control of the Company occurred on June 4, 2009. On August
10, 2009, the Company changed its name to “Cono Italiano, Inc.” and its symbol
changed to CNOZ.
On August
10, 2009, the Company conducted a one for sixty reverse stock
split. As of such date, all of the outstanding shares of common
stock of the Company have been consolidated such that stockholders of
record hold one share of post-split common stock for every sixty shares owned
prior to the reverse stock split. All fractional shares resulting
from the reverse stock split have been rounded up to the next whole
share.
The
Company identified Cono Italiano, Inc. a Delaware corporation (“Cono Italiano
(Delaware)”), as a business venture that would be suitable for the Company’s
future operations. On November 12, 2009, the Company entered into
agreement with the shareholders of Cono Italiano (Delaware) pursuant to which
the Company acquired all of the issued and outstanding shares of the Cono
Italiano (Delaware) and we will now operate Cono Italiano (Delaware) as a
wholly-owned subsidiary of our Company.
Our
principal business address is 10 Main Street, Keyport, NJ 07735 and our
telephone number is 877-330-2666.
Our
Business
The
Company was previously party to a joint venture named Xinjiang Yajia Distillate
Company Limited (the “Venture”) to produce ethanol in the People’s Republic of
China. The Company’s board of directors determined that it was in our best
interest to initiate a withdrawal from the ethanol business as of January 31,
2009 and assess alternative businesses.
On June
4, 2009, an Affiliate Stock Purchase Agreement (the “Stock Purchase Agreement”)
was entered into by and between Gallant Energy International Inc. (“Gallant”),
the owner of 5,000,000 shares of the Company’s common stock (prior to the
Company’s one for sixty reverse stock split) and Lara Mac Inc. (“Lara
Mac”), an entity controlled by Mitchell Brown (who is now the Chief
Executive Officer of the Company and a member of the Company’s Board of
Directors). Pursuant to the Stock Purchase Agreement, Gallant sold all of its
5,000,000 shares of the Company’s common stock to Lara Mac. The
Gallant transaction with Lara Mac resulted in a change in control of the largest
voting block of the Company effective as of June 4, 2009.
Under the
terms of the Stock Purchase Agreement, the Board appointed five individuals to
fill vacancies on the Board. These new directors commenced their service on June
19, 2009. The Board also appointed four new officers of the
Company.
On June
22, 2009, Lara Mac entered into a Management Services Agreement with the Company
(the “Management Services Agreement”). Pursuant to the Management
Services Agreement, Lara Mac would render to the Company consulting and
other advisory services in relation to developing strategic plans for inception
of operations, corporate management, the operations of the Company, strategic
planning, domestic and international marketing and sales, financial advice,
including, without limitation, advisory and consulting services in relation to
the selection and retention of candidates for senior management of the Company
and its subsidiaries, prospective strategic alliance partners, preparing
acquisition growth plans, identifying prospective merger and acquisition
candidates, developing value propositions for the Company and acquisition
candidates, analyzing financial implications of potential transactions, advising
on negotiations regarding terms and conditions of transactions, outlining and
managing due diligence issues and due diligence processes, introductions to
prospective customers, selection of investment bankers or other financial
advisors or consultants, and advice with respect to the capital structure of the
Company, equity participation plans, employee benefit plans and other incentive
arrangements for certain key executives of the Company (collectively, the
“Services”). In exchange for the Services, Lara Mac received
9,553,377 shares of the Company’s common stock (these 9,553,377 shares were
issued prior to the Company’s August 10, 2009 one for sixty reverse stock split,
and accordingly, Lara Mac’s ownership of 14,553,377 shares was reduced to
242,557 shares pursuant to such reverse stock split). The parties to
the Management Services Agreement also agreed that Lara Mac may render other
services beyond the scope of activities which the parties contemplate as part of
the Services, as to which Lara Mac shall be entitled to separate compensation
that shall be negotiated in good faith by the parties on a case-by-case
basis. The Company identified Cono Italiano, Inc. a Delaware
corporation (“Cono Italiano (Delaware)”), as a business venture that would be
suitable for the Company’s future operations. On November 12, 2009,
the Company entered into agreement with the shareholders of Cono Italiano
(Delaware) pursuant to which the Company acquired all of the issued and
outstanding shares of the Cono Italiano (Delaware) and we will now operate Cono
Italiano (Delaware) as a wholly-owned subsidiary of our Company. As
an inducement to the shareholders of Cono Italiano (Delaware) to enter into the
exchange described above, Lara Mac agreed to the cancellation of these 242,557
shares of the Company’s common stock and Termination of the Management Services
Agreement.
4
On August
10, 2009, the Company conducted a one for sixty reverse stock split. As of such
date, all of the outstanding shares of common stock of the Company have been
consolidated such that stockholders of record hold one share of post-split
common stock for every sixty shares owned prior to the reverse stock split. All
fractional shares resulting from the reverse stock split have been rounded up to
the next whole share.
Cono
Italiano (Delaware)
In March
2006 Cono Italiano LLC, a New Jersey limited liability company, entered into an
agreement with Kono Italia S.R. L., an Italian company doing business as “Pizza
Hands.” Kono Italia S.R.L owns the designs, recipes and technology for the
“Pizza Cono,” a food product for quick service restaurants consisting of a cone
shaped pizza dough. Cono Italiano (Delaware), as the successor to Cono Italiano,
LLC, holds a distribution agreement for North America from Kono Pizza in Italy.
This distribution agreement grants the licensee an exclusive license to exploit
this product in the United States, Canada and Mexico for a twenty-five (25) year
term. The product is patented in the United States and Europe as is the cone
production machine which is proprietary. In 2007 Cono Italiano, LLC introduced
the product into the North American market by building an alliance with Center
Plate, a food service provider to stadiums and arenas throughout North America
(at the present time, the Company has no contractual agreements with Center
Plate).
Cono
Italiano (Delaware) was formed through the merger of Cono Italiano LLC, a New
Jersey limited liability company, and Janex International, Inc., a Delaware
corporation, on January 14, 2008. The combined entity changed its name to “Cono
Italiano, Inc.” on that date.
Cono
Italiano is licensed to distribute a food product called the “Pizza Cono.” This
Pizza Cone is designed to be a drip free, spill free cone-shaped pizza made of a
proprietary dough and filled with freshly selected ingredients. The Company
intends that the Pizza Cone will be distributed through the fast food market
(the fast food market is generally defined as restaurants selling food and
drinks for immediate consumption either on the premises in designated eating
areas, or for consumption elsewhere). The Pizza Cone will be distributed to
quick-service restaurants, takeaways, mobile and street vendors, and leisure
locations. These establishments include typical fast food chains, supermarkets,
convenience stores, entertainment facilities and sports arenas.
On July
9, 2008, Cono Italiano (Delaware) entered into a distribution and licensing
agreement (the “Distribution Agreement”) with Pino Gelato, Inc., a South
Carolina corporation presently involved in retail sales of Italian gelato and
sales of franchises for the sale of gelato. Under the terms of the Distribution
Agreement, we have granted to Pino Gelato, Inc. the rights in the United States,
Canada and Mexico to sell and distribute our products through immediate
consumption retail channels, such as a restaurant, snack bar, kiosk, or other
similar setting. The initial term of the Distribution Agreement is for ten (10)
years and shall be automatically renewed for additional ten (10) year terms if
neither party is in material breach of the Distribution Agreement at the
expiration date of each ten (10) year term. The Distribution Agreement includes
the right to market Pizza Cones and establish Pizza Cone and Pino Gelato Cafes.
Cono Italiano (Delaware) has received $100,000 in cash in consideration for such
Distribution Agreement. There have been five retail channels established through
Pino Gelato to date and Cono Italiano (Delaware) products have been sold to
various sub-distributors throughout the country for distribution. As an
inducement to buy the distribution and franchise rights by Pino Gelato, Inc. the
Company agreed to issue 375,000 shares of common stock to Pino Gelato. Common
stock amounting to 250,000 shares were issued to Pino Gelato, with the remaining
125,000 shares to be issued.
Cono
Italiano (Delaware) has reserved distribution rights regarding the sale of
products on a wholesale basis to grocery stores, convenience stores, and other
similar establishments which do not resell the products to customers in a
restaurant, snack bar, kiosk, or other similar setting. By way of example, Cono
Italiano (Delaware) has retained the rights to sell the products on a wholesale
basis to big box stores, convenience stores, and other chains that sell “frozen”
packaged products.
As part
of Cono Italiano (Delaware)’s marketing strategy, Cono Italiano (Delaware) paid
$8,500 in September of 2008 to develop retail packaging and conducted a photo
shoot for the product in October of 2008 at a cost of $1,500.
There
have been five licenses sold to date and there are currently five such cafes in
operation, located in South Carolina, Tennessee, Pittsburgh and Ohio. These
cafes are presently selling the Pizza Cone product.
Since
March of 2009, Cono Italiano (Delaware)’s marketing and distribution efforts
have also included giving free samples of its product away at the Indianapolis
Speedway, presenting the product to potential distributors at a trade show, and
selling the product at an Italian festival in Indianapolis.
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" in Indianapolis Indiana. Mitchell Brown
transferred his ownership interests in Edesia Emprise, LLC to his father, Gene
Brown, later that month. Taylor's Bakery was contracted as a third party
manufacturer for this project in January of 2009, and in March of 2009, Dough
Bros., Inc., an entity established by Taylor’s Bakery, entered into an agreement
with Edesia Emprise, LLC and Cono Italiano (Delaware).
5
In the
first quarter of 2009, a production facility was established in Indianapolis,
Indiana by Taylor’s Bakery with proprietary baking equipment purchased from
Italy. Cono Italiano (Delaware) has been working together with the TurboChef
Brand of ovens to develop cooking settings to bake the Cono Italiano (Delaware)
product in retail distribution settings. Major food establishments including
Subway, Dunkin Donuts, and Quick Chek currently use TurboChef Brand ovens to
cook frozen products in their establishments. Cono Italiano (Delaware) shipped
its initial orders for products in the second quarter of 2009. Cono Italiano
(Delaware) buys and resells the TurboChef Brand ovens as needed. An alternative
supplier, Amana, makes similar ovens at similar prices which the management of
Cono Italiano (Delaware) believes it can rely upon if there is any disruption in
supply of ovens from TurboChef Brand.
On
October 22, 2009, Dough Bros., Inc., John Allen, Drew Allen, Matt Allen, Edesia
Emprise, LLC, Cono Italiano (Delaware), Mitchell Brown, John Jacobs and Ramona
Fantini entered into an agreement to terminate the relationship between Cono
Italiano (Delaware), Edesia Emprise, LLC and Dough Bros., Inc.
On
November 9, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of our shareholders, Lara Mac has agreed to provide
financing to Cono Italiano, Inc., with such funds as the Company’s Board of
Directors shall deem to be sufficient to maintain the Company’s ordinary course
of business operations (the “Commitment Amount”). We may draw on the Commitment
Amount in monthly tranches in accordance with our operating requirements as set
forth in our business plan. The available Commitment Amount will be reduced by
the aggregate cash proceeds received by the Company which are derived from the
issuance of any equity securities and Company gross revenues. Draws on the
Commitment Amount will be made on terms of unsecured notes, with interest set on
each note as of the date of the draw at prime rate plus two percent per annum.
The notes will mature and become repayable thirty calendar days after demand at
any time following the earlier of (a) December 31, 2010 or (b) the date upon
which we are in receipt of revenues or proceeds from the sales of equity
securities. We will give Lara Mac customary representations and warranties
regarding the good standing of our Company and status of progress in respect of
our Company business plan prior to each draw on the Commitment Amount, and we
will provide certifications and covenants regarding use of proceeds of each
draw, which will be in customary forms reasonably requested by Lara Mac as
determined by reference to similar lenders making similar loans to similar
companies. Lara Mac will not be required to make any loans under the Commitment
Amount to us if we are unable to make the representations, warranties,
certifications or covenants, or if we are in breach of any previously given
representations, warranties, certifications or covenants. If we breach any of
the notes, the default rate will be 15% per annum and Lara Mac may seek recourse
against our company for repayment of all of the notes. As of the end of the
period covered by this Report, there had been no borrowings under the Commitment
Letter.
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master
Manufacturing Agreement, Edesia Emprise, LLC will produce the Company’s Pizza
Cono product. Cono Italiano (Delaware) has agreed to pay Edesia
Emprise, LLC the costs of production plus fifteen percent (15%). This
Master Manufacturing Agreement has a five (5) year term and will automatically
renew unless cancelled by one of the parties pursuant to its
terms. This Master Manufacturing Agreement is exclusive within the
United States. Edesia Emprise, LLC may either produce this product directly or
through a subcontractor. On December 8, 2009, the Company was advised
that Edesia Emprise had entered into its first subcontract agreement with
Sunrise Baking Acquisition Company, based in Brooklyn, New York.
Distribution
The
Company intends to contact food distributors who sell to the restaurant
community to distribute the product. The Company will seek to develop
relationships with independent commissioned sales representatives throughout the
country to sell and market the product to the retail community and specialty
customers. The Pizza Cone will be targeted at a substantial number of
potential customers, including quick service restaurants, takeaways, mobile and
street vendors, and leisure locations such as typical fast food chains,
supermarkets, convenience stores, entertainment facilities, and sports
arenas. The Company therefore does not anticipate depending on a
single or a few major customers.
Cono
Italiano’s marketing and distribution efforts have also included giving free
samples of its product away at the Indianapolis Speedway, presenting the product
to potential distributors at a trade show, and selling the product at an Italian
festival in Indianapolis.
Competitive
Position
Cono
Italiano is a relatively new company introducing a new product into the market
place for quick service pizza. The market in the United States for
quick service pizza is large, highly fragmented and intensely
competitive. There are no assurances that the product will be
generally accepted.
We intend
to do business under our new business model in highly competitive markets. There
are many competitors, some of which are significantly larger, have access to
much more important resources or capital than us, or have established
reputations among potential customers. We may not be able to compete effectively
against other industry participants.
6
Raw
Materials
The raw
materials used in production of the Pizza Cones include readily available food
products which are purchased in bulk by third party contract bakers. All raw
materials are supplied by the third party contract bakers pursuant to
proprietary recipes and standards of Cono Italiano and baked into the product.
Cono Italiano pays Edesia Emprise, LLC for the product following
shipping.
Compliance
with Government Regulations
At the
present time, Cono Italiano does not need and has not requested government
approval on any products and services. Edesia Emprise, LLC and the third party
contract bakers of Edesia Emprise, LLC are responsible for operation of
production facilities which make our cones and fillings, and they are subject to
various federal state, and local laws, including various health sanitation,
fire, and safety standards and may be subject to licensing and regulations by a
number of governmental authorities.
Research
and Development
The
Company does note presently engage in spending on research and development. The
Company’s anticipates that it may engage in such activity in the
future.
Compliance
with Environmental Laws
The costs
and effects of compliance with federal, state and local environmental laws have
not been material to our business from inception through the date of this
Report.
Intellectual
Property
Our
success and ability to compete are dependent, in part, upon our ability to
establish and adequately protect our intellectual property rights. We intend to
rely on a combination of patent, copyright, trademark and trade secret laws, as
well as confidentiality agreements to establish and protect our proprietary
rights. We expect to license certain proprietary rights from third parties. We
also intend to protect our proprietary rights, in part, through the terms of
license agreements and by confidentiality agreements with our employees,
consultants, customers and others.
Employees
As of the
date hereof, the Company has four (4) officers, Mitchell Brown (our Chief
Executive Officer), Joseph Masselli, (our President and Chief Operating
Officer), Alex J. Kaminski (our Chief Financial Officer and Treasurer) and Steve
Savage (our Secretary).
Where
You Can Find More Information
We do not
currently maintain an internet website .
The
Company is and expects to remain a “reporting company.” We will therefore be
required to continue to file annual, quarterly and other filings with the U.S.
Securities and Exchange Commission (the “SEC”). Members of the public may read
and copy any materials which we file with the SEC at the SEC’s Public Reference
Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Members of the
public may obtain additional information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
internet site that contains reports, proxy and information statements, as well
as other information regarding issuers that file electronically with the SEC.
This site is located at http://www.sec.gov.
You may
also request a copy of our filings at no cost, by writing or telephoning us
at:
Cono
Italiano, Inc.
10 Main
Street
Keyport,
NJ 07735
Telephone:
877-330-2666
Attn:
Mitchell Brown
Chief
Executive Officer
7
ITEM 1A.
|
RISK
FACTORS
|
Our
business is subject to numerous risks. We caution you that the following
important factors, among others, could cause our actual results to differ
materially from those expressed in forward-looking statements made by us or on
our behalf in filings with the SEC, press releases, communications with
investors and oral statements. Any or all of our forward-looking statements in
this and in any other public statements we make may turn out to be wrong. They
can be affected by inaccurate assumptions we might make or by known or unknown
risks and uncertainties. Many factors mentioned in the discussion below will be
important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially from
those anticipated in forward-looking statements. We undertake no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any further
disclosure we make in our reports filed with the SEC.
An
investment in our Company involves a substantial risk of loss. You should
carefully consider the risks described below, before you make any investment
decision regarding our Company. Additional risks and uncertainties, including
those generally affecting the market in which we operate or that we currently
deem immaterial, may also impair our business. If any such risks actually
materialize, our business, financial condition and operating results could be
adversely affected. In such case, the trading price of our common stock could
decline.
The
following risk factors are not exhaustive and the risks discussed herein do not
purport to be inclusive of all possible risks but are intended only as examples
of possible investment risks. To facilitate understanding of the various
business risks applicable to our Company and the strategic alliance companies
through which we intend to operate our business during the foreseeable future,
the risk factors discussed herein address our Company together with the risks
applicable to our operations that we intend to conduct with our strategic
alliance partners.
Risks
Related to Our Business
We
are a small company with a limited operating history and limited capital
resources. We may not be able to raise additional capital to grow and expand our
business, which could materially and adversely affect the future of our
business.
We are a
small company with a limited history, limited capital and limited operating
resources. As of December 31, 2009, we had cash and cash equivalents of $10,658
(audited). While we believe we will be able to meet our current needs for cash
from revenues (as the Company is spending minimal cash, and is not required to
pay its suppliers until after orders are placed and delivered), we may need
additional capital to conduct business, grow and expand.
The terms
and condition of any which we may receive financing could have a material
adverse affect on our business, results of operations, liquidity and financial
condition. Any investment in our shares is subject to the significant risk that
we will not be able to adequately capitalize our Company to enable us to
continue to develop and implement our business model. Even if we are able to
raise adequate capital, the cost of such capital may be burdensome and may
materially impair our ability to fully implement our business plan.
Indebtedness
may burden us with high interest payments and highly restrictive terms which
could adversely affect our business.
Should we
borrow money to implement our business plans, we would be burdened with interest
payments. A significant amount of indebtedness could increase the
possibility that we may be unable to generate sufficient revenues to service the
payments on indebtedness, when due, including principal, interest and other
amounts. Agreements made in connection with any borrowings may
contain significant restrictions and covenants that, among other things, could
limit our ability to make investments, pay dividends or make distributions to
our shareholders, repurchase or redeem indebtedness, grant liens on our assets,
enter into transactions with our affiliates, merge or consolidate with other
entities or transfer all or substantially all of our assets, and restrict the
ability of our subsidiaries to pay dividends or to make other payments to us.
