Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 7, 2014
GROGENESIS, INC.
(Exact name of registrant as specified in its charter)
Nevada 333-168337 42-1771870
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
Highway 79 North, Springville, TN 38256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 855-691-4764
H16/B Adsulim, Benaulim, Goa, K7 403716
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act
(17 CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act
(17 CFR 240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
ITEM 2.01. COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS
On September 9, 2013, we entered into an asset purchase agreements with Joseph
Fewer of Aylmer, Ontario and Stephen Moseley of Paris, Tennessee, whereby we
agreed to acquire all rights, title, and interest in and to the assets relating
to a natural blend of plant extracts that is used as a liquid plant growth
enhancer, known as the Agraburst crop surfactant formula SURF0107
("Agraburst"),. A plant surfactant is a compound that lowers the surface tension
between a liquid and a solid in order to allow for more efficient nutrient
uptake in the plant.
In consideration of Joseph Fewer selling the intellectual property comprising
Agraburst to us, including the technology described in the United States
provisional patent application number 61/897,584- "Composition and Method for
Enhancing Plant Growth", as well as all related assets necessary for operating a
plant growth enhancement product manufacture and sales business as a going
concern, we issued to Mr. Fewer 12,500,000 post forward-split common shares in
our capital. The agreement also required that we complete a forward split of our
common stock such that 25 new shares of common stock are exchanged for each
currently issued share of common stock outstanding, and that 74,000,000 shares
of post-forward-split common stock held by our former president be returned to
treasury. We completed this forward-split on November 1, 2013. We have also
executed a consulting agreement with Mr. Fewer whereby he will provide his
full-time management services to us in consideration of payments of $7,000 per
month. The consulting agreement will become effective on the date that we raise
a minimum of $500,000 for operations.
Closing of the asset purchase agreement with Mr. Fewer was also subject to us
changing our name to a name acceptable to Mr. Fewer. We changed our name from
"Lisboa Leisure, Inc." to "GroGenesis, Inc." on December 10, 2013.
We also entered into an agreement with Mr. Moseley on September 9, 2013 whereby
we agreed to acquire certain equipment used in conjunction with the production,
sales, and marketing of Agraburst. In consideration of Mr. Moseley transferring
title of these assets to us, we have issued 5,000,000 post-split shares of our
common stock to him. We have also executed a consulting agreement with Mr.
Moseley whereby he will receive $5,000 per month in consideration of him
providing his full-time services to us. As with Mr. Fewer's consulting
agreement, Mr. Moseley's agreement will become effective on the date that we
raise a minimum of $500,000 for operations. The agreement recognizes that Mr.
Moseley has been involved in the sale of surfactants prior to the date of the
agreement and that he shall maintain the right to sell Agraburst to 53 existing
clients and profit exclusively from sales to them.
We have also entered into an easement agreement with Joseph Fewer and Denise
Fewer whereby they have agreed to grant to us the right to use a portion of
their farm located in Alymer, Ontario for the purposes of using it as a
demonstration farm in order to evaluate and exhibit the effects of Agraburst. In
consideration of the easement, we have issued to the Fewers an aggregate of
2,500,000 post-split shares of our common stock. The initial term of the
easement is three years.
We completed the purchase of the assets necessary for the operation of the
Agraburst plant growth surfactant manufacture and sales business on February 7,
2014.
DESCRIPTION OF BUSINESS
PRIOR OPERATIONS
We were incorporated pursuant to the laws of Nevada on May 19, 2010. Our
intended plan of operation was to operate beach front eating establishments on
the beaches on Goa, India. However, due to difficulties in raising additional
funds to cover our planned operations and obtaining the necessary permits to
operate beach shacks, management decided to discontinue operations in the
sector.
AGRABURST FORMULA
We intend to proceed with business operations in the agricultural and
environmental sectors. On February 7, 2014, we completed the acquisition of the
assets relating to the Agraburst naturally-derived plant stimulant, including
all intellectual property rights relating to its unique formulation. Agraburst
2
consists of a blend of predominantly natural plant extracts, or phytochemicals,
that are naturally-derived, non-toxic, carcinogen-free, and biodegradable. It is
a foliar-feed liquid growth enhancer that aids efficient nutrient and water
uptake in plants. Foliar feeding involves applying AgraBurst directly to plant
foliage, which then absorbs it. Agraburst can be used alone or tank-mixed with
most liquid fertilizers, herbicides, pesticides, and fungicides in order to
increase their effectiveness. It can also be utilized as a wash for fruits and
vegetables, and as a cleaner for garden and lawn sprayers, field-sized sprayers,
and agricultural tanks.
Agraburst is designed to work as a cation exchange stimulant that penetrates
plant foliage and roots in order to enhance photosynthesis and higher brix
levels. The brix level is the percentage of solids, particularly sugar and
minerals, present in the plant. A high brix level is an indication that the
plant has been grown with sufficient nutrients and water. Minute particles in
Agraburst increase the speed of nutrient transport within a plant and can carry
other blended products into plant leaves.
The small particles within Agraburst have very close to a neutral electrical
charge, which allows them to form light bonds with the hydrogen atoms in water,
which results in a reduction in water's natural surface tension. As a result,
Agraburst acts akin to a lubricant that keeps water flowing and transporting
nutrients within a plant with little resistance. This promotes higher efficiency
of water and nutrient uptake in a plant. The resulting higher brix level in the
plant better enables it to resist disease, insects, drought, and cold weather.
It is also linked to better tasting food crops.
To date, Agraburst and predecessor product formulations have been sold to a
small group of farming clients and tested in a variety of case studies that has
resulted, amongst other benefits, in increased yield for corn, soybean, tobacco,
canola, alfalfa, wheat, cabbage, cotton, corn silage, hay, tomatoes, and beans.
PRODUCT SAFETY
Because Agraburst ingredients are comprised of refined extracts that originate
from tree oils and plants, it is considered to be environmentally friendly. It
complies with the United States Occupational Safety and Health Administration's
OSHA CFR - 1910.1200 Section (i) in that Agraburst contains no hazardous or
toxic components.
In addition, Agraburst is comprised solely of ingredients that are contained on
the Food and Drug Administration's EAFUS list and are thus considered safe for
use with food products. Additional tests performed at the Genetic ID testing
facility in Fairfield, Iowa also confirmed that Agraburst is free of genetically
modified organisms.
