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EX-10.1 - JAMMIN JAVA CORP. | ex10-1.htm |
EX-10.2 - JAMMIN JAVA CORP. | ex10-2.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
(Mark
One)
[X]
|
ANNUALREPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
fiscal year ended January
31, 2009
[ ]
|
TRANSITIONREPORT
UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
|
For the
transition period from [ ] to []
Commission
file number 333-127143
Marley
Coffee Inc.
|
||
(Name
of small business issuer in its charter)
|
||
Nevada
|
TBA
|
|
(State
or other jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
|
357
South Fairfax Avenue, Suite 321
Los
Angeles, CA
|
90036
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
Issuer's
telephone number (310)467-9832
Securities
registered pursuant to Section 12(b) of the Act:
Title
of each class
Nil
|
Name
of each exchange on which registered
Nil
|
Securities
registered pursuant to Section 12(g) of the Act:
Common
Shares, par value $0.001
|
(Title
of class)
|
Check
whether the issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Exchange Act during the past 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 checkmark whether the registrant is a large accelerated filer, an accelerated
filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act. (Check one):
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer “ (Do not check if a smaller reporting
company)
|
Smaller
reporting company X
|
Check if
there is no disclosure of delinquent filers in response to Item 405of Regulation
S-B is not contained in this form, and no disclosure will be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form10-K or any amendment to this
Form 10-K. [ ]
State
issuer's revenues for its most recent fiscal year $0.
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
sold, or the average bid and asked prices of such common equity, as of a
specified date within 60 days. (See definition of affiliate in Rule 12b-2of the
Exchange Act.)
N/A
State the
number of shares outstanding of each of the issuer's classes of equity stock, as
of the latest practicable date.
32,570,198 common shares
issued and outstanding as of April 30, 2009
Transitional
Small Business Disclosure Format (Check one): Yes [ ]; No
[X]
Check
whether the registrant is a shell company (as defined in Rule 12b-2 of the
Exchange Act). . Yes [ X] No [ ]
Table Of
Contents
Page | |||
Part I | |||
Item I | Description of Business | 4 | |
Item I A | Risk Factors | 6 | |
Item 2 | Description of Property | 8 | |
Item 3 | Legal Proceedings | 9 | |
Item 4 | Submissions of Matters to a Vote of Security Holders | 9 | |
Part II | |||
Item 5 | Market for Common Equity and Related Stockholder Matters | 9 | |
Item 6 | Selected Financial Data | 9 | |
Item 7 | Management Discussion and Analysis and Plan of Operations | 9 | |
Item 8 | Financial Statements | 13 | |
Report of Independent Registered Public Accounting Firm | F-1 | ||
Balance Sheets | F-2 | ||
Statements of Operations | F-3 | ||
Statements of Stockholders' Equity | F-4 | ||
Statements of Cash Flows | F-5 | ||
Notes to Financial Statements | F-6 | ||
Item 9 | Changes in Disagreements with Accountants on Accounting and Financial Disclosures | 14 | |
Item 9A | Controls and Procedures | 14 | |
Item 9B | Other Information | 15 | |
Item 10 | Directors, Executive Officers, Promoters and Control Persons; Compliance with Section 16(a) of the Exchange Act | 15 | |
Item 11 | Executive Compensation | 16 | |
Item 12 | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 18 | |
Item 13 | Certain Relationships and Related Transactions | 18 | |
Item 14 | Exhibits | 18 | |
Item 15 | Principal Accountant Fees and Services | 19 | |
Signatures | 20 | ||
PART
I
Item
1. Description of Business.
This
annual report contains forward-looking statements as that term is defined in the
Private Securities Litigation Reform Act of 1995. These statements relate to
future events or our future financial performance. In some cases, you can
identify forward-looking statements by terminology such as” may", "should",
"expects", "plans”,” anticipates", "believes", "estimates”,” predicts",
"potential" or "continue" or the negative of these terms or other comparable
terminology. These statements are only predictions and involve known and unknown
risks, uncertainties and other factors, including the risks in the section
entitled "Risk Factors”, that may cause our or our industry's actual results,
levels of activity, performance or achievements to be materially different from
any future results, levels of activity, performance or achievements expressed or
implied by these forward-looking statements.