Our
ability to comply with any restrictions and covenants related to indebtedness in
the future is uncertain and would be affected by the levels of cash flow from
our operations and events or circumstances beyond our control. Our
failure to comply with any of restrictions and covenants under indebtedness
financing could result in a default under those facilities, and could cause all
of our existing indebtedness to be immediately due and payable. If any of our
indebtedness were to be accelerated, we may not be able to repay our
indebtedness or borrow sufficient funds to refinance it. Even if we were able to
obtain new financing, it may not be on commercially reasonable terms or on terms
that are acceptable to us. If any of our indebtedness is in default
for any reason, our business, financial condition and results of operations
could be materially and adversely affected. In addition, complying with any
restrictions and covenants may also cause us to take actions that are not
favorable to our shareholders and may make it more difficult for us to
successfully execute our business plan and compete against companies that are
not subject to such restrictions and covenants.
8
We
may have to price our products and services at low margins which could adversely
affect our business and any investment in our company.
Even if
we are able to compete with our competitors, we may have to price our products
and services at low gross margins in order to gain market share. Competitive
pricing pressures together with new or improved competing product introductions
by our competitors may adversely affect the average selling price of our
products and services and force us to make downward adjustments. If we are
unable to offset price decreases by increasing our sales volumes or by adjusting
our product offerings, our revenues and gross margins would decline. To grow our
business we generate revenues as soon as possible and thereafter continue to
develop and introduce new products, services and improvements. If we cannot
maintain reasonable gross margins, our financial position may be harmed, our
stock price may decline and we may fail.
We
could have substantial difficulty addressing the challenges of rapid
growth.
If demand
for our products increases rapidly, we will need to either increase our internal
production capacity or implement additional outsourcing. Success in developing
and producing a limited volume of products does not guarantee that we will
experience comparable success in operations conducted on a larger scale.
Modifying our procedures and facilities to adjust to increased demand may delay
delivery of our products. Production efficiencies, yields and product quality
may decline as our Company expands over time. If we are unable to meet the
demand of our customers and deliver products quickly and cost effectively,
customers may turn to our competitors. The costs and risks associated with
implementing new technologies, methods and processes, including the purchase of
new equipment, and any resulting delays, inefficiencies and loss of sales, could
harm our results of operations.
We
expect that our anticipated future growth may strain our management,
administrative, operational and financial infrastructure. Failure of our ability
to reasonably manage anticipated growth could materially and adversely affect
our business.
We
anticipate that significant expansion of our present operations will be required
to capitalize on market opportunities. This expansion is expected to place a
significant strain on our management, operational and financial resources. We
expect to add a substantial number of additional key personnel in the future,
including key managerial employees who will have to be fully integrated into our
operations. In order to manage our growth, we will be required to continue to
implement and improve our operational and financial systems, to expand existing
operations, to attract and retain superior management, and to train, manage and
expand our employee base. We cannot assure you that we will be able to
effectively manage the expansion of our operations, that our systems, procedures
or controls will be adequate to support our operations or that our management
will be able to successfully implement our business plan. If we are unable to
manage growth effectively, our business, financial condition and results of
operations could be materially and adversely affected.
Our
success will depend heavily on our management. If we fail to hire and retain
qualified management and other key personnel, the implementation of our business
plan will be materially and adversely affected.
Our
performance is substantially dependent on the continued services and performance
of our executive officers and other key personnel, and our ability to retain and
motivate our officers and key employees. Our future success also depends on our
ability to identify, attract, hire, train, retain and motivate other highly
skilled technical, managerial and marketing personnel. Competition for qualified
personnel is intense, and we cannot assure you that we will be successful in
attracting and retaining such personnel. The failure to attract and retain our
officers or the necessary technical, managerial and marketing personnel could
have a material adverse effect on our business, prospects, financial condition
and results of operations.
Our
dependence on management creates risks. The loss of our experienced officers and
key employees could materially and adversely affect our ability to
professionally manage our business.
Our plan
for success is dependent, in large part, on the active participation of our
executive officers. The loss of their services would materially and adversely
affect our business and future success. We do not have key-man life
insurance in effect at the present time. Should any of our key
employees die or become incapacitated, we may not be able to replace them in a
timely or cost effective manner which could materially and adversely harm our
business, financial condition and results of operations.
We
may be sued for infringing on the intellectual property rights of
others.
Third
parties may claim that we are infringing on their intellectual property
rights. We may violate the rights of others without our knowledge. If
a litigant establishes that we are infringing its intellectual property rights,
or that our intellectual property rights are invalid, we may be forced to change
our products, services, or manufacturing processes, and such changes may be
expensive or impractical. We may then be forced to seek royalty or license
agreements from such litigant. If we are unable to agree on acceptable terms, we
may be required to discontinue the sale of key products or halt other aspects of
our operations. In addition, we may also be liable for significant financial
damages for a violation of intellectual property rights. Any adverse
result related to violation of third party intellectual property rights could
materially and adversely harm our business, financial condition and results of
operations. Even if intellectual property claims brought against us
are without merit, they may result in litigation which could be costly and time
consuming, and may divert our management and key personnel from operating our
business.
9
We
may be exposed to tax audits, which could be expensive for the Company and time
consuming for management.
At the
present time, the Company is not in compliance with its obligation to file
income tax returns, however, the Company intends to remediate this
non-compliance in the immediate future. Our U.S. federal and state tax returns
may be audited by the U.S. Internal Revenue Service (the “IRS”). An audit may
result in the challenge and disallowance of deductions claimed by us. Further,
an audit could lead to an audit of one or more of our investors and ultimately
result in attempts to adjust investors’ tax returns with respect to items
unrelated to us. We are unable to guarantee the deductibility of any item that
we acquire. We will claim all deductions for federal and state income tax
purposes which we reasonably believe that we are entitled to claim. In
particular, we will elect to treat as an expense for tax purposes all interest,
management fees, taxes and insurance. The IRS may disallow any of the various
elements used in calculating our expenses, thereby reducing federal income tax
benefits of an investment. To the extent that any challenge or disallowance is
raised in connection with a tax return filed by an individual shareholder, the
cost of any audit and/or litigation resulting there from would be born solely by
the affected shareholder. In the event the IRS should disallow any of our
deductions, the directors, in their sole discretion, will decide whether to
contest such disallowance. No assurance can be given that in the event of such a
contest the deductions would be sustained by the courts. If the disallowance of
any deductions results in an underpayment of tax, investors could also be
responsible for interest on the underpayments.
Securities
compliance may be expensive and time consuming for our management.
Compliance
with the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated there under, including, the Sarbanes-Oxley Act of 2002
and related requirements will be costly and will place a significant burden on
our management. At the present time, the Company has only a limited history of
operating with the internal controls and procedures required of a public
company. Previously, the Company’s accounting predecessor, Janex International,
Inc. (the Delaware entity which later changed its name to Cono Italiano, Inc.
and was acquired by the Company) was registered with the U.S. Securities and
Exchange Commission. However, on March 23, 2009, the SEC took action under
Section 12(j) of the Securities Exchange Act of 1934 and revoked that entity’s
registration because it was seriously delinquent in its mandatory reporting
obligations. Should the Company fail to make its filings with the SEC in a
timely manner, its registration could be revoked as well.
We expect
to commence documenting, reviewing, and where appropriate, improving our
internal controls and procedures in anticipation of being subject to
Section 404 of the Sarbanes-Oxley Act of 2002, which will require
management assessments of the effectiveness of our internal control over
financial reporting. Management will be required to conduct an annual evaluation
of our internal control over financial reporting and include a management report
on our internal control over financial reporting, along with a report by our
independent registered public accounting firm addressing these assessments. We
cannot assure you that measures we have taken, or future measures we may take,
will enable us to provide accurate and timely financial reports, particularly if
we are unable to hire additional personnel in our accounting and financial
department, or if we lose personnel in this area. Any failure to maintain an
effective system of internal controls, or any other problems with our financial
systems or internal controls, could result in delays or inaccuracies in
reporting financial information or failure to comply with SEC reporting and
other regulatory requirements. Any of these situations could
adversely affect our business and stock price.
Estimates
must be made in connection with the preparation of our financial reports. If
changes must be made to financial reports, we could be adversely
affected.
We follow
accounting principles generally accepted in the United States in preparing our
financial statements. As part of this work, we must make many estimates and
judgments which affect the value of the assets and liabilities, contingent
assets and liabilities, and revenue and expenses reported in our financial
statements. We believe that our estimates and judgments are reasonable and we
make them in accordance with our accounting policies based on information
available at the time. However, actual results could differ from our estimates
and this could require us to record adjustments to expenses or revenues that
could be adversely material to our financial position and results of
operations.
A
significant percentage of our Common Stock is owned by a single investor,
Mitchell Brown, our Chief Executive Officer and a member of our Board of
Directors, which may lead to the Company taking actions which conflict with
other shareholders.
Our Chief
Executive Officer, Mr. Mitchell Brown, owns 30,000,000 shares of the Company’s
common stock directly, and has sole voting power and sole power of disposition
over all 6,000,000 shares of the Company’s common owned by Lara Mac
Inc. Thus Mr. Brown controls the voting of approximately 44% of our
issued and outstanding shares. This concentration of ownership and control could
discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, or could otherwise delay or prevent a change
in control transaction or other business combination, which could in turn have
an adverse effect on the market price of our common shares. As long as this
concentration of ownership persists, it is unlikely that any other holder or
group of holders of our common shares will be able to affect the way we are
managed or the direction of our business. The interests of the control group of
shareholders could conflict with the interests of other shareholders. In
addition, we may adopt amendments to our organizational documents and applicable
state law which have anti-takeover provisions that could delay or prevent a
change in control of our company.
10
A
majority of our stock is owned or controlled by three of our officers and
directors, and as such, they can exert complete control over all decisions where
a vote of shareholders is required.
51,750,000
shares of our Company’s common stock, equal to 63.2% of our issued and
outstanding shares, is owned or controlled by three individuals: (i) Mr.
Mitchell Brown, our Chief Executive Officer and a member of our Board of
Directors, owns 30,000,000 shares of the Company’s common stock directly, and
has sole voting power and sole power of disposition over all 6,000,000 shares of
the Company’s common owned by Lara Mac Inc.; (ii) Mr. Joseph Masselli, our
President, Chief Operating Officer and a member of our Board of Directors, owns
15,000,000 shares of the Company’s common stock; and (iii) Mr. Steve Savage, our
Secretary and a member of our Board of Directors owns 750,000 shares of the
Company’s common stock. As a result, these three individuals will be able to
control the direction the Company takes.
We
will indemnify our officers and directors which could cause our capital
resources to be used to defend and settle claims or legal actions against
them.
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers for expenses incurred in connection with the defense of
any action relating to their services. Costs, charges and expenses (including
attorneys' fees) incurred by such person in defending a civil or criminal
proceeding shall be paid by the Company in advance upon receipt of an
undertaking to repay all amounts advanced if it is ultimately determined that
the person is not entitled to be indemnified by the Company as authorized by the
bylaws, and upon satisfaction of other conditions required by current or future
legislation. To the extent that a director has been successful in defense of any
proceeding, the Nevada Revised Statutes provide that he shall be indemnified
against reasonable expenses incurred in connection therewith. These provisions
may limit the ability of our stockholders to recover damages against our
directors through legal proceeding or otherwise.
In
addition to the indemnification provided for in the Company’s bylaws, we may
enter into agreements to indemnify our directors and officers. Under these
agreements, we will be obligated to indemnify our directors and officers for
expenses, attorneys’ fees, judgments, fines and settlement amounts incurred by
any director or officer in any action or proceeding arising out of the
director’s or officer’s services as a director or officer of us, any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified individuals to serve as directors and
officers.
If
our food products become contaminated, we may be subject to product liability
claims, product recalls and increased scrutiny by regulators, any of which could
adversely affect our business.
Food
products like Pizza Cones are vulnerable to contamination leading to
food-related illness. There is a risk that our products could become
contaminated and then ultimately consumed by purchasers. Purchasers who suffer,
or claim to suffer, as a result of consuming our products may sue us, and such
suits could be expensive and time consuming for the Company and its management.
While Cono Italiano believes that it has adequate insurance to mitigate the
potential risk of losses for product liability claims, such insurance may prove
to be insufficient.
A
decline in the economy may lead to a decline in demand for our
products.
Should
the U.S. economy experience a further decline, demand for our product may not
grow and may even decrease, and accordingly, our ability to generate revenues
may be impaired.
Increased
costs for the raw materials used to produce the Pizza Cone may reduce our
profits.
The
Company is unable to predict the extent to which the raw materials used to
produce the Pizza Cone may increase in the future. Significant cost increase may
substantially reduce our profits.
A
material disruption at our processing plant could seriously harm our financial
condition and operating results.
In the
event that the processing plant at which our products are made was to be damaged
due to natural disaster or disrupted by labor disputes, the Company could
experience difficulties in finding an alternative production location. Such
difficult and delay could impact the profitability of the
Company.
11
The
failure of Pino Gelato, Inc. to effectively sell our products could reduce that
portion of our sales and profits attributable to retail sales.
The
Company will be reliant on Pino Gelato, Inc. and its management in the near
future for the sale of its product to retail outlets. Should Pino Gelato, Inc.
fail to accomplish its goals, the Company will be adversely
impacted.
The
Company’s sole focus is on the sale of cones. Should there be a lack of demand
for the cones we sell, we will not be able to rely on alternative products for
revenue.
The
Company’s product is a cone can be marketed as an empty vessel and filled with
fresh ingredients. There are currently over 100 recipes that can be used in the
cones. However, should there be a lack of demand for cones in general, the
Company will not receive revenues from other product lines.
Risks
Related To Investing In Our Common Shares
You
may have difficulty selling our common shares and may therefore lose all or a
significant portion of your investment.
Our
common shares trades on the OTC Bulletin Board. The stock price may be volatile.
The market price of our common shares may be subject to wide fluctuations in
response to several factors including the following:
·
|
Our ability to execute our
business plan and significantly grow our
business;
|
·
|
Increased competition from
competitors who offer competing services;
and
|
·
|
Our financial condition and
results of operations.
|
As a
result, our shareholders may find it more difficult to obtain accurate
quotations concerning the market value of the stock. Shareholders also may
experience greater difficulties in attempting to sell our common shares than if
they were listed on a self-regulated national stock exchange.
We
may need to raise additional capital. If we are unable to raise additional
capital, our business may fail.
We may
need to raise additional capital to provide cash for our operations. The fact
that we have generated only $12,600 in sales during the twelve months ended
December 31, 2009 (audited) may deter potential investors from providing
financing. Uncertainty regarding our ability to generate revenues may make it
difficult for us to find financing on acceptable terms. If we are unable to
obtain adequate funding, we may not be able to successfully develop and market
our products and our business may fail. To secure additional financing, we may
need to borrow money or sell more securities. Under the current circumstances,
we may be unable to secure additional financing on favorable terms, if available
at all.
We
do not currently intend to pay dividends on our common stock and, consequently,
the ability to achieve a return on your investment in our common stock will
depend on appreciation in the price of our common stock. If our common stock
does not appreciate in value, investors could suffer losses in their investment
in our common stock.
We do not
expect to pay cash dividends on our common stock. Any future dividend payments
are within the absolute discretion of our Board of Directors and will depend on,
among other things, our results of operations, working capital requirements,
capital expenditure requirements, financial condition, contractual restrictions,
business opportunities, anticipated cash needs, provisions of applicable law and
other factors that our Board of Directors may deem relevant. We may not generate
sufficient cash from operations in the future to pay dividends on our common
stock. As a result, the success of your investment in our common stock will
depend on future appreciation in its value. The price of our common stock may
not appreciate in value or even maintain the price at which you purchased our
shares. If our common stock does not appreciate in value, investors could suffer
losses in their investment in our common stock.
Because
the market for our common shares is limited, investors may not be able to resell
their common shares. Investors should therefore assume that any investment in
our company will be illiquid for the foreseeable future.
Our
common shares trade on the Over-the-Counter-Bulletin-Board quotation system.
Trading in our shares has historically been subject to very low volumes and wide
disparity in pricing. Investors may not be able to sell or trade their common
shares because of thin volume and volatile pricing with the consequence that
they may have to hold your shares for an indefinite period of
time.
12
There
are legal restrictions on the resale of the common shares offered, including
penny stock regulations under the U.S. Federal Securities Laws. These
restrictions may adversely affect your ability to resell your
stock.
We
anticipate that our common stock will continue to be subject to the penny stock
rules under the Securities Exchange Act of 1934, as amended. These rules
regulate broker/dealer practices for transactions in "penny stocks." Penny
stocks are generally equity securities with a price of less than $5.00. The
penny stock rules require broker/dealers to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker/dealer must also
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker/dealer and its salesperson and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations and the broker/dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction, the broker and/or dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number
of broker-dealers who may be willing to engage in the trading of our shares.
These additional penny stock disclosure requirements are burdensome and may
reduce all of the trading activity in the market for our common stock. As long
as the common stock is subject to the penny stock rules, our shareholders may
find it more difficult to sell their shares.
Our
future sales of our common shares could cause our stock price to
decline.
There is
no contractual restriction on our ability to issue additional shares. We cannot
predict the effect, if any, that market sales of our common shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales by us of our common shares in the public market, or the
perception that our sales may occur, could cause the trading price of our stock
to decrease or to be lower than it might be in the absence of those sales or
perceptions.
You
may experience dilution of your ownership interests due to the future issuance
of additional shares of our common stock which could be materially adverse to
the value of our common stock.
As of
April 14, 2010, we have 81,880,988 shares of our common stock issued and
outstanding. We are authorized to issue up to 100,000,000 shares of common
stock. Our Board of Directors may authorize the issuance of additional common or
preferred shares under applicable state law without shareholder approval. We may
also issue additional shares of our common stock or other securities that are
convertible into or exercisable for common stock in connection with the hiring
of personnel, future acquisitions, future private placements of our securities
for capital raising purposes or for other business purposes. Future sales of
substantial amounts of our common stock, or the perception that sales could
occur, could have a material adverse effect on the price of our common stock. If
we need to raise additional capital to expand or continue operations, it may be
necessary for us to issue additional equity or convertible debt securities. If
we issue equity or convertible debt securities, the net tangible book value per
share may decrease, the percentage ownership of our current stockholders may be
diluted and such equity securities may have rights, preferences or privileges
senior or more advantageous to our common stockholders.
Grants
of stock options and other rights to our employees may dilute your stock
ownership.
We plan
to attract and retain employees in part by offering stock options and other
purchase rights for a significant number of common shares. We have granted stock
options to certain officers and directors. The issuance of common shares
pursuant to these options, and options issued in the future, will have the
effect of reducing the percentage of ownership in us of our then existing
shareholders.
The
market price of our common stock may be volatile which could adversely affect
the value of your investment in our common stock.