MARKET FOR THE PRODUCT
As consumers become increasingly concerned over the use of synthetic pesticides
and fertilizers on food crops, the infiltration of harmful crop additives in
soil and water supplies, and the availability of food products as reasonable
prices, there is growing pressure on global farmers to provide safe food
products for consumption without causing undue environmental harm. Because
Agraburst is formulated to increase agricultural output without adverse health
and environmental impacts, the potential market for the product is large. Our
business plan is based on the premise that there will be increasing pressure on
farmers to provide more agricultural products without increasing the amount of
land cleared for farm use or creating environmental or health risks for society.
3
We intend to initially manufacture and distribute Agraburst in the United States
and Canada with a view to expanding our market focus depending on our initial
success.
Our Agraburst manufacturing facility is located in Paris, Tennessee, and has the
capacity to produce approximately 100,000 gallons of Agraburst per month with
existing equipment. Currently, it takes approximately six hours to produce a
3,000 gallon batch of Agraburst. It currently involves an exothermic process
that involves ingredient mixing in large stainless steel tanks and then allowing
the product to cool. Currently, Agraburst is sold to a small group of farmers
and local cooperatives located primarily in Tennessee and Kentucky.
Our ability to market Agraburst in North America will be adversely impacted by
the fragmented and competitive nature of the agriculture fertilizer and
fertilizer enhancement industry. The sector includes large entities that produce
fertilizers in massive quantities, as well as small, boutique manufacturers that
produce fertilizers and growth enhancement products in small batches.
While the principal competitive factors in the sale of fertilizer enhancement
products are crop output and product safety, pricing and availability of the
product and geographic coverage are also critical. Most of our competitors have
an established market for their products and greater financial resources and may
be able to withstand sales or price decreases better than we will. We also
expect to continue to face competition from new market entrants. We may be
unable to compete effectively with these existing or new competitors, which
could have a material adverse effect on our financial condition and results of
operations.
EXISTING COMPETITIVE PRODUCTS
While various companies offer commercial agricultural fertilizer products and
fertilizer enhancements to farms and consumers, we are not aware of any direct
competitors that offer a product that substantially increases yields that is
also naturally-derived.
SALES AND MARKETING STRATEGY
Our proposed marketing strategy is to demonstrate to our potential end-use
customers, principally commercial farmers, that Agraburst will increase their
agricultural output. We intend to accomplish this through a combination of
independent product testing through scientific trials and by allowing farmers to
use Agraburst on a trial basis. We expect that our marketing strategy will be
most successful if farmers are able to realize improvements in crop quality and
yield on their own fields when they use Agraburst.
We intend to sell Agraburst through distribution arrangements with agricultural
input distributors and agricultural supply stores. We are subject to the risk
that large, high-profile, distributors could exert substantial pressure on us
due to their size and the small contribution that our products would likely have
to their financial success. Because of this difference in market influence, such
distributors would have leverage over the pricing and promotion of Agraburst.
We hope to enter into agreements with both national and international
distributors, though there is no guarantee that we will be successful in
reaching such arrangements. While we attempt to establish these relationships,
we will also directly market our product to farmers through a direct sales
force, as well as offer Agraburst through a corporate website. If we decide to
4
directly control product distribution, we will incur costs related to taking and
processing product orders from retailers; shipping and warehousing costs;
credit, collections, and in-house accounting fees.
EMERGING GROWTH COMPANY STATUS
Because we generated less than $1 billion in total annual gross revenues during
our most recently completed fiscal year, we qualify as an "emerging growth
company" under the Jumpstart Our Business Startups ("JOBS") Act.
We will lose our emerging growth company status on the earliest occurrence of
any of the following events:
1. on the last day of any fiscal year in which we earn at least $1
billion in total annual gross revenues, which amount is adjusted for
inflation every five years;
2. on the last day of the fiscal year of the issuer following the fifth
anniversary of the date of our first sale of common equity securities
pursuant to an effective registration statement;
3. on the date on which we have, during the previous 3-year period,
issued more than $1 billion in non-convertible debt; or
4. the date on which such issuer is deemed to be a `large accelerated
filer', as defined in section 240.12b-2 of title 17, Code of Federal
Regulations, or any successor thereto."
A "large accelerated filer" is an issuer that, at the end of its fiscal year,
meets the following conditions:
1. it has an aggregate worldwide market value of the voting and
non-voting common equity held by its non-affiliates of $700 million or
more as of the last business day of the issuer's most recently
completed second fiscal quarter;
2. It has been subject to the requirements of section 13(a) or 15(d) of
the Act for a period of at least twelve calendar months; and
3. It has filed at least one annual report pursuant to section 13(a) or
15(d) of the Act.
As an emerging growth company, exemptions from the following provisions are
available to us:
1. Section 404(b) of the Sarbanes-Oxley Act of 2002, which requires
auditor attestation of internal controls;
2. Section 14A(a) and (b) of the Securities Exchange Act of 1934, which
require companies to hold shareholder advisory votes on executive
compensation and golden parachute compensation;
3. Section 14(i) of the Exchange Act (which has not yet been
implemented), which requires companies to disclose the relationship
between executive compensation actually paid and the financial
performance of the company;
4. Section 953(b)(1) of the Dodd-Frank Act (which has not yet been
implemented), which requires companies to disclose the ratio between
5
the annual total compensation of the CEO and the median of the annual
total compensation of all employees of the companies; and
5. The requirement to provide certain other executive compensation
disclosure under Item 402 of Regulation S-K. Instead, an emerging
growth company must only comply with the more limited provisions of
Item 402 applicable to smaller reporting companies, regardless of the
issuer's size.
Pursuant to Section 107 of the JOBS Act, an emerging growth company may choose
to forgo such exemption and instead comply with the requirements that apply to
an issuer that is not an emerging growth company. We have elected under this
section of the JOBS Act to maintain our status as an emerging growth company and
take advantage of the JOBS Act provisions relating to complying with new or
revised accounting standards under Section 102(b)(1) of the JOBS Act.
GOVERNMENT REGULATION
While agricultural fertilizers, soil amendments, and related products are highly
regulated at the state level in the United States, these regulations do not
apply to Agraburst because it is a crop surfactant that is comprised of less
than 3% active ingredients, which typically include potassium, nitrogen, and
phosphorus. In Canada, where we intend to extend our marketing efforts, such
active ingredients must constitute less than 5% of the surfactant product
ingredient mix.
We anticipate that we will incur periodic testing costs in order to ensure that
Agraburst qualifies as a crop surfactant and is not deemed to be a fertilizer or
similarly regulated product that is subject to regulatory requirements. However,
we do not anticipate that such testing costs will be material to our operations.
SUBSIDIARIES
We do not have any subsidiaries.