Although
we believe that the expectations reflected in the forward-looking statements are
reasonable, we cannot guarantee future results, levels of activity, performance
or achievements. Except as required by applicable law, including the securities
laws of the United States, we do not intend to update any of the forward-looking
statements to conform these statements to actual results.
Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with United States Generally Accepted Accounting
Principles.
In this
annual report, unless otherwise specified, all dollar amounts are expressed in
United States dollars. All references "common shares” refer to the common shares
in our capital stock.
As used
in this annual report, the terms "we", "us”,” our", and "Marley" mean Marley
Coffee Inc. (formerly known as “Global Electronic Recovery Corp.”), unless
otherwise indicated.
Business
History
Marley
was incorporated on September 27, 2004, under its former name “Global Electronic
Recovery Corp.” Our resident agent is Empire Stock Transfer of Nevada located at
2470 Saint Rose Parkway, Suite 304 Henderson, Nevada. Prior to February 25,
2008, we were engaged in the recycling of electronic waste in the city of Los
Angeles, California. We commenced limited operations including a
feasibility study and the search for an appropriate facility location. We also
joined various recycling organizations to assist in the marketing of our
recycling facility. As our management conducted due diligence on the
electronic waste recycling industry, management realized that this industry did
not present the best opportunity for our company to realize value for our
shareholders. In an effort to substantiate shareholder value, Marley
Coffee then sought to identify, evaluate and investigate various companies and
compatible or alternative business opportunities with the intent that, should
the opportunity arise, a new business be pursued.
On
February 5, 2008, we incorporated a subsidiary named Marley Coffee
Inc. On February 25, 2008 we changed our name from” Global Electronic
Recovery Corp." to "Marley Coffee Inc." when we merged our subsidiary, Marley
Coffee Inc., into our company. Our common stock will be quoted on the NASD
Over-the-Counter Bulletin Board under the new symbol "MYCF" effective at the
opening of the market on March 7, 2008.
Properties
Effective
February 15, 2008 Marley Coffee entered into a lease agreement for 52 acres of
coffee farmland in the Jamaican Blue Mountains. The term is eight
years and has an annual lease payment of $1,000.
The farm
is located at Chepstowe,Skibo in Portland, Jamaica. The farm is spread out over
52 acres of land. Currently only 12 acres have been identified for coffee
production but this will be increased but to a maximum of 30 acres to preserve
ecological diversity. Due to the altitude and geographic location of the land on
which the farm is located, the coffee produced can be classified as “Blue
Mountain Coffee.”
Current
Business Operations
-4-
Marley
Coffee
In
February 2008, we decided to pursue the business of premium roasted
coffee to take advantage of the consumer awareness and significant trend toward
packaged ground premium and super premium coffees with new Marley Coffee branded
entries to the category. We also intend to develop a share of
the category and create a leadership position by capitalizing on the success of
the Marley name and franchise while using Jamaican Blue Mountain as
the flagship item. In addition, we intend to use this opportunity to
take advantage of this strong increase in consumer demand by stepping forward
and combining name, music and quality coffees to generate
interest.
We also
intend to produce our own premium organic coffee on the farmland we lease in the
Blue Mountain region of Jamaica. Our goal is to manage the Marley Coffee Farm in
manner that ensures economic viability, optimal yields and unrivaled product
quality while maintaining the environmental integrity of the ecosystem
incompliance with international organic standards.
To
achieve our objectives, we will do the following:
1.
|
Develop
and implement a sustainable fertility management program compliant with
international organic standards.
|
2.
|
Develop
and implement a sustainable pest management program compliant with
international organic standards.
|
3.
|
Continually
review and adjust the installed system for the management of our human and
financial resources
|
4.
|
Continue
the resuscitation of existing coffee trees and restoration of
location-specific optimal planting density
|
5.
|
Conduct
research into sustainable organic agronomic practices and novel marketable
coffee blends
|
6.
|
Identify
and outsource suitable local pulping and roasting facilities with the
intent to construct and install washing, pulping and roasting mechanism
that is compliant to international organic standards on site.
|
7.
|
Identify
and facilitate the sale of secondary cash crops on the local
market
|
Our
administrative office is located at 357 South Fairfax Avenue Suite #321, Los
Angeles California, USA 90036, telephone (310) 467-9832 and our registered
statutory office is located at 2470 Saint Rose Parkway, Suite 304 Henderson,
Nevada 89074. Our fiscal year end is January 31.