The
trading price of our common stock may be highly volatile and could be subject to
wide fluctuations in response to various factors. Some of the factors that may
cause the market price of our common stock to fluctuate include:
·
|
fluctuations
in our quarterly financial results or the quarterly financial results of
companies perceived to be similar to
us;
|
·
|
Changes
in estimates of our financial results or recommendations by securities
analysts;
|
13
·
|
failure
of any of our products to achieve or maintain market
acceptance;
|
·
|
Changes
in market valuations of similar
companies;
|
·
|
significant
products, contracts, acquisitions or strategic alliances of our
competitors;
|
·
|
Success
of competing products or services;
|
·
|
Changes
in our capital structure, such as future issuances of securities or the
incurrence of additional debt;
|
·
|
regulatory
developments;
|
·
|
litigation
involving our company, our general industry or
both;
|
·
|
additions
or departures of key personnel;
|
·
|
investors’
general perception of us; and
|
·
|
Changes
in general economic, industry and market
conditions.
|
Absence
of equity research reports or unfavorable reports could adversely affect the
price of our stock.
The
trading market for our common shares will rely in part on the research and
reports that equity research analysts publish about us and the industry segments
in which we operate. The public price of our publicly traded common shares could
decline if one or more securities analysts downgrades investment in our common
shares or if those analysts issue other unfavorable commentary about our
industry or other major participants in our industry, or if they decline to
publish reports about us. At the current time there are no analysts
providing coverage of the Company’s securities.
ITEM
1B:
|
UNRESOLVED
STAFF COMMENTS
|
Pursuant
to permissive authority, we have omitted Unresolved Staff Comments.
ITEM
2:
|
PROPERTIES
|
Our
principal executive offices are located at 10 Main Street, Keyport,
NJ 07735. We are not paying rent for this location, which
is being provided by our Chief Executive Officer at no expense. We
believe that this property is adequate for our current and immediately
foreseeable operating needs. At the present time, we do not own any
real estate. We do not have any policies regarding investments in
real estate, securities or other forms of property.
ITEM 3:
|
LEGAL
PROCEEDINGS
|
We are
not aware of any pending or threatened litigation against us that we expect will
have a material adverse effect on our business, financial condition, liquidity,
or operating results. We cannot assure you that we will not be adversely
affected in the future by legal proceedings.
ITEM
4:
|
RESERVED
|
Not
Applicable.
14
ITEM
5:
|
MARKET FOR
REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
|
Market
Information
Our
common stock trades on the over-the-counter bulletin board quotation system
(OTCBB) under the symbol “CNOZ”. The following table shows the range of high and
low bids per share of our Common Stock as reported by the Over-the-Counter
Bulletin Board for the fiscal year periods indicated. Such over-the-counter
market quotations reflect inter-dealer prices, without retail mark-up, markdown
or commission, and may not necessarily represent actual
transactions.
2009
|
||||||||
High
|
Low
|
|||||||
4
th
Quarter ended December 31
|
$
|
3.49
|
1.50
|
|||||
3
rd
Quarter ended September 30
|
$
|
6.60
|
0.06
|
|||||
2
nd
Quarter ended June 30
|
$
|
0.15
|
0.06
|
|||||
1
st
Quarter ended March 31
|
$
|
0.20
|
0.03
|
2008
|
||||||||
High
|
Low
|
|||||||
4
th
Quarter ended December 31
|
$
|
0.20
|
0.06
|
|||||
3
rd
Quarter ended September 30
|
$
|
0.56
|
0.09
|
|||||
2
nd
Quarter ended June 30
|
$
|
1.45
|
0.52
|
|||||
1
st
Quarter ended March 31
|
$
|
2.03
|
0.90
|
Holders
As of
April 14, 2010, there were 81,880,988 shares of common stock issued and
outstanding.
As of
April 14, 2010, there were 67 holders of record of our common
stock.
Dividend
Policy
We have
not paid any dividends to the holders of our common stock and we do not expect
to pay any such dividends in the foreseeable future as we expect to retain our
future earnings for use in the operation and expansion of our
business.
Securities
Authorized for Issuance Under Equity Compensation Plans
At the
present time, we have no securities authorized for issuance under equity
compensation plans.
ITEM 6:
|
SELECTED FINANCIAL
DATA
|
Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted Selected
Financial Data.
15
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
|
Selected
Financial Data
Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted selected
financial data.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion of the financial condition and results of operations of the
Company should be read in conjunction with the financial statements and the
related notes thereto included elsewhere in this Report. This Report contains
certain forward-looking statements and the Company's future operating results
could differ materially from those discussed herein. Certain statements
contained in this Report, including, without limitation, statements containing
the words "believes", "anticipates," "expects" and the like, constitute
"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934,
as amended (the “Exchange Act”). However, as the Company intends to issue “penny
stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange
Act, the Company is ineligible to rely on these safe harbor provisions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to announce publicly the results of any revisions of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.
Introduction
The
Company was incorporated in the State of Nevada on September 9, 2004 as Arch
Management Services Inc. A change of control of the Company occurred on June 5,
2006 and the Company changed its name from “Arch Management Services Inc.” to
“Tiger Ethanol International Inc.” on November 24, 2006. On February 11, 2008
the Company changed its name to “Tiger Renewable Energy Ltd.” Another change of
control of the Company occurred on June 4, 2009. On August 10, 2009, the Company
changed its name to “Cono Italiano, Inc.” and its symbol changed to
CNOZ.
On August
10, 2009, the Company conducted a one for sixty reverse stock split. As of such
date, all of the outstanding shares of common stock of the Company have been
consolidated such that stockholders of record hold one share of post-split
common stock for every sixty shares owned prior to the reverse stock split. All
fractional shares resulting from the reverse stock split have been rounded up to
the next whole share.
Our
principal business address is 10 Main Street, Keyport, NJ 07735 and our
telephone number is 877-330-2666.
Our
Business
The
Company was previously involved in the production of ethanol from agricultural
products. The Company’s board of directors determined that it was in our best
interest to initiate a complete and total withdrawal from the ethanol business
as of January 31, 2009. The Company subsequently began seeking new business
opportunities.
We
recently identified Cono Italiano (Delaware) as a business venture that would be
suitable for future operation. On November 12, 2009, we entered into agreement
with the shareholders of Cono Italiano (Delaware) pursuant to which we acquired
all of the issued and outstanding shares of the Cono Italiano (Delaware) and we
will now operate Cono Italiano (Delaware) as a wholly-owned subsidiary of our
Company.
Cono
Italiano (Delaware)
In March
2006 Cono Italiano LLC, a New Jersey limited liability company, entered into an
agreement with Kono Italia S.R. L., an Italian company doing business as “Pizza
Hands.” Kono Italia S.R.L owns the designs, recipes and technology for the
“Pizza Cono,” a food product for quick service restaurants consisting of a cone
shaped pizza dough. Cono Italiano (Delaware) (as the successor to Cono Italiano,
LLC) holds a distribution agreement for North America from Kono Pizza in Italy.
This distribution agreement grants the licensee an exclusive license to exploit
this product in the United States, Canada and Mexico for a twenty-five (25) year
term. The product is patented in the United States and Europe as is the cone
production machine which is proprietary. In 2007 Cono Italiano, LLC introduced
the product into the North American market by building an alliance with Center
Plate, a food service provider to stadiums and arenas throughout North America.
At the present time, Cono Italiano (Delaware) has no contractual agreements with
Center Plate.
16
Cono
Italiano (Delaware) was formed through the merger of Cono Italiano LLC, a New
Jersey limited liability company, and Janex International, Inc., a Delaware
corporation, in January, 2008. Cono Italiano (Delaware) was formed as Janex
International, Inc. on July 6, 2007 in the State of Delaware. On January 8, 2008
Janex International Inc. changed its name to Cono Italiano, Inc. Cono Italiano,
LLC (Cono, LLC) was formed on June 27, 2007 as a limited liability company in
the State of New Jersey. Cono, LLC had no operations and its primary assets were
the license rights to manufacture, market, and distribute “pizza cono”, a unique
pizza style food product. In March 2007, the license rights held by the
individual founders of Cono, LLC was sold to The Total Luxury Group (“TLG”), an
unrelated entity. Subsequently, on January 8, 2008 the license rights were
transferred to Mitchell Brown, our Company’s Chief Executive Officer, for the
total consideration of $312,000. The transfer of Cono, LLC (which includes the
license rights) was effected in settlement of an obligation due to Mitchell
Brown by TLG. On January 14, 2008, Cono, LLC was sold to Cono Italiano
(Delaware) for the total consideration of $426,000. In exchange for the 100%
interest in Cono, LLC, the sole member of the LLC received 6,000,000 shares of
Cono Italiano (Delaware) valued at $114,700 and was issued a promissory note for
$312,000. Mitchell Brown is also a principal stockholder in the
Company.
Cono
Italiano (Delaware) is licensed to distribute a food product called the “Pizza
Cono.” The Pizza Cone is designed to be a drip free, spill free cone-shaped
pizza made of a proprietary dough and filled with freshly selected ingredients.
The Company intends that the Pizza Cone will be distributed through the fast
food market (the fast food market is generally defined as restaurants selling
food and drinks for immediate consumption either on the premises in designated
eating areas, or for consumption elsewhere). The Pizza Cone will be distributed
to quick-service restaurants, takeaways, mobile and street vendors, and leisure
locations. These establishments include typical fast food chains, supermarkets,
convenience stores, entertainment facilities and sports arenas.
On July
9, 2008, Cono Italiano (Delaware) entered into a distribution and licensing
agreement (the “Distribution Agreement”) with Pino Gelato, Inc., a South
Carolina corporation presently involved in retail sales of Italian gelato and
sales of franchises for the sale of gelato. Under the terms of the Distribution
Agreement, we have granted to Pino Gelato, Inc. the rights in the United States,
Canada and Mexico to sell and distribute our products through retail channels.
The initial term of the Distribution Agreement is for ten (10) years and shall
be automatically renewed for additional ten (10) year terms if neither party is
in material breach of the Distribution Agreement at the expiration date of each
ten (10) year term. The Distribution Agreement includes the right to market
Pizza Cones and establish Pizza Cone and Pino Gelato Cafes. Cono Italiano
(Delaware) has received $100,000 in cash in consideration for such Distribution
Agreement. There have been five retail channels established to date for a
licensing fee of $25,000. Product has been sold to various distributors
throughout the country for distribution. As an inducement to buy the
distribution and franchise rights by Pino Gelato, Inc. the Company agreed to
issue 375,000 shares of common stock to Pino Gelato. Common stock amounting to
250,000 shares were issued to Pino Gelato, with the remaining 125,000 shares to
be issued .
As part
of Cono Italiano (Delaware)’s marketing strategy, Cono Italiano (Delaware) paid
$8,500 in September of 2008 to develop retail packaging and conducted a photo
shoot for the product in October of 2008 at a cost of $1,500.
There
have been five licenses sold to date and there are currently five such cafes in
operation, located in South Carolina, Tennessee, Pittsburgh and Ohio. These
cafes are presently selling the Pizza Cone product.
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" in Indianapolis Indiana. Mitchell Brown
transferred his ownership interests in Edesia Emprise, LLC to his father, Gene
Brown, later that month. Taylor's Bakery was contracted as a third party
manufacturer for this project in January of 2009, and in March of 2009, Dough
Bros., Inc., an entity established by Taylor’s Bakery, entered into an agreement
with Edesia Emprise, LLC and Cono Italiano (Delaware).
Since
March of 2009, Cono Italiano (Delaware)’s marketing and distribution efforts
have also included giving free samples of its product away at the Indianapolis
Speedway, presenting the product to potential distributors at a trade show, and
selling the product at an Italian festival in Indianapolis.
17
In the
first quarter of 2009, a production facility was established in Indianapolis,
Indiana by Taylor’s Bakery with proprietary baking equipment purchased from
Italy. Cono Italiano (Delaware) has been working together with the TurboChef
Brand of ovens to develop cooking settings to bake the Cono Italiano product in
retail distribution settings. Major food establishments including Subway, Dunkin
Donuts, and Quick Chek currently use TurboChef Brand ovens to cook frozen
products in their establishments. Cono Italiano (Delaware) shipped its initial
orders for products in the second quarter of 2009. Cono Italiano (Delaware) buys
and resells the TurboChef Brand ovens as needed. An alternative supplier, Amana,
makes similar ovens at similar prices which the management of Cono Italiano
(Delaware) believes it can rely upon if there is any disruption in supply of
ovens from TurboChef Brand.
On
October 22, 2009, Dough Bros., Inc., John Allen, Drew Allen, Matt Allen, Edesia
Emprise, LLC, Cono Italiano (Delaware), Mitchell Brown, John Jacobs and Ramona
Fantini entered into an agreement to terminate the relationship between Cono
Italiano (Delaware), Edesia Emprise, LLC and Dough Bros., Inc.
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master Manufacturing
Agreement, Edesia Emprise, LLC will produce the Company’s Pizza Cono product.
Cono Italiano (Delaware) has agreed to pay Edesia Emprise, LLC the costs of
production plus fifteen percent (15%). This Master Manufacturing Agreement has a
five (5) year term and will automatically renew unless cancelled by one of the
parties pursuant to its terms. This Master Manufacturing Agreement is exclusive
within the United States. Edesia Emprise, LLC may either produce this product
directly or through a subcontractor. On December 8, 2009, the Company was
advised that Edesia Emprise had entered into its first subcontract agreement
with Sunrise Baking Acquisition Company, based in Brooklyn, New
York.
Financial
Information in this Report
The
acquisition of Cono Italiano (Delaware) by our Company is for accounting
purposes treated as a reverse acquisition where Cono Italiano (Delaware) is the
accounting survivor. As such, all financial information discussed and presented
herein is the historical and current information pertaining only to Cono
Italiano (Delaware) except as otherwise indicated. The financial statements and
notes included as part of this Report pertain only to Cono Italiano (Delaware)
as the accounting survivor and disregard the historical financial statements
filed by our Company prior to the acquisition of Cono Italiano
(Delaware).
In
connection with the acquisition of Cono Italiano (Delaware), the Company changed
its fiscal year end from January 31 st to
December 31 st
.
Revenues
From
inception through December 31, 2009, the Company has had total sales of $23,885.
In the twelve month period ended December 31, 2009, Cono Italiano (Delaware) had
total sales of $12,600, compared to total sales of $11,285 in the twelve month
period ended December 31, 2008.
From
inception through December 31, 2009, the Company’s gross profits have been
$14,762.
Financial
Condition, Liquidity and Capital Resources
Through
December 31, 2009, Cono Italiano (Delaware) has accrued total liabilities of
$1,280,647 in the course of developing its operations. The Company’s
expenditures are expected to increase as the Company expands its operations,
expends additional funds on marketing, administration and new staff, and
commences the payment of salaries to existing officers and directors (although
the Company’s officers and directors have agreed that they will not receive any
salary through December 31, 2010). Total liabilities increased from $831,838 on
December 31, 2008 to $1,280,647 at December 31, 2009.
The total
assets of Cono Italiano (Delaware) increased from $240,497 on December 31, 2008
to $322,041 on December 31, 2009. The Company’s largest asset as of December 31,
2009 was the value of its licensing rights, net of accumulated amortization of
$137,004. This was a decrease from December 31, 2008 of
$143,502.
As of
December 31, 2009, Cono Italiano (Delaware) had $10,658 in cash and cash
equivalents on hand, as compared to $724 on hand as of December 31, 2008. The
main source of this cash was loans from an officer; our Chief Executive Officer,
Mitchell Brown, was owed $624,366 as of December 31, 2009, which total loan
amount had increased from $568,828 at December 31, 2008.
From
inception through December 31, 2009, the Company’s total expenses were
$1,432,172. Total expenses for the twelve month period ended December 31, 2009
were $446,470. This included, in part, selling expenses of $48,735, compensation
expenses of $140,005, general and administrative expenses of $240,634 and
interest expense of $20,296. This was a decrease from the twelve month period
ended December 31, 2008, in which total expenses were $935,412, consisting of
selling expenses of $121,631, compensation expense of $280,000, general and
administrative expenses of $521,863 and interest expenses of
$11,918.
18
The
Company’s net loss from inception through December 31, 2009 was $1,417,410. The
net loss for the twelve month period ended December 31, 2009 was $437,325. This
was a decrease from the twelve month period ended December 31, 2008, in which
the net loss was $929,795.
The
Company’s management believes that Cono Italiano will need additional capital to
conduct business, grow and expand the Company. The terms and condition of any
which we may receive financing could have a material adverse affect on our
business, results of operations, liquidity and financial condition.
On
November 9, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of our shareholders, Lara Mac has agreed to provide
financing to Cono Italiano, Inc., with such funds as the Company’s Board of
Directors shall deem to be sufficient to maintain the Company’s ordinary course
of business operations (the “Commitment Amount”). We may draw on the Commitment
Amount in monthly tranches in accordance with our operating requirements as set
forth in our business plan. The available Commitment Amount will be reduced by
the aggregate cash proceeds received by the Company which are derived from the
issuance of any equity securities and Company gross revenues. Draws on the
Commitment Amount will be made on terms of unsecured notes, with interest set on
each note as of the date of the draw at prime rate plus two percent per annum.
The notes will mature and become repayable thirty calendar days after demand at
any time following the earlier of (a) December 31, 2010 or (b) the date upon
which we are in receipt of revenues or proceeds from the sales of equity
securities. We will give Lara Mac customary representations and warranties
regarding the good standing of our Company and status of progress in respect of
our Company business plan prior to each draw on the Commitment Amount, and we
will provide certifications and covenants regarding use of proceeds of each
draw, which will be in customary forms reasonably requested by Lara Mac as
determined by reference to similar lenders making similar loans to similar
companies. Lara Mac will not be required to make any loans under the Commitment
Amount to us if we are unable to make the representations, warranties,
certifications or covenants, or if we are in breach of any previously given
representations, warranties, certifications or covenants. If we breach any of
the notes, the default rate will be 15% per annum and Lara Mac may seek recourse
against our company for repayment of all of the notes. As of the end of the
period covered by this Report, there had been no borrowings under the Commitment
Letter.
The
independent auditor's reports of EFP Rotenberg LLP for the period ended December
31, 2009 contained "going concern" qualifications, noting that there was an
accumulated deficit of $980,085 at December 31, 2008 and $1,417,410 at December
31, 2009. Cono Italiano (Delaware)’s auditors expressed the opinion that such
entity’s continued existence is dependent upon its ability to raise capital. The
financial statements do not include any adjustments that might be necessary
should Cono Italiano (Delaware) be unable to continue as a going
concern.
Critical
Accounting Policies and Estimates
Our
consolidated financial statements are prepared in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”). The preparation of the financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses, and related
disclosures. Though we evaluate our estimates and assumptions on an ongoing
basis, our actual results may differ from these estimates.
Intangible
Assets
Intangible
assets consist of licensing rights. The Company applies an impairment evaluation
whenever events or changes in business circumstances indicate that the carrying
value of the intangible assets may not be recoverable. Other intangible assets
are amortized on a straight-line basis over their estimated economic lives. The
Company believes that the straight-line method of amortization reflects an
appropriate allocation of the cost of the intangible assets to earnings in
proportion to the amount of economic benefits obtained annually by the
Company.
