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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURUTIES EXCHANGE ACT OF 1934
For the fiscal year ended November 30, 2014
Commission file number 000-53707
TRIDENT BRANDS INCORPORATED
(Exact Name of Registrant as Specified in Its Charter)
Nevada 26-1367322
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
200 South Executive Drive, Suite 101
Brookfield, WI 53005
(Address of Principal Executive Offices & Zip Code)
(262) 789-6689
(Telephone Number)
Resident Agents of Nevada
711 S. Carson Street, Suite 4
Carson City, NV 89701
(Name and Address of Agent for Service)
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to section 12(g) of the Act:
Common Stock, $.001 par value
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 Section 15(d) of the 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 Securities Exchange Act of 1934 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 (ss.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 [X] 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):
Non-accelerated filer [ ] Accelerated filer [ ]
Large accelerated filer [ ] Smaller reporting company [X]
(Do not check if a smaller reporting company)
Indicate by check mark whether the registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act). Yes [ ] No [X]
As of March 2, 2015, the registrant had 28,000,000 shares of common stock issued
and outstanding. No market value has been computed based upon the fact that no
active trading market had been established as of March 2, 2015.
TRIDENT BRANDS INCORPORATED
TABLE OF CONTENTS
Page No.
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Part I
Item 1. Business 3
Item 1A. Risk Factors 8
Item 1B. Unresolved Staff Comments 17
Item 2. Properties 17
Item 3. Legal Proceedings 17
Item 4. Mining Safety Disclosures 17
Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters and Issuer Purchases of Equity Securities 18
Item 6. Selected Financial Data 20
Item 7. Management's Discussion and Analysis of Financial Condition
and Results of Operations 20
Item 7A. Quantitative and Qualitative Disclosures About Market Risk 24
Item 8. Financial Statements 25
Item 9. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure 35
Item 9A(T). Controls and Procedures 35
Item 9B. Other Information 36
Part III
Item 10. Directors, Executive Officers and Corporate Governance 37
Item 11. Executive Compensation 42
Item 12. Security Ownership of Certain Beneficial Owners and Management
and Related Stockholder Matters 44
Item 13. Certain Relationships and Related Transactions, and
Director Independence 45
Item 14. Principal Accountant Fees and Services 47
Part IV
Item 15. Exhibits 47
Signatures 48
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PART I
ITEM 1. BUSINESS
GENERAL INFORMATION
You should read the following summary together with the more detailed business
information and the financial statements and related notes that appear elsewhere
in this report. In this report, unless the context otherwise denotes, references
to "we", "us", "our", "Trident" and "Trident Brands" are to Trident Brands
Incorporated.
Trident Brands Incorporated was incorporated in the State of Nevada on November
5, 2007 as Sandfield Ventures Corp. to engage in the acquisition, exploration
and development of natural resource properties. Our administrative office is
located at 200 South Executive Drive, Suite 101, Brookfield, Wisconsin, 53005.
Our fiscal year end is November 30.
The Company is in the development stage and has transitioned out of their shell
status with the Super-8 filing at the end of August. Its activities to date have
been limited to capital formation, organization, development of its business
plan and development of their products for sale. Everlast Lean is now available
for sale and next year should see a ramp-up of sales revenue. Our independent
auditor has issued an audit opinion which includes a statement expressing
substantial doubt as to our ability to continue as a going concern.
We have a total of 75,000,000 authorized common shares with a par value of
$0.001 per share and 28,000,000 common shares issued and outstanding as of
November 30, 2014.
We completed a Registration Statement on Form S-1 under the Securities Act of
1933 with the U.S. Securities and Exchange Commission registering 4,000,000
shares at a price of $0.015 per share. The offering was completed for total
proceeds to the company of $60,000.
Sandfield Ventures Corp. was incorporated in the state of Nevada in 2007. Its
primary business was resource exploration in that state. Management of our
company decided to take on a new direction for the business. The new strategy is
to focus on consumer goods - primarily branded nutrition products and
ingredients. On June 12, 2013 the Board of Directors approved an agreement and
plan of merger with a wholly-owned subsidiary called Trident Brands
Incorporated. At that point it affected the name change from Sandfield Ventures
Corp. to Trident Brands Incorporated.
On July 9, 2013, our company's board of directors approved a resolution to
effect a 4 for 1 forward split. Upon effect of the forward split, our authorized
capital increased from 75,000,000 to 300,000,000 shares of common stock and
correspondingly, our issued and outstanding shares of common stock will be
increased from 7,000,000 to 28,000,000 shares of common stock, all with a par
value of $0.001
On August 1, 2013, our directors approved the adoption of a 2013 Stock Option
Plan which permits us to issue up to 4,200,000 shares of its common stock to
directors, officers, employees and consultants of our company upon the exercise
of stock options granted under the 2013 Stock Option Plan.
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On December 23, 2013, we took on an agreement with Everlast World's Boxing
Headquarters Corp., International Brand Management & Licensing. Through this
agreement, we received a 15 year license to market and sell products in the
nutritional foods and supplements category under the Everlast(R) brand.
Trident's licensing agreement enables it to introduce a portfolio of nutritional
products in categories such as supplements and functional foods using this brand
mark.
Effective March 21, 2014, we appointed the following individuals as officers and
directors:
* Donald MacPhee was appointed to our Board of Directors, Chairman of
the Audit Committee and as a member of the Corporate Governance
Committee.
* Scott Chapman was appointed to our Board of Directors, Chairman of the
Corporate Governance Committee, member of the Audit Committee and
member of the Compensation Committee.
* Michael Browne was appointed as our President, Chief Financial
Officer, Treasurer and Secretary.
* Peter Salvo was appointed as our Controller.
Mark Holcombe resigned as Chief Executive Officer, President, Secretary and
Treasurer, and has been appointed as Chairman of the Board of Directors and
Chairman of the Compensation Committee. Mr. Holcombe's resignation as Chief
Executive Officer, President, Secretary and Treasurer was not the result of any
disagreement with our company regarding its operations, policies, practices or
otherwise.
On May 5, 2014, we entered into a Product Development Agreement with Continental
Ingredients Canada Inc. with respect to our plan to commercialize nutritional
supplements and functional food and beverage products for sales in North
America.
Under the Agreement, we have engaged Continental Ingredients on an exclusive
basis to provide services for the development, manufacturing and supply of our
products for a period of five years commencing on May 5, 2014 and ending on May
5, 2019, such term to renew automatically for a further 12 months unless either
party delivers written termination notice six months prior to the expiration of
the initial term or renewal period.
On May 5, 2014, we appointed Robert Campbell and Karen Arseneault as special
advisors.
Also on May 5, 2014, we granted an aggregate of 2,875,000 stock options to
directors, officers, employees and consultants of our company pursuant to our
2013 Stock Plan. The stock options are exercisable for five years from the date
of grant at exercise prices of $0.75 per share for shares vesting 12 months from
the date of issuance, $1.00 per share for shares vesting 24 months from the date
of issuance and $1.50 for shares vesting 36 months from the date of issuance. Of
the 2,875,000 stock options granted, we granted:
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1. 1,125,000 stock options to our President, Chief Financial Officer,
Treasurer and Secretary, Michael Browne;
2. 300,000 stock options to each of our directors, Donald MacPhee, Scott
Chapman, Mark Holcombe;
3. 150,000 stock options to its controller, Peter Salvo; and
4. 350,000 stock options to each of our special advisors, Robert Campbell
and Karen Arseneault.
Description of Business
Trident Brands brings together over 50 years of seasoned expertise in branded
consumer products and corporate finance. The principals of Trident brands have
experience in developing and commercializing consumer products, in global
companies and specialty markets. Our purpose is to apply these capabilities in
starting new product lines with specific competitive advantage. All of our
product development will be built on the success formula:
* Extending established brands with existing equity
* Delivering consumer benefit with unique technology or intellectual
properties
* Targeting dynamic growth segments
Coupled with strategic capital investment, our focus is controlled investments
in companies within the targeted segment/sectors. Our goal is to provide our
shareholders with outstanding ROI through a portfolio of branded platforms.
Trident Brands is targeting the follow growth opportunities:
* Brand Licenses or Consolidated Licenses
* Consumer hard and soft goods
* Functional Food and Beverage
* Life Science technology that have applications in consumer products
* Natural and Organic food and beverage
* Intellectual Property and/or licenses in recognized brand platforms
INVESTMENT STRATEGY
Trident will seek to acquire majority and/or control positions through common
and preferred equity, senior secured, unsecured, and convertible debt in
organizations who meet our investment hurdles. Through our management and
directors vast expertise in both the consumer branded segment and investment
experience, we seek to provide our shareholders with near term value and
liquidity. Through strategic investment and controlled organic growth, Trident
Brands will seek to provide their investments with solid short and long term
returns and yields.
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The Company strategic objective is:
* Make strategic controlled investments in high growth companies
* Merge brands/business lines into larger multi-national Companies
* Build and grow strategic brands organically
* Mitigate risk by creating a diverse portfolio of companies in the
growth sectors listed above
COMPANIES & STRATEGIC PARTNERSHIPS
EVERLAST NUTRITION
Trident Brands finalized documentation to acquire Sports Nutrition Products Inc.
the company has obtained a 15 year exclusive North American license for
Everlast's functional and nutritional product brand segment from IBML (a
worldwide leader in Brand licensing). This transaction closed in December 2013.
PRODUCT PRODUCTION
Trident Brands has identified ingredient supply and contract packaging vendors
for the manufacture of the products currently under the Everlast brand. These
vendors would be responsible for the private label production of our products.
COMPETITION
Eventually, through acquisitions, Trident Brands plans to compete in multiple
branded market segments. Through its wholly owned subsidiary Everlast Sports
Nutrition, the first market segment Trident will be competing in is the
nutritional product market. This market is highly competitive with many
companies fighting for market share. The nutritional product market is one of
the fastest growing markets in the world producing close to 32 billion dollars
in revenue in 2012, and is projected to double, producing revenues exceeding 60
billion dollars by 2021 according to the Nutritional Business Journal. With the
combination of high quality, scientifically designed products and the brand
equity in the Everlast name, we are poised to take market share in the rapidly
growing nutritional product market.
BANKRUPTCY OR SIMILAR PROCEEDINGS
There has been no bankruptcy, receivership or similar proceeding.
REORGANIZATIONS, PURCHASE OR SALE OF ASSETS
There have been no material reclassifications, mergers, consolidations, or
purchase or sale of a significant amount of assets not in the ordinary course of
business.
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COMPLIANCE WITH GOVERNMENT REGULATION
Trident Brands is compliant with all government regulations.
PATENTS, TRADEMARKS, FRANCHISES, CONCESSIONS, ROYALTY AGREEMENTS, OR LABOR
CONTRACTS
We have no current plans for any registrations such as patents, trademarks,
copyrights, franchises, concessions, royalty agreements or labor contracts. We
will assess the need for any copyright, trademark or patent applications on an
ongoing basis.
NEED FOR GOVERNMENT APPROVAL FOR ITS PRODUCTS OR SERVICES
Trident Brands through its contracted third party manufactures, will have all
necessary approvals for its products and services.
RESEARCH AND DEVELOPMENT COSTS DURING THE LAST TWO YEARS
We have not expended funds for research and development costs since inception.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
Our officers and directors do not have written employment contracts with us. We
presently do not have pension, health, annuity, insurance, profit sharing or
similar benefit plans; however, we may adopt plans in the future. Except for our
stock option plan, which no options have been issued, there are presently no
personal benefits available to our officers and directors. Our officers and
directors will handle our administrative duties.
Our only employee is our President, Chief Financial Officer, Treasurer and
Secretary, Michael Browne. Mr. Browne currently devotes 100% of his time to the
company. Mr. Browne entered into an employment contract with us beginning on
March 18, 2014 for a term of one year. Pursuant to this contract, Mr. Browne is
to act as our President. In exchange for his services to our company as
President, we will compensate Mr. Browne with a base annual salary of $5,000
prior to the start of consumer sales, and $10,000 monthly thereafter.