Product
Research and Development
We do not
anticipate that we will expend any significant funds on research and development
over the twelve months ending January 31, 2010.
Employees
Currently,
we have 8 employees other than our officers. We are not a party to any
collective bargaining agreements. We have not entered into any employment
agreements with any of our executives. We anticipate that we will enter into
employment agreements with our officers when, and if, our revenue production
justifies such agreements. We do not currently anticipate that we will hire any
employees in the next three months, unless we successfully raise funds necessary
to implement our business plan. From time-to-time, we anticipate that we will
also use the services of independent contractors and consultants to support our
business development. We believe our future success depends in large part upon
the continued service of our senior management personnel and our ability to
attract and retain highly qualified technical and managerial
personnel.
-5-
Purchase
or Sale of Equipment
We intend
to purchase equipment for the farm we lease in Jamaica. We anticipate
such expenditures to be approximately $2,000.
Item
1A.
RISK
FACTORS
Much of
the information included in this annual report includes or is based upon
estimates, projections or other "forward-looking statements". Such
forward-looking statements include any projections or estimates made by us and
our management in connection with our business operations. While these
forward-looking statements, and any assumptions upon which they are based, are
made in good faith and reflect our current judgment regarding the direction of
our business, actual results will almost always vary, sometimes materially, from
any estimates, predictions, projections, assumptions, or other future
performance suggested herein. We undertake no obligation to update
forward-looking statements to reflect events or circumstances occurring after
the date of such statements.
Such
estimates, projections or other "forward-looking statements” involve various
risks and uncertainties as outlined below. We caution readers of this annual
report that important factors in some cases have affected and, in the future,
could materially affect actual results and cause actual results to differ
materially from the results expressed in any such estimates, projections or
other "forward-looking statements". In evaluating us, our business and any
investment in our business, readers should carefully consider the following
factors.
We
have no operating history and have maintained losses since inception that we
expect to continue into the future. If the losses continue we may go out of
business. We have no assets, no experience in the proposed line of business,
certifications, current customers, or negotiations or agreements with any
processing centers or refurbishes
We were
incorporated in September 27, 2004 ,and only just recently
commenced a new business plan. We have only just completed our
business plan to grow and roast our own and third party organic coffee. We have
not realized any revenues to date. We have no operating history upon which an
evaluation of our future success or failure can be made. There is a net loss
since inception of $(294,104) and also an accumulated deficit of $(294,104). We
expect to incur losses for the foreseeable future; therefore, we may not be able
to achieve profitable operations and we may not even be able to generate any
revenues. We will encounter difficulties as an early stage company in the
rapidly evolving and highly competitive coffee industry. Therefore, the revenue
and income potential of our business model is unproven.
We
face substantial competition from established and new companies in our industry.
If we are unable to compete with these companies our proposed business will
fail.
We face
intense competition from established coffee growers and roasters. We may not be
able to compete effectively with these companies now or in the future. Many of
our potential competitors have significantly greater financial, marketing,
technical and other competitive resources, as well as greater name recognition,
than we have. As a result, our competitors may be able to adapt more quickly to
changes in consumer requirements or may be able to devote greater resources to
the promotion and sale of their products. We may not be able to compete
successfully with our potential and existing competitors. In addition,
competition could increase if new companies enter the market or if existing
competitors expand their products. An increase in competition could result in
price reductions and loss of market share and could have a material adverse
effect on our business, financial condition or results of operations. To be
competitive we will need to continue to invest in sales and marketing. We may
not have sufficient resources to make such investments necessary to remain
competitive. In addition, current and potential competitors have established or
may in the future establish collaborative relationships among themselves or with
third parties, including third parties with whom we have relationships, to
increase the visibility and utility of their products. Accordingly, new
competitors or alliances may emerge and rapidly acquire significant market
share. If we are unable to compete with companies in the coffee industry, our
proposed business will fail and you will lose your entire
investment.