Stock-Based
Compensation
Stock-based
compensation related to non-employees is recognized as compensation expense in
the accompanying consolidated statements of operations and is based on the fair
value of the services received or the fair value of the equity instruments
issued, whichever is more readily determinable. The Company’s accounting policy
for equity instruments issued to consultants and vendors in exchange for goods
and services follows the provisions of FASB ASC 505, “Equity Based Payments to
Non-Employees.” The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii) the
date at which the consultant or vendor’s performance is complete. In the case of
equity instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting agreement.
19
Off
Balance Sheet Arrangements
The
Company does not have any off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
QUANITATIVE AND QUALITATIVE
DISCLOSURES ABOUT MARKET
RISK
|
We did
not have any operations which implicated market risk as of the end of the latest
fiscal year. We intend to implement an analysis and assessment program which
will on a regular basis determine exposures of the Company to future risks. We
expect to report the results of all such quantitative and qualitative risk
assessments prior to entering into any material agreements, and on a regular
monthly and annual basis to our audit committee so that responsive risk
management measures can be discussed and actions taken to the extent reasonably
feasible. Inflationary factors in the future, such as increases in overhead
costs, may adversely affect our operating results. A high rate of inflation in
the future may have an adverse effect on our ability to manage selling, general
and administrative expenses as a percentage of net revenues if our revenues do
not increase with these increased costs.
20
ITEM 8:
|
FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA
|
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
FINANCIAL REPORTS
AT
DECEMBER
31, 2009
F-1
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
FINANCIAL
REPORTS
AT
DECEMBER
31, 2009
TABLE
OF CONTENTS
|
|
Report
of Independent Registered Public Accounting Firm
|
F-3
|
Consolidated
Balance Sheets at December 31, 2009 and 2008
|
F-4
|
Consolidated
Statements of Changes in Stockholders’ Deficit for the Period from Date of
Inception (March 2, 2006) Through December 31, 2009
(Restated)
|
F-5
|
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and 2008
and the Period from Inception (March 2, 2006) through December 31, 2009
(Restated)
|
F-6
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and 2008
and the Period from Inception (March 2, 2006) through December 31, 2009
(Restated)
|
F-7
|
Notes
to Consolidated Financial Statements
|
F-8
-
F-19
|
F-2
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Cono Italiano, Inc.
We have
audited the accompanying consolidated balance sheets of Cono Italiano, Inc. as
of December 31, 2009 and 2008, and the related consolidated statements of
statements of operations, change in stockholders' deficit, and cash flows for
the years then ended and for the period since inception (March 2, 2006) through
December 31, 2009. Cono Italiano, Inc.’s management is responsible for
these consolidated financial statements. Our responsibility is to express an
opinion on these consolidated financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, 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 consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Cono Italiano, Inc. as of
December 31, 2009 and 2008, and the results of its operations and its cash flows
for each of the years in then ended and for the period since inception (March 2,
2006) through December 31, 2009 in conformity with accounting principles
generally accepted in the United States of America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note H to the
consolidated financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going
concern. The consolidated financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
As
discussed in Note N to the consolidated financial statements, the Company has
concluded it is a development stage entity and therefore has restated its
financials statements to include the required cumulative amounts from the date
of inception.
/s/ EFP
Rotenberg, LLP
EFP
Rotenberg, LLP
Rochester,
New York
April 15,
2010, except for Note N,
as to
which the date is May 25, 2010.
F-3
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED BALANCE SHEETS
December 31,
|
2009
|
2008
|
||||||
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 10,658 | $ | 724 | ||||
Due
from Related Party
|
133,938 | 55,500 | ||||||
Prepaid
Expenses
|
20,048 | 4,615 | ||||||
Total
Current Assets
|
164,644 | 60,839 | ||||||
Property
and Equipment - Net of Accumulated Depreciation
|
20,393 | 36,156 | ||||||
Other
Assets
|
||||||||
Licensing
Rights - Net of Accumulated Amortization
|
137,004 | 143,502 | ||||||
Total
Assets
|
$ | 322,041 | $ | 240,497 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Liabilities
|
||||||||
Accounts
Payable
|
$ | 199,427 | $ | — | ||||
Accrued
Expenses
|
39,400 | — | ||||||
Accrued
Legal Expense
|
63,360 | — | ||||||
Accrued
Interest
|
36,182 | 17,885 | ||||||
Deferred
Revenue
|
10,109 | 4,750 | ||||||
Notes
Payable
|
231,987 | 200,000 | ||||||
Due
to Officer
|
624,366 | 568,828 | ||||||
Total
Current Liabilities
|
1,204,831 | 791,463 | ||||||
Other
Liabilities
|
||||||||
Deferred
Revenue
|
75,816 | 40,375 | ||||||
Total
Liabilities
|
1,280,647 | 831,838 | ||||||
Stockholders'
Deficit
|
||||||||
Common
Stock - $.001 Par; 100,000,000 Shares
Authorized, 79,880,988 and 53,250,000 Shares Issued and
Outstanding
|
79,881 | 53,250 | ||||||
Additional
Paid-In-Capital
|
378,923 | 335,494 | ||||||
Deficit
Accumulated During Development Stage
|
(1,417,410 | ) | (980,085 | ) | ||||
Total
Stockholders' Deficit
|
(958,606 | ) | (591,341 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 322,041 | $ | 240,497 |
The
accompanying notes are an integral part of these financial
statements.
F-4
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT FOR THE PERIOD FROM DATE OF
INCEPTION (MARCH 2, 2006) THROUGH DECEMBER 31, 2009 (RESTATED)
|
Deficit
|
|||||||||||||||||||||||
|
Common Stock
|
Additional
|
Accumulated
|
Total
|
||||||||||||||||||||
|
$ .001 Par
|
Paid-In
|
During
|
Treasury Stock
|
Stockholders'
|
|||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Development Stage
|
at Cost
|
Deficit
|
||||||||||||||||||
Balance
- March 2, 2006
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
$
|
—
|
|||||||||||||
Common
Stock Issued for Contribution of License Rights and Equipment
(1)
|
6,000,000
|
6,000
|
159,000
|
—
|
—
|
165,000
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
—
|
—
|
—
|
||||||||||||||||||
Balance
- December 31, 2006 (1)
|
6,000,000
|
6,000
|
159,000
|
—
|
—
|
165,000
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
(50,290
|
)
|
—
|
(50,290
|
)
|
||||||||||||||||
Balance
- December 31, 2007
|
6,000,000
|
6,000
|
159,000
|
(50,290
|
)
|
—
|
114,710
|
|||||||||||||||||
Additional
Paid-In-Capital - Deemed Distribution
|
—
|
—
|
(312,000
|
)
|
—
|
—
|
(312,000
|
)
|
||||||||||||||||
Common
Stock Issued to Prior Owners
|
3,000,000
|
3,000
|
54,000
|
—
|
—
|
57,000
|
||||||||||||||||||
Common
Stock Issued in Exchange for Services
|
44,250,000
|
44,250
|
434,494
|
—
|
—
|
478,744
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
(929,795
|
)
|
—
|
(929,795
|
)
|
||||||||||||||||
Balance
- December 31, 2008
|
53,250,000
|
53,250
|
335,494
|
(980,085
|
)
|
—
|
(591,341
|
)
|
||||||||||||||||
Common
Stock Issued in Exchange for Services
|
7,616,428
|
7,616
|
178,777
|
—
|
—
|
186,393
|
||||||||||||||||||
Common
Stock Issued for Cash
|
262,000
|
262
|
64,608
|
—
|
—
|
64,870
|
||||||||||||||||||
Common
Stock Issued for Related Party Expense
|
500,000
|
500
|
69,500
|
—
|
—
|
70,000
|
||||||||||||||||||
Acquisition
of Shell (1)
|
242,560
|
243
|
(272,946
|
)
|
—
|
—
|
(272,703
|
)
|
||||||||||||||||
Common
Stock Issued to Relieve Accounts Payable
|
10,000
|
10
|
3,490
|
—
|
—
|
3,500
|
||||||||||||||||||
Common
Stock Issued for Note Payable Conversion
|
18,000,000
|
18,000
|
—
|
—
|
—
|
18,000
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
(437,325
|
)
|
—
|
(437,325
|
)
|
||||||||||||||||
Balance
- December 31, 2009
|
79,880,988
|
$
|
79,881
|
$
|
378,923
|
$
|
(1,417,410
|
)
|
$
|
—
|
$
|
(958,606
|
)
|
(1)
|
The stockholders equity of Cono
Italiano, Inc. has been recapitalized to give effect to the shares
received by the existing shareholders of Cono Italiano, Inc. from the
share exchange agreement with Tiger Renewable Energy
Ltd.
|
The
accompanying notes are an integral part of these financial
statements.
F-5
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(Restated)
|
|||||||||||
|
Period From
|
|||||||||||
|
Date of Inception
|
|||||||||||
|
(March 2, 2006)
|
|||||||||||
|
Through
|
|||||||||||
For the Years Ended December 31,
|
2009
|
2008
|
December 31, 2009
|
|||||||||
Sales
|
$
|
12,600
|
$
|
11,285
|
$
|
23,885
|
||||||
Cost
of Sales
|
3,455
|
5,668
|
9,123
|
|||||||||
Gross
Profit
|
9,145
|
5,617
|
14,762
|
|||||||||
Expenses
|
||||||||||||
Selling
and Direct
|
48,735
|
121,631
|
170,366
|
|||||||||
Compensation
Expense
|
140,005
|
280,000
|
420,005
|
|||||||||
General
and Administrative
|
240,634
|
521,863
|
806,820
|
|||||||||
Interest
Expense
|
20,296
|
11,918
|
38,181
|
|||||||||
Gain
on Sale of Assets
|
(3,200
|
)
|
—
|
(3,200
|
)
|
|||||||
Total
Expenses
|
446,470
|
935,412
|
1,432,172
|
|||||||||
Net
Loss
|
$
|
(437,325
|
)
|
$
|
(929,795
|
)
|
$
|
(1,417,410
|
)
|
|||
Loss
per Share - Basic and Diluted
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
$
|
(0.05
|
)
|
|||
Weighted
Average Common Shares Outstanding
|
55,716,122
|
40,687,123
|
27,991,556
|
The
accompanying notes are an integral part of these financial
statements.
F-6
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(Restated)
|
|||||||||||
|
Period From
|
|||||||||||
|
Date of Inception
|
|||||||||||
|
(March 2, 2006)
|
|||||||||||
|
Through
|
|||||||||||
For the Years Ended December 31,
|
2009
|
2008
|
December 31, 2009
|
|||||||||
Cash
Flows from Operating Activities
|
||||||||||||
Net
Loss
|
$
|
(437,325
|
)
|
$
|
(929,795
|
)
|
$
|
(1,417,410
|
)
|
|||
Adjustments
to Reconcile Net Loss to Net Cash Flows from Operating
Activities:
|
||||||||||||
Amortization
|
6,498
|
6,498
|
12,996
|
|||||||||
Depreciation
|
14,587
|
13,980
|
29,607
|
|||||||||
Common
Stock Issued in Exchange for Services
|
170,960
|
478,744
|
649,704
|
|||||||||
Expense
to Prior Owners
|
—
|
257,000
|
257,000
|
|||||||||
Gain
on Sale of Assets
|
(3,200
|
)
|
—
|
(3,200
|
)
|
|||||||
Changes
in Assets and Liabilities:
|
||||||||||||
Prepaid
Expenses
|
—
|
(4,615
|
)
|
(4,615
|
)
|
|||||||
Accounts
Payable
|
(22,703
|
)
|
—
|
(22,703
|
)
|
|||||||
Accrued
Expenses
|
39,400
|
—
|
39,400
|
|||||||||
Accrued
Legal Expense
|
63,360
|
—
|
63,360
|
|||||||||
Accrued
Interest
|
20,296
|
11,918
|
38,182
|
|||||||||
Deferred
Revenue
|
40,800
|
45,125
|
85,925
|
|||||||||
Net
Cash Flows from Operating Activities
|
(107,327
|
)
|
(121,145
|
)
|
(271,754
|
)
|
||||||
Net
Cash Flows from Investing Activities
|
||||||||||||
Proceeds
from Sale of Asset
|
5,000
|
—
|
5,000
|
|||||||||
Acquisition
of Cash in Reorganization
|
916
|
—
|
916
|
|||||||||
Purchase
of Property and Equipment
|
(625
|
)
|
(15,374
|
)
|
(36,802
|
)
|
||||||
Net
Cash Flows from Investing Activities
|
5,291
|
(15,374
|
)
|
(30,886
|
)
|
|||||||
Cash
Flows from Financing Activities
|
||||||||||||
Cash
Proceeds from Sale of Stock
|
64,870
|
—
|
64,870
|
|||||||||
Cash
Advance to Related Party
|
(8,438
|
)
|
(55,500
|
)
|
(63,938
|
)
|
||||||
Due
to Officer
|
55,538
|
92,226
|
312,366
|
|||||||||
Net
Cash Flows from Financing Activities
|
111,970
|
36,726
|
313,298
|
|||||||||
Net
Change in Cash and Cash Equivalents
|
9,934
|
(99,793
|
)
|
10,658
|
||||||||
Cash
and Cash Equivalents - Beginning of Year
|
724
|
100,517
|
—
|
|||||||||
Cash
and Cash Equivalents - End of Year
|
$
|
10,658
|
$
|
724
|
$
|
10,658
|
||||||
Supplemental
Non-Cash Investing and Financing Activities:
|
||||||||||||
Acquisition
of Accounts Payable in Reorganization
|
$
|
210,132
|
$
|
—
|
$
|
210,132
|
||||||
Acquisition
of Notes Payable in Reorganization
|
$
|
47,988
|
$
|
—
|
$
|
47,988
|
||||||
Deemed
Distribution
|
$
|
—
|
$
|
312,000
|
$
|
312,000
|
||||||
Common
Stock Issued for Prepaid Expenses
|
$
|
15,433
|
$
|
—
|
$
|
15,433
|
||||||
Common
Stock Issued to Relieve Accounts Payable
|
$
|
3,500
|
$
|
—
|
$
|
3,500
|
||||||
Common
Stock Issued for Note Payable Conversion
|
$
|
18,000
|
$
|
—
|
$
|
18,000
|
||||||
Common
Stock Issued for Related Party Payable
|
$
|
70,000
|
$
|
—
|
$
|
70,000
|
||||||
Cash
Paid During the Year for:
|
||||||||||||
Interest
|
$
|
—
|
$
|
—
|
$
|
—
|
||||||
Income
Taxes
|
$
|
—
|
$
|
—
|
$
|
—
|
The
accompanying notes are an integral part of these financial
statements.
F-7
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
A -
|
The
Company
|
Merger
and Recapitalization
The
Company was incorporated in the State of Nevada on September 9, 2004, as Arch
Management Services Inc. A change of control of the Company occurred on June 5,
2006 and the Company changed its name form “Arch Management Services Inc.” to
“Tiger Ethanol International Inc.” on November 24, 2006. On February 11, 2008
the Company changed its name to “Tiger Renewable Energy Ltd.” Another change of
control of the Company occurred on June 4, 2009. On August 10, 2009 the Company
changed its name to “Cono Italiano, Inc.” and its symbol changed to
CNOZ.
The
Company was previously party to a joint venture named Xinjiang Yajia Distillate
Company Limited (the “Venture”) to produce ethanol in the People’s Republic of
China. The Company’s board of directors determined that it was in the Company’s
best interest to initiate a withdrawal from the ethanol business as of January
31, 2009 and assess alternative businesses.
On June
4, 2009 an Affiliate Stock Purchase Agreement (the “Stock Purchase Agreement”)
was entered into by and between Gallant Energy International Inc. (“Gallant”),
the owner of 5,000,000 shares of the Company’s common stock (prior to the
Company’s one for sixty reverse stock split) and Lara Mac Inc. (“Lara Mac”), an
entity controlled by Mitchell Brown (now the Chief Executive Officer of the
Company and a member of the Company’s Board of Directors). Pursuant to the Stock
Purchase Agreement, Gallant sold all of its 5,000,000 shares of the Company’s
common stock to Lara Mac. The Gallant transaction with Lara Mac resulted in a
change in control of the largest voting block of the Company effective as of
June 4, 2009.
Under the
terms of the Stock Purchase Agreement, the Board appointed five individuals to
fill vacancies on the Board. These new directors commenced their service on June
19, 2009. The Board also appointed four new officers of the
Company.
On August
10, 2009, the Company conducted a one for sixty reverse stock split. As of that
date, all of the existing outstanding common stock of the Company have been
consolidated such tat existing stockholders will hold one share of post-split
common stock for every sixty shares owned prior to the reverse split. All
fractional shares resulting from the reverse stock split have been rounded up to
the next whole share.
Janex
International Inc. was formed on July 6, 2007, in the State of
Delaware. On January 8, 2008 Janex International Inc., changed its name to Cono
Italiano, Inc (Delaware).
Cono
Italiano, LLC (Cono, LLC) was formed on June 27, 2007 as a limited liability
company in the State of New Jersey. Cono, LLC had no operations and its primary
assets were the license rights to manufacture, market, and distribute “pizza
cono”, a unique pizza style food product.
-
continued
-
F-8
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL STATEMENTS
Note
A -
|
The
Company - continued
|
Merger
and Recapitalization
In March
2007, the license rights held by the individual founders of Cono, LLC were sold
to The Total Luxury Group (TLG), an unrelated entity. Subsequently, on January
8, 2008 the license rights were transferred to Mitchell Brown for the total
consideration of $312,000. The transfer of Cono, LLC (which includes the license
rights) was effected in settlement of an obligation due to Mitchell Brown by
TLG.
On
January 14, 2008, Cono, LLC was sold to Cono, Inc. (Delaware) for the total
consideration of $426,000. In exchange for the 100% interest in Cono, LLC, the
sole member of the LLC received 6,000,000 shares of Cono, Inc. (Delaware) valued
at $114,000 and was issued a promissory note for $312,000. Mitchell Brown is
also a principal stockholder in Cono, Inc. (Delaware).
The
transaction was accounted for as a recapitalization of Cono, Inc. and Cono, LLC;
as both companies were under common control. As such, the assets and liabilities
of Cono, LLC were carried over to Cono, Inc. (Delaware) at the historical
carrying values.
At the
time of the sale of Cono, LLC to Cono, Inc. (Delaware), Cono LLC had a tangible
net book value of $114,700. Since the assets and liabilities of Cono, LLC were
recorded at their historical carrying amounts after the merger and
recapitalization, the excess of the consideration paid of $426,000 over the
carrying value of $114,700 had been recorded as a distribution to the
stockholder.