Additionally, Mr. Browne will receive the following equity options granted
pursuant to our Stock Option Plan:
1. 375,000 options at $0.75 vesting at 12 months
2. 375,000 options at $1.00 vesting at 24 months; and
3. 375,000 options at $1.50 vesting at 36 months.
REPORTS TO SECURITIES HOLDERS
We provide an annual report that includes audited financial information to our
shareholders. We will make our financial information equally available to any
interested parties or investors through compliance with the disclosure rules of
Regulation S-K for a small business issuer under the Securities Exchange Act of
1934. We are subject to disclosure filing requirements, including filing Form
10-K annually and Form 10-Q quarterly. In addition, we will file Form 8-K and
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other proxy and information statements from time to time as required. We do not
intend to voluntarily file the above reports in the event that our obligation to
file such reports is suspended under the Exchange Act. The public may read and
copy any materials that we file with the Securities and Exchange Commission,
("SEC"), at the SEC's Public Reference Room at 100 F Street NE, Washington, DC
20549. The public may obtain information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an
Internet site (http://www.sec.gov) that contains reports, proxy and information
statements, and other information regarding issuers that file electronically
with the SEC.
ITEM 1A. RISK FACTORS
RISKS RELATED TO OUR BUSINESS
You should carefully consider the risks described below together with all of the
other information included in this report before making an investment decision
with regard to our securities. The statements contained in or incorporated into
this current report on Form 10-K that are not historic facts are forward-looking
statements that are subject to risks and uncertainties that could cause actual
results to differ materially from those set forth in or implied by
forward-looking statements. If any of the following risks actually occur, our
business, financial condition or results of operations could be harmed. In that
case, the trading price of our common stock could decline, and you may lose all
or part of your investment.
WE HAVE A LIMITED OPERATING HISTORY WITH SIGNIFICANT LOSSES AND EXPECT LOSSES TO
CONTINUE FOR THE FORESEEABLE FUTURE.
We have yet to establish any history of profitable operations and, as at
November 30, 2014, have incurred a net loss of $644,937 since our inception on
November 5, 2007. Our business operations began in 2007 and have resulted in net
losses in each year. We have generated only nominal revenues since our inception
and do not anticipate that we will generate revenues which will be sufficient to
sustain our operations in the near future. Our profitability will require the
successful commercialization and sales of our planned products. We may not be
able to successfully achieve any of these requirements or ever become
profitable.
THERE IS DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO RECURRING
LOSSES FROM OPERATIONS, ACCUMULATED DEFICIT AND INSUFFICIENT CASH RESOURCES TO
MEET OUR BUSINESS OBJECTIVES, ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO
CONTINUE OPERATIONS.
Our independent auditors have added an explanatory paragraph to their audit
opinion issued in connection with the financial statements for the years ended
November 30, 2014 and 2013 with respect to their doubt about our ability to
continue as a going concern. As discussed in Note 3 to our financial statements
for the years ended November 30, 2014 and 2013, we have generated operating
losses since inception, and our cash resources are insufficient to meet our
planned business objectives, which together raises doubt about our ability to
continue as a going concern.
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WE COULD FACE INTENSE COMPETITION, WHICH COULD RESULT IN LOWER REVENUES AND
HIGHER EXPENDITURES AND COULD ADVERSELY AFFECT OUR RESULTS OF OPERATIONS.
Unless we keep pace with changing market demands, we could lose existing
customers and fail to win new and retain any future customers. In order to
compete effectively in the food and nutrition industry, we must continually
design, develop implement and market new and/or enhanced products and
strategies. Our future success will depend, in part, upon our ability to address
the changing and sophisticated needs of the marketplace. Our strategy of
expanding our food and nutrition business could adversely affect our business
operations and financial condition.
Further, we expect to derive over a significant amount of revenue from our food
and nutrition products, which are often non-standard, involve competitive
bidding, and may produce volatility in earnings and revenue.
Our plan to pursue sales of our product in international markets may be limited
by risks related to conditions in such markets.
WE ARE GOVERNED BY ONLY THREE PERSONS SERVING AS DIRECTORS AND OFFICERS WHICH
MAY LEAD TO FAULTY CORPORATE GOVERNANCE.
We have not implemented various corporate governance measures nor have we
adopted any independent committees as we presently do not have any independent
directors.
WE MUST ATTRACT AND MAINTAIN KEY PERSONNEL OR OUR BUSINESS WILL FAIL.
Success depends on the acquisition of key personnel. We will have to compete
with other companies both within and outside the food and nutrition industry to
recruit and retain competent employees. If we cannot maintain qualified
employees to meet the needs of our anticipated growth, this could have a
material adverse effect on our business and financial condition.
WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL
NEEDS DUE TO CHANGES IN GENERAL ECONOMIC CONDITIONS.
We anticipate requiring significant capital to fulfill our contractual
obligations (as noted in our audited financial statements), continue development
of our planned products to meet market evolution, and execute our business plan,
generally. We may use capital more rapidly than currently anticipated and incur
higher operating expenses than currently expected, and we may be required to
depend on external financing to satisfy our operating and capital needs. We may
need new or additional financing in the future to conduct our operations or
expand our business. Any sustained weakness in the general economic conditions
and/or financial markets in the United States or globally could adversely affect
our ability to raise capital on favorable terms or at all. From time to time we
have relied, and may also rely in the future, on access to financial markets as
a source of liquidity to satisfy working capital requirements and for general
corporate purposes. We may be unable to secure debt or equity financing on terms
acceptable to us, or at all, at the time when we need such funding. If we do
raise funds by issuing additional equity or convertible debt securities, the
ownership percentages of existing stockholders would be reduced, and the
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securities that we issue may have rights, preferences or privileges senior to
those of the holders of our common stock or may be issued at a discount to the
market price of our common stock which would result in dilution to our existing
stockholders. If we raise additional funds by issuing debt, we may be subject to
debt covenants, which could place limitations on our operations including our
ability to declare and pay dividends. Our inability to raise additional funds on
a timely basis would make it difficult for us to achieve our business objectives
and would have a negative impact on our business, financial condition and
results of operations.
OUR BUSINESS AND OPERATING RESULTS COULD BE HARMED IF WE FAIL TO MANAGE OUR
GROWTH OR CHANGE.
Our business may experience periods of rapid change and/or growth that could
place significant demands on our personnel and financial resources. To manage
possible growth and change, we must continue to try to locate skilled
professionals in the food and nutrition industry and adequate funds in a timely
manner.
WE HAVE A LIMITED OPERATING HISTORY AND IF WE ARE NOT SUCCESSFUL IN CONTINUING
TO GROW OUR BUSINESS, THEN WE MAY HAVE TO SCALE BACK OR EVEN CEASE OUR ONGOING
BUSINESS OPERATIONS.
We have achieved no revenues and have limited assets. There can be no assurance
that we will ever operate profitably. We have a limited operating history. Our
success is significantly dependent on the successful marketing and sales of our
food and nutritional products, which cannot be guaranteed. Our operations will
be subject to all the risks inherent in the uncertainties arising from the
absence of a significant operating history. We may be unable to complete the
marketing and implementation of our food and nutritional products and operate on
a profitable basis. Potential investors should be aware of the difficulties
normally encountered by enterprises in the development stage. If our business
plan is not successful, and we are not able to operate profitably, investors may
lose some or all of their investment in our company.
IF OUR INTELLECTUAL PROPERTY IS NOT ADEQUATELY PROTECTED, THEN WE MAY NOT BE
ABLE TO COMPETE EFFECTIVELY AND WE MAY NOT BE PROFITABLE.
Our commercial success may depend, in part, on obtaining and maintaining patent
protection, trade secret protection and regulatory protection of our
technologies and product candidates as well as successfully defending
third-party challenges to such technologies and candidates. We will be able to
protect our technologies and product candidates from use by third parties only
to the extent that valid and enforceable patents, trade secrets or regulatory
protection cover them and we have exclusive rights to use them. The ability of
our licensors, collaborators and suppliers to maintain their patent rights
against third-party challenges to their validity, scope or enforceability will
also play an important role in determining our future.
The patent positions of technology related companies can be highly uncertain and
involve complex legal and factual questions that include unresolved principles
and issues. No consistent policy regarding the breadth of claims allowed
regarding such companies' patents has emerged to date in the United States, and
the patent situation outside the United States is even more uncertain. Changes
in either the patent laws or in interpretations of patent laws in the United
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States or other countries may diminish the value of our intellectual property.
Accordingly, we cannot predict with any certainty the range of claims that may
be allowed or enforced concerning our patents.
We may also rely on trade secrets to protect our technologies, especially where
we do not believe patent protection is appropriate or obtainable. However, trade
secrets are difficult to protect. While we seek to protect confidential
information, in part, through confidentiality agreements with our consultants
and scientific and other advisors, they may unintentionally or willfully
disclose our information to competitors. Enforcing a claim against a third party
related to the illegal acquisition and use of trade secrets can be expensive and
time consuming, and the outcome is often unpredictable. If we are not able to
maintain patent or trade secret protection on our technologies and product
candidates, then we may not be able to exclude competitors from developing or
marketing competing products, and we may not be able to operate profitability.
IF WE ARE THE SUBJECT OF AN INTELLECTUAL PROPERTY INFRINGEMENT CLAIM, THE COST
OF PARTICIPATING IN ANY LITIGATION COULD CAUSE US TO GO OUT OF BUSINESS.
There has been, and we believe that there will continue to be, significant
litigation and demands for licenses in our industry regarding patent and other
intellectual property rights. Although we anticipate having a valid defense to
any allegation that our current products, production methods and other
activities infringe the valid and enforceable intellectual property rights of
any third parties, we cannot be certain that a third party will not challenge
our position in the future. Other parties may own patent rights that we might
infringe with our products or other activities, and our competitors or other
patent holders may assert that our products and the methods we employ are
covered by their patents. These parties could bring claims against us that would
cause us to incur substantial litigation expenses and, if successful, may
require us to pay substantial damages. Some of our potential competitors may be
better able to sustain the costs of complex patent litigation, and depending on
the circumstances, we could be forced to stop or delay our research,
development, manufacturing or sales activities. Any of these costs could cause
us to go out of business.
WE COULD LOSE OUR COMPETITIVE ADVANTAGES IF WE ARE NOT ABLE TO PROTECT ANY OUR
FOOD AND NUTRITIONAL PRODUCTS AND INTELLECTUAL PROPERTY RIGHTS AGAINST
INFRINGEMENT, AND ANY RELATED LITIGATION COULD BE TIME-CONSUMING AND COSTLY.
Our success and ability to compete depends to a significant degree on our
license and the ability to use our food and nutritional products. If any of our
competitor's copies or otherwise gains access to any of our competitive
advantages or develops similar products independently, we would not be able to
compete as effectively.
We also consider our assigned trademarks invaluable to our ability to continue
to develop and maintain the goodwill and recognition associated with our brand.
These and any other measures that we may take to protect our intellectual
property rights, which presently are based upon a combination of copyright,
trade secret and trademark laws, may not be adequate to prevent their
unauthorized use.
Further, the laws of foreign countries may provide inadequate protection of such
intellectual property rights. We may need to bring legal claims to enforce or
protect such intellectual property rights. Any litigation, whether successful or
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unsuccessful, could result in substantial costs and diversions of resources. In
addition, notwithstanding any rights we have secured in our intellectual
property, other persons may bring claims against us that we have infringed on
their intellectual property rights, including claims based upon the content we
license from third parties or claims that our intellectual property right
interests are not valid. Any claims against us, with or without merit, could be
time consuming and costly to defend or litigate, divert our attention and
resources, result in the loss of goodwill associated with our service marks or
require us to make changes to our website or other of our technologies.
IF WE FAIL TO EFFECTIVELY MANAGE OUR GROWTH OUR FUTURE BUSINESS RESULTS COULD BE
HARMED AND OUR MANAGERIAL AND OPERATIONAL RESOURCES MAY BE STRAINED.
As we proceed with the commercialization of our technology, we expect to
experience significant and rapid growth in the scope and complexity of our
business. We will need to add staff to market our services, manage operations,
handle sales and marketing efforts and perform finance and accounting functions.