-6-
We
depend on our key personnel to manage our business effectively in a rapidly
changing market. If we are unable to retain our key employees, our business,
financial condition and results of operations could be harmed.
Our
future success depends to a significant degree on the skills, efforts and
continued services of our executive officers and other key sales, marketing and
support personnel who have critical industry experience and relationships. If we
were to lose the services of one or more of our key executive officers and
senior management members, we may not be able to grow our business as we expect,
and our ability to compete could be harmed, adversely affecting our business and
prospects.
Changes
in the government regulation of our coffee farm could harm our
business
Our
coffee products are subject to foreign government regulation by the Jamaican
Coffee Board and international regulatory bodies. These regulatory bodies could
enact regulations which affect our products or the service providers which
distribute our products, such as limiting the scope of the service providers'
market, capping fees for services provided by them or imposing coffee quality
control standards which impact our products.
If
we are unable to obtain organic certification, our business may be
impaired.
It is
proposed that we obtain organic certification for our leased farmland in Jamaica
from the certifying agency Certification of Environmental Standards (CERES). If
we are unable to obtain certification we may be forced to grown non-organic
coffee on our property. This may impair our business plan and force us buy from
third party sources.
We need to continue as a going
concern if our business is to succeed, if we do not we will go out of
business.
Our
independent accountant's report to our audited financial statements for the
period ended January 31, 2009 indicates that there are a number of factors that
raise substantial doubt about our ability to continue as a going concern.
Such factors identified in the report are our accumulated deficit since
inception, our failure to attain profitable operations and our dependence upon
adequate financing to pay our liabilities. If we are not able to continue
as a going concern, it is likely investors will lose their
investments.
-7-
If
we do not obtain additional financing, our business will fail.
Our
current operating funds are less than necessary to complete all intended
exploration of the property, and therefore we will need to obtain additional
financing in order to complete our business plan. As of January 31, 2009
we had cash in the amount of $8,197. We currently have minimal operations
and we have no income.
Our
business plan calls for significant expenses in connection with the development
of our coffee property. We will require additional financing to sustain our
business operations if we are not successful in earning revenues once coffee
production is complete. We do not currently have any arrangements for
financing and we can provide no assurance to investors that we will be able to
find such financing if required. Obtaining additional financing would be subject
to a number of factors, including the market prices for coffee and general
market conditions. These factors may make the timing, amount, terms or
conditions of additional financing unavailable to us.
The most
likely source of future funds presently available to us is through the sale of
equity capital. Any sale of share capital will result in dilution to existing
shareholders.
Because
we have commenced limited business operations, we face a high risk of business
failure.
We have
only just recently commenced operations Accordingly, we have no
way to evaluate the likelihood that our business will be successful. We
were incorporated on September 27, 2004, and have been involved primarily in
organizational activities and the acquisition of our mineral property. We
have not earned any revenues as of the date of this prospectus.
Prior to
completion of our coffee production stage, we anticipate that we will incur
increased operating expenses without realizing any significant revenues.
We therefore expect to incur significant losses into the foreseeable
future. There is no history upon which to base any assumption as to the
likelihood that we will prove successful, and we can provide investors with no
assurance that we will generate any operating revenues or ever achieve
profitable operations. If we are unsuccessful in addressing these risks, our
business will most likely fail.
We
lack an operating history and we expect to have losses in the
future.
We have
not started our proposed business operations or realized any revenues. We have
no operating history upon which an evaluation of our future success or failure
can be made. Our ability to achieve and maintain profitability and positive cash
flow is dependent upon the following:
·
|
Our
ability to operate a profitable coffee farm;
|
·
|
Our
ability to generate revenues; and
|
·
|
Our
ability to reduce farming and marketing
costs.
|
Based
upon current plans, we expect to incur operating losses in future periods. This
will happen because there are expenses associated with the development of our
coffee property. We cannot guarantee that we will be successful in generating
revenues in the future. Failure to generate revenues will cause us to go out of
business.