On
November 12, 2009 Cono Inc. (Delaware) entered into a share exchange agreement
whereby Cono Inc. (Delaware) would exchange all of its common stock for the
stock of Tiger Renewable Energy, Ltd. (TRE) (a shell company) on a share for
share basis. Prior to entering into the share exchange agreement, the principal
stockholder of Cono Inc. (Delaware) became a stockholder of TRE, either through
direct ownership or through an entity in which he controlled, effectively
gaining control of TRE, and on August 10, 2009, TRE changed its name to Cono
Italiano, Inc., a Nevada corporation. As an inducement for Cono (Delaware) to
enter the share exchange agreement, TRE’s largest shareholder has agreed to the
cancellation of 242,557 shares of Cono (Nevada) stock.
The
exchange of shares between Cono Italiano, Inc., (Delaware) and Cono Italiano,
Inc., (Nevada) will be accounted for as a recapitalization of the Companies, as
the majority stockholder of Cono Italiano, Inc. will be the majority stockholder
of the surviving company. Pursuant to the accounting for a recapitalization, the
historical carrying value of the assets and liabilities of Cono Italiano, Inc.
(Nevada) will carry over to the surviving company.
Effective
at the closing of the share exchange transactions, November 12, 2009, Cono
(Delaware) became a wholly owned subsidiary of Cono (Nevada).
-
continued
-
F-9
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note
A -
|
The
Company - continued
|
Scope
of Business
The
Company is licensed to distribute an innovative food product - a cone-shaped
pizza called "Pizza Cono." The product will be distributed into fast
food market establishments which include typical fast food chains, supermarkets,
convenience stores, entertainment facilities, and sports arenas. The
Company’s focus will be the sale and management of licensing and distribution
agreements with customers.
Note B -
|
Summary of Significant Accounting
Policies
|
Principles
of Consolidation
The
consolidated financial statements include the accounts of Cono Italiano, Inc.
(Nevada) and its wholly owned subsidiary, Cono Italiano, Inc. (Delaware) (the
“Company”). All significant intercompany balances have been
eliminated in consolidation.
Method
of Accounting
The
Company maintains its books and prepares its financial statements on the accrual
basis of accounting.
Development
Stage
The
Company has operated as a development stage enterprise since its inception by
devoting substantially all of its efforts to financial planning, raising
capital, research and development, and developing markets for its
services. The Company prepares its financial statements in accordance
with the requirements of FSAB ASC 915, ““Development Stage
Entities.”
Cash
and Cash Equivalents
Cash and
cash equivalents include time deposits, certificates of deposit, and all highly
liquid debt instruments with original maturities of three months or
less. The Company maintains cash and cash equivalents at financial
institutions, which periodically may exceed federally insured
amounts.
Property,
Equipment and Depreciation
Property
and equipment are reflected at cost of acquisition and are depreciated on
various methods utilizing the following estimated lives:
Machinery
and Equipment
|
5 -
7 Years
|
Office
Equipment
|
3 -
7 Years
|
Maintenance
and repairs are expensed as incurred. The cost of property and
equipment retired or otherwise disposed of and the related accumulated
depreciation are removed from the accounts and reflected as other income or
expense.
- continued
–
F-10
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note B -
|
Summary of Significant Accounting
Policies – continued
|
Long-lived
Assets
The
Company accounts for impaired long-lived assets in accordance with FASB ASC
360-10-15-3, "Impairment or Disposal of Long-Lived Assets”. This standard
prescribes the method for asset impairment evaluation for long-lived assets and
certain identifiable intangibles that are either held and used or are to be
disposed of. The Company evaluates the ability to recover long-lived assets
whenever events or circumstances indicate that the carrying value of the asset
may not be recoverable. In the event assets are impaired, losses are recognized
to the extent the carrying value exceeds the fair value. In addition, the
Company reports assets to be disposed of at the lower of the carrying amount or
the fair market value less selling costs.
Intangible
Assets
Intangible
assets consist of licensing rights. The Company applies an impairment evaluation
whenever events or changes in business circumstances indicate that the carrying
value of the intangible assets may not be recoverable. Other intangible assets
are amortized on a straight-line basis over their estimated economic lives. The
Company believes that the straight-line method of amortization reflects an
appropriate allocation of the cost of the intangible assets to earnings in
proportion to the amount of economic benefits obtained annually by the
Company.
Income
Taxes
The Company accounts for income taxes
in accordance with FASB ASC 740, “Income Taxes” using the asset and liability
approach, which requires recognition of deferred tax liabilities and assets for
the expected future tax consequences of temporary differences between the
carrying amounts and the tax basis of such assets and liabilities. This method
utilizes enacted statutory tax rates in effect for the year in which the
temporary differences are expected to reverse and gives immediate effect to
changes in income tax rates upon enactment. Deferred tax assets are recognized,
net of any valuation allowance, for temporary differences and net operating loss
and tax credit carry forwards. Deferred income tax expense represents the change
in net deferred assets and liability balances.
Earnings
per Share
Earnings per share of common stock are
computed in accordance with FASB ASC 260, “Earnings per Share”. Basic earnings
per share are computed by dividing income or loss available to common
shareholders by the weighted-average number of common shares outstanding for
each period. Diluted earnings per share are calculated by adjusting the weighted
average number of shares outstanding assuming conversion of all potentially
dilutive stock options, warrants and convertible securities, if dilutive. Common
stock equivalents that are anti-dilutive are excluded from both diluted weighted
average number of common shares outstanding and diluted earnings per
share.
Use
of Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those
estimates.
-
continued -
F-11
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note B -
|
Summary of Significant Accounting
Policies – continued
|
Reclassifications
Certain
amounts in the prior year consolidated financial statements have been
reclassified to conform with current year presentation. The reclassifications
made to the prior year have no impact on the net income (loss) or overall
presentation of the consolidated financial statements.
Fair
value of financial instruments
Prepaid
expenses, accrued expenses, notes payable, and amounts due to and from related
parties are carried in the financial statements at amounts which approximate
fair value.
Stock-Based
Compensation
Stock-based
compensation related to non-employees is recognized based on service provided in
the accompanying statements of operations and is based on the fair value of the
services received or the fair value of the equity instruments issued, whichever
is more readily determinable. The Company’s accounting policy for equity
instruments issued to consultants and vendors in exchange for goods and services
follows the provisions of FASB ASC 505, “Equity Based Payments to
Non-Employees”. The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii) the
date at which the consultant or vendor’s performance is complete. In the case of
equity instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting agreement.
Note C -
|
Recently Issued Accounting
Standards
|
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB ASC
810-10-65 “Consolidations”. FASB ASC 810-10-65 establishes accounting and
reporting standards for the non-controlling interest in a subsidiary and for the
deconsolidation of a subsidiary. FASB ASC 810-10-65 is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after
December 15, 2008. As such, the Company was required to adopt these provisions
at the beginning of the fiscal year ended December 31, 2009. The adoption of
FASB ASC 810-10-65 on its consolidated financial statements did not have a
material effect.
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB ASC
805 "Business Combinations”. FASB ASC 805 establishes principles and
requirements for recognition and measurement of identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree
at fair value. The guidance also established disclosure requirements to enable
the evaluation of the nature and financial effects of a business combination.
FASB ASC 805 is effective for fiscal years, and interim periods within those
fiscal years, beginning on or after December 15, 2008. As such, the Company was
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The adoption of FASB ASC 805 on its consolidated financial
statements did not have a material effect.
In March
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 815-10
“Derivatives and Hedging”. FASB ASC 815-10 requires enhanced disclosures about
an entity’s derivative and hedging activities. FASB ASC 815-10 is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008 with early application encouraged. As such, the Company was
required to adopt these provisions at the beginning of the fiscal year ended
December 31, 2009. The adoption of FASB ASC 815-10 on its consolidated financial
statements did not have a material effect.
-
continued -
F-12
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note C -
|
Recently Issued Accounting
Standards – continued
|
In May
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 944,
“Financial Services - Insurance”. FASB ASC 944 interprets Statement 60 and
amends existing accounting pronouncements to clarify their application to the
financial guarantee insurance contracts included within the scope of that
Statement. FASB ASC 944 is effective for financial statements issued for fiscal
years beginning after December 15, 2008, and all interim periods within those
fiscal years. As such, the Company was required to adopt these provisions at the
beginning of the fiscal year ended December 31, 2009. The adoption of FASB ASC
944 on its financial statements did not have a material effect.
In May
2009, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 855,
“Subsequent Events”. FASB ASC 855 establishes general standards of accounting
for and disclosure of events that occur after the balance sheet date but before
the financial statements are issued. FASB ASC 855 was effective for interim or
annual financial periods ending after June 15, 2009. Adoption of FASB ASC 855
did not have a significant effect on the Company’s consolidated financial
statements.
In June 2009, the FASB issued revised
authoritative guidance related to variable interest entities, which requires
entities to perform a qualitative analysis to determine whether a variable
interest gives the entity a controlling financial interest in a variable
interest entity. The guidance also requires an ongoing reassessment of variable
interests and eliminates the quantitative approach previously required for
determining whether an entity is the primary beneficiary. This guidance, which
was reissued by the FASB in December 2009 as ASU No. 2009-17, “Improvements to
Financial Reporting by Enterprises Involved with Variable Interest Entities,”
amends ASC Topic 810, “Consolidation”, and will be effective as of the beginning
of an entity’s first annual reporting period that begins after November 15, 2009
(January 1, 2010 for the Company). The Company does not expect that the adoption
of this guidance will have a significant impact on its consolidated financial
statements.
In June 2009, the Financial Accounting
Standards Board issued FASB ASC 105, “Generally Accepted Accounting Principles”.
FASB ASC 105 establishes the FASB Accounting
Standards Codification as
the source of authoritative accounting principles recognized by the FASB to be
applied by nongovernmental entities in the preparation of financial statements
in conformity with GAAP. FASB ASC 105 is effective for financial statements
issued for interim and annual periods ending after September 15, 2009. The
adoption changed certain disclosure references to U.S. GAAP, but did not have
any other impact on the Company’s consolidated financial
statements.
In January 2010, the FASB issued
Accounting Standards Updated (ASU) No. 2010-06, “Improving Disclosures about
Fair Value Measurements,” which amends ASC 820, “Fair Value Measures and
Disclosures.” ASU No. 2010-06 amends the ASC to require disclosure of transfers
into and out of Level 1 and Level 2 fair value measurements, and also require
more detailed disclosure about the activity within Level 3 fair value
measurements. The changes to the ASC as a result of this update are effective
for annual and interim reporting periods beginning after December 15, 2009
(January 1, 2010 for the Company), except for the requirements related to Level
3 disclosures, which are effective for annual and interim reporting periods
beginning after December 15, 2010 (January 1, 2011 for the Company). This
guidance requires new disclosures only, and will have no impact on the Company’s
consolidated financial statements.
F-13
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note D -
|
Property and
Equipment
|
Property and equipment consisted of the
following:
December 31,
|
2009
|
2008
|
||||||
Machinery
and Equipment
|
$ | 45,652 | $ | 49,402 | ||||
Office
Equipment
|
2,398 | 1,774 | ||||||
$ | 48,050 | $ | 51,176 | |||||
Less: Accumulated
Depreciation
|
27,657 | 15,020 | ||||||
Net
Property and Equipment
|
$ | 20,393 | $ | 36,156 |
Depreciation
expense for the years ended December 31, 2009 and 2008 was $14,587 and $13,980,
respectively.
Note
E -
|
Licensing
Rights
|
Licensing
Rights were bought in March 2006 and have a life of 25 years. However, the
Company began amortization in 2008 after entering in manufacturing and
distribution agreements, and therefore the rights are being amortized over 23
years and consist of the following:
December 31,
|
2009
|
2008
|
||||||
Licensing
Rights
|
$ | 150,000 | $ | 150,000 | ||||
Less: Accumulated
Depreciation
|
12,996 | 6,498 | ||||||
Net
Licensing Rights
|
$ | 137,004 | $ | 143,502 |
Amortization
expense for each of the years ended December 31, 2009 and 2008 was
$6,498. Amortization for the next five (5) years is expected to be
$6,498 annually.
Note F -
|
Related Party
Transactions
|
Due from Related
Party
On July
14, 2008, (the date of Edesia’s inception), the Company entered into an
operating agreement with Edesia Emprise, LLC to manufacture product for the
Company. The CEO of the Company owned 50% of Edesia until July 21, 2008 when he
transferred his interest to a relative. At the date of the transfer, Edesia had
no assets or business operations.
Due from
Related Party consists of monies advanced on behalf of Edesia Emprise,
LLC.
-
continued -
F-14
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note
F -
|
Related
Party Transactions – continued
|
Due
from Related Party
The
Company purchased manufacturing equipment on behalf of Edesia to be used by an
unrelated entity for the production of the pizza cones products. The
manufactured pizza cone products will be resold by Cono and its licensees.
Production of the pizza cones under the agreement began in
March 2009.
The
advances are non-interest bearing and is due upon demand. Due from
related party consists of the following:
December
31,
|
2009
|
2008
|
||||||
|
||||||||
Edesia
Emprise, LLC
|
$ | 133,938 | $ | 55,500 |
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master
Manufacturing Agreement, Edesia Emprise, LLC will produce the Company’s Pizza
Cono product. Cono Italiano (Delaware) has agreed to pay Edesia
Emprise, LLC the costs of production plus fifteen percent (15%). This
Master Manufacturing Agreement has a five (5) year term and will automatically
renew unless cancelled by one of the parties pursuant to its
terms. This Master Manufacturing Agreement is exclusive within the
United States. Edesia Emprise, LLC may either produce this product
directly or through a subcontractor.
Edesia
Emprise, LLC has advised Cono Italiano (Delaware) that it has entered into its
first subcontract agreement. Sunrise Bakery, located in Brooklyn, New
York, will produce the cones for the Pizza Cono product on behalf of Edesia
Emprise, LLC
Due to
Officer
Certain
disbursements of the Company have been paid by an officer of the
Company. The balance at December 31, 2009 and 2008 was $624,366 and
$568,828, respectively. There are no established repayment
terms. For the years ended December 31, 2009 and 2008, the Company
has imputed interest at the applicable federal rate of 2.64% and 3.25%,
respectively. Accrued interest was $33,939 and $17,885, at December 31, 2009 and
2008, respectively.
Note G -
|
Notes
Payable
|
In
January, 2008, Cono Inc. (Delaware) issued 3,000,000 shares of common stock to
the former owners of the license rights of the Pizza Cono
Products. The shares were issued by agreement between Cono, Inc.
(Delaware) and the former owners in satisfaction of any future claims whether
known or unknown with regards to the license rights. In addition to
the shares issued, the Company also issued a note payable to the MEGK Group LLC
(the former owners) in the amount of $200,000 on December 28, 2007. Interest
accrued at 8% per annum, and the note was due in full on December 28,
2008. This note was also convertible automatically upon the sale of
all or substantially all of the assets of the Company or the merger,
consolidation or liquidation of the Company where the Company would not remain
in control of the new company. The note could also be converted at
option of the holder. Common stock issued upon conversion would be
calculated by dividing the principal amount of the note to be converted divided
by $.001. On November 1, 2009, MEGK assigned its rights to this note
payable to Azure Seas Ltd.
-
continued -
F-15
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note G -
|
Notes Payable -
continued
|
On
December 16, 2009, Azure renegotiated the original convertible promissory note,
waived all past due interest on the note through November 1, 2009, and assigned
$18,000 of the note to various holders. Prior to December 31, 2009,
those holders converted their notes payable of $18,000 to 18,000,000 shares
common stock. At December 31, 2009 and 2008, note payable to Azure
was $182,000 and $200,000 to MEGK, respectively. For the years ended
December 31, 2009 and 2008 interest expense was $2,547 and $-0-,
respectively.
.
|
The Company also has a note
payable to DT Crystal Limited accruing interest at 10% annual which is due
upon demand. The note is convertible at option of the holder
into restricted stock of Cono (Nevada). At December 31, 2009
and 2008 note payable to DT Crystal was $49,987 and $-0-,
respectively. Interest expense for the years ended December 31,
2009 and 2008 was $1,999 and $-0-,
respectively.
|
Note H -
|
Going
Concern
|
The
Company’s financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has reported
recurring losses from operations. As a result, there is an
accumulated deficit of $1,417,410 at December 31, 2009.
.
|
The Company’s continued existence
is dependent upon its ability to raise capital. The financial
statements do not include any adjustments that might be necessary should
the Company be unable to continue as a going
concern
|
Note
I –
|
Employment
Contracts
|
As of the
end of our prior fiscal year on January 31, 2009, the Company did not have any
employment contracts with any officer, director or other
employees. On December 30, 2009 the Company entered into employment
agreements with each of the officers serving the Company. The
employment agreements contained the following provisions: (i) two-year terms
with automatic renewal provisions unless notice is given by either party 30 days
prior to renewal; (ii) commitment of a substantial portion of their professional
time to the Company, consisting of 75% of their time for Mitchell Brown and 60%
of their time for each of Joseph Masselli, Alex Kaminski and Steve Savage; and
(iii) and additional customary employment agreement terms and
conditions. The officers have agreed that they will not receive any
compensation for their services to the Company prior to January 1,
2012. The compensation of the officers has been set as
follows:
Annual
|
||||
Officer
|
Salary
|
|||
Mitchell
Brown, Chief Executive Officer
|
$ | 125,000 | ||
Joseph
Masselli, President and Chief Operating Officer
|
$ | 75,000 | ||
Alex
Kaminski, Chief Financial Officer and Treasurer
|
$ | 50,000 | ||
Steve
Savage, Secretary
|
$ | 50,000 |
-
continued -
F-16
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note I –
|
Employment Contracts –
continued
|
It has
been agreed by the Company, Mr. Smith, a director and Mr. Kaminski that pursuant
to separate stock option agreements, Mr. Smith will be granted options to
purchase 2,000,000 shares of the Company’s common stock at $.01 per share and
Mr. Kaminski will be granted options to purchase 1,500,000 shares of the
Company’s common stock at $.01 per share. These options will vest in
one year and will expire in three years.
Note J –
|
Stock Based Compensation
Expense
|
On
October 5, 2006, the Company’s Board of Directors adopted the Company’s 2006
Equity Incentive Plan, which authorizes the Company to issue options for the
purchase of up to 2,000,000 shares of the Company’s common stock, pursuant to
the terms and conditions set forth therein. The Equity Incentive Plan
authorizes the issuance of incentive stock options (ISQ) and non-qualified stock
options (NQOs) to the Company’s employees, directors or
consultants.
Options
outstanding at the date of acquisition were 336. All outstanding options were
fully vested and expensed prior to the acquisition.
|
Year Ended
|
|||||||
|
December 31, 2009
|
|||||||
|
Number of
|
Weighted - Average
|
||||||
Options
|
Options
|
Exercise Price
|
||||||
Balance
at Acquisition
|
336
|
$
|
120
|
|||||
Granted
|
––
|
––
|
||||||
Exercised
|
––
|
––
|
||||||
Cancelled
|
––
|
––
|
||||||
Balance
at December 31, 2009
|
336
|
$
|
120
|
|||||
Options
Exercisable at December 31, 2009
|
336
|
$
|
120
|
The
aggregate intrinsic value of the options outstanding and the options exercisable
on December 31, 2009 is $-0-.