We will be required to hire a broad range of additional personnel in order to
successfully advance our operations. This growth is likely to place a strain on
our management and operational resources. The failure to develop and implement
effective systems, or to hire and retain sufficient personnel for the
performance of all of the functions necessary to effectively service and manage
our potential business, or the failure to manage growth effectively, could have
a materially adverse effect on our business and financial condition.
OUR SERVICES MAY BECOME OBSOLETE AND UNMARKETABLE IF WE ARE UNABLE TO RESPOND
ADEQUATELY TO RAPIDLY CHANGING TECHNOLOGY AND CUSTOMER DEMANDS.
Our industry is characterized by rapid changes market demands. As a result, our
products may quickly become obsolete and unmarketable. Our future success will
depend on our ability to adapt to and anticipate market demands, develop new
products and enhance our current products on a timely and cost-effective basis.
Further, our products must remain competitive with those of other companies with
substantially greater resources. We may experience technical or other
difficulties that could delay or prevent the development, introduction or
marketing of new products or enhanced versions of existing products. Also, we
may not be able to adapt new or enhanced services to emerging industry or
governmental standards.
OUR FAILURE TO APPROPRIATELY RESPOND TO CHANGING CONSUMER PREFERENCES AND DEMAND
FOR NEW PRODUCTS OR PRODUCT ENHANCEMENTS COULD SIGNIFICANTLY HARM PRODUCT SALES
AND HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.
Our business is subject to changing consumer trends and preferences, especially
with respect to weight management products. Our success depends on our ability
to anticipate and respond to these changes, and we may not respond in a timely
or commercially appropriate manner to such changes. The nutritional supplement
industry is characterized by rapid and frequent changes in demand new product
introductions and enhancements. Our failure to predict these trends could
negatively impact consumer opinion of our products.
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IF WE DO NOT INTRODUCE NEW PRODUCTS OR MAKE ENHANCEMENTS TO ADEQUATELY MEET THE
CHANGING NEEDS OF OUR CUSTOMERS, SOME OF OUR PRODUCTS COULD FAIL IN THE
MARKETPLACE, WHICH COULD NEGATIVELY IMPACT OUR REVENUES, FINANCIAL CONDITION AND
OPERATING RESULTS.
The business of marketing weight management and nutrition products is highly
competitive and sensitive to the introduction of new products or weight
management plans, including various prescription drugs, which may rapidly
capture a significant share of the market. These market segments include
numerous manufacturers, distributors, marketers, retailers and physicians that
actively compete for the business of consumers.
For example, if our competitors develop other diet or weight management
treatments that prove to be more effective than our products, demand for our
products could be reduced. Accordingly, we may not be able to compete
effectively in our markets and competition may intensify.
In addition, because the industry in which we operate is not particularly
capital intensive or otherwise subject to high barriers to entry, it is
relatively easy for new competitors to emerge who will compete with us.
WE ARE AFFECTED BY LAWS AND GOVERNMENTAL REGULATIONS WITH POTENTIAL PENALTIES OR
CLAIMS, WHICH COULD HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.
The formulation, manufacturing, packaging, labeling, distribution, advertising,
licensing, sale and storage of our products are affected by laws and
governmental regulations.
New regulations or changes in the interpretations of existing regulations may
result in significant compliance costs or discontinuation of product sales and
may negatively impact the marketing of our products, resulting in loss of sales
revenues. We are subject to FDA rules for current good manufacturing practices,
or cGMPs, for the manufacture, packing, labeling and holding of dietary
supplements distributed in the United States. Trident has retained supply
partners that implement a comprehensive quality assurance program designed to
If contract manufacturers fail to comply with the cGMPs, this could negatively
impact Trident's reputation and ability to sell its products even though Trident
is not directly liable under the cGMPs for such compliance.
SINCE WE RELY ON INDEPENDENT THIRD PARTIES FOR THE MANUFACTURE AND SUPPLY OF
CERTAIN OF OUR PRODUCTS, IF THESE THIRD PARTIES FAIL TO RELIABLY SUPPLY PRODUCTS
TO US AT REQUIRED LEVELS OF QUALITY AND WHICH ARE MANUFACTURED IN COMPLIANCE
WITH APPLICABLE LAWS, THEN OUR FINANCIAL CONDITION AND OPERATING RESULTS WOULD
BE HARMED.
We cannot assure you that our outside contract manufacturers will continuously,
reliably supply products to us at the levels of quality, or the quantities, we
require, and in compliance with applicable laws, including under the FDA's cGMP
regulations. Additionally, while we are not presently aware of any current
liquidity issues with our suppliers, we cannot assure you that they will not
experience financial hardship or capacity constraints in future that could
interrupt supply.
13
WE MAY INCUR MATERIAL PRODUCT LIABILITY CLAIMS, WHICH COULD INCREASE OUR COSTS
AND HARM OUR FINANCIAL CONDITION AND OPERATING RESULTS.
Our products will consist of vitamins, minerals and other ingredients that are
classified as foods or dietary supplements and are not subject to pre-market
regulatory approval in the United States. Our products could contain
contaminated substances, and some of our products contain some ingredients that
do not have long histories of human consumption. We rely upon published and
unpublished safety information including clinical studies on ingredients used in
our products. Previously unknown adverse reactions resulting from human
consumption of these ingredients could occur. As a marketer of dietary and
nutritional supplements and other products that are ingested by consumers or
applied to their bodies, we may be subjected to various product liability
claims, including that the products contain contaminants, the products include
inadequate instructions as to their uses, or the products include inadequate
warnings concerning side effects and interactions with other substances. It is
possible that widespread product liability claims could increase our costs, and
adversely affect our revenues and operating income. Moreover, liability claims
arising from a serious adverse event may increase our costs through higher
insurance premiums and deductibles, and may make it more difficult to secure
adequate insurance coverage in the future.
CREDIT RISK
On May 1, 2014, the Company obtained a short term loan of $200,000 from Rene
Arseneault. The loan bears interest at the rate of 8.0% per annum, payable on
maturity, calculated on the principle amount of the loan outstanding. Unless
paid earlier, the loan and accrued and unpaid interest shall be payable in full
on April 30, 2015. On July 21, 2014, the Company obtained another short term
loan of $100,000 from 1169822 Ontario Limited. The loan bears interest at the
rate of 8.0% per annum, payable on maturity, calculated on the principle amount
of the loan outstanding. Unless paid earlier, the loan and accrued and unpaid
interest shall be payable in full on June 21, 2015. As of November 30, 2014,
both short term loans are still outstanding. The accrued interest expense is
$12,215 ($9,333 and $2,882 respectively).
Our company had $352 in cash at the end of November 30, 2014. Unless we are able
to generate cash from the sale of product or obtains long term financing, we may
not be able to fulfill its obligation to pay off the loan.
RISKS RELATING TO OWNERSHIP OF OUR SECURITIES
OUR STOCK PRICE MAY BE VOLATILE, WHICH MAY RESULT IN LOSSES TO OUR SHAREHOLDERS.
The stock markets have experienced significant price and trading volume
fluctuations, and the market prices of companies listed on the OTCQB quotation
system in which shares of our common stock are listed, have been volatile in the
past and have experienced sharp share price and trading volume changes. The
trading price of our common stock is likely to be volatile and could fluctuate
widely in response to many factors, including the following, some of which are
beyond our control:
14
* variations in our operating results;
* changes in expectations of our future financial performance, including
financial estimates by securities analysts and investors;
* changes in operating and stock price performance of other companies in
our industry;
* additions or departures of key personnel; and
* future sales of our common stock.
Domestic and international stock markets often experience significant price and
volume fluctuations. These fluctuations, as well as general economic and
political conditions unrelated to our performance, may adversely affect the
price of our common stock.
OUR COMMON SHARES MAY BECOME THINLY TRADED AND YOU MAY BE UNABLE TO SELL AT OR
NEAR ASK PRICES, OR AT ALL.
We cannot predict the extent to which an active public market for trading our
common stock will be sustained. Although the trading volume of our common shares
increased significantly recently, it has historically been sporadically or
"thinly-traded" meaning that the number of persons interested in purchasing our
common shares at or near bid prices at certain given time may be relatively
small or non-existent.
This situation is attributable to a number of factors, including the fact that
we are a small company which is relatively unknown to stock analysts, stock
brokers, institutional investors and others in the investment community who
generate or influence sales volume. Even if we came to the attention of such
persons, those persons tend to be risk-averse and may be reluctant to follow,
purchase, or recommend the purchase of shares of an unproven company such as
ours until such time as we become more seasoned and viable. As a consequence,
there may be periods of several days or more when trading activity in our shares
is minimal or non-existent, as compared to a seasoned issuer which has a large
and steady volume of trading activity that will generally support continuous
sales without an adverse effect on share price. We cannot give you any assurance
that a broader or more active public trading market for our common stock will
develop or be sustained, or that current trading levels will be sustained.
THE MARKET PRICE FOR OUR COMMON STOCK IS PARTICULARLY VOLATILE GIVEN OUR STATUS
AS A RELATIVELY SMALL COMPANY, WHICH COULD LEAD TO WIDE FLUCTUATIONS IN OUR
SHARE PRICE. YOU MAY BE UNABLE TO SELL YOUR COMMON STOCK AT OR ABOVE YOUR
PURCHASE PRICE IF AT ALL, WHICH MAY RESULT IN SUBSTANTIAL LOSSES TO YOU.
Shareholders should be aware that, according to SEC Release No. 34-29093, the
market for penny stocks has suffered in recent years from patterns of fraud and
abuse. Such patterns include (1) control of the market for the security by one
or a few broker-dealers that are often related to the promoter or issuer; (2)
manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving
high-pressure sales tactics and unrealistic price projections by inexperienced
sales persons; (4) excessive and undisclosed bid-ask differential and markups by
selling broker-dealers; and (5) the wholesale dumping of the same securities by
promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with
consequent investor losses. Our management is aware of the abuses that have
15
occurred historically in the penny stock market. Although we do not expect to be
in a position to dictate the behavior of the market or of broker-dealers who
participate in the market, management will strive within the confines of
practical limitations to prevent the described patterns from being established
with respect to our securities. The occurrence of these patterns or practices
could increase the volatility of our share price.
WE DO NOT ANTICIPATE PAYING ANY CASH DIVIDENDS TO OUR COMMON SHAREHOLDERS.
We presently do not anticipate that we will pay dividends on any of our common
stock in the foreseeable future. If payment of dividends does occur at some
point in the future, it would be contingent upon our revenues and earnings, if
any, capital requirements, and general financial condition. The payment of any
common stock dividends will be within the discretion of our Board of Directors.
We presently intend to retain all earnings after paying the interest for the
preferred stock, if any, to implement our business plan; accordingly, we do not
anticipate the declaration of any dividends for common stock in the foreseeable
future.
WE ARE LISTED ON THE OTCQB QUOTATION SYSTEM, OUR COMMON STOCK IS SUBJECT TO
"PENNY STOCK" RULES WHICH COULD NEGATIVELY IMPACT OUR LIQUIDITY AND OUR
SHAREHOLDERS' ABILITY TO SELL THEIR SHARES.
Our common stock is currently quoted on the OTCQB. We must comply with numerous
NASDAQ MarketPlace rules in order to maintain the listing of our common stock on
the OTCQB. There can be no assurance that we can continue to meet the
requirements to maintain the quotation on the OTCQB listing of our common stock.
If we are unable to maintain our listing on the OTCQB, the market liquidity of
our common stock may be severely limited.
VOLATILITY IN OUR COMMON SHARE PRICE MAY SUBJECT US TO SECURITIES LITIGATION.
The market for our common stock is characterized by significant price volatility
as compared to seasoned issuers, and we expect that our share price will
continue to be more volatile than a seasoned issuer for the indefinite future.
In the past, plaintiffs have often initiated securities class action litigation
against a company following periods of volatility in the market price of its
securities. We may, in the future, be the target of similar litigation.
Securities litigation could result in substantial costs and liabilities and
could divert management's attention and resources.