PATENTS AND TRADEMARKS
The composition of our crop surfactant, Agraburst, is covered by provisional
patent application number 61/897,584 - "Composition and Method for Enhancing
Plant Growth" that was filed with the United States patent office on October 30,
2013.
Our product brand name, Agraburst, is covered by a U.S. Trademark Application
Serial Number 86/092618, which was filed with the United States Trademark and
Patent Office on October 16, 2013.
Otherwise, we do not own, either legally or beneficially, any patents or
trademarks.
RESEARCH AND DEVELOPMENT ACTIVITIES AND COSTS
We have not spent any funds on research and development activities to date.
COMPLIANCE WITH ENVIRONMENTAL LAWS
Our current operations are not subject to any environmental laws.
6
FACILITIES
Our Agraburst manufacturing facility is located in Paris, Tennessee, and has the
capacity to produce approximately 100,000 gallons of Agraburst per month with
existing equipment. The facility is currently leased under a 1-year rental
agreement with Bradley Moseley at the rate of $800 per month, which lease term
expires on May 22, 2014 and then continues on a month-to-month basis thereafter
until terminated by either party on written notice. Management believes that
this facility's current production capacity is sufficient to satisfy customer
demand for the foreseeable future. We will consider re-locating and/or expanding
internationally to new manufacturing facilities in future based on sales
fulfilment logistics concerns, alongside sales side requirements and economics.
Pursuant to our asset purchase agreement with Joseph Fewer, we also have an
easement for a period of three years in a 10 acre portion of a hobby farm
located in Aylmer, Ontario. The easement allows us to operate an agricultural
surfactant testing and development facility on the land.
EMPLOYEES
We have commenced only limited operations, and therefore currently have no
employees.
RISK FACTORS
Please consider the following risk factors before deciding to invest in our
common stock. Any investment in our common stock involves a high degree of risk.
You should carefully consider the risks described below and all of the
information contained in this current report before deciding whether to purchase
our common stock. If any of the following risks actually occur, our business,
financial condition and results of operations could be harmed. The trading price
of our common stock could decline, and you may lose all or part of your
investment in our common stock.
THERE IS SUBSTANTIAL UNCERTAINLY AS TO WHETHER WE WILL CONTINUE AS A GOING
CONCERN. IF WE DISCONTINUE OPERATIONS, YOU WILL LOSE YOUR INVESTMENT.
We have incurred losses since our inception resulting in an accumulated deficit
of $76,709 at November 30, 2013. Further losses are anticipated in the
development of our business. As a result, there is substantial doubt about our
ability to continue as a going concern. In fact, our auditors have issued a
going concern opinion in connection with their audit of our financial statements
for our most recent fiscal year ended May 31, 2013. This means that our auditors
believe there is substantial doubt that we can continue as an on-going business
for the next twelve months. While we have acquired the assets relating to the
manufacturing and sales of Agraburst subsequent to our most recently completed
fiscal year, there is still no assurance that our intended operations will be
profitable.
Our ability to continue as a going concern is dependent upon our ability to
generate profitable operations in the future and to obtain the necessary
financing to expand our business operations; to market our current products and
services; and to develop new products and services.
Our ability to achieve and maintain profitability and positive cash flow is
dependent upon:
7
* our ability to raise necessary financing in order to develop and
expand our operations;
* our ability to successfully manufacture, distribute, market and sell
Agraburst;
* our success in expanding operations by hiring experienced employees
and independent contractors in the agricultural sector; and
* our ability to develop additional products; and
Based upon current plans, we expect to incur operating losses in future periods
because we will be incurring expenses related to developing a commercial-sized
manufacturing facility for Agraburst and the marketing of our product. We cannot
guarantee that we will be successful in generating substantial revenues in the
future. Failure to generate revenues will cause us to go out of business.
IF WE DO NOT OBTAIN ADDITIONAL FINANCING, OUR BUSINESS WILL FAIL.
In order to successfully manufacture, distribute, market, and sell Agraburst, we
will need to obtain additional financing in order to establish a manufacturing
facility, retain and train staff, market our product, generate sales, and pursue
additional business development. In order to expand and develop our operations
as we envision, we anticipate that our expenses over the next 12 months will be
approximately $1.5 million.
We will require additional financing to sustain our business operations if we
are not successful in earning significant revenues from operations. We do not
currently have any arrangements for financing and we can provide no assurance to
investors that we will be able to find such financing if required. Obtaining
additional financing would be subject to a number of factors, including our
ability to generate revenue, investor acceptance of our business plan and
general economic and market conditions. These factors may make the timing,
amount, terms or conditions of additional financing unavailable to us.
The most likely source of future funds presently available to us is through the
sale of equity capital. Any sale of share capital will result in dilution to
existing shareholders. We do not have any arrangement in place for the sale of
shares of our common stock.
BECAUSE WE HAVE NOT COMMENCED COMMERCIAL SCALE BUSINESS OPERATIONS, WE FACE A
HIGH RISK OF BUSINESS FAILURE.
We have not yet commenced manufacturing and selling Agraburst in commercial
quantities. Accordingly, we have no way to evaluate the likelihood that our
business will be successful. We have not earned any revenues as of the date of
this report and do not anticipate earning significant revenue during the next 12
month period. Potential investors should be aware of the difficulties normally
encountered by development stage companies and the high rate of failure of such
enterprises. The likelihood of success must be considered in light of the
problems, expenses, difficulties, complications and delays encountered in
manufacturing, marketing, and the sale of new products.
There is no history upon which to base any assumption as to the likelihood that
we will prove successful, and it is doubtful that we will generate any operating
revenues or ever achieve profitable operations. If we are unsuccessful in
addressing these risks, our business will most likely fail.
8
BECAUSE WE WILL RELY UPON THIRD PARTY CONSULTANTS FOR IMPORTANT ASPECTS OF OUR
BUSINESS PLAN, WE ARE SUBJECT TO THE RISK THAT THEY WILL NOT PERFORM THEIR TASKS
EFFECTIVELY AND THAT WE WILL BE UNSUCCESSFUL IN OPERATING OUR BUSINESS AS A
RESULT.
We intend to rely on third parties, such as a marketing consultants and
distributors for the marketing and sale of Agraburst. We may also outsource
aspects of the manufacturing process as well. Because some of these consultants
will have expertise in areas that our management does not, we may not be able to
effectively evaluate their work. We also cannot ensure that third party
consultants will be able to complete their work for us in a timely or effective
manner. Accordingly, our reliance on third parties exposes us to the risk that
our business will be unsuccessful if they do not market and distribute our
product as envisioned.