The
following table summarizes information about options outstanding and exercisable
at December 31, 2009:
|
Weighted
|
|||||||||||
|
Options
|
Average
|
Options
|
|||||||||
|
Outstanding
|
Contractual Life
|
Exercisable
|
|||||||||
Exercise Price
|
Number
|
(In Years)
|
Number
|
|||||||||
$120
|
336
|
1.85
|
336
|
As of December 31, 2009, there was no
unrecognized compensation cost related to non-vested stock
options.
F-17
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note K -
|
Income Tax
Compliance
|
The
Company is not in compliance with filing its required income tax
returns. Since the Company has had continuous losses and has
available net operating losses, the Company believes that any tax liability
would not be material. Deferred taxes are provided for the temporary differences
between the financial reporting basis and the tax reporting basis of the
Company’s assets and liabilities. The temporary differences between
financial reporting and income tax purposes are primarily net operating loss
carry forwards for income tax purposes. A valuation allowance is recorded for
deferred tax assets when management determines it is more likely than not, that
such assets, will not be realized.
A full
valuation allowance has been established against the deferred tax assets for the
years ended December 31, 2009 and 2008 as utilization of the loss carry forwards
and realization of other deferred tax assets cannot be reasonably
assured.
Note
L -
|
Licensing
Revenue
|
On July
9, 2008, (subsequently amended in October, 2009) the Company entered into a
Supplier/Distribution agreement with Pino Gelato, Inc., an unrelated
entity. The agreement grants the exclusive manufacture and
distribution rights to Pino Gelato, Inc. for the production of pizza cono food
products for certain specified geographical territories. The term of
the agreement is for ten (10) years with an automatic renewal for another ten
(10) years. In addition, Pino Gelato, Inc. has the exclusive rights
to enter into franchise agreements with third parties to market and sell the
pizza cono food products.
In
exchange for the rights granted to Pino Gelato under the agreement, the Company
received total cash consideration of $100,000.
As an
inducement for Pino Gelato, Inc to buy the distribution and franchise rights,
the Company agreed to issue 375,000 shares of common stock to Pino upon receipt
of the first and final installment of the agreement. Common stock
amounting to 250,000 shares were issued prior to the execution of the amendment
in October, 2009 with the remaining 125,000 shares to be issued upon receipt of
the final $25,000 cash payment from Pino. As of December 31, 2009, the final
payment has been received from Pino. The related 125,000 shares remain unissued
and will be issued upon request. The fair market value of the common stock
issued in connection with the installment payments made has been recorded as an
offset to the payments received under the agreement. The payments
received have been recorded as deferred licensing revenue in the accompanying
consolidated financial statements. The licensing revenue is being
amortized to revenue over the initial license term of ten (10)
years.
In
addition to the $100,000 cash consideration, the Company is entitled to
royalties on the sale of all Pino Gelato’s pizza cono food products in the
amount of $9,500, which had been received as of the year ended December 31,
2009. Furthermore, the Company is entitled to ten (10) percent of all
franchise revenue generated by Pino Gelato.
F-18
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY LTD.)
(A
DEVELOPMENT STAGE COMPANY)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS
Note
M -
|
Other
Matters
|
In
October, 2009, the Company through its related party entity, Edesia Emprise,
LLC, terminated an agreement (which began in March, 2009) with an unrelated
party for the manufacture of pizza cone products. The termination was reached in
mutual agreement with the counter party and mutual releases were granted in
connection wit the termination.
On
November 6, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of the Company’s shareholders, Lara Mac has agreed to
provide financing to Cono Italiano, Inc., with such funds as the Company’s Board
of Directors shall deem to be sufficient to maintain the Company’s ordinary
course of business operations (the “Commitment Amount”). We may draw
on the Commitment Amount in monthly tranches in accordance with our operating
requirements as set forth in our business plan. The available Commitment
Amount will be reduced by the aggregate cash proceeds received by the Company
which are derived from the issuance of any equity securities and Company gross
revenues. Draws on the Commitment Amount will be made on terms of unsecured
notes, with interest set on each note as of the date of the draw at prime rate
plus two percent per annum. The notes will mature and become repayable thirty
calendar days after demand at any time following the earlier of (a) December 31,
2010 or (b) the date upon which we are in receipt of revenues or proceeds from
the sales of equity securities. We will give Lara Mac customary representations
and warranties regarding the good standing of our Company and status of progress
in respect of our Company business plan prior to each draw on the Commitment
Amount, and we will provide certifications and covenants regarding use of
proceeds of each draw, which will be in customary forms reasonably requested by
Lara Mac as determined by reference to similar lenders making similar loans to
similar companies. Lara Mac will not be required to make any loans under the
Commitment Amount to us if we are unable to make the representations,
warranties, certifications or covenants, or if we are in breach of any
previously given representations, warranties, certifications or covenants. If we
breach any of the notes, the default rate will be 15% per annum and Lara Mac may
seek recourse against our company for repayment of all of the notes. As of
December 31, 2009, no funds have been borrowed.
Note N -
|
Restatement of Prior Period
Financial Statements
|
The
financial statements included herein have been restated to include information
for the reader on operations and cash flows from inception. The
Company concluded that it is a development stage company and per reporting
guidelines, income from operations, the statement of changes in deficit and cash
flows must be shown from inception date.
F-19
ITEM
9:
|
CHANGES IN AND
DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
On
November 12, 2009, the Company dismissed its independent auditor, Paritz and
Company P.A. and appointed EFP Rotenberg LLP, as its independent
auditor. The decision to change auditors was approved by the
Company's Board of Directors.
During
the Company's fiscal years ended January 31, 2009 and January 31, 2008, and the
interim period between January 31, 2009 and November 12, 2009, the opinion of
Paritz and Company P.A. on the Company's financial statements did not contain an
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles, except as follows: the
independent auditor's report of Paritz and Company P.A. dated May 18, 2009 (for
the year ended January 31, 2009) contained "going concern" qualifications. These
qualifications questioned the Company’s ability to raise additional funds
through either the sale of equity securities or issuance and stressed the
absence of any resulting adjustments in the financial statements; thus raising
substantial doubts regarding the Company's ability to continue as a going
concern. During the Company's two most recent fiscal years, and through the date
of their dismissal, there were no disagreements with Paritz and Company P.A.,
whether or not resolved, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Paritz and Company P.A.’s satisfaction, would
have caused it to make reference to the subject matter of the disagreement(s) in
connection with its report.
During
the years ended January 31, 2009 and January 31, 2008, and the interim period
between January 31, 2009 and the appointment of EFP Rotenberg LLP, neither the
Company nor anyone acting on the Company’s behalf consulted with EFP Rotenberg
LLP regarding (i) the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s financial statements, or (ii) any matter
that was either the subject of a disagreement as that term is used in
Item 304 (a)(1)(iv) of Regulation S-K and the related instructions to
Item 304 of Regulation S-K or a reportable event as that term is used
in Item 304(a)(1)(v) and the related instructions to Item 304 of
Regulation S-K.
ITEM
9A:
|
CONTROLS AND
PROCEDURES
|
Disclosure
Controls and Procedures
We
maintain disclosure controls and procedures that are designed to ensure that
information required to be disclosed in our reports pursuant to the Securities
Exchange Act of 1934, as amended, (the "Exchange Act") is recorded, processed,
summarized and reported within the time periods specified in the SEC's rules and
forms, and that such information is accumulated and communicated to our
management, including our Chief Executive Officer and Chief Financial Officer,
as appropriate to allow timely decisions regarding required disclosure. Under
the supervision of, and with the participation of, our management, including our
principal executive officer and principal financial officer, we conducted an
evaluation of our disclosure controls and procedures, as such term is defined
under Rule 13a-15(e) promulgated under the Exchange Act, as they existed on
December 31, 2009.
Management's
Report on Internal Control Over Financial Reporting
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as such term is defined in Rule 13a-15(f)
of the Exchange Act. Internal control over financial reporting refers to the
process designed by, or under the supervision of, our Chief Executive Officer
and Chief Financial Officer, and effected by our board of directors, management
and other personnel, to provide reasonable assurance regarding the reliability
of financial reporting and the preparation of financial statements for external
purposes in accordance with generally accepted accounting principles, and
includes those policies and procedures that:
(a) Pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the
Company;
(b) Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and
(c) Provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of the Company's assets that could have a
material effect on the financial statements.
Because
of its inherent limitations, internal control over financial reporting may not
prevent or detect misstatements. Also, projections of any evaluation of
effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
A
material weakness is a deficiency, or a combination of deficiencies, in internal
control over financial reporting, such that there is a reasonable possibility
that a material misstatement of our annual or interim financial statements will
not be prevented or detected on a timely basis.
21
Management
has evaluated the effectiveness of the Company's internal control over financial
reporting as of December 31, 2009. Management based its assessment on the
framework set forth in COSO’s Internal Control – Integrated Framework (1992) in
conjunction with Securities and Exchange Commission Release No. 33-8820 entitled
"Commission Guidance Regarding Management’s Report on Internal Control Over
Financial Reporting Under Section 13(a) or 15(d) of the Securities and Exchange
Commission". Based on its assessment, management concluded that the
Company did not maintain effective internal control over financial reporting as
of December 31, 2009, because of certain material weaknesses addressed
below.
·
|
Lack
of adequate segregation of duties due to the limited resources within the
Company’s accounting department.
|
·
|
Lack
of proper authorization and documentation of stock transactions, including
issuance, cancellations or
redemptions.
|
·
|
Inadequate
policies and procedures surrounding the financial reporting process,
including timely communication of transactions, which has resulted in the
Company’s inability to produce accurate financial information on a timely
basis.
|
The
principal executive officer has concluded that, other than the specific changes
identified in this Item 9A, there have been no changes to our internal control
over financial reporting (as defined in Rules 13a-15(f) under the Exchange
Act) during the last fiscal quarter that materially affected, or are reasonably
likely to materially affect, the Company's internal control over financial
reporting.
This
annual report does not include an attestation report of the company's registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the company's registered
public accounting firm pursuant to temporary rules of the Commission that permit
the company to provide only management's report in this annual
report.
ITEM 9B:
|
OTHER
INFORMATION
|
Not
Applicable.
22
PART
III
ITEM
10:
|
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS AND CORPORATE GOVERNANCE MANAGEMENT AND
CERTAIN SECURITY HOLDERS
|
Directors,
Executive Officers, Promoters and Control Persons
The
following table presents information with respect to our officers, directors and
significant employees as of April 13, 2010:
Name
|
Age
|
Position
|
||
Mitchell
Brown
|
44
|
Chief
Executive Officer and Director
|
||
Joseph
Masselli
|
44
|
President,
Chief Operating Officer and Director
|
||
Alex
J. Kaminski
|
44
|
Chief
Financial Officer, Treasurer and Director
|
||
Steve
Savage
|
51
|
Secretary
and Director
|
||
Scott
Smith
|
42
|
Director
|
Each of
our directors serves until his or her successor is elected and qualified. Each
of our officers is elected by the board of directors to a term of one (1) year
and serves until his or her successor is duly elected and qualified, or until he
or she is removed from office.
Biographical
Information Regarding Officers and Directors
Mitchell
Brown, Chief Executive Officer and Director
Mr. Brown
was appointed Chief Executive Officer on June 4, 2009 and commenced serving as a
director on June 19, 2009. From 2004 through 2007, Mr. Brown served
as the President of Discount Direct, a marketing company which served various
cell phone providers. From 2007 through the date hereof, Mr. Brown
has served as the Chairman and Chief Executive Officer of Cono Italiano, Inc., a
company which has acquired the North American rights to sell certain food
products.
Joseph
Masselli, President, Chief Operating Officer and Director
Mr.
Masselli was appointed President and Chief Operating Officer on June 4, 2009 and
commenced serving as a director on June 19, 2009. From 2004 through
2008, Mr. Masselli, 44, was the Owner-General Managing Partner of a
restaurant/club. Since 2008, Mr. Masselli has been employed by Cono Italiano,
Inc., where he leads the Marketing and Public Relations efforts to
establish Cono Italiano’s brand.
Alex
J. Kaminski, Chief Financial Officer, Treasurer and Director
Mr.
Kaminski was appointed Treasurer of the Company on June 4, 2009. He
commenced serving as Chief Financial Officer on June 22, 2009 and Director on
June 19, 2009. Mr. Kaminski, 43, is a Certified Public
Accountant. Since 1989, he has had his own practice. From
2002 to 2008 he served as the Chief Financial Officer and President of Basik
Funding Inc. Since 2005, he has also served as the President of
Homestead Funding Group Inc.
Steve
Savage, Secretary and Director
Mr.
Savage commenced serving as Secretary and Director on June 19,
2009. For the past 5 years Mr. Savage has served as President and
owner of Ocean Consultants Inc. a Real Estate Investment company. The
purpose of the business was to locate, purchase, remodel and market various
residential properties.
Scott
Smith, Director
Mr. Smith
commenced serving as a director on June 19, 2009. Since 1997, Mr.
Smith, 41, has served as the owner and manufacturer’s representative for S.J.
Smith Distributors Inc. Since 2002, Mr. Smith has served as the
Corporate Sales Manager for Ray Catena Motor Car in Edison, NJ.
Family
Relationships
None of
the Company’s officers or directors have any family relationships with the
Company’s other officers or directors or persons nominated or chosen by the
Company to become officers or directors.
23
Involvement
in Certain Legal Proceedings
During
the past five years no director, person nominated to become a director,
executive officer, promoter or control person of the Company has: (i) had any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; (ii) been convicted in a criminal
proceeding or been subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (iii) been subject to any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; or (iv) been found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.
ITEM 11:
|
EXECUTIVE
COMPENSATION
|
Executive
Compensation
The
following table sets forth compensation for each of the past three fiscal years
with respect to each person who served as Chief Executive Officer of the Company
and each of the four most highly-compensated executive officers of the Company
who earned a total annual salary and bonuses that exceeded $100,000 in any of
the two preceding fiscal years.
Summary
Compensation Table
Name and Principal
Position
|
Year (1)(2)
|
Salary ($)
|
Stock Awards ($)
|
Total
|
||||||||||
Mitchell
Brown, Chief Executive Officer and Director (3)
|
2009
2008
|
0
0
|
$ |
140,005
280,000
|
140,005
280,000
|
|||||||||
Joseph
Masselli, President, Chief Operating Officer and Director
(3)
|
2009
2008
|
0
0
|
0
40,000
|
0
40,000
|
||||||||||
Alex
J. Kaminski, Chief Financial Officer, Treasurer and Director
(3)
|
2009
2008
|
0
0
|
0
0
|
0
0
|
||||||||||
Steve
Savage, Secretary and Director (3)
|
2009
2008
|
0
0
|
0
20,000
|
0
20,000
|
Officers
serving the Company prior to the acquisition of Cono Italiano
(Delaware):
James Pak Chiu
Leung former CEO, former President, former
Director (4)
|
2009
2008
|
70,000
131,000
|
0
0
|
70,000
131,000
|
||||||||||
Robert
G. Clarke, former CEO(5)
|
2009
|
0
|
0
|
0
|
||||||||||
Michel
St-Pierre, former CFO (6)
|
2009
2008
|
116,694
109,359
|
0
0
|
116,694
109,359
|
(1)
|
No
officers earned over $100,000 in any of the three preceding fiscal years,
other than as set forth above.
|
(2)
|
The
Company’s fiscal year previously ended on January 31 st .
The Company changed its fiscal year-end from November 30, 2006 to January
31, 2007, and on November 12, 2009 the Company changed its fiscal year end
to December 31st. The 2009, 2008 and 2007 fiscal years for
Mitchell Brown, Joseph Masselli, Alex J. Kaminski and Steve Savage refer
to the fiscal years ended December 31, 2009, December 31, 2008 and
December 31, 2007. The 2009 and 2008 fiscal years for Mr. Leung, Mr.
Clarke and Mr. St-Pierre refer to the fiscal years ended January 31, 2009
and January 31, 2008.
|
(3)
|
To
date, each of Mitchell Brown, Joseph Masselli, Alex J. Kaminski and Steve
Savage have not been paid cash compensation by either the Company or Cono
Italiano (Delaware).
|
(4)
|
Mr.
Leung was granted stock options to purchase 70,000 shares. The Company
valued these options using the Black-Scholes option -pricing valuation
model. The model uses market sourced inputs such as interest rates, stock
prices, and option volatilities, the selection of which requires Company
management’s judgment, and which may impact the value of the options. The
assumptions used in the Black-Scholes valuation model were: a risk-free
interest rate of 4.6% and 4.7%; the current stock price at date of
issuance of $0.03 and $2.00 per share; the exercise price of the options
of $0.05 and $2.00 per share; the term of 5 years; volatility of 157% and
160%. The stock options granted to Mr. Leung have vested as
follows: 60,000 were granted on October 5, 2006 and vested
immediately, 5,000 were granted on November 6, 2006, and vested on that
date, and 5,000 were granted on November 6, 2006 and vested on November 6,
2007.
|
24
(5)
|
Mr.
Clarke was appointed as the Company’s President and CEO on September 12,
2008; he resigned from these positions on June 4, 2009.
|
(6)
|
Mr.
St-Pierre served as the Chief Financial Officer of the Company from
January 9, 2007 until June 22,
2009.
|
None of
the officers earned any bonus, restricted stock awards, LTIP Payouts or any
other annual or long term compensation other than the stock awards paid to each
of Mr. Brown, Mr. Masselli and Mr. Savage by Cono Italiano
(Delaware).
Outstanding
Equity Awards at Fiscal Year-End (1)
As of the
end of our most recent fiscal year, December 31, 2009, Mitchell Brown, our Chief
Executive Officer and Director, Joseph Masselli, our President, Chief Operating
Officer and Director, Alex J. Kaminski, our Chief Financial Officer, Treasurer
and Director and Steve Savage, our Secretary and Director have not been issued
any options in the Company.
The
following table provides the information regarding outstanding options owned by
the named executive officers and directors as of December 31,
2009. We have never granted any stock appreciation
rights. The shares set forth below reflect our August 10, 2009 one
for sixty stock split.
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option Exercise
Price
|
Option Expiration
Date
|
||||||||
James
Pak Chiu Leung, Former CEO, Former President and Former Director
(1)
|
84
|
0
|
120.00
|
November
6, 2012
|
||||||||
84
|
0
|
120.00
|
November
6, 2011
|
|||||||||
Claude
Pellerin, Former Secretary and Former Director (2)
|
84
|
0
|
120.00
|
November
6, 2012
|
||||||||
84
|
0
|
120.00
|
November
6, 2011
|
(1) Mr.
Leung served as the Chief Executive Officer, President and Director of the
Company from June 5, 2006 to September 9, 2008.
(2) Mr.
Pellerin resigned as the Company’s secretary on June 19, 2009.
Director
Compensation
The
persons who served as members of our board of directors, including executive
officers, did not receive any compensation for services as a director in either
the fiscal year ended December 31, 2009 or the fiscal year ended January 31,
2009.