THE ELIMINATION OF MONETARY LIABILITY AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES UNDER NEVADA LAW AND THE EXISTENCE OF INDEMNIFICATION RIGHTS OF OUR
DIRECTORS, OFFICERS AND EMPLOYEES MAY RESULT IN SUBSTANTIAL EXPENDITURES BY OUR
COMPANY AND MAY DISCOURAGE LAWSUITS AGAINST OUR DIRECTORS, OFFICERS AND
EMPLOYEES.
Our Articles of Incorporation contains a specific provision that eliminates the
liability of our directors and officers for monetary damages to our company and
shareholders. Further, we are prepared to give such indemnification to our
directors and officers to the extent provided for by Nevada law. We may also
have contractual indemnification obligations under our employment agreements
with our officers. The foregoing indemnification obligations could result in our
16
company incurring substantial expenditures to cover the cost of settlement or
damage awards against directors and officers, which we may be unable to recoup.
These provisions and resultant costs may also discourage our company from
bringing a lawsuit against directors and officers for breaches of their
fiduciary duties, and may similarly discourage the filing of derivative
litigation by our shareholders against our directors and officers even though
such actions, if successful, might otherwise benefit our company and
shareholders.
OUR BUSINESS IS SUBJECT TO CHANGING REGULATIONS RELATED TO CORPORATE GOVERNANCE
AND PUBLIC DISCLOSURE THAT HAVE INCREASED BOTH OUR COSTS AND THE RISK OF
NONCOMPLIANCE.
Because our common stock is publicly traded, we are subject to certain rules and
regulations of federal, state and financial market exchange entities charged
with the protection of investors and the oversight of companies whose securities
are publicly traded. These entities, including the Public Company Accounting
Oversight Board, the SEC and FINRA, have issued requirements and regulations and
continue to develop additional regulations and requirements in response to
corporate scandals and laws enacted by Congress, most notably the Sarbanes-Oxley
Act of 2002. Our efforts to comply with these regulations have resulted in, and
are likely to continue resulting in, increased general and administrative
expenses and diversion of management time and attention from revenue-generating
activities to compliance activities. Because new and modified laws, regulations
and standards are subject to varying interpretations in many cases due to their
lack of specificity, their application in practice may evolve over time as new
guidance is provided by regulatory and governing bodies. This evolution may
result in continuing uncertainty regarding compliance matters and additional
costs necessitated by ongoing revisions to our disclosure and governance
practices.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
We do not currently own any property. Our administrative office is located at
200 South Executive Drive, Suite 101, Brookfield, Wisconsin, 53005. The
facilities include answering services, fax services, secretarial services,
reception area and offices. Management believes the current premises are
sufficient for its needs at this time. During the year ended November 30, 2014
we incurred $7,893 in rental fees.
We currently have no investment policies as they pertain to real estate, real
estate interests or real estate mortgages.
ITEM 3. LEGAL PROCEEDINGS
We are not currently involved in any legal proceedings and we are not aware of
any pending or potential legal actions.
ITEM 4. MINING SAFETY DISCLOSURES
None.
17
PART II
ITEM 5. MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
PURCHASES OF EQUITY SECURITIES
Since July 8, 2013 our shares have been approved for trading under the symbol
"TDNT". As of the date of this filing, there has been no active trading of our
securities, and, therefore, no high and low bid pricing.
The OTCBB is a regulated quotation service that displays real-time quotes, last
sale prices and volume information in over-the-counter (OTC) securities. The
OTCBB is not an issuer listing service, market or exchange. Although the OTCBB
does not have any listing requirements per se, to be eligible for quotation on
the OTCBB, issuers must remain current in their filings with the SEC or
applicable regulatory authority. Market Makers are not permitted to begin
quotation of a security whose issuer does not meet this filing requirement.
Securities already quoted on the OTCBB that become delinquent in their required
filings will be removed following a 30 or 60 day grace period if they do not
make their required filing during that time.
As of November 30, 2014, we have 28,000,000 Shares of $0.001 par value common
stock issued and outstanding held by 17 shareholders of record.
Of the 28,000,000 shares of common stock outstanding as of November 30, 2014,
12,000,000 shares are owned by Mark Holcombe, a former officer and director, and
may only be resold in compliance with Rule 144 of the Securities Act of 1933.
The stock transfer agent for our securities is Holladay Stock Transfer.
DIVIDENDS
We have never declared or paid any cash dividends on our common stock. For the
foreseeable future, we intend to retain any earnings to finance the development
and expansion of our business, and we do not anticipate paying any cash
dividends on its common stock. Any future determination to pay dividends will be
at the discretion of the Board of Directors and will be dependent upon then
existing conditions, including our financial condition and results of
operations, capital requirements, contractual restrictions, business prospects,
and other factors that the board of directors considers relevant.
SECTION RULE 15(G) OF THE SECURITIES EXCHANGE ACT OF 1934
The Company's shares are covered by Section 15(g) of the Securities Exchange Act
of 1934, as amended that imposes additional sales practice requirements on
broker/dealers who sell such securities to persons other than established
customers and accredited investors (generally institutions with assets in excess
of $5,000,000 or individuals with net worth in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 jointly with their spouses). For
transactions covered by the Rule, the broker/dealer must make a special
suitability determination for the purchase and have received the purchaser's
18
written agreement to the transaction prior to the sale. Consequently, the Rule
may affect the ability of broker/dealers to sell our securities and also may
affect your ability to sell your shares in the secondary market.
Section 15(g) also imposes additional sales practice requirements on
broker/dealers who sell penny securities. These rules require a one page summary
of certain essential items. The items include the risk of investing in penny
stocks in both public offerings and secondary marketing; terms important to in
understanding of the function of the penny stock market, such as "bid" and
"offer" quotes, a dealers "spread" and broker/dealer compensation; the
broker/dealer compensation, the broker/dealers duties to its customers,
including the disclosures required by any other penny stock disclosure rules;
and the customers rights and remedies in causes of fraud in penny stock
transactions.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
As of November 30, 2014, we issued the following securities under our option
compensation plan:
Vesting From
Name and Position Number of Options Date of Grant Exercise Price Expiration Date of Grant
----------------- ----------------- ------------- -------------- ---------- -------------
1. Michael Browne 375,000 May 5, 2014 $0.75 May 5, 2019 12 months
President, Chief 375,000 May 5, 2014 $1.00 May 5, 2019 24 months
Financial Officer, 375,000 May 5, 2014 $1.50 May 5, 2019 36 months
Treasurer and
Secretary
2. Donald MacPhee 100,000 May 5, 2014 $0.75 May 5, 2019 12 months
Director, Chairman 100,000 May 5, 2014 $1.00 May 5, 2019 24 months
of the Audit 100,000 May 5, 2014 $1.50 May 5, 2019 36 months
Committee and
member of the
Corporate
Governance
Committee
3. Scott Chapman 100,000 May 5, 2014 $0.75 May 5, 2019 12 months
Director 100,000 May 5, 2014 $1.00 May 5, 2019 24 months
100,000 May 5, 2014 $1.50 May 5, 2019 36 months
4. Mark Holcombe 100,000 May 5, 2014 $0.75 May 5, 2019 12 months
Director, Chairman 100,000 May 5, 2014 $1.00 May 5, 2019 24 months
of the Board of 100,000 May 5, 2014 $1.50 May 5, 2019 36 months
Directors and
Chairman of the
Compensation
Committee
5. Peter Salvo 50,000 May 5, 2014 $0.75 May 5, 2019 12 months
Controller 50,000 May 5, 2014 $1.00 May 5, 2019 24 months
50,000 May 5, 2014 $1.50 May 5, 2019 36 months
6. Robert Campbell 175,000 May 5, 2014 $0.75 May 5, 2019 12 months
Special Advisor 175,000 May 5, 2014 $1.25 May 5, 2019 24 months
7. Karen Arseneault 175,000 May 5, 2014 $0.75 May 5, 2019 12 months
Special Advisor 175,000 May 5, 2014 $1.25 May 5, 2019 24 months
TOTAL: 2,875,000
19
SECTION 16(a)
Based solely upon a review of Form 3 and 4 furnished by us under Rule 16a-3(d)
of the Securities Exchange Act of 1934, we are not aware of any individual who
failed to file a required report on a timely basis required by Section 16(a) of
the Securities Exchange Act of 1934.
PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
There were no shares of common stock or other securities issued to the issuer or
affiliated purchasers during the year ended November 30, 2014.
ITEM 6. SELECTED FINANCIAL DATA
As a smaller reporting company we are not required to provide this information.
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
RESULTS OF OPERATIONS
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED NOVEMBER 30, 2014 AND
2013, AND THE FISCAL YEARS ENDED NOVEMBER, 2014 AND 2013.
The following summary of our results of operations should be read in conjunction
with our audited financial statements for the three month periods ended November
30 2014 and 2013, and the fiscal years ended November 30, 2014 and 2013.
Our operating results for the three and twelve month periods ended November 30,
2014 and 2013 are summarized as follows:
Three Months Three Months Twelve Months Twelve Months November 5, 2007
Ended Ended Ended Ended (inception) to
Nov 30, Nov 30, Nov 30, Nov 30, Nov 30,
2014 2013 2014 2013 2014
---------- ---------- ---------- ---------- ----------
Revenues $ 479 $ Nil $ 479 $ Nil $ 479
Cost of Goods $ 305 $ Nil $ 305 $ Nil $ 305
Operating Expenses $ 192,326 $ 14,919 $ 399,373 $ 55,563 $ 556,515
Other Expenses $ 30,000 $ 123 $ 110,000 $ 123 $ 88,596
Net Income (Loss) $ (222,152) $ (14,797) $ (509,200) $ (55,441) $ (644,938)
We have generated very limited revenues since our inception on November 5, 2007.
EXPENSES
Our operating expenses for the three and twelve month periods ended November 30,
2014 and 2013, from inception to November 30, 2014 are outlined in the table
below:
20
Three Months Three Months Twelve Months Twelve Months November 5, 2007
Ended Ended Ended Ended (inception) to
Nov 30, Nov 30, Nov 30, Nov 30, Nov 30,
2014 2013 2014 2013 2014
---------- ---------- ---------- ---------- ----------
Professional Fees $ 62,451 $ 5,970 $ 130,383 $ 22,655 $ 130,383
General & Administrative
Expenses $ 23,969 $ 7,449 $ 36,617 $ 30,908 $ 36,617
Marketing Expenses $ 58,508 $ Nil $ 108,265 $ Nil $ 108,265
Management Salary $ 21,000 $ Nil $ 56,000 $ Nil $ 56,000
Director's Fees $ 18,000 $ Nil $ 48,000 $ Nil $ 48,000
Rent - Related Party & H.O $ 2,397 $ 1,500 $ 7,893 $ 2,000 $ 7,893
Interest Expense $ 6,000 $ Nil $ 12,215 $ Nil $ 12,215
Expenses for the three month period ended November 30, 2014 were $192,326 as
compared to $14,919 for the comparative period in 2013. The increase in our
expenses is primarily due to an increase in professional fees, marketing
expenses and management salaries.
Operating expenses for the twelve month period ended November 30, 2014 were
$399,373 as compared to $55,563 for the comparative period in 2013. The increase
in our expenses is primarily due to an increase in professional fees, marketing
expenses and management salaries.
LIQUIDITY AND CAPITAL RESOURCES
Our cash balance at November 30, 2014 was $352. Management believes the current
funds available to the company and loans from our directors will fund our
operations for the next twelve months. We are a development stage company and
have generated $479 in revenue to date.
GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had limited revenue raising operations during the period from
November 5, 2007 (date of inception) to November 30, 2014 and generated a net
loss of $644,937. This condition raises substantial doubt about the Company's
ability to continue as a going concern.
PLAN OF OPERATION
CASH REQUIREMENTS
Over the next 12 months we intend to carry on business as a food and nutrition
product company. We anticipate that we will incur the following operating
expenses during this period:
21
ESTIMATED FUNDING REQUIRED DURING THE NEXT 12 MONTHS
Expense Amount ($)
------- ----------
Professional fees 400,000
Consulting/Advisor fees 260,000
Rent 10,000
Sales, Travel and Marketing 450,000
Other general administrative expenses 210,000
Royalty obligations (1) 235,000
TOTAL 1,565,000
----------
(1) Due to the Trade Mark License Agreement of June 4, 2013 that was assigned
to us in the assignment Agreement dated December 23, 2013.