BECAUSE WE HAVE NOT YET PATENT PROTECTED AGRABURST, A COMPETITOR COULD COPY OUR
PROPOSED DESIGN, WHICH COULD CAUSE OUR BUSINESS TO FAIL.
Our potential competitive advantage lies in the potential unique formulation of
Agraburst. While we have a provisional patent application for protection of our
intellectual property in the United States, there is no guarantee that a patent
will be issued for Agraburst or that competitors may not try to use our formula
to develop similar products that do not violate any patent that we do obtain.
Accordingly, our business is subject to the risk that competitors could either
copy or reverse engineer our surfactant and could thereby produce and sell a
competing product with similar features. If this occurs, our ability to sell our
product could be jeopardized, which could cause our business to fail.
THE AGRICULTURAL SURFACTANT INDUSTRY IS EXTREMELY FRAGMENTED AND COMPETITIVE AND
WE MAY NOT BE ABLE TO COMPETE SUCCESSFULLY WITH EXISTING COMPETITORS OR NEW
ENTRANTS IN THIS MARKET.
The agricultural fertilizer and surfactant industry is extremely fragmented and
competitive. The sector includes large entities, such as Bunge Limited, Cargill,
Incorporated, and Archer-Daniels-Midland Company, which mass produce a variety
of fertilizer products, as well as many boutique manufacturers that produce
fertilizer enhancements and crop surfactants in small batches.
While the principal competitive factors in crop surfactants are their effects on
agricultural output and environmental impact, pricing and availability of the
product and geographic coverage are also key. Most of our competitors have
greater financial resources and may be able to withstand sales or price
decreases better than we will. We also expect to continue to face competition
from new market entrants. We may be unable to compete effectively with these
existing or new competitors, which could have a material adverse effect on our
financial condition and results of operations.
WE ARE AN "EMERGING GROWTH COMPANY" AND WE INTEND TO TAKE ADVANTAGE OF REDUCED
DISCLOSURE AND GOVERNANCE REQUIREMENTS APPLICABLE TO EMERGING GROWTH COMPANIES,
WHICH COULD RESULT IN OUR COMMON STOCK BEING LESS ATTRACTIVE TO INVESTORS.
We are an "emerging growth company," as defined in the Jumpstart Our Business
Startups Act of 2012 and we intend to take advantage of certain exemptions from
various reporting requirements that are applicable to other public companies
that are not emerging growth companies including, but not limited to, not being
required to comply with the auditor attestation requirements of Section 404 of
the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive
9
compensation in our periodic reports and proxy statements, and exemptions from
the requirements of holding a nonbinding advisory vote on executive compensation
and shareholder approval of any golden parachute payments not previously
approved. As well, our election allows us to delay the adoption of new or
revised accounting standards that have different effective dates for public and
private companies until they apply to private companies. Therefore, as a result
of our election, our financial statements may not be comparable to companies
that comply with public company effective dates.
We cannot predict if investors will find our common stock less attractive
because we will rely on these exemptions. If some investors find our common
stock less attractive as a result, there may be a less active trading market for
our common stock and our stock price may be more volatile. We may take advantage
of these reporting exemptions until we are no longer an emerging growth company,
which in certain circumstances could be for up to five years.
BECAUSE MANAGEMENT HAS LIMITED EXPERIENCE IN MANUFACTURING AND MANAGEMENT, OUR
BUSINESS HAS A HIGHER RISK OF FAILURE.
Joseph Fewer and Alan Hughes, our sole members of management, have limited
business experience in the manufacture, marketing, and sale of agricultural
products, particularly on a large-scale, commercial basis. Consequently,
management's decisions and choices may not be well thought out and our
operations, earnings and ultimate financial success may suffer irreparable harm
as a result.
BECAUSE WE RELY ON OUR KEY CONSULTANTS, JOSEPH FEWER AND STEVE MOSELEY, TO
CONDUCT OUR OPERATIONS, OUR BUSINESS WILL LIKELY FAIL IF WE LOSE THEIR SERVICES.
We depend on the services of our senior management for the future success of our
business. Our sole contracted consultants, Joseph Fewer and Stephen Moseley, are
the only people who know and understand the Agraburst formulation and have been
involved in its small trial scale production. Our success depends on their
continued efforts. While we have executed formal consulting agreements with Mr.
Fewer and Mr. Moseley, each consultant is able to terminate his respective
agreement on 90 days' notice. The loss of their services could have an adverse
effect on our business, financial condition, and results of operations.
WE WILL LIKELY ISSUE ADDITIONAL SHARES OF COMMON STOCK THAT WILL RESULT IN
DILUTION TO EXISTING SHAREHOLDERS AND ADVERSELY IMPACT THE VALUE OF OUR SHARES.
We must raise additional capital in order for our business plan to succeed. Our
most likely source of additional capital will be through the sale of additional
shares of common stock. We are currently authorized to issue up to 200,000,000
shares of common stock. Our directors have the authority to cause us to issue
additional shares of common, and to determine the rights, preferences and
privilege of such shares, without consent of any of our stockholders. We may
issue shares in connection with financing arrangements or otherwise. Any such
issuances will result in immediate dilution to our existing shareholders'
interests, which will negatively affect the value of their shares.
A PURCHASER IS PURCHASING PENNY STOCK WHICH LIMITS HIS OR HER ABILITY TO SELL
OUR STOCK.
The shares offered by this prospectus constitute penny stock under the Exchange
Act. The shares will remain penny stock for the foreseeable future. "Penny
stock" rules impose additional sales practice requirements on broker-dealers who
10
sell such securities to persons other than established customers and accredited
investors, that is, generally those with assets in excess of $1,000,000 or
annual income exceeding $200,000 or $300,000 together with a spouse. For
transactions covered by these rules, the broker-dealer must make a special
suitability determination for the purchase of such securities and have received
the purchaser's written consent to the transaction prior to the purchase.
Additionally, for any transaction involving a penny stock, unless exempt, the
rules require the delivery, prior to the transaction, of a disclosure schedule
prescribed by the Commission relating to the penny stock market. The
broker-dealer also must disclose the commissions payable to both the
broker-dealer and the registered representative and current quotations for the
securities. Finally, monthly statements must be sent disclosing recent price
information on the limited market in penny stocks. Consequently, the "penny
stock" rules may restrict the ability of broker-dealers to sell our shares of
common stock. The market price of our shares would likely suffer as a result.