The
Company has employment agreements with each of Mitchell Brown, Joseph Masselli,
Alex Kaminski and Steve Savage. These directors will not be
separately compensated for their service as directors, as they are also serving
as officers of the Company. The Company does not have an employment
or other compensation agreement with Scott Smith, who was compensated according
to the schedule above. Mr. Smith, who will be serving only as a
director and not as an officer will be paid a fee of $18,000 per annum, which
will be deferred for the first year of service to the
Company.
25
Employment
Contracts
As of the
end of our prior fiscal year on January 31, 2009 the Company did not have any
employment contracts with any officer, director or other
employees. On December 30, 2009, the Company entered into employment
agreements with each of the officers serving the Company. The
employment agreements contained the following material provisions: (i) two-year
terms with automatic renewal provisions unless notice is given by either party
30 days prior to renewal; (ii) commitment of a substantial portion of their
professional time to the Company, consisting of 75% of their time for Mitchell
Brown and 60% of their time for each of Joseph Masselli, Alex Kaminski and Steve
Savage; and (iii) and additional customary employment agreement terms and
conditions. The officers have agreed that they will not receive any
compensation for their services to the Company prior to January 1,
2012. The compensation of the officers has been set as
follows:
Officer
|
Annual
Salary
|
|||
Mitchell
Brown, Chief Executive Officer
|
$
|
125,000
|
||
Joseph
Masselli, President and Chief Operating Officer
|
$
|
75,000
|
||
Alex
Kaminski, Chief Financial Officer and Treasurer
|
$
|
50,000
|
||
Steve
Savage, Secretary
|
$
|
50,000
|
It has
been agreed by the Company, Mr. Masselli and Mr. Kaminski that pursuant to
separate stock option agreements, Mr. Masselli will be granted options to
purchase 2,000,000 shares of the Company’s common stock at $.01 per share and
Mr. Kaminski will be granted options to purchase 1,500,000 shares of the
Company’s common stock at $.01 per share. These options will vest in
one year and will expire in three years.
Equity
Incentive Plan
On
October 5, 2006, the Company’s Board of Directors adopted the Company’s 2006
Equity Incentive Plan, which authorizes the Company to issue options for the
purchase of up to 2,000,000 shares of the Company’s common stock, pursuant to
the terms and conditions set forth therein. The Equity Incentive Plan authorizes
the issuance of incentive stock options (ISO) and non-qualified stock options
(NQOs) to our employees, directors or consultants.
During
the year ended November 30, 2006, the Company issued 517,500 stock options to
officers and directors of the Company with an average exercise price of $0.30
per share. Of the stock options issued, 450,000 were vested on October 5, 2006,
33,750 were vested on November 1, 2006 and the balance vested on November 1,
2007. Following the resignation of one of our directors in January
2007, 70,000 such options were cancelled. During the month of August, 2007, the
Company issued 50,000 stock options to officers and directors of the Company
with an average exercise price of $2.86 per share. Of the stock options issued,
50,000 vested on August 1, 2007. No options were exercised during the
years ended January 31, 2009 or December 31, 2009. As of January 31,
2009 we had three directors and officers eligible to receive options under the
Equity Incentive Plan. Options to buy 277,500 shares of common stock
(equal to 4,625 shares of common stock after the 1 for 60 stock split)
were outstanding under the Equity Incentive Plan and 1,722,500 shares remained
available for grants under this plan. As of December 31, 2009, we had
five officers and directors eligible to receive options under the Equity
Incentive Plan. Options to buy 336 shares of common stock were
outstanding under the Equity Incentive Plan and 1,999,664 options remained
eligible for grant.
2006
Equity Plan Administration
The
compensation committee is empowered to select those eligible persons to whom
options shall be granted under the 2006 Equity Incentive Plan; to determine the
time or times at which each option shall be granted, whether options will be
ISOs or NQOs and the number of shares to be subject to each option; and to fix
the time and manner in which each option may be exercised, including the
exercise price and option period, and other terms and conditions of options, all
subject to the terms and conditions of the 2006 Equity Incentive
Plan. The compensation committee has sole discretion to interpret and
administer the Plan, and its decisions regarding the Plan are
final.
26
2006
Equity Plan Option Pricing
Each
grant shall specify an option price per share, which shall be equal to or
greater than the fair market value per share on the grant date; provided that in
the case of any incentive stock option granted to a person who on any given date
owns, either directly or indirectly (taking into account the attribution rules
contained in Section 424(d) of the Code), stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company or any
subsidiary, the option price shall not be less than 110% of the fair market
value of a share on the date of grant.
2006
Equity Plan Amendment and Termination
The Plan
may be amended from time to time by the Board, but no such amendment shall
increase any of the limitations concerning the shares or options available under
the Plan, other than to reflect an adjustment made in accordance with Section 14
of the Plan (i.e. dilution, enlargement of the rights of participants in the
Plan), change the class of persons eligible to receive grants of awards or the
types of awards available under the Plan and increase the benefits to
participants under the Plan, in any such case without the further approval of
the stockholders of the Company. The Board will also condition any
amendment on the approval of the stockholders of the Company if such approval is
necessary with respect to the applicable listing or other requirements of a
national securities exchange or other applicable laws, policies or regulations,
and the Board may condition any amendment on the approval of the stockholders of
the Company if such approval is deemed advisable to comply with such
requirements.
The Plan
shall terminate on the tenth anniversary of the date upon which it is approved
by the stockholders of the Company, and no award shall be granted after that
date.
The
Company expects to adopt a new equity plan during the foreseeable future which
will be similar to the 2006 Plan.
Indemnification
Agreements
Through
its Indemnification Agreements, the Company agrees to indemnify directors and
officers, to the extend provided for in the Agreement, and to hold them harmless
from and against, any losses or expenses at any time incurred by or assessed
against them arising out of or in connection with their work as a director,
advisory director, Board Committee member, officer, employee or agent of the
Company or of an affiliate, whether the basis of such proceeding is alleged
action in an official capacity or in any other capacity while serving as an
officer or director of the Company or of an Affiliate, to the fullest extent
permitted by law in as in effect or as such laws may from time to time hereafter
be amended to increase the scope of such permitted indemnification.
Whistleblower
Procedures Policy
In
accordance with the requirements of Section 301 of the Sarbanes-Oxley Act of
2002, the Board of Directors the Company has adopted this Whistleblower
Procedures Policy, stating that all employees of the Company and its
subsidiaries are strongly encouraged to report any evidence of financial
irregularities which they may become aware of, including those with respect to
internal controls, accounting or auditing matters. Under this
Whistleblower Procedures Policy, the management of the Company shall promptly
and periodically communicate to all employees with access to accounting, payroll
and financial information the means by which they may report any such
irregularities. In the event an employee is uncomfortable for any
reason reporting irregularities to his or her supervisor or other management of
the Company, employees may report directly to any member of the Board of
Directors of the Company. The identity of any employee reporting
under these procedures will be maintained as confidential at the request of the
employee, or may be made on an anonymous basis. Notice must be
provided to all of the Company’s employees with access to accounting, payroll
and financial information in respect of these procedures.
Changes
in Control
As of the
date of filing of this Report, the Company is unaware of any arrangement which
may result in a change in control.
27
ITEM 12:
|
SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
The
following table sets forth, as of the close of business on April 13, 2010, the
total number of shares owned beneficially by the Company’s directors, officers
and key employees, and any person (including any group) who is known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities. Except as otherwise indicated below,
each person named has sole voting and investment power with respect to the
shares indicated. The percentage of ownership set forth below reflects each
holder's ownership interest in the 81,880,988 shares of the Company's common
stock outstanding as of April 13, 2010. The number of shares set
forth below reflect both our August 10, 2009 one for sixty stock split, and our
share exchange which was entered into as of November 12, 2009.
Amount and Nature
of
Beneficial
Ownership
Name and Address of Beneficial Owner
|
Shares
|
Options/
Warrants (1)
|
Total (1)
|
Percentage of
Shares
Outstanding (1)
|
||||||||||||
Five
Percent Stockholders
|
||||||||||||||||
Lara
Mac Inc.(2)
|
36,000,000
|
0
|
36,000,000
|
44
|
%
|
|||||||||||
Joseph
H. Masselli
|
15,000,000
|
0
|
15,000,000
|
18.3
|
%
|
|||||||||||
Executive
Officers and Directors
|
||||||||||||||||
Mitchell
Brown, Chief Executive Officer and Director (2)
|
36,000,000
|
0
|
36,000,000
|
44
|
%
|
|||||||||||
Joseph
Masselli, President, Chief Operating Officer and Director
|
15,000,000
|
0
|
15,000,000
|
18.3
|
%
|
|||||||||||
Alex
J. Kaminski, Chief Financial Officer, Treasurer and
Director
|
0
|
0
|
0
|
0
|
%
|
|||||||||||
Steve
Savage, Secretary and Director
|
750,000
|
0
|
750,000
|
.9
|
%
|
|||||||||||
Scott
Smith, Director
|
0
|
0
|
0
|
0
|
%
|
|||||||||||
All
officers and directors as group (5 persons)
|
51,750,000
|
0
|
51,750,000
|
63.2
|
%
|
* Less
than 1%.
The
mailing address for each of the officers and directors is Cono Italiano, Inc.,
10 Main Street, Keyport, NJ 07735.
(1) Includes
options and warrants exercisable as of the date hereof or within 60 days
hereafter. The Company is unaware of any pledges of any shares, options or
warrants by any of the individuals or entities listed above. The
Company intends to make option grants to certain officers and directors within
the foreseeable future, however, no options or agreements pertaining to options
have been granted or entered into by the Company or such officers and directors
as of the date hereof.
(2) Our
Chief Executive Officer Mr. Mitchell Brown has sole voting power and sole power
of disposition over all 6,000,000 shares of Company common owned by Lara Mac
Inc. (in addition to 30,000,000 shares owned by Mr. Brown directly), and as such
all such shares are therefore deemed to be beneficially owned by Mr.
Brown.
Potential
Changes in Control
To the
knowledge of management, there are no present arrangements or pledges of
securities of the Company which may result in a change in control of the
Company.
Changes
in Control
On June
4, 2009, an Affiliate Stock Purchase Agreement (the “Stock Purchase Agreement”)
was entered into by and between Gallant Energy International Inc. (“Gallant”),
the owner of 5,000,000 shares of the Company’s common stock and Lara Mac Inc.
(“Lara Mac”), an entity controlled by Mitchell Brown (who is now the Chief
Executive Officer of the Company and a member of the Company’s Board of
Directors). Pursuant to the Stock Purchase Agreement, Gallant sold
all of its 5,000,000 shares of the Company’s common stock to Lara
Mac.
28
The
Gallant transaction with Lara Mac resulted in a change in control of the largest
voting block of the Company effective as of June 4, 2009. The
compensation which Gallant received from Lara Mac consisted of Lara Mac’s
agreement to assure the payment of certain obligations of the Company in the
amount of $162,139 which shall be paid by the Company in due
course. The Company is not a party to the Stock Purchase
Agreement. The address of Lara Mac is 10 Main Street, Keyport, NJ
07735.
In
addition, on June 22, 2009, the Company and Lara Mac entered into a Management
Services Agreement. In exchange for the provision of services as set
forth therein, Lara Mac received 9,553,377 shares of the Company’s common stock.
On November 6, 2009, as additional inducement to the shareholders of Cono
Italiano (Delaware) to enter into the Share Exchange Agreements, Lara Mac Inc.
agreed to the termination of the Management Services Agreement with Cono Italian
(Nevada) and cancellation of all Cono Italian (Nevada) shares previously issued
to Lara Mac under the Management Services Agreement (242,557 shares of the
Company’s common stock as adjusted for the one-for-sixty reverse stock
split).
After
giving effect to the Share Exchange, Mitchell Brown, both as an individual
and through his control of Lara Mac, controls 36,000,000 shares of the Company’s
common stock. These shares constitute 44% of the Company’s 81,880,988
issued and outstanding shares.
Adverse
Interests
The
Company is not aware of any material proceeding to which any director, officer,
or affiliate of the Company, or any owner of record or beneficially of more than
five percent of any class of the Company’s voting securities, or security holder
is a party adverse to the Company or has a material interest adverse to the
Company.
ITEM 13:
|
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS AND DIRECTOR
INDEPENDENCE
|
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Lara
Mac Inc. Management Services Agreement
On June
22, 2009, Lara Mac Inc., an entity controlled by Mitchell Brown, our Chief
Executive Officer and a member of our Board of Directors, entered into a
Management Services Agreement with the Company (the “Management Services
Agreement”). Pursuant to the Management Services Agreement, Lara
Mac would render to the Company consulting and other advisory services in
relation to developing strategic plans for inception of operations, corporate
management, the operations of the Company, strategic planning, domestic and
international marketing and sales, financial advice, including, without
limitation, advisory and consulting services in relation to the selection and
retention of candidates for senior management of the Company and its
subsidiaries, prospective strategic alliance partners, preparing acquisition
growth plans, identifying prospective merger and acquisition candidates,
developing value propositions for the Company and acquisition candidates,
analyzing financial implications of potential transactions, advising on
negotiations regarding terms and conditions of transactions, outlining and
managing due diligence issues and due diligence processes, introductions to
prospective customers, selection of investment bankers or other financial
advisors or consultants, and advice with respect to the capital structure of the
Company, equity participation plans, employee benefit plans and other incentive
arrangements for certain key executives of the Company (collectively, the
“Services”). In exchange for the Services, Lara Mac shall receive
9,553,377 shares of the Company’s common stock (the “Fee”). The value
of the restricted shares of common stock constituting the Fee is deemed to be
$0.044 per share, which is equivalent to fifty percent of the average closing
trading price of the Company’s common stock during the ninety day period of
February 27, 2009, through May 27, 2009. Such time period is deemed
to constitute an objective public capital market valuation of the Company’s
stock price, having an aggregate value of $410,666 (the “Issue
Value”). The parties to the Management Services Agreement also agreed
that Lara Mac may render other services beyond the scope of activities which the
parties contemplate as part of the Services, as to which Lara Mac shall be
entitled to separate compensation that shall be negotiated in good faith by the
parties on a case-by-case basis. In the event that the Company is not
generating organic revenues (excluding interest and investment income) as of the
first anniversary of the date of the Management Services Agreement, then all of
the Shares constituting the Fee shall be subject to repurchase in the entirety
by the Company at a repurchase price equal to the Issue Value. On November 6,
2009, as additional inducement to the shareholders of Cono Italiano (Delaware)
to enter into the Share Exchange Agreements, Lara Mac Inc. agreed to the
termination of the Management Services Agreement with Cono Italian (Nevada) and
cancellation of all Cono Italian (Nevada) shares previously issued to Lara Mac
under the Management Services Agreement (242,557 shares of the Company’s common
stock as adjusted for the one-for-sixty reverse stock
split).
29
There
have been no transactions, since the beginning of the Company’s last fiscal
year, and there are no currently proposed transactions, in which the Company was
or is to be a participant and the amount involved exceeds the lesser of $120,000
or one percent of the average of the Company’s total assets at fiscal year-end
for the last three completed fiscal years, and in which any related person had
or will have a direct or indirect material interest, except as set forth
above.
Mr. Scott
Smith, who is the only current member of the Board of Directors who is
independent under the standards for independence contained in the Nasdaq
Marketplaces Rules, Rule 5605(a)(2), has independently reviewed and assessed the
fairness of the Management Services Agreement. Mr. Smith has
determined that the terms and conditions of the Management Services Agreement
are fair and reasonable to the Company and its shareholders and he has
recommended that the Management Services Agreement be adopted and approved by
the entire Board of Directors. Mr. Mitchell Brown, having an economic
interest in the Management Services Agreement through his beneficial ownership
of Lara Mac, recused himself from all deliberations and voting in regard to the
Management Services Agreement.
Edesia
Emprise, LLC
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" used in the Company’s products at a
location in Indianapolis Indiana. Mitchell Brown transferred his
ownership interests in Edesia Emprise, LLC to his father, Gene Brown, later that
month.
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master
Manufacturing Agreement, Edesia Emprise, LLC will produce the Company’s Pizza
Cono product. Cono Italiano (Delaware) has agreed to pay Edesia
Emprise, LLC the costs of production plus fifteen percent (15%). This
Master Manufacturing Agreement has a five (5) year term and will automatically
renew unless cancelled by one of the parties pursuant to its
terms. This Master Manufacturing Agreement is exclusive within the
United States. Under the Master Manufacturing Agreement, Edesia
Emprise, LLC may engage qualified subcontractors throughout its territory for
purposes of performing its obligations to the Company. On December 8,
2009, the Company was advised that Edesia Emprise had entered into its first
subcontract agreement with Sunrise Baking Acquisition Company, based in
Brooklyn, New York.
On
November 12, 2009, the Company’s Board of Directors ratified the Master
Manufacturing Agreement entered into by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC. The Board has determined that the terms and
conditions of this agreement are fair and reasonable to the Company and its
shareholders. Mr. Mitchell Brown, whose father owns Edesia Emprise,
LLC, recused himself from all deliberations and voting in regard to this
agreement.
DIRECTOR
INDEPENDENCE
Mr. Scott
Smith is the only current member of the Board who may be deemed to be
independent. The Company has adopted the standards for independence
contained in the Nasdaq Marketplaces Rules, Rule 5605(a)(2).
30
ITEM
14:
|
PRINCIPAL
ACCOUNTANT FEES AND SERVICES
|
On
November 12, 2009, the Company dismissed its independent auditor, Paritz and
Company P.A. and appointed EFP Rotenberg LLP, as its independent
auditor.
Audit
Fees
The
aggregate fees of EFP Rotenberg LLP for professional services rendered for the
audit of the Company's annual financial statements for the year ended December
31, 2009, totaled $15,000. The aggregate fees of Paritz and Company,
P.A. for professional services rendered for the audit of the Company's annual
financial statements for the year ended January 31, 2009, totaled
$15,000.
Audit-Related
Fees
The
aggregate fees billed by EFP Rotenberg LLP for audit related services for the
year ended December 31, 2009, and which are not disclosed in "Audit Fees" above,
were $31,500. These fees included fees related to procedures performed for the
Company in connection with (i) the filing of a Registration Statement on Form
S-1; and (ii) the Company’s acquisition of Cono Italiano
(Delaware). The aggregate fees billed by Paritz and Company, P.A. for
audit related services for the year ended January 31, 2009, and which are not
disclosed in "Audit Fees" above, were $0.
Tax
Fees
The
aggregate fees billed by EFP Rotenberg LLP for tax compliance for the year ended
December 31, 2009, were $0. The aggregate fees billed by Paritz and
Company, P.A. for tax compliance for the year ended January 31, 2009, were
$0.
All
Other Fees
The
aggregate fees billed by EFP Rotenberg LLP for services other than those
described above, for the year ended December 31, 2009, were $0. The
aggregate fees billed by Paritz and Company, P.A. for services other than those
described above, for the year ended January 31, 2009, were $0.
Audit
Committee Pre-Approval Policies
Our Board
of Directors reviewed the audit and non-audit services rendered by EFP Rotenberg
LLP and Paritz and Company, P.A. during the periods set forth above and
concluded that such services were compatible with maintaining the auditors’
independence. All audit and non-audit services performed by our independent
accountants are pre-approved by our Board of Directors to assure that such
services do not impair the auditors’ independence from us.