We will require funds of approximately $1,565,000 over the next twelve months to
operate our business. These funds may be raised through equity financing, debt
financing, or other sources, which may result in further dilution in the equity
ownership of our shares. There is no assurance that we will be able to maintain
operations at a level sufficient for an investor to obtain a return on their
investment in our common stock. Further, we may continue to be unprofitable.
PURCHASE OF SIGNIFICANT EQUIPMENT
We do not anticipate the purchase or sale of any plant or significant equipment
during the next 12 months.
GOING CONCERN
There is significant doubt about our ability to continue as a going concern.
As shown in the accompanying financial statements, we have incurred net losses
of $644,937 since inception. This condition raises substantial doubt as to our
ability to continue as a going concern. In response to these conditions, we may
raise additional capital through the sale of equity securities, through an
offering of debt securities or through borrowings from financial institutions or
individuals. The financial statements do not include any adjustments that might
be necessary if we are unable to continue as a going concern.
Our objective is the creation of value through strategic investments high growth
early stage consumer brands businesses. We intend to focus on control
investments in companies within the segment/sectors which are currently
experiencing long term growth. Our goal is to provide our shareholders with
private equity like returns through strategic investments in multiple branded
platforms. The platforms we will be focusing on are:
* Brand Licenses or Consolidated Licenses
* Consumer hard and soft goods
* Functional Food and Beverage
* Life Science technology that have applications in consumer products
* Natural and Organic food and beverage Intellectual Property and/or
licenses in recognized brand platforms
22
INVESTMENT STRATEGY
Trident will seek to acquire majority and/or control positions through common
and preferred equity, senior secured, unsecured, and convertible debt in
organizations who meet our investment hurdles. Through our management and
directors vast expertise in both the consumer branded segment and investment
experience, we seek to provide our shareholders with near term value and
liquidity. Through strategic investment and controlled organic growth, Trident
Brands will seek to provide their investments with solid short and long term
returns and yields.
The Company strategic objective is:
* Make strategic controlled investments in high growth companies
* Merge brands/business lines into larger multi-national Companies
* Build and grow strategic brands organically
* Mitigate risk by creating a diverse portfolio of companies in the
growth sectors listed above.
COMPANIES & STRATEGIC PARTNERSHIPS
EVERLAST NUTRITION
Trident Brands finalized documentation to acquire Sports Nutrition Products Inc.
the company has obtained a 15 year exclusive North American license for
Everlast's functional and nutritional product brand segment from IBML (a
worldwide leader in Brand licensing). This transaction closed in December 2013.
PRODUCT PRODUCTION
Trident Brands has identified ingredient supply and contract packaging vendors
for the manufacture of the products currently under the Everlast brand. These
vendors would be responsible for the private label production of our products.
PRODUCT DEVELOPMENT
On May 5, 2014, Trident Brands Incorporated (the "Company") entered into a
Product Development Agreement with Continental Ingredients Canada Inc.
("Continental Ingredients") with respect to the Company's plan to commercialize
nutritional supplements and functional food and beverage products for sales in
North America (the "Agreement").
Under the Agreement the Company has engaged Continental Ingredients on an
exclusive basis to provide services for the development, manufacture and supply
of the Company's products for a period of five years commencing on May 5, 2014
and ending on May 5, 2019, such term to renew automatically for a further 12
months unless either party delivers written termination notice six months prior
to the expiration of the initial term or renewal period.
23
Continental Ingredients will submit for approval by the Company, proposals for
the production of any products. Once product specifications have been approved
by the Company, the parties will enter into separate production agreements for
the manufacturing, pricing and distribution of the products (the "Production
Agreements"). The pricing of the products under the Production Agreements will
result in a gross margin to Continental Ingredients of between 20 to 30 percent,
as more particularly described in the Agreement.
The Company will remain the sole owner or licensee of all intellectual property
rights associated with the products.
OFF-BALANCE SHEET ARRANGEMENTS
We do not have any off-balance sheet arrangements that have or are reasonably
likely to have a current or future effect on our financial condition, changes in
financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to investors.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
As a smaller reporting company we are not required to provide this information.
24
ITEM 8. FINANCIAL STATEMENTS
GEORGE STEWART, CPA
316 17TH AVENUE SOUTH
SEATTLE, WASHINGTON 98144
(206) 328-8554 FAX (206) 328-0383
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Trident Brands Inc.
I have audited the accompanying balance sheets of Trident Brands Inc. (A
Development Stage Company) as of November 30, 2014 and 2013, and the related
statements of operations, stockholders' equity and cash flows for the years
ended November 30, 2014 and 2013 and for the period from November 5, 2007
(inception), to November 30, 2014. These financial statements are the
responsibility of the Company's management. My responsibility is to express an
opinion on these financial statements based on my audit.
I conducted my audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that I plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit provides a reasonable
basis for my opinion.
In my opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Trident Brands Inc., (A Development
Stage Company) as of November 30, 2014 and 2013, and the results of its
operations and cash flows for the years ended November 30, 2014 and 2013 and the
period from November 5, 2007 (inception), to November 30, 2014 in conformity
with generally accepted accounting principles in the United States of America.
The accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As discussed in Note # 4 to the financial
statements, the Company has had no operations and has no established source of
revenue. This raises substantial doubt about its ability to continue as a going
concern. Management's plan in regard to these matters is also described in Note
#4. The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.
/s/ George Stewart
------------------------------
Seattle, Washington
February 24, 2015
25
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Balance Sheet
--------------------------------------------------------------------------------
As of As of
November 30, November 30,
2014 2013
---------- ----------
ASSETS
CURRENT ASSETS
Cash $ 352 $ 131
Prepaid 1,049 --
---------- ----------
TOTAL CURRENT ASSETS 1,401 131
---------- ----------
TOTAL ASSETS $ 1,401 $ 131
========== ==========
LIABILITIES & STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable $ 134,758 $ 11,385
Accrued Liability 82,760 --
Loan Payable - Related Party 53,820 49,483
Loan Payable - Third Party 300,000 --
---------- ----------
TOTAL CURRENT LIABILITIES 571,338 60,868
---------- ----------
TOTAL LIABILITIES 571,338 60,868
---------- ----------
STOCKHOLDERS' EQUITY
Common stock, ($0.001 par value, 300,000,000 shares authorized;
28,000,000 shares issued and outstanding as of November 30, 2014
and November 30, 2013 28,000 28,000
Additional paid-in capital 47,000 47,000
Deficit accumulated during development stage (644,937) (135,738)
---------- ----------
TOTAL STOCKHOLDERS' EQUITY (569,937) (60,738)
---------- ----------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 1,401 $ 131
========== ==========
See Notes to Financial Statements
26
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Statement of Operations
--------------------------------------------------------------------------------
Three Months Three Months Twelve Months Twelve Months
Ended Ended Ended Ended
November 30, November 30, November 30, November 30,
2014 2013 2014 2013
------------ ------------ ------------ ------------
REVENUES $ 479 $ $ 479 $ --
Cost of Sales 305 -- 305 --
------------ ------------ ------------ ------------
GROSS PROFIT 173 -- 173 --
Professional Fees 62,451 5,970 130,383 22,655
Mineral Expenditures -- -- -- --
General & Administrative Expenses 23,969 7,449 36,617 30,908
Marketing, Selling & Warehousing Expenses 58,508 -- 108,265 --
Management Salary 21,000 -- 56,000 --
Director's Fees 18,000 -- 48,000 --
Rent 2,397 1,500 7,893 2,000
Interest Expense 6,000 -- 12,215 --
------------ ------------ ------------ ------------
TOTAL GENERAL & ADMINISTRATIVE EXPENSES (192,326) (14,919) (399,373) (55,563)
OTHER INCOME (EXPENSES)
Royalty Fees (30,000) -- (110,000) --
Other Income -- 123 -- 123
Gain on Note Payable Forgiveness -- -- -- --
------------ ------------ ------------ ------------
TOTAL OTHER INCOME (EXPENSES) (30,000) 123 (110,000) 123
------------ ------------ ------------ ------------
NET INCOME (LOSS) $ (222,152) $ (14,797) $ (509,200) $ (55,441)
============ ============ ============ ============
BASIC EARNING (LOSS) PER SHARE $ (0.01) $ (0.00) $ (0.01) $ (0.00)
============ ============ ============ ============
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 28,000,000 28,000,000 28,000,000 28,000,000
============ ============ ============ ============
See Notes to Financial Statements
27
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Statement of Changes in Stockholders' Equity
From November 5, 2007 (Inception) through November 30, 2014
--------------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid-in Development
Stock Amount Capital Stage Total
----- ------ ------- ----- -----
BALANCE, NOVEMBER 5, 2007 -- $ -- $ -- $ -- $ --
Stock issued for cash on November 5, 2007
@ $0.00125 per share 12,000,000 12,000 3,000 15,000
Net loss, November 30, 2007 (690) (690)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2007 12,000,000 12,000 3,000 (690) 14,310
=========== ======== ======== ========== =========
Stock issued for cash on July 23, 2008
@ 0.00375 per share 16,000,000 16,000 44,000 60,000
Net loss, November 30, 2008 (27,885) (27,885)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2008 28,000,000 28,000 47,000 (28,575) 46,425
=========== ======== ======== ========== =========
Net loss, November 30, 2009 (22,588) (22,588)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2009 28,000,000 28,000 47,000 (51,163) 23,837
=========== ======== ======== ========== =========
Net loss, November 30, 2010 (14,801) (14,801)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2010 28,000,000 28,000 47,000 (65,964) 9,036
=========== ======== ======== ========== =========
Net loss, November 30, 2011 (16,767) (16,767)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2011 28,000,000 28,000 47,000 (82,731) (7,731)
=========== ======== ======== ========== =========
Net loss, November 30, 2012 2,434 2,434
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2012 28,000,000 28,000 47,000 (80,297) (5,297)
=========== ======== ======== ========== =========
Net loss, November 30, 2013 (55,441) (55,441)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2013 28,000,000 28,000 47,000 (135,738) (60,738)
=========== ======== ======== ========== =========
Net loss, November 30, 2014 (509,200) (509,200)
----------- -------- -------- ---------- ---------
BALANCE, NOVEMBER 30, 2014 28,000,000 $ 28,000 $ 47,000 $ (644,938) $(569,937)
=========== ======== ======== ========== =========
Note: On July 30, 2013 the Company effected a 4 for 1 forward split of its share
capital such that every one share of common stock issued and outstanding
prior to the split was exchanged for four post-split shares of common
stock. These forward splits have been retro-actively applied to all
previous periods.
See Notes to Financial Statements
28
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Statement of Cash Flows
--------------------------------------------------------------------------------
Twelve Months Twelve Months
Ended Ended
November 30, November 30,
2014 2013
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (509,200) $ (55,441)
Adjustments to reconcile net loss to net cash
provided by (used in) operating activities:
Changes in operating assets and liabilities:
Pre-paid & Deposits (1,049) --
Accounts Payable and Accrued Liabilities 206,133 6,585
---------- ----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (304,115) (48,856)
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Loan Payable - Related Party 4,337 44,483
Loan Payable - Third Party 300,000
Issuance of common stock -- --
---------- ----------
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 304,337 44,483
---------- ----------
NET INCREASE (DECREASE) IN CASH 222 (4,372)
CASH AT BEGINNING OF PERIOD 131 4,503
---------- ----------
CASH AT END OF PERIOD $ 352 $ 131
========== ==========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during year for:
Interest $ -- $ --
========== ==========
Income Taxes $ -- $ --
========== ==========
See Notes to Financial Statements
29
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Notes to Financial Statements
November 30, 2014
--------------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Trident Brands Incorporated (f/k/a Sandfield Ventures Corp.) (the Company) was
incorporated under the laws of the State of Nevada on November 5, 2007. The
Company was formed to engage in the acquisition, exploration and development of
natural resource properties.