FORWARD-LOOKING STATEMENTS
This report contains forward-looking statements that involve risks and
uncertainties. We use words such as anticipate, believe, plan, expect, future,
intend and similar expressions to identify such forward-looking statements. You
should not place too much reliance on these forward-looking statements. Our
actual results may differ materially from those anticipated in these
forward-looking statements for many reasons, including the risks faced by us
described in the "Risk Factors" section and elsewhere in this report.
REPORTS TO SECURITY HOLDERS
We are required to file annual, quarterly and current reports, and other
information with the Securities & Exchange Commission. The public may read and
copy any materials that we file with the Commission at the Commission's Public
Reference Room at 100 F Street, N.E., Washington, D.C. 20549. The public may
obtain information on the operation of the Public Reference Room by calling the
Commission at 1-800-SEC-0330. The Commission maintains an Internet site that
contains reports, proxy and information statements, and other information
regarding issuers that file electronically with the Commission. The address of
that site is http://www.sec.gov.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
We are a development stage corporation with no revenues from our business
operations. Our auditors have issued a going concern opinion. This means that
our auditors believe there is substantial doubt that we can continue as an
ongoing business for the next twelve months. While we have acquired ownership of
the formulation of Agraburst, including all related intellectual property
rights, subsequent to our most recently completed fiscal year, there is still no
assurance that our intended operations will be profitable.
To meet our financing requirements, we anticipate raising funds through the sale
of our equity. At the present time, we have not made any arrangements to raise
additional cash. If we need additional cash and cannot raise it, we will either
have to delay or suspend operations until we do raise the cash, or cease
operations entirely.
PLAN OF OPERATION
We were incorporated pursuant to the laws of Nevada on May 19, 2010 and intended
to be involved in the development of beach front restaurants in Goa, India until
11
we entered into an asset purchase agreement with Joseph Fewer Farms Inc. on
September 9, 2013.
Our plan of operation for the twelve month period following the date of this
report is to establish facilities for the commercial manufacture of Agraburst,
enter into distribution arrangements for the sale of Agraburst, and retain a
sales force necessary for the direct marketing of Agraburst to commercial
farmers in the United States and Canada.
We expect to incur the following costs in the next 12 months in connection with
our goals:
Manufacturing facilities and equipment costs: $ 500,000
Sales and Marketing: $ 350,000
Product manufacturing costs: $ 250,000
Consulting and distribution costs: $ 200,000
Wages for sales force: $ 150,000
General and administrative costs: $ 50,000
----------
Total: $1,500,000
==========
Total expenditures over the next 12 months are therefore expected to be
approximately $1,500,000. Our ability to meet these objectives will be dependent
on our ability to generate revenue from operations and to raise sufficient
additional capital to expand operations. If we are unable to generate sufficient
revenue or raise financing as required, we will delay our establishment and
expansion of operations as necessary.
SOURCES AND USES OF CASH
At November 30, 2013, our current assets consisted of $31 in cash. Subsequent to
that date, we have raised $150,500 from the sale of our common stock.
Accordingly, we will have to raise additional funds in the next twelve months in
order to cover our anticipated administrative costs and costs of expanding our
operations as outlined above. We currently do not have a specific plan of how we
will obtain such funding; however, we anticipate that additional funding will be
in the form of equity financing from the sale of our common stock. Any private
placement of our common stock could result in substantial dilution to existing
shareholders.
EVENTS, TRENDS AND UNCERTAINTIES
The development of our business will depend upon our success in selling
Agraburst to commercial farmers. Our ability to generate revenue may be affected
by events and trends such as general economic conditions, changes to farm
subsidies, and competing products from existing and new companies in the same
business.
RESULTS OF OPERATIONS
PERIOD ENDED NOVEMBER 30, 2013
We did not earn any revenues from operations in the six-month period ended
November 30, 2013. We incurred operating expenses in the amount of $8,982 during
the period consisting of general and administrative costs of $2,982 and
professional fees of $6,000.
12
FISCAL YEAR ENDED MAY 31, 2013
We did not earn any revenues from operations in the fiscal year ended May 31,
2013. We incurred operating expenses in the amount of $42,891 during the fiscal
year. These operating expenses were comprised of general and administrative
costs of $34,877 and professional fees of $8,014.
FISCAL YEAR ENDED MAY 31, 2012
We did not earn any revenues from operations in the fiscal year ended May 31,
2012. We incurred operating expenses in the amount of $18,575 during the fiscal
year. These operating expenses were comprised of general and administrative
costs of $3,575 and professional fees of $15,000.
We have not attained profitable operations and are dependent upon obtaining
financing to pursue exploration activities. For these reasons, there is
substantial doubt that we will be able to continue as a going concern.
PROPERTIES
Our Agraburst manufacturing facility is located in Paris, Tennessee, and has the
capacity to produce approximately 100,000 gallons of Agraburst per month with
existing equipment. The facility is currently leased under a one-year rental
agreement with Bradley Moseley at the rate of $800 per month, which lease term
expires on May 22, 2014 and then continues on a month-to-month basis thereafter
until terminated by either party on written notice.
Pursuant to our asset purchase agreement with Joseph Fewer, we also have an
easement for a period of three years in a 10 acre portion of a hobby farm
located in Aylmer, Ontario. The easement allows us to operate an agricultural
surfactant testing and development facility on the land.
Otherwise, we do not hold any interest in real property.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table provides the names and addresses of each person known to us
to own more than 5% of our outstanding common stock as of the date of this
current report, and by the officers and directors, individually and as a group.
Except as otherwise indicated, all shares are owned directly.
Amount of
Title of Name and address beneficial Percent
Class of beneficial owner ownership of class
----- ------------------- --------- --------
Common Joseph Fewer 24,000,000 (1) 30.7%
Stock President and C.E.O.
7123 Hacienda Road
Aylmer, Ontario
Common Maria Fernandes 11,000,000 13.5%
Stock Former President
H16/B Adsulim
Benaulim, Goa, India
Common Stephen Moseley 5,000,000 6.1%
Stock Former President
737 Salem Circle
Paris, TN
13
Common Alan Hughes 250,000 0.3%
Stock Chief Operating Officer
2221 Southwood Drive,
The Villages, Florida 32162
Common All Officers and Directors 24,250,000 29.8%
Stock as a group that consists of shares
two people
----------
1. includes 2,500,000 registered in the name of Joseph Fewer and his wife,
Denise Fewer
The percent of class is based on 81,430,000 shares of common stock issued and
outstanding as of the date of this current report.
There are no arrangements that may result in our change in control of the
company.