31
PART IV
ITEM 15:
|
EXHIBITS AND FINANCIAL STATEMENT
SCHEDULES
|
Exhibit
No.
|
Description
of Exhibits
|
|
Exhibit
3.1
|
Articles
of Incorporation, incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form SB-2, filed with the Securities
and Exchange Commission on December 17, 2004.
|
|
Exhibit
3.2
|
Bylaws,
incorporated by reference to Exhibit 3.2 to the Company’s Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission
on December 17, 2004.
|
|
Exhibit
3.3
|
Certificate
of Amendment to the Articles of Incorporation, dated as of November 11,
2006, incorporated by reference to Exhibit 3.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
30, 2006.
|
|
Exhibit
3.4
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.4 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on July 17, 2007.
|
|
Exhibit
3.5
|
Certificate
of Amendment to the Articles of Incorporation, dated as of February 11,
2008, incorporated by reference to Exhibit 3.5 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
3.6
|
Certificate
of Amendment to the Articles of Incorporation, dated as of July 31, 2009,
incorporated by reference to Exhibit 3.6 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.7
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.7 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.8
|
Certificate
of Incorporation of Cono Italiano (Delaware) (formerly known as Janex
International, Inc.), incorporated by reference to Exhibit 3.8 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.9
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.9 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.10
|
Certificate
of Merger of Foreign Corporation into a Domestic Corporation (Cono
Italiano (Delaware)), incorporated by reference to Exhibit 3.10 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.11
|
Certificate
of Merger of Domestic Corporation and Foreign Limited Liability Company
(Cono Italiano (Delaware)), incorporated by reference to Exhibit 3.11 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.12
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.12 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.13
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.13 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.14
|
Certificate
of Correction (Cono Italiano (Delaware)), incorporated by reference to
Exhibit 3.14 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.15
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.15 to the Company’s
Registration Statement on Form S-1, filed with the Securities and Exchange
Commission on January 14,
2010.
|
32
Exhibit
5.1
|
Opinion
of counsel to the Company, to be filed by amendment.
|
|
Exhibit
10.16
|
Stock
Purchase Agreement by and between the Company and Adagio Marine Ltd, dated
July 27, 2007, incorporated by reference to Exhibit 10.16 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on September 20, 2007.
|
|
Exhibit
10.17
|
Series
A Warrant issued to Adagio Marine Ltd, dated July 27, 2007, incorporated
by reference to Exhibit 10.17 to the Company’s Report on Form 10-QSB,
filed with the Securities and Exchange Commission on September 20,
2007.
|
|
Exhibit
10.26
|
Memorandum
by and between the Company, Xinjiang Wangye Brewing Co. Ltd. and Guangdong
Kecheng Trading Co., dated as of June 6, 2007, incorporated by reference
to Exhibit 10.26 to the Company’s Amended Registration Statement Form
SB-2/A, filed with the Securities and Exchange Commission on January 29,
2008.
|
|
Exhibit
10.27
|
Exchange
Agreement by and between the Company and DT Crystal Holdings Limited,
dated as of June 19, 2008, incorporated by reference to Exhibit 10.27 to
the Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 18, 2008.
|
|
Exhibit
10.28
|
Exchange
Agreement by and between the Company and Buck Master Overseas, dated as
of August 12, 2008, incorporated by reference to Exhibit 10.28 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on December 15, 2008.
|
|
Exhibit
10.29
|
Working
Interest Purchase and Sale Agreement, by and between the Company and
Wellington Capital Management Inc., dated as of January 29, 2009,
incorporated by reference to Exhibit 10.29 to the Company’s Report on Form
10-K, filed with the Securities and Exchange Commission on May 18,
2009.
|
|
Exhibit
10.30
|
Assignment
and Assumption Agreement, by and between the Company and DT Crystal
Holdings Limited, dated as of January 31, 2009, incorporated by reference
to Exhibit 10.30 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.31
|
Convertible
Note Agreement, by and between the Company and Wellington Capital
Management Inc., dated as of February 2, 2009, incorporated by reference
to Exhibit 10.31 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.32
|
Termination
of Working Interest Purchase and Sale Agreement, by and between the
Company and Wellington Capital Management Inc., dated as of April 28,
2009, incorporated by reference to Exhibit 10.1 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.33
|
Termination
and Discharge of Convertible Note Agreement, by and between the Company
and Wellington Capital Management Inc., dated as of April 28, 2009,
incorporated by reference to Exhibit 10.2 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.34
|
Mutual
Release, by and between the Company and Wellington Capital Management
Inc., incorporated by reference to Exhibit 10.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.35
|
Letter
of Intent, by and between the Company and Financial Media Net, Inc., dated
as of March 25, 2009, incorporated by reference to Exhibit 99.1 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on March 26, 2009.
|
|
Exhibit
10.36
|
Affiliate
Stock Purchase Agreement, dated June 4, 2009, between Gallant Energy
International Inc. and Lara Mac Inc., incorporated by reference to Exhibit
99.1 to Lara Mac Inc.’s Schedule 13D, filed with the Securities and
Exchange Commission on June 15, 2009.
|
|
Exhibit
10.37
|
Management
Services Agreement, by and between the Company and Lara Mac Inc., dated as
of June 22, 2009, incorporated by reference to Exhibit 10.37 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 14, 2009.
|
|
Exhibit
10.38
|
Agreement,
by and between Kono Italia S.r.l & Spuntibreak S.r.l. DBA Pizza Hands
and Cono Italiano LLC, dated as of March 2, 2006, incorporated by
reference to Exhibit 10.38 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
33
Exhibit
10.39
|
Distribution
Agreement, by and between Cono Italiano, Inc. and Pino Gelato, Inc., dated
as of July 9, 2008, incorporated by reference to Exhibit 10.39 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.40
|
Amendment
to Distribution Agreement, by and between Cono Italiano, Inc. and Pino
Gelato, Inc., dated as of July 9, 2008, incorporated by reference to
Exhibit 10.40 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.41
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.41 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.42
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 1, 2008, incorporated by reference to Exhibit 10.42 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.43
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.43 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.44
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.45
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 11, 2009, incorporated by reference to Exhibit 10.43 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.46
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.47
|
Settlement
Agreement and Mutual Release, by and between Dough Bros., Inc., John
Allen, Drew Allen, Matt Allen, Edesia Emprise, LLC, Cono Italiano, Inc.,
Mitchell Brown, John Jacobs and Ramona Fantini, dated as of October 22,
2009, incorporated by reference to Exhibit 10.47 to the Company’s Report
on Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
10.48
|
Commitment
Agreement, by and between Cono Italiano (Delaware) and Lara Mac Inc.,
dated as of November 9, 2009, incorporated by reference to Exhibit 10.48
to the Company’s Report on Form 8-K, filed with the Securities and
Exchange Commission on November 13, 2009.
|
|
Exhibit
10.49
|
Master
Manufacturing Agreement, by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC, dated as of November 11, 2009, incorporated by
reference to Exhibit 10.49 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.50
|
Form
of Share Exchange Agreement, by and between the Company and the
shareholders of Cono Italiano (Delaware), incorporated by reference to
Exhibit 10.50 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.51
|
Amendment
to the Management Services Agreement, by and between Lara Mac Inc., Cono
Italiano, Inc. (a Nevada corporation) and Cono Italiano, Inc. (a Delaware
corporation), dated as of November 6, 2009, incorporated by reference to
Exhibit 10.51 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.52
|
Employment
Agreement, by and between the Company and Mitchell Brown, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.52 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14,
2010.
|
34
Exhibit
10.53
|
Employment
Agreement, by and between the Company and Joseph Masselli, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.53 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.54
|
Employment
Agreement, by and between the Company and Alex Kaminski, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.54 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.55
|
Employment
Agreement, by and between the Company and Steve Savage, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.55 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.56
|
Convertible
Promissory Note issued by Cono Italiano (Delaware) on December 28, 2007,
incorporated by reference to Exhibit 10.56 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.57
|
Convertible
Promissory Note re-issued by Cono Italiano (Delaware) on January 31, 2008,
incorporated by reference to Exhibit 10.57 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.58
|
Amendment
to Convertible Promissory Note, dated as of October 22, 2009, incorporated
by reference to Exhibit 10.58 to the Company’s Registration Statement on
Form S-1, filed with the Securities and Exchange Commission on January 14,
2010.
|
|
Exhibit
14.1
|
Code
of Conduct, incorporated by reference to Exhibit 14.1 to the Company’s
Report on Form 8-K, filed with the Securities and Exchange Commission on
August 31, 2006.
|
|
Exhibit
14.2
|
Equity
Incentive Plan, incorporated by reference to Exhibit 14.2 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on October 23, 2006.
|
|
Exhibit
14.3
|
Audit
Committee Charter, incorporated by reference to Exhibit 14.3 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.4
|
Whistleblower
Procedures Policy, incorporated by reference to Exhibit 14.4 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.5
|
Governance
Charter, incorporated by reference to Exhibit 14.5 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
14.6
|
Compensation
Charter, incorporated by reference to Exhibit 14.6 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
21
|
|
List
of Subsidiaries.
|
35
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
CONO
ITALIANO, INC.
|
||
By:
|
/s/
Mitchell Brown
|
|
Name:
|
Mitchell
Brown
|
|
Title:
|
Principal
Executive Officer
|
|
By:
|
/s/
Alex J. Kaminski
|
|
Name:
|
Alex
J. Kaminski
|
|
Title:
|
Principal
Financial Officer and
Principal
Accounting
Officer
|
Dated:
June 11, 2010
In
accordance with the Exchange Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
/s/ Mitchell Brown
|
|
Name:
|
Mitchell
Brown
|
Title:
|
Director
|
Dated:
|
June
11, 2010
|
/s/ Joseph Masselli
|
|
Name:
|
Joseph
Masselli
|
Title:
|
Director
|
Dated:
|
June
11, 2010
|
/s/ Alex J. Kaminski
|
|
Name:
|
Alex
J. Kaminski
|
Title:
|
Director
|
Dated:
|
June
11, 2010
|
/s/ Steve Savage
|
|
Name:
|
Steve
Savage
|
Title:
|
Director
|
Dated:
|
June
11, 2010
|
/s/ Scott Smith
|
|
Name:
|
Scott
Smith
|
Title:
|
Director
|
Dated:
|
June
11, 2010
|
36
Exhibit
Index
Exhibit
No.
|
Description
of Exhibits
|
|
Exhibit
3.1
|
Articles
of Incorporation, incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form SB-2, filed with the Securities
and Exchange Commission on December 17, 2004.
|
|
Exhibit
3.2
|
Bylaws,
incorporated by reference to Exhibit 3.2 to the Company’s Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission
on December 17, 2004.
|
|
Exhibit
3.3
|
Certificate
of Amendment to the Articles of Incorporation, dated as of November 11,
2006, incorporated by reference to Exhibit 3.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
30, 2006.
|
|
Exhibit
3.4
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.4 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on July 17, 2007.
|
|
Exhibit
3.5
|
Certificate
of Amendment to the Articles of Incorporation, dated as of February 11,
2008, incorporated by reference to Exhibit 3.5 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
3.6
|
Certificate
of Amendment to the Articles of Incorporation, dated as of July 31, 2009,
incorporated by reference to Exhibit 3.6 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.7
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.7 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.8
|
Certificate
of Incorporation of Cono Italiano (Delaware) (formerly known as Janex
International, Inc.), incorporated by reference to Exhibit 3.8 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.9
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.9 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.10
|
Certificate
of Merger of Foreign Corporation into a Domestic Corporation (Cono
Italiano (Delaware)), incorporated by reference to Exhibit 3.10 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.11
|
Certificate
of Merger of Domestic Corporation and Foreign Limited Liability Company
(Cono Italiano (Delaware)), incorporated by reference to Exhibit 3.11 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.12
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.12 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.13
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.13 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.14
|
Certificate
of Correction (Cono Italiano (Delaware)), incorporated by reference to
Exhibit 3.14 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.15
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.15 to the Company’s
Registration Statement on Form S-1, filed with the Securities and Exchange
Commission on January 14,
2010.
|
37
Exhibit
5.1
|
Opinion
of counsel to the Company, to be filed by amendment.
|
|
Exhibit
10.16
|
Stock
Purchase Agreement by and between the Company and Adagio Marine Ltd, dated
July 27, 2007, incorporated by reference to Exhibit 10.16 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on September 20, 2007.
|
|
Exhibit
10.17
|
Series
A Warrant issued to Adagio Marine Ltd, dated July 27, 2007, incorporated
by reference to Exhibit 10.17 to the Company’s Report on Form 10-QSB,
filed with the Securities and Exchange Commission on September 20,
2007.
|
|
Exhibit
10.26
|
Memorandum
by and between the Company, Xinjiang Wangye Brewing Co. Ltd. and Guangdong
Kecheng Trading Co., dated as of June 6, 2007, incorporated by reference
to Exhibit 10.26 to the Company’s Amended Registration Statement Form
SB-2/A, filed with the Securities and Exchange Commission on January 29,
2008.
|
|
Exhibit
10.27
|
Exchange
Agreement by and between the Company and DT Crystal Holdings Limited,
dated as of June 19, 2008, incorporated by reference to Exhibit 10.27 to
the Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 18, 2008.
|
|
Exhibit
10.28
|
Exchange
Agreement by and between the Company and Buck Master Overseas, dated as
of August 12, 2008, incorporated by reference to Exhibit 10.28 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on December 15, 2008.
|
|
Exhibit
10.29
|
Working
Interest Purchase and Sale Agreement, by and between the Company and
Wellington Capital Management Inc., dated as of January 29, 2009,
incorporated by reference to Exhibit 10.29 to the Company’s Report on Form
10-K, filed with the Securities and Exchange Commission on May 18,
2009.
|
|
Exhibit
10.30
|
Assignment
and Assumption Agreement, by and between the Company and DT Crystal
Holdings Limited, dated as of January 31, 2009, incorporated by reference
to Exhibit 10.30 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.31
|
Convertible
Note Agreement, by and between the Company and Wellington Capital
Management Inc., dated as of February 2, 2009, incorporated by reference
to Exhibit 10.31 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.32
|
Termination
of Working Interest Purchase and Sale Agreement, by and between the
Company and Wellington Capital Management Inc., dated as of April 28,
2009, incorporated by reference to Exhibit 10.1 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.33
|
Termination
and Discharge of Convertible Note Agreement, by and between the Company
and Wellington Capital Management Inc., dated as of April 28, 2009,
incorporated by reference to Exhibit 10.2 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.34
|
Mutual
Release, by and between the Company and Wellington Capital Management
Inc., incorporated by reference to Exhibit 10.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.35
|
Letter
of Intent, by and between the Company and Financial Media Net, Inc., dated
as of March 25, 2009, incorporated by reference to Exhibit 99.1 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on March 26, 2009.
|
|
Exhibit
10.36
|
Affiliate
Stock Purchase Agreement, dated June 4, 2009, between Gallant Energy
International Inc. and Lara Mac Inc., incorporated by reference to Exhibit
99.1 to Lara Mac Inc.’s Schedule 13D, filed with the Securities and
Exchange Commission on June 15, 2009.
|
|
Exhibit
10.37
|
Management
Services Agreement, by and between the Company and Lara Mac Inc., dated as
of June 22, 2009, incorporated by reference to Exhibit 10.37 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 14,
2009.
|
38
Exhibit
10.38
|
Agreement,
by and between Kono Italia S.r.l & Spuntibreak S.r.l. DBA Pizza Hands
and Cono Italiano LLC, dated as of March 2, 2006, incorporated by
reference to Exhibit 10.38 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.39
|
Distribution
Agreement, by and between Cono Italiano, Inc. and Pino Gelato, Inc., dated
as of July 9, 2008, incorporated by reference to Exhibit 10.39 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.40
|
Amendment
to Distribution Agreement, by and between Cono Italiano, Inc. and Pino
Gelato, Inc., dated as of July 9, 2008, incorporated by reference to
Exhibit 10.40 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.41
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.41 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.42
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 1, 2008, incorporated by reference to Exhibit 10.42 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.43
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.43 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.44
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.45
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 11, 2009, incorporated by reference to Exhibit 10.43 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.46
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.47
|
Settlement
Agreement and Mutual Release, by and between Dough Bros., Inc., John
Allen, Drew Allen, Matt Allen, Edesia Emprise, LLC, Cono Italiano, Inc.,
Mitchell Brown, John Jacobs and Ramona Fantini, dated as of October 22,
2009, incorporated by reference to Exhibit 10.47 to the Company’s Report
on Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
10.48
|
Commitment
Agreement, by and between Cono Italiano (Delaware) and Lara Mac Inc.,
dated as of November 9, 2009, incorporated by reference to Exhibit 10.48
to the Company’s Report on Form 8-K, filed with the Securities and
Exchange Commission on November 13, 2009.
|
|
Exhibit
10.49
|
Master
Manufacturing Agreement, by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC, dated as of November 11, 2009, incorporated by
reference to Exhibit 10.49 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.50
|
Form
of Share Exchange Agreement, by and between the Company and the
shareholders of Cono Italiano (Delaware), incorporated by reference to
Exhibit 10.50 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.51
|
Amendment
to the Management Services Agreement, by and between Lara Mac Inc., Cono
Italiano, Inc. (a Nevada corporation) and Cono Italiano, Inc. (a Delaware
corporation), dated as of November 6, 2009, incorporated by reference to
Exhibit 10.51 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.52
|
Employment
Agreement, by and between the Company and Mitchell Brown, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.52 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14,
2010.
|
39
Exhibit
10.53
|
Employment
Agreement, by and between the Company and Joseph Masselli, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.53 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.54
|
Employment
Agreement, by and between the Company and Alex Kaminski, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.54 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.55
|
Employment
Agreement, by and between the Company and Steve Savage, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.55 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.56
|
Convertible
Promissory Note issued by Cono Italiano (Delaware) on December 28, 2007,
incorporated by reference to Exhibit 10.56 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.57
|
Convertible
Promissory Note re-issued by Cono Italiano (Delaware) on January 31, 2008,
incorporated by reference to Exhibit 10.57 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.58
|
Amendment
to Convertible Promissory Note, dated as of October 22, 2009, incorporated
by reference to Exhibit 10.58 to the Company’s Registration Statement on
Form S-1, filed with the Securities and Exchange Commission on January 14,
2010.
|
|
Exhibit
14.1
|
Code
of Conduct, incorporated by reference to Exhibit 14.1 to the Company’s
Report on Form 8-K, filed with the Securities and Exchange Commission on
August 31, 2006.
|
|
Exhibit
14.2
|
Equity
Incentive Plan, incorporated by reference to Exhibit 14.2 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on October 23, 2006.
|
|
Exhibit
14.3
|
Audit
Committee Charter, incorporated by reference to Exhibit 14.3 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.4
|
Whistleblower
Procedures Policy, incorporated by reference to Exhibit 14.4 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.5
|
Governance
Charter, incorporated by reference to Exhibit 14.5 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
14.6
|
Compensation
Charter, incorporated by reference to Exhibit 14.6 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
21
|
|
List
of Subsidiaries.
|
40