The Company is now focused on consumer products. The objective is investment in
and development of high growth consumer brands and ingredients businesses. The
Company is now an operating company and has transitioned out of their shell
status with the Super-8 filing at the end of August. Its activities to date have
been limited to capital formation, organization, development of its business
plan and development of an array of products for sale. Everlast Lean is now
available for sale and next year should see a ramp-up in sales revenue.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected a November 30, year-end.
BASIC EARNINGS (LOSS) PER SHARE
ASC No. 260, "Earnings Per Share", specifies the computation, presentation and
disclosure requirements for earnings (loss) per share for entities with publicly
held common stock. The Company has adopted the provisions of ASC No. 260.
Basic net earnings (loss) per share amounts is computed by dividing the net
earnings (loss) by the weighted average number of common shares outstanding.
Diluted earnings (loss) per share are the same as basic earnings (loss) per
share due to the lack of dilutive items in the Company.
CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
INVENTORY
The Company has entered into an agreement with one of their co-manufacturers,
Continental Ingredients Company, to purchase the inventory. The company is not
liable to pay for the inventory until the following month that the goods are
sold with the balance of the remaining inventory payable after 90 days. As of
November 30, 2014, Continental has purchased approximately $90,000 of inventory
which the Company will be liable for next year.
USE OF ESTIMATES AND ASSUMPTIONS
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. In accordance with ASC No. 250
all adjustments are normal and recurring.
30
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Notes to Financial Statements
November 30, 2014
--------------------------------------------------------------------------------
INCOME TAXES
Income taxes are provided in accordance with ASC No. 740, Accounting for Income
Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carryforwards. Deferred tax expense (benefit) results from the net change during
the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion of all of the deferred
tax assets will be realized. Deferred tax assets and liabilities are adjusted
for the effects of changes in tax laws and rates on the date of enactment.
REVENUE
The Company records revenue from on-line point of sales (POS) transactions when
the cash is credited to the bank. The Company is just beginning to generate
sales revenue.
ADVERTISING
The Company will expense its advertising when incurred. Advertising expenses for
the year were approximately $2,900.
NOTE 3. RECENT ACCOUNTING PRONOUCEMENTS
The Company has evaluated all the recent accounting pronouncements through the
date the financial statements were issued and filed with the Securities and
Exchange Commission and believe that none of them will have a material effect on
the Company's financial statements.
NOTE 4. GOING CONCERN
The accompanying financial statements are presented on a going concern basis.
The Company had no significant operations during the period from November 5,
2007 (date of inception) to November 30, 2014 and generated a net loss of
$644,938. This condition raises substantial doubt about the Company's ability to
continue as a going concern. The Company is currently in the pre-production
stage and expenses are increasing. They have secured short term bridge loans to
cover these expenses. The current cash of $352 is insufficient to cover the
expenses they will incur during the next twelve months. The Company was in the
process of securing major long term financing to see them through this period.
(See note on subsequent events).
NOTE 5. WARRANTS AND OPTIONS
On May 5, 2014, Trident granted an aggregate of 2,875,000 stock options to
directors, officers, employees and consultants of the Company pursuant to
Trident's 2013 Stock Plan. The stock options are exercisable for five years from
31
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Notes to Financial Statements
November 30, 2014
--------------------------------------------------------------------------------
the date of grant at exercise prices of $0.75 per share for shares vesting 12
months from the date of issuance, $1.00 per share for shares vesting 24 months
from the date of issuance and $1.50 for shares vesting 36 months from the date
of issuance. Of the 2,875,000 stock options granted, Trident granted 1,125,000
stock options to its president, Michael Brown; 300,000 stock options to each of
its directors, Donald MacPhee, Scott Chapman, Mark Holcombe; 150,000 stock
options to its controller, Peter Salvo; and 350,000 stock options to each of its
special advisors, Robert Campbell and Karen Arsenault.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. Between June
1, 2009 and August 31, 2009 and the month of September 2012 the Company paid a
director $300 per month for use of office space and services. Between September
1, 2009 and August 31, 2012 and August 1, 2013 and November 30, 2014 the Company
paid a director $500 per month for use of office space and services.
As of November 30, 2014, there is a loan payable due to Mark Holcombe, sole
officer and director of the Company, for $53,820 that is non-interest bearing
with no specific repayment terms.
The officer and director of the Company may, in the future, become involved in
other business opportunities as they become available, he may face a conflict in
selecting between the Company and his other business opportunities. The Company
has not formulated a policy for the resolution of such conflicts.
NOTE 7. LOAN PAYABLE - THIRD PARTY
On May 1, 2014, the Company obtained a short term loan of $200,000 from Rene
Arseneault. On July 21, 2014, the Company obtained another short term loan of
$100,000 from 1169822 Ontario Limited. Both loans bear interest at the rate of
8.0% per annum, payable on maturity, calculated on the principle amount of the
loans outstanding. Unless paid earlier, the loans and accrued and unpaid
interest shall be payable in full on April 30, 2015 and June 21, 2015
respectively. As of November 30, 2014, both short term loans are still
outstanding. The accrued interest expense is $12,215 ($9,333 and $2,882
respectively).
NOTE 8. EVERLAST LICENCE AGREEMENT
On December 23, 2013, the Company entered into a Deed of Assignment Agreement
with Everlast World's Boxing Headquarters Corporation, International Brand
Management Limited, Sports Nutrition Products Incorporated and Manchester
Capital Incorporated wherein Everlast, International Brand, Sports Nutrition and
Manchester Capital are parties to a trade mark license and Sports Nutrition, a
New York corporation, has assigned its interest in the trade mark license to the
Company.
Pursuant to the terms of the assignment agreement, Sports Nutrition Products
Incorporated, a wholly owned subsidiary of Trident Brands Incorporated, assigns
all of its rights, title, interest and benefit to the trade mark license to the
Company effective December 23, 2013 and the Company will assume all of the
obligations of Sports Nutrition Products Incorporated under the license
agreement. The Company shall remain responsible to Everlast and International
Brand for all acts and omissions of the subsidiary, Sports Nutrition Products
Inc.
The Everlast Licence Agreement includes a clause stating that Manchester Capital
Incorporated will guarantee that the Licensee shall perform all of its
obligations and duties under the Licence Agreement. If the Licensee defaults in
the payment when due of any amount it is obliged to pay to Licensor under the
32
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Notes to Financial Statements
November 30, 2014
--------------------------------------------------------------------------------
Licence Agreement, or arising from its termination, Manchester Capital is
unconditionally responsible to pay that amount to Licensor in the manner
prescribed in the Licence Agreement as if it were the Licensee.
NOTE 9. INCOME TAXES
As of November 30, 2014
-----------------------
Deferred tax assets:
Net operating tax carryforwards $ 644,938
Tax rate 35%
---------
Gross deferred tax assets 225,728
Valuation allowance (225,728)
---------
Net deferred tax assets $ 0
=========
Realization of deferred tax assets is dependent upon sufficient future taxable
income during the period that deductible temporary differences and carryforwards
are expected to be available to reduce taxable income. As the achievement of
required future taxable income is uncertain, the Company recorded a valuation
allowance.
NOTE 10. NET OPERATING LOSSES
As of November 30, 2014, the Company has a net operating loss carryforward of
approximately $644,938. Net operating loss carryforwards expires twenty years
from the date the loss was incurred.
NOTE 11. STOCK TRANSACTIONS
Transactions, other than employees' stock issuance, are in accordance with ASC
No. 505. Thus issuances shall be accounted for based on the fair value of the
consideration received. Transactions with employees' stock issuance are in
accordance with ASC No. 718. These issuances shall be accounted for based on the
fair value of the consideration received or the fair value of the equity
instruments issued, or whichever is more readily determinable.
On November 5, 2007, the Company issued a total of 3,000,000 shares of common
stock to Mark Holcombe for cash in the amount of $0.005 per share for a total of
$15,000.
On July 23, 2008, the Company issued a total of 4,000,000 shares of common stock
to 27 unrelated shareholders for cash in the amount of $0.015 per share for a
total of $60,000 pursuant to the Company's SB-2 registration statement.
On July 30, 2013, the Company effected a 4 for 1 forward split of its share
capital such that every one share of common stock to the split was exchanged for
four post-split shares of common stock. As of November 30, 2013, the Company had
28,000,000 shares of common stock issued and outstanding.
NOTE 12. STOCKHOLDERS' EQUITY
The stockholders' equity section of the Company contains the following classes
of capital stock as of November 30, 2013:
Common stock, $ 0.001 par value: 300,000,000 shares authorized; 28,000,000
shares issued and outstanding.
33
TRIDENT BRANDS INCORPORATED
(f/k/a SANDFIELD VENTURES CORP.)
(A Development Stage Company)
Notes to Financial Statements
November 30, 2014
--------------------------------------------------------------------------------
NOTE 13. SUBSEQUENT EVENTS
On January 29, 2015, Trident Brands Incorporated entered into a securities
purchase agreement with
a non-US institutional investor whereby it agreed to sell an aggregate principal
amount of $2,300,000 of senior secured convertible debentures, convertible into
shares of the company's common stock. The Company received the funds from the
transaction on February 5, 2015.
The convertible debentures provide for repayment in four quarterly payments of
interest commencing on April 29, 2015, and are convertible into shares of the
Company's common stock at an initial conversion price of $.71 per share, for an
aggregate of up to 3,239,437 shares. The debentures bear interest at 8% per
annum, payable in cash each quarter.
The Company intends to use the net proceeds from this transaction for working
capital and general corporate purposes.
34
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON FINANCIAL DISCLOSURE
None.
ITEM 9A (T). CONTROLS AND PROCEDURES
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Under the supervision and with the participation of our management, including
our principal executive officer and the principal financial officer (our
president), we have conducted an evaluation of the effectiveness of the design
and operation of our disclosure controls and procedures, as defined in Rules
13a-15(e) and 15d-15(e) under the Securities and Exchange Act of 1934, as of the
end of the period covered by this report. Based on this evaluation, our
principal executive officer and principal financial officer concluded as of the
evaluation date that our disclosure controls and procedures were effective such
that the material information required to be included in our Securities and
Exchange Commission reports is accumulated and communicated to our management,
including our principal executive and financial officer, recorded, processed,
summarized and reported within the time periods specified in SEC rules and forms
relating to our company, particularly during the period when this report was
being prepared.
MANAGEMENT'S ANNUAL 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 Rules 13a-15(f) and
15d-15(f) under the Exchange Act, for the Company. Internal control over
financial reporting includes those policies and procedures that: (1) pertain to
the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of our assets; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of
financial statements in accordance with generally accepted accounting
principles, and that our receipts and expenditures are being made only in
accordance with authorizations of its management and directors; and (3) provide
reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use or disposition of our assets that could have a material effect
on the financial statements.
Management recognizes that there are inherent limitations in the effectiveness
of any system of internal control, and accordingly, even effective internal
control can provide only reasonable assurance with respect to financial
statement preparation and may not prevent or detect material misstatements. In
addition, effective internal control at a point in time may become ineffective
in future periods because of changes in conditions or due to deterioration in
the degree of compliance with our established policies and procedures.
A material weakness is a significant deficiency, or combination of significant
deficiencies, that results in there being a more than remote likelihood that a
material misstatement of the annual or interim financial statements will not be
prevented or detected.
Under the supervision and with the participation of our Chief Executive Officer
and Chief Financial Officer, management conducted an evaluation of the
effectiveness of our internal control over financial reporting, as of the
35
Evaluation Date, based on the framework set forth in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). Based on its evaluation under this framework, management
concluded that our internal control over financial reporting was not effective
as of the Evaluation Date.
Management assessed the effectiveness of the Company's internal control over
financial reporting as of Evaluation Date and identified the following material
weaknesses:
INSUFFICIENT RESOURCES: We have an inadequate number of personnel with requisite
expertise in the key functional areas of finance and accounting.
INADEQUATE SEGREGATION OF DUTIES: We have an inadequate number of personnel to
properly implement control procedures.