DIRECTORS AND EXECUTIVE OFFICERS
Our executive officers and directors and their respective ages as of the date of
this current report are as follows:
DIRECTORS:
Name of Director Age
---------------- ---
Joseph Fewer 59
Alan Hughes 62
EXECUTIVE OFFICERS:
Name of Officer Age Office
--------------- --- ------
Joseph Fewer 59 President, C.E.O., Secretary and Treasurer
Alan Hughes 62 Chief Operating Officer
BIOGRAPHICAL INFORMATION
Set forth below is a brief description of the background and business experience
of each of our executive officers and directors for the past five years.
JOSEPH FEWER acts as our President, C.E.O., Secretary, Treasurer and as a
director, and has been responsible for much of the formulation and testing of
Agraburst to date. Mr. Fewer has acted as the President of Joseph Fewer Acres
Inc., a 25 acre hobby farm and supplier of agricultural products in North
America since November 2009. From May 2012 to January 2013, he also acted as
Chief Operating Officer of Premier Equipment Services Inc., a ten store John
Deere dealership business located in Ontario, Canada. From 2005 to 2012, Mr.
Fewer also acted as President and C.E.O. of AgraTurf Equipment Services Inc., a
14
five store John Deere dealership in southwestern Ontario that subsequently
merged with Elmira Farm Services Inc. to create Premier Equipment Services Inc.
ALAN HUGHES acts as our Chief Operating Officer and as a director. Mr. Hughes
has spent over 36 years with John Deere managing sales territories, as well as
being involved in product training, wholesale finance, and dealer development
improvement processes. Since 2009, he has acted as the principal of Clear
Processes, LLC, a consulting company that provides advice on business
consolidations, operational performance, and strategic business planning in the
agribusiness sector. Mr. Hughes graduated from Southern Illinois University with
a dual degree in agricultural economics and finance.
TERM OF OFFICE
Our directors are appointed for a one-year term to hold office until the next
annual general meeting of our shareholders or until removed from office in
accordance with our bylaws. Our officers are appointed by the board of directors
and will hold office until removed by the board.
EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The table below summarizes all compensation awarded to, earned by, or paid to
our executive officers by any person for all services rendered in all capacities
to us for the fiscal years ended May 31, 2013 and 2012, as well as the six-month
fiscal period ended November 30, 2013:
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Name and Incentive Deferred
Principal Stock Option Plan Compensation All Other
Position Year Salary($) Bonus($) Awards($) Awards($) Compensation($) Earnings($) Compensation($) Totals($)
-------- ---- --------- -------- --------- --------- --------------- ----------- --------------- ---------
Joseph Fewer 2014 None None None None None None None None
President
Alan Hughes 2014 None None None None None None None None
C.O.O.
Maria Fernandes 2013 None None None None None None None None
Former President 2012 None None None None None None None None
2011 None None None None None None None None
STOCK OPTION GRANTS
We have not granted any stock options to the executive officer since our
inception.
CONSULTING AGREEMENTS
We do not have any employment or consulting agreement with our current officers,
other that Joseph Fewer. We have executed a consulting agreement with Mr. Fewer
whereby he will provide his full-time management services to us in consideration
15
of payments of $7,000 per month. The consulting agreement will become effective
on the date that we raise a minimum of $500,000 for operations.
We do not pay Mr. Fewer or Mr. Hughes any amount for acting as directors.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
On September 9, 2013, we entered into an asset purchase agreements with Joseph
Fewer, our president and a director, whereby we acquired from him the
intellectual property comprising Agraburst to us, including the technology
described in in the United States provisional patent application number
61/897,584 - "Composition and Method for Enhancing Plant Growth", as well as all
related assets necessary for operating a plant growth enhancement product
manufacture and sales business as a going concern. In connection with the
acquisition, we issued to Mr. Fewer 12,500,000 post forward-split common shares
in our capital.
We have also executed a consulting agreement with Mr. Fewer whereby he will
provide his full-time management services to us in consideration of payments of
$7,000 per month. The consulting agreement will become effective on the date
that we raise a minimum of $500,000 for operations.
We have also entered into an easement agreement with Joseph Fewer and Denise
Fewer, Mr. Fewer's wife, whereby they have agreed to grant to us the right to
use a portion of their farm located in Alymer, Ontario for the purposes of using
it as a demonstration farm in order to evaluate and exhibit the effects of
Agraburst. In consideration of the easement, we have issued to the Fewers an
aggregate of 2,500,000 post-split shares of our common stock. The initial term
of the easement is three years.
Otherwise, none of the following parties has, since our date of incorporation,
had any material interest, direct or indirect, in any transaction with us or in
any presently proposed transaction that has or will materially affect us:
* Any of our directors or officers;
* Any person proposed as a nominee for election as a director;
* Any person who beneficially owns, directly or indirectly, shares
carrying more than 10% of the voting rights attached to our
outstanding shares of common stock;
* Any of our promoters; or
* Any relative or spouse of any of the foregoing persons who has the
same house as such person.
LEGAL PROCEEDS
There are no legal proceedings pending or threatened against us. Our address for
service of process in Nevada is 1802 N Carson Street, Suite 212, Carson City,
Nevada, 89701.
MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY
AND RELATED STOCKHOLDER MATTERS.
MARKET INFORMATION
Our shares of common stock are quoted for trading on the OTC Bulletin Board
under the symbol GROG. However, no trades of our shares of common stock occurred
through the facilities of the OTC Bulletin Board during the fiscal year ended
May 31, 2013.
DIVIDENDS
There are no restrictions in our articles of incorporation or bylaws that
prevent us from declaring dividends. The Nevada Revised Statutes, however, do
prohibit us from declaring dividends where, after giving effect to the
distribution of the dividend:
16
1. we would not be able to pay our debts as they become due in the usual
course of business; or
2. our total assets would be less than the sum of our total liabilities
plus the amount that would be needed to satisfy the rights of
shareholders who have preferential rights superior to those receiving
the distribution.
We have not declared any dividends, and we do not plan to declare any dividends
in the foreseeable future.
RECENT SALES OF UNREGISTERED SECURITIES
In the past three years, we have sold the following securities that were not
registered under the Securities Act, including new securities resulting from the
modification of outstanding securities:
On February 7, 2014, we issued 12,500,000 shares of our common stock to Joseph
Fewer (as to 11,500,000), and certain assignees, namely Helen Keenan (500,000
shares), Alan Hughes (250,000 shares), Ronald Evinou (250,000 shares), in
connection with our purchase of the technology described in in the United States
provisional patent application number 61/897,584 - "Composition and Method for
Enhancing Plant Growth", as well as all related assets necessary for operating
the Agraburst plant growth surfactant manufacture and sales business as a going
concern.