LACK OF AUDIT COMMITTEE & OUTSIDE DIRECTORS ON THE COMPANY'S BOARD OF DIRECTORS:
We do not have a functioning audit committee or outside directors on the
Company's Board of Directors, resulting in ineffective oversight in the
establishment and monitoring of required internal controls and procedures.
Management is committed to improving its internal controls and will (1) continue
to use third party specialists to address shortfalls in staffing and to assist
the Company with accounting and finance responsibilities, (2) increase the
frequency of independent reconciliations of significant accounts which will
mitigate the lack of segregation of duties until there are sufficient personnel
and (3) may consider appointing outside directors and audit committee members in
the future.
Management, including our Chief Executive Officer and Chief Financial Officer,
has discussed the material weakness noted above with our independent registered
public accounting firm. Due to the nature of this material weakness, there is a
more than remote likelihood that misstatements which could be material to the
annual or interim financial statements could occur that would not be prevented
or detected.
This Annual Report does not include an attestation report of our registered
public accounting firm regarding internal control over financial reporting.
Management's report was not subject to attestation by the our registered public
accounting firm pursuant to temporary rules of the SEC that permit us to provide
only management's report in this annual report.
Changes in Internal Controls Over Financial Reporting
There have been no changes in our internal control over financial reporting that
occurred during the last fiscal quarter for our fiscal year ended November 30,
2014 that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
ITEM 9B. OTHER INFORMATION
None.
36
PART III
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The following sets forth information about our directors and executive officers
as of the date of this report:
Name Age Position
---- --- --------
Mark Holcombe (1) 47 Director, Chairman of the Board of Directors
and Chairman of the Compensation Committee.
Donald MacPhee (2) 53 Director, Chairman of the Audit Committee and
member of the Corporate Governance Committee.
Scott Chapman (3) 51 Director.
Michael Browne (4) 53 President, Chief Financial Officer, Treasurer
and Secretary.
Peter Salvo (5) 60 Controller.
----------
(1) Mark Holcombe was appointed as a Director and Treasurer of our company on
November 5, 2007 and as Chairman of the Compensation Committee of our
company on March 21, 2014.
(2) Donald MacPhee was appointed as a Director and to his other roles with our
company on March 21, 2014.
(3) Scott Chapman was appointed as a Director of our company on March 21, 2014.
(4) Michael Browne was appointed as President, Chief Financial Officer,
Treasurer and Secretary of our company on March 21, 2014.
(5) Peter Salvo was appointed as a Controller of our company on March 21, 2014.
Our directors will serve in that capacity until our next annual shareholder
meeting or until his successor is elected or appointed and qualified. Officers
hold their positions at the will of our Board of Directors. There are no
arrangements, agreements or understandings between non-management security
holders and management under which non-management security holders may directly
or indirectly participate in or influence the management of our affairs.
EXECUTIVE MANAGEMENT
Our executive management team represents a significant depth of experience in
public companies, food and nutritional products, marketing, and domestic and
international business development. The team represents a cross-disciplinary
approach to management and business development.
DONALD MACPHEE, DIRECTOR
Donald MacPhee is a partner of Continental Ingredients Canada Inc. Mr. MacPhee
co-founded Continental Ingredients in 1994 and played a major role in taking the
company from $650,000 in revenue to over $50 million today. He has over 30 years
of experience in the food and beverage ingredient industry. Don has worked
closely with major North American food and beverage manufacturers to develop new
products for their portfolios.
37
Mr. McPhee will be providing guidance to our company relating to product
development, sourcing, and supply chain management of the various products that
we will be launching within our portfolio.
Mr. McPhee holds a business administration and marketing degree from St.
Lawrence College.
SCOTT CHAPMAN, DIRECTOR
Scott Chapman is an investment professional with over 20 years of experience
both in Canada and internationally. He has acted as a senior partner with Lines
Overseas Management (Bermuda, Bahamas), [1998-2006]; and in institutional,
retail sales with Midland Walwyn (Montreal, Quebec), [1988-1997].
Across numerous financial sectors, Mr. Chapman's responsibilities have included
corporate finance, venture capital, institutional and retail sales.
Mr. Chapman is a native of Montreal, Quebec educated at Concordia University and
has recently returned to Montreal after 10 years of working in Bermuda and the
Bahamas.
MARK HOLCOMBE, DIRECTOR, CHAIRMAN OF THE COMPENSATION COMMITTEE, CHAIRMAN OF THE
BOARD OF DIRECTORS
Mr. Mark Holcombe is experienced in corporate and investment banking, corporate
development and asset management. Mr. Holcombe has over 23 years of banking and
corporate finance experience. He has significant experience in M&A advisory,
corporate restructurings and public and private debt and equity financings.
Formerly, Mr. Holcombe was Managing Partner of Stirling Partners (Bahamas) Ltd.
Formerly, he was a Senior Advisor to Providence Advisors Limited, Managing
Director and Head of Asset Management for Madison Williams Holdings, LLC in New
York City and Head of Corporate Development/Private Equity of GEM Global
Equities Management S.A. Also, He has worked as a senior investment banker at
Global Hunter Securities, Donaldson, Lufkin and Jenrette, Gleacher
NatWest/NatWest Markets, and ING Capital. Mr. Holcombe presently serves as a
Director of Asante Gold Corporation.
Mr. Holcombe holds a B.A. from Colgate University and graduated from the
Chemical Bank Corporate Finance Analyst Training Program.
38
MICHAEL BROWNE, PRESIDENT, CHIEF FINANCIAL OFFICER, TREASURER AND SECRETARY
Michael Browne is a sales and marketing professional with a leadership resume in
industry-leading consumer products companies: Kellogg, Frito-Lay, Mars Inc.,
MillerCoors LLC. Mr. Browne has managed power brands in the categories of: ready
to eat cereal, salty snacks, confectionery, mainstream and specialty beer. He
has over 25 years' business experience spanning both North American and
international markets.
From September 2003 to November 2010, Mr. Browne employed by MillerCoors in
various positions. Most recently, he was the Vice President of Marketing for
Above Premium from August 2008 to November 2010. As Vice President of Marketing,
Mr. Browne lead the above premium portfolio including key brands that included
Blue Moon, Leinenkugel, Molson, and SAB international imports (Peroni, Pilsner
Urquell, Grolsch), and super premium brands (Sparks, Miller Chill). Mr. Browne
drove craft beer share growth and increases in value of key franchises. Further,
his broad range of commercial responsibilities included sales execution
planning, cultivating key distributor relationships, collaborating with global
trademark owners, and capability development for professional marketing staff of
24.
PETER SALVO, CONTROLLER
Peter Salvo is a professional accountant with over 25 years of experience in
manufacturing, most notably in the automotive industry. Mr. Salvo has served in
many capacities, most recently as controller and finance manager with Meritor
Suspension Systems Company for 14 years. He has also worked for Rockwell
International for 11 years as Manager of Financial Analysis. Mr. Salvo has
extensive financial management experience and served as a key member of various
management teams. His experience includes development of business operating
plans, preparation of sales and profit projections and monitoring of results,
preparation of monthly financial statements and variance analysis, cash flow
forecasts, standard costing and inventory controls, capital expenditure and cost
benefit analysis, implementation of internal controls and safeguarding of
assets.
Mr. Salvo received his Certified Management Accountant designation in 1985 and
holds a bachelor degree in commerce from McMaster University.
Our company believes that all of our directors' respective educational
background, operational and business experience give them the qualifications and
skills necessary to serve as directors and officers, respectively, of our
company. Our board of directors now consists solely of Mr. Holcombe, Mr. D.
MacPhee and Mr. Chapman.
SIGNIFICANT EMPLOYEES
Our only employee is our President, Chief Financial Officer, Treasurer and
Secretary, Michael Browne. Mr. Browne currently devotes 100% of his time to the
company. Mr. Browne entered into an employment contract with us beginning on
March 18, 2014 for a term of one year. Pursuant to this contract, Mr. Browne is
to act as our President. In exchange for his services to our company as
President, we will compensate Mr. Browne with a base annual salary of $5,000
39
prior to the start of consumer sales, and $10,000 monthly thereafter.
Additionally, Mr. Browne will receive the following equity options granted
pursuant to our Stock Option Plan:
1. 375,000 options at $0.75 vesting at 12 months
2. 375,000 options at $1.00 vesting at 24 months; and
3. 375,000 options at $1.50 vesting at 36 months.
FAMILY RELATIONSHIPS
There are no family relationships between any of our directors and officers.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of our knowledge, none of our directors or executive officers has,
during the past ten years:
1. been convicted in a criminal proceeding or been subject to a pending
criminal proceeding (excluding traffic violations and other minor
offences);
2. had any bankruptcy petition filed by or against the business or
property of the person, or of any partnership, corporation or business
association of which he was a general partner or executive officer,
either at the time of the bankruptcy filing or within two years prior
to that time;
3. been subject to any order, judgment, or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction
or federal or state authority, permanently or temporarily enjoining,
barring, suspending or otherwise limiting, his involvement in any type
of business, securities, futures, commodities, investment, banking,
savings and loan, or insurance activities, or to be associated with
persons engaged in any such activity;
4. been found by a court of competent jurisdiction in a civil action or
by the SEC 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;
5. been the subject of, or a party to, any federal or state judicial or
administrative order, judgment, decree, or finding, not subsequently
reversed, suspended or vacated (not including any settlement of a
civil proceeding among private litigants), relating to an alleged
violation of any federal or state securities or commodities law or
regulation, any law or regulation respecting financial institutions or
insurance companies including, but not limited to, a temporary or
permanent injunction, order of disgorgement or restitution, civil
money penalty or temporary or permanent cease-and-desist order, or
removal or prohibition order, or any law or regulation prohibiting
mail or wire fraud or fraud in connection with any business entity; or
40
6. been the subject of, or a party to, any sanction or order, not
subsequently reversed, suspended or vacated, of any self-regulatory
organization (as defined in Section 3(a)(26) of the Exchange Act (15
U.S.C. 78c(a)(26))), any registered entity (as defined in Section
1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any
equivalent exchange, association, entity or organization that has
disciplinary authority over its members or persons associated with a
member.
COMPLIANCE WITH SECTION 16(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our
executive officers and directors and persons who own more than 10% of a
registered class of our equity securities to file with the SEC initial
statements of beneficial ownership, reports of changes in ownership and annual
reports concerning their ownership of our shares of common stock and other
equity securities, on Forms 3, 4 and 5, respectively. Executive officers,
directors and greater than 10% shareholders are required by the SEC regulations
to furnish us with copies of all Section 16(a) reports they file.
Based solely on our review of the copies of such forms received by us, or
written representations from certain reporting persons, we believe that during
fiscal year ended November 30, 2013, all filing requirements applicable to our
officers, directors and greater than 10% percent beneficial owners were complied
with.
Our company filed a post-effective amendment our SB-2 Registration to disclose
the information reflecting the change to the corporation's officer and director
and the ownership of securities upon consummation of the transfer.
CODE OF ETHICS
We have not adopted a code of ethics that applies to our officers, directors and
employees. When we do adopt a code of ethics, we will disclose it in a Current
Report on Form 8-K.
AUDIT COMMITTEE AND AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has determined that it does not have a member of its
audit committee that qualifies as an "audit committee financial expert" as
defined in Item 407(d)(5)(ii) of Regulation S-K, and is "independent" as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended.
We believe that our board of directors is capable of analyzing and evaluating
our financial statements and understanding internal controls and procedures for
financial reporting. We believe that retaining an independent director who would
qualify as an "audit committee financial expert" would be overly costly and
burdensome and is not warranted in our circumstances given the early stages of
our development and the fact that we have not generated any material revenues to
date. In addition, we currently do not have nominating, compensation or audit
committees or committees performing similar functions nor do we have a written
nominating, compensation or audit committee charter. Our directors do not
believe that it is necessary to have such committees because they believe the
functions of such committees can be adequately performed by the members of our
board of directors.
41
ITEM 11. EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
Change in
Pension
Value and
Non-Equity Nonqualified
Incentive Deferred All
Name and Plan Compen- Other
Principal Stock Option Compen- sation Compen-
Position Year Salary Bonus Awards Awards sation Earnings sation Totals
------------ ---- ------ ----- ------ ------ ------ -------- ------ ------
Mike Browne, 2014 $40,000 0 0 0 0 0 0 $40,000
CEO & CFO
Peter Salvo, 2014 $16,000 0 0 0 0 0 0 $16,000
Controller
Mark 2014 0 0 0 0 0 0 $16,000 $16,000
Holcombe, 2013 0 0 0 0 0 0 0 0
Former CEO & 2012 0 0 0 0 0 0 0 0
CFO
Donald 2014 0 0 0 0 0 0 $16,000 $16,000
MacPhee,
Director
Scott 2014 0 0 0 0 0 0 $16,000 $16,000
Chapman,
Director
Our officers and directors have written employment contracts with us. We
presently do not have pension, health, annuity, insurance, profit sharing or
similar benefit plans; however, we may adopt plans in the future. Except for our
stock option plan, which no options have been issued, there are presently no
personal benefits available to our officers and directors. Our officers and
directors will handle our administrative duties.
Our only employee is our President, Chief Financial Officer, Treasurer and
Secretary, Michael Browne. Mr. Browne currently devotes 100% of his time to the
company. Mr. Browne entered into an employment contract with us beginning on
March 18, 2014 for a term of one year. Pursuant to this contract, Mr. Browne is
to act as our President. In exchange for his services to our company as
President, we will compensate Mr. Browne with a base annual salary of $5,000
prior to the start of consumer sales, and $10,000 monthly thereafter.
Additionally, Mr. Browne will receive the following equity options granted
pursuant to our Stock Option Plan:
42
1. 375,000 options at $0.75 vesting at 12 months
2. 375,000 options at $1.00 vesting at 24 months; and
3. 375,000 options at $1.50 vesting at 36 months.
On November 5, 2006, a total of 3,000,000 shares of common stock were issued to
Mr. Holcombe in exchange for cash in the amount of $15,000 U.S., or $.005 per
share. On July 30, 2013 the company effected a 4 for 1 split of its common stock
resulting in Mr. Holcombe owning 12,000,000 shares of common stock. The terms of
these stock issuances were as fair to the company, in the opinion of the board
of directors, as could have been made with an unaffiliated third party.
There are no annuity, pension or retirement benefits proposed to be paid to
officers, directors or employees in the event of retirement at normal retirement
date pursuant to any presently existing plan provided or contributed to by the
company or any of its subsidiaries, if any.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Option Awards Stock Awards
----------------------------------------------------------------- ------------------------------------------------
Equity
Incentive
Equity Plan
Incentive Awards:
Plan Market or
Awards: Payout
Equity Number of Value of
Incentive Number Unearned Unearned
Plan Awards; of Market Shares, Shares,
Number of Number of Number of Shares Value of Units or Units or
Securities Securities Securities or Units Shares or Other Other
Underlying Underlying Underlying of Stock Units of Rights Rights
Unexercised Unexercised Unexercised Option Option That Stock That That That
Options Options Unearned Exercise Expiration Have Not Have Not Have Not Have Not
Name Exercisable(#) Unexercisable(#) Options(#) Price($) Date Vested(#) Vested($) Vested(#) Vested(#)
---- -------------- ---------------- ---------- ----- ---- --------- --------- --------- ---------
Mike 0 0 0 0 0 0 0 0 0
Browne
Mark 0 0 0 0 0 0 0 0 0
Holcombe
Donald 0 0 0 0 0 0 0 0 0
MacPhee
DIRECTOR COMPENSATION
Change in
Pension
Value and
Fees Non-Equity Nonqualified
Earned Incentive Deferred
Paid in Stock Option Plan Compensation All Other
Name Cash Awards Awards Compensation Earnings Compensation Total
---- ---- ------ ------ ------------ -------- ------------ -----
Mark Holcombe $16,000 0 0 0 0 0 $16,000
Donald MacPhee $16,000 0 0 0 0 0 $16,000
Scott Chapman $16,000 0 0 0 0 0 $16,000
43
On May 5, 2014, Trident granted an aggregate of 2,875,000 stock options to
directors, officers, employees and consultants of the Company pursuant to
Trident's 2013 Stock Plan. The stock options are exercisable for five years from
the date of grant at exercise prices of $0.75 per share for shares vesting 12
months from the date of issuance, $1.00 per share for shares vesting 24 months
from the date of issuance and $1.50 for shares vesting 36 months from the date
of issuance. Of the 2,875,000 stock options granted, Trident granted 1,125,000
stock options to its president, Michael Brown; 300,000 stock options to each of
its directors, Donald MacPhee, Scott Chapman, Mark Holcombe; 150,000 stock
options to its controller, Peter Salvo; and 350,000 stock options to each of its
special advisors, Robert Campbell and Karen Arsenault.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth information regarding beneficial ownership of our
common stock as of August 22, 2014 (i) by each person who is known by us to
beneficially own more than 5% of our common stock; (ii) by each of our officers
and directors; and (iii) by all of our officers and directors as a group.
Amount and
Nature of
Name and Address Beneficial Percent
of Beneficial Owner Office, If Any Title of Class Ownership (1) of Class (2)
------------------- -------------- -------------- ------------- ------------
OFFICERS AND DIRECTORS
Mark Holcombe Director and Chairman Common Stock 12,000,000 42.86%
of the Compensation
Committee
Donald MacPhee Director, Chairman of Common Stock 182,000 0.65%
the Audit Committee
and member of the
Corporate Governance
Committee
All officers and
directors as a group Common stock,
$0.001 par value 43.51%
5%+ SECURITY HOLDERS
None. n/a n/a n/a n/a
All 5%+ Security Holders Common stock,
$0.001 par value
----------
(1) Beneficial Ownership is determined in accordance with the rules of the SEC
and generally includes voting or investment power with respect to
securities. Each of the beneficial owners listed above has direct ownership
of and sole voting power and investment power with respect to the shares of
our common stock.
(2) Based on 28,000,000 shares issued and outstanding.
(3) Continental Ingredients of Canada Inc. holds 400,000 common shares of our
company and Donald MacPhee is Managing Partner of Continental Ingredients
with 45.5% ownership share in Continental Ingredients.
44
CHANGES IN CONTROL
We do not currently have any arrangements which if consummated may result in a
change of control of our company.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
The following includes a summary of transactions since the beginning of the
November 30, 2014 fiscal year, or any currently proposed transaction, in which
our company was or is to be a participant and the amount involved exceeded or
exceeds the lesser of $120,000 or one percent of the average of our total assets
at year end for the last two completed fiscal years, and in which any related
person had or will have a direct or indirect material interest (other than
compensation described under "Executive Compensation"). We believe the terms
obtained or consideration that we paid or received, as applicable, in connection
with the transactions described below were comparable to terms available or the
amounts that would be paid or received, as applicable, in arm's-length
transactions.
KAREN ARSENEAULT
On May 1, 2014, our company entered into a loan agreement with Rene Arseneault.
Pursuant to this agreement, Mr. Arseneault agreed to loan to our company an
aggregate of USD$200,000 being an interest of 8% per annum for a term of one
year.
Mr. Arseneault is the husband of Karen Arseneault. Mrs. Arseneault was appointed
as one of our special advisors and granted the following options on May 5, 2014:
Vesting from
Number of Options Date of Grant Exercise price Expiration date of Grant
----------------- ------------- -------------- ---------- -------------
175,000 May 5, 2014 $0.75 May 5, 2019 12 months
175,000 May 5, 2014 $1.25 May 5, 2019 24 months
MARK HOLCOMBE
On May 31, 2014, there is a loan payable due to Mark Holcombe, a director of our
company, for $53,820 that is non-interest bearing with no specific repayment
terms. This loan was by oral agreement.
In addition, our company rents office space from Mr. Holcombe for $500 per
month.
DONALD MACPHEE
On May 5, 2014, we entered into a Product Development Agreement with Continental
Ingredients Canada Inc. with respect to our plan to commercialize nutritional
supplements and functional food and beverage products for sales in North America
(the "PRODUCT AGREEMENT").
45
Under the Agreement, our company has exclusively engaged Continental Ingredients
to provide services for the development, manufacture and supply of our products
for a period of five years commencing on May 5, 2014 and ending on May 5, 2019,
such term to renew automatically for a further 12 months unless either party
delivers written termination notice six months prior to the expiration of the
initial term or renewal period.
Continental Ingredients will submit for approval from our company, proposals for
the production of any products. Once product specifications have been approved
by us, the parties will enter into separate production agreements for the
manufacturing, pricing and distribution of the products (the "PRODUCTION
AGREEMENTS"). The pricing of the products under any Production Agreements will
result in a gross margin to Continental Ingredients of between 20 to 30 percent,
as more particularly described in the Product Agreement.
Donald MacPhee is Managing Partner of Continental Ingredients with 45.5%
ownership share in Continental Ingredients and a director of our company as of
March 21, 2014. Continental Ingredients also owns 400,000 common shares of our
company, which is approximately 1.43% of our issued and outstanding common
stock.
PROMOTERS AND CERTAIN CONTROL PERSONS
Mark Holcombe, who is one of three directors of our company, was our only
promoter in the past five fiscal years. Mr. Holcombe has not received, nor will
he receive, anything of value from us, directly or indirectly in his capacity as
promoter. However, he holds 12,000,000 or approximately 42.86 of our issued and
outstanding common shares. Additionally, Mr. Holcombe receives $24,000 on an
accrued annual basis and the following options as of May 5, 2014:
Vesting from
Number of Options Date of Grant Exercise price Expiration date of Grant
----------------- ------------- -------------- ---------- -------------
100,000 May 5, 2014 $0.75 May 5, 2019 12 months
100,000 May 5, 2014 $1.00 May 5, 2019 24 months
100,000 May 5, 2014 $1.50 May 5, 2019 36 months
CORPORATE GOVERNANCE
We currently act with three directors, consisting of Mark Holcombe, Donald
MacPhee and Scott Chapman.
We have an audit committee, compensation committee and corporate governance
committee.
However, all of the members of the committees are not independent. We believe
that our board of directors is capable of analyzing and evaluating our financial
statements and understanding internal controls and procedures for financial
reporting. The board of directors of our company does not believe that it is
necessary to have a completely independent audit, compensation or corporate
governance committee at this time because we believe that the functions of such
committees can be adequately performed by the board of directors. Additionally,
we believe that retaining independent directors would be overly costly and
burdensome and is not warranted in our circumstances given the early stages of
our development.
46
DIRECTOR INDEPENDENCE
We currently have only two independent directors, Scott Chapman and Donald
MacPhee, as the term "independent" is defined by the rules of the NASDAQ Stock
Market.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES
The total fees charged to the company for audit services were $10,700, for
audit-related services were $10,700, for tax services were $Nil and for other
services were $Nil during the year ended November 30, 2014.
The total fees charged to the company for audit services were $9,000, for
audit-related services were $9,000, for tax services were $Nil and for other
services were $Nil during the year ended November 30, 2013.
PART IV
ITEM 15. EXHIBITS
The following exhibits are included with this filing:
Exhibit Description
------- -----------
3(i) Articles of Incorporation*
3(ii) Bylaws*
31.1 Sec. 302 Certification of CEO
31.2 Sec. 302 Certification of CFO
32 Sec. 906 Certification of CEO/CFO
101 Interactive Data Files pursuant to Rule 405 of Regulation
S-T.
----------
* Included in our original Registration Statement on Form SB-2 (subsequently
amended utilizing Form S-1) under Commission File Number 333-148710.
47
SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
March 2, 2015 Trident Brands Incorporated
/s/ Mike Browne
------------------------------------
By: Mike Browne
(President, Chief Financial Officer,
Chief Executive Officer, Treasurer &
Secretary)
/s/ Peter Salvo
------------------------------------
By: Peter Salvo
(Controller)
/s/ Mark Holcombe
------------------------------------
By: Mark Holcombe
(Director & Chairman of the Board)
/s/ Donald MacPhee
------------------------------------
By: Donald MacPhee
(Director)
/s/ Scott Chapman
------------------------------------
By: Scott Chapman
(Director)
4