On February 7, 2014, we issued 2,500,000 shares of our common stock to Joseph
Fewer and Denise Fewer in connection with an easement agreement whereby we
acquire the right to use a portion of their farm located in Alymer, Ontario for
the purposes of using it as a demonstration farm in order to evaluate and
exhibit the effects of Agraburst.
On February 7, 2014, we issued 5,000,000 shares of our common stock to Stephen
Moseley in connection with our acquisition of certain equipment used in
conjunction with the production and marketing of Agraburst.
On January 6, 2014, we issued 300,000 shares of our common stock to Peter Born
pursuant to a private placement subscription agreement. Mr. Born paid $0.35 per
share.
On February 3, 2014, we issued 100,000 shares of our common stock to Richard
Williams and 30,000 shares to Judith Weiss pursuant to private placement
subscription agreements. They each paid $0.35 per share.
We issued the shares to Joseph Fewer, Denise Fewer, and Stephen Moseley pursuant
to Section 4(2) of the Securities Act of 1933. We were able to rely upon this
exemption since this issuance does not constitute a public offering of our
shares.
In connection with these issuances, the shareholders were provided with access
to all material aspects of the company, including the business, management,
offering details, risk factors and financial statements. They also represented
to us that they were acquiring the shares as principal for their own accounts
with investment intent. They also represented that they was sophisticated,
having prior investment experience and having adequate and reasonable
opportunity and access to any corporate information necessary to make an
informed decision. This issuance of securities was not accompanied by general
17
advertisement or general solicitation. The shares were issued with a Rule 144
restrictive legend.
In connection with the completion of the aforementioned agreements, we completed
a forward split our common stock such that every share of pre-split stock was
exchange for 25 post-split shares of common stock. All of the above-noted share
issuances were on a post forward split basis.
We issued the shares to Peter Born, Richard Williams, and Judith Weiss pursuant
to Regulation S of the Securities Act of 1933. These investors were not U.S.
persons (as that term is defined in Regulation S of the Securities Act of 1933,
as amended) and they purchased our shares in transactions outside of the United
States. The certificates representing the common shares each bear a restrictive
legend in accordance with Regulation S. In addition, we and the purchaser have
complied or will comply with the following requirements of Regulation S:
1. the offer or sale was made in an offshore transaction;
2. we did not make any directed selling efforts in the United States;
3. no offer or sale was made to a U.S. person or for the account or
benefit of a U.S. person;
4. the purchasers of the securities certified that they were not U.S.
persons and were not acquiring the securities for the account or
benefit of any U.S. person;
5. the purchasers of the securities agreed to resell such securities only
in accordance with the provisions of Regulation S, pursuant to
registration under the Act, or pursuant to an available exemption from
registration and agreed not to engage in hedging transactions with
regard to such securities unless in compliance with the Act; and
6. we are required to refuse to register any transfer of the securities
not made in accordance with the provisions of Regulation S pursuant to
registration under the Act, or pursuant to an available exemption from
registration.
DESCRIPTION OF SECURITIES
COMMON STOCK
Our authorized common stock consists of 200,000,000 shares, $0.001 par value, of
which 81,430,000 shares of common stock are currently issued and outstanding.
Holders of our common stock have no preemptive rights to purchase additional
shares of common stock or other subscription rights. The common stock carries no
conversion rights and is not subject to redemption or to any sinking fund
provisions. All shares of common stock are entitled to share equally in
dividends from sources legally available. Therefore, when, as and if declared by
the Board of Directors, and upon our liquidation or dissolution, whether
voluntary or involuntary, to share equally in our assets that are available for
distribution to stockholders.
The Board of Directors is authorized to issue additional shares of common stock
not to exceed the amount authorized by our Articles of Incorporation, on such
18
terms and conditions and for such consideration as the Board may deem
appropriate without further stockholder action.
VOTING RIGHTS
Each holder of common stock is entitled to one vote per share on all matters on
which such stockholders are entitled to vote. Since the shares of common stock
do not have cumulative voting rights, the holders of more than fifty percent of
the shares voting for the election of directors can elect all the directors if
they choose to do so and, in such event, the holders of the remaining shares
will not be able to elect any person to the Board of Directors.
DIVIDEND POLICY
Holders of our common stock are entitled to dividends if declared by the Board
of Directors out of funds legally available therefore. We do not anticipate the
declaration or payment of any dividends in the foreseeable future. We intend to
retain earnings, if any, to finance the development and expansion of our
business. Future dividend policy will be subject to the discretion of the Board
of Directors and will be contingent upon future earnings, if any, our financial
condition, capital requirements, general business conditions and other factors.
Therefore, there can be no assurance that any dividends of any kind will ever be
paid.
SHARE PURCHASE WARRANTS
We have not issued and do not have outstanding any warrants to purchase shares
of our common stock.
OPTIONS
We have not issued and do not have outstanding any options to purchase shares of
our common stock.
CONVERTIBLE SECURITIES
We have not issued and do not have outstanding any securities convertible into
shares of our common stock or any rights convertible or exchangeable into shares
of our common stock.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
Our officers and directors are indemnified as provided by the Nevada Revised
Statutes (the "NRS") and our bylaws.
Under the NRS, director immunity from liability to a company or its shareholders
for monetary liabilities applies automatically unless it is specifically limited
by a company's articles of incorporation that is not the case with our articles
of incorporation. Excepted from that immunity are:
(1) a willful failure to deal fairly with the company or its shareholders
in connection with a matter in which the director has a material
conflict of interest;
(2) a violation of criminal law (unless the director had reasonable cause
to believe that his or her conduct was lawful or no reasonable cause
to believe that his or her conduct was unlawful);
19
(3) a transaction from which the director derived an improper personal
profit; and
(4) willful misconduct.
Our bylaws provide that we will indemnify our directors and officers to the
fullest extent not prohibited by Nevada law; provided, however, that we may
modify the extent of such indemnification by individual contracts with our
directors and officers; and, provided, further, that we shall not be required to
indemnify any director or officer in connection with any proceeding (or part
thereof) initiated by such person unless:
(1) such indemnification is expressly required to be made by law;
(2) the proceeding was authorized by our Board of Directors;
(3) such indemnification is provided by us, in our sole discretion,
pursuant to the powers vested us under Nevada law; or
(4) such indemnification is required to be made pursuant to the bylaws.
Our bylaws provide that we will advance all expenses incurred to any person who
was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative
or investigative, by reason of the fact that he is or was our director or
officer, or is or was serving at our request as a director or executive officer
of another company, partnership, joint venture, trust or other enterprise, prior
to the final disposition of the proceeding, promptly following request. This
advanced of expenses is to be made upon receipt of an undertaking by or on
behalf of such person to repay said amounts should it be ultimately determined
that the person was not entitled to be indemnified under our bylaws or
otherwise.
Our bylaws also provide that no advance shall be made by us to any officer in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made: (a) by the
board of directors by a majority vote of a quorum consisting of directors who
were not parties to the proceeding; or (b) if such quorum is not obtainable, or,
even if obtainable, a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion, that the facts known to the
decision- making party at the time such determination is made demonstrate
clearly and convincingly that such person acted in bad faith or in a manner that
such person did not believe to be in or not opposed to our best interests.
FINANCIAL STATEMENTS
Our pro forma financial statements for the period ended November 30, 2013
showing what our financial position would have been if our acquisition of
Agraburst described in the "Description of Business" section had occurred at
November 30, 2013 are filed as an exhibit to this current report. Readers are
advised to review these pro forma financial statements in conjunction with our
interim report on Form 10-Q for the period ended November 30, 2013, as well as
our annual report on Form 10-K for the fiscal year ended May 31, 2013.
20
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
We have had no changes in or disagreements with our accountants.
ITEM 3.02. UNREGISTERED SALES OF EQUITY SECURITIES
On February 7, 2014, we issued 12,500,000 shares of our common stock to Joseph
Fewer (as to 11,500,000), and certain assignees, namely Helen Keenan (500,000
shares), Alan Hughes (250,000 shares), Ronald Evinou (250,000 shares),in
connection with our purchase of the technology described in in the United States
provisional patent application number 61/897,584 - "Composition and Method for
Enhancing Plant Growth", as well as all related assets necessary for operating
the Agraburst plant growth surfactant manufacture and sales business as a going
concern.
On February 7, 2014, we issued 2,500,000 shares of our common stock to Joseph
Fewer and Denise Fewer in connection with an easement agreement whereby we
acquire the right to use a portion of their farm located in Alymer, Ontario for
the purposes of using it as a demonstration farm in order to evaluate and
exhibit the effects of Agraburst.
On February 7, 2014, we issued 5,000,000 shares of our common stock to Stephen
Moseley in connection with our acquisition of certain equipment used in
conjunction with the production, marketing of Agraburst.
On January 6, 2014, we issued 300,000 shares of our common stock to Peter Born
pursuant to a private placement subscription agreement. Mr. Born paid $0.35 per
share.
On February 3, 2014, we issued 100,000 shares of our common stock to Richard
Williams and 30,000 shares to Judith Weiss pursuant to private placement
subscription agreements. They each paid $0.35 per share.
We issued the shares to Joseph Fewer, Denise Fewer, and Stephen Moseley pursuant
to Section 4(2) of the Securities Act of 1933. We were able to rely upon this
exemption since this issuance does not constitute a public offering of our
shares.
In connection with these issuances, the shareholders were provided with access
to all material aspects of the company, including the business, management,
offering details, risk factors and financial statements. They also represented
to us that they were acquiring the shares as principal for their own accounts
with investment intent. They also represented that they was sophisticated,
having prior investment experience and having adequate and reasonable
opportunity and access to any corporate information necessary to make an
informed decision. This issuance of securities was not accompanied by general
advertisement or general solicitation. The shares were issued with a Rule 144
restrictive legend.
We issued the shares to Peter Born, Richard Williams, and Judith Weiss pursuant
to Regulation S of the Securities Act of 1933. These investors were not U.S.
persons (as that term is defined in Regulation S of the Securities Act of 1933,
as amended) and they purchased our shares in transactions outside of the United
States. The certificates representing the common shares each bear a restrictive
legend in accordance with Regulation S. In addition, we and the purchaser have
complied or will comply with the following requirements of Regulation S:
21
1. the offer or sale was made in an offshore transaction;
2. we did not make any directed selling efforts in the United States;
3. no offer or sale was made to a U.S. person or for the account or
benefit of a U.S. person;
4. the purchasers of the securities certified that they were not U.S.
persons and were not acquiring the securities for the account or
benefit of any U.S. person;
5. the purchasers of the securities agreed to resell such securities only
in accordance with the provisions of Regulation S, pursuant to
registration under the Act, or pursuant to an available exemption from
registration and agreed not to engage in hedging transactions with
regard to such securities unless in compliance with the Act; and
6. we are required to refuse to register any transfer of the securities
not made in accordance with the provisions of Regulation S pursuant to
registration under the Act, or pursuant to an available exemption from
registration.
ITEM 5.01. CHANGES IN CONTROL OF REGISTRANT
On February 7, 2014 we completed asset purchase agreements whereby we issued
12,500,000 restricted shares of our common stock to Joseph Fewer, and 5,000,000
restricted shares of our common stock to Stephen Moseley. In addition, we issued
2,500,000 restricted shares of common stock to Joseph Fewer and Denise Fewer
pursuant to an easement agreement.
Concurrently, Maria Fernandes, our former director, agreed to sell 10,000,000
shares of restricted common stock to Joseph Fewer for $10,000. She also agreed
to return to treasury a total of 74,000,000 restricted shares in our common
stock, thereby relinquishing control. As a result of these transactions, Joseph
Fewer is the beneficial owner of 31% of our issued common stock and Joseph Fewer
and Alan Hughes now control our Board of Directors.
ITEM 5.02. DEPARTURE OF DIRECTORS OR CERTAIN OFFICERS; ELECTION OF DIRECTORS;
APPOINTMENT OF CERTAIN OFFICERS; COMPENSATORY ARRANGEMENTS OF
CERTAIN OFFICERS
On February 7, 2014, we appointed Joseph Fewer and Alan Hughes as our directors
in place of Maria Fernandes, who tendered her resignation as of that date.
Our officers now consist of Joseph Fewer (President, C.E.O., Secretary, and
Treasurer) and Alan Hughes (Chief Operating Officer).
ITEM 5.06. CHANGE IN SHELL COMPANY STATUS
As a result of the closing of between us and Joseph Fewer, management believes
that we have ceased to be a shell company as defined in Rule 12b-2 of the
Securities Exchange Act. Details of the material terms of the asset purchase
agreement that led to our change in shell company status are contained in Item
2.01 in this current report.
ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS
Exhibit No. Description
----------- -----------
10.1 Asset Purchase Agreement
10.2 Asset Purchase Agreement
10.3 Easement Agreement
99.1 Pro Forma Financial Statements
22
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GroGenesis, Inc.
Date: February 7, 2014 By: /s/ Joseph Fewer
----------------------------------
Joseph Fewer, President
2