Item
2. Description of Property.
Our
administrative office is located at 357 South Fairfax Avenue Suite 321,Los
Angeles, CA 90036 and our telephone number is (310) 467-9832. Effective February
15, 2008, Marley Coffee entered into a lease agreement for 52 acres of coffee
farmland in the Jamaican Blue Mountains. The term is eight years and
has an annual lease payment of $1,000.
The farm
is located at Chepstowe,Skibo in Portland, Jamaica. The farm is spread out over
52 acres of land. Currently only 12 acres have been identified for coffee
production but this will be increased but to a maximum of 30 acres to preserve
ecological diversity. Due to the altitude and geographic location of the land on
which the farm is located, the coffee produced can be classified as “Blue
Mountain Coffee.” At the moment, there are other marketable crops being produced
on the farm. These included sheen, cocoa, coconuts, bananas, plantain, oranges
etc. which may be sold on the local market.
We have a
website address at www.marleycoffee.com.
-8-
Item
3. Legal Proceedings.
We know
of no material, active or pending legal proceedings against us, nor are we
involved as a plaintiff in any material proceedings or pending litigation .
There are no proceedings in which any of our directors, officers or affiliates,
or any registered beneficial shareholder are an adverse party or has a material
interest adverse to us.
Item
4. Submissions of Matters to a Vote of Security Holders.
None.
PART
II
Item
5. Market for Common Equity and Related Stockholder Matters.
As of May
15, 2009 there were 33 holders of record of our common stock. As of such date,
32,570,198 common shares were issued and outstanding. Our common stock is quoted
on the Over-the-Counter Bulletin Board under the symbol "MYCF.
Our
common shares are issued in registered form. Empire Stock Transfer, Henderson,
Nevada 89128-8380 (Telephone: 702-988-1242; Facsimile: 702-988-1244) is the
registrar and transfer agent for our common shares.
There are
no outstanding options or warrants to purchase, or securities convertible into,
our common shares. We have not declared any dividends since incorporation and do
not anticipate that we will do so in the foreseeable future. Although there are
no restrictions that limit the ability to pay dividends on our common shares,
our intention is to retain future earnings for use in our operations and the
expansion of our business.
Recent
Sales of Unregistered Securities
In
February 2008, the Company received $125,000 as subscription for private
placement of 125,000 shares of the Company’s common stock at $1.00 per share.
The related common shares were issued in May, 2008.
These
shares were acquired from us in private placements that were exempt from
registration under Regulation S of the Securities Act of 1933.
In
November 2008 the Company received $47,500 as subscription for private placement
of 38,000 shares of the Company’s common stock at $1.25 per share. These shares were acquired
from us in private placements that were exempt from registration under
Regulation S of the Securities Act of 1933.
The
subscription
Item
6. Selected Financial Data
Not
required for smaller reporting companies.
Item
7. Management Discussion and Analysis and Plan of Operation.
Results
of Operations.
For the
year ending January 31, 2009 we posted losses of $200,686 as compared to losses
of $68,649 for the year ended January 31, 2008. Inception through January 31,
2009 losses total $294,104. General and administrative expenses are the
principal components of our losses since inception. The
principal source of cash was from private placements of our common
stock. The principal uses of cash resources and the dollar amounts
involved were as follows:
Consulting
fees to farm biologist: $14,000
Accounting
and audit fees: $27,000
Legal
fees: $16,000
Travel
fees for officers to farm in Jamaica: $9,000
Advertising:
$100,000
Farm
expenses including seedlings and labor: $60,000
-9-
Financial
Condition, Liquidity and Capital Resources
At
January 31, 2009, we had cash of $8,197.
At
January 31, 2009 our total assets were $90,547 comprised of cash, prepaid
expenses and property plant and equipment.
As of
January 31, 2009, our total liabilities were $17,137 comprised of third party
payables and related party payables. This compares to our total liabilities of
$38,475 at January 31, 2008.
Cash
Requirements
Over the
next twelve months we intend to use funds to commence marketing our product,
leasehold improvements and for general and administrative expenditures, as
follows:
Estimated Funding Required
During the Next Twelve Months
General
and Administrative
|
$ | 55,000 | ||
Operations
|
||||
Marketing/Advertising
Farm
Improvements
|
$ | 25,000 $70,000 | ||
Working
Capital
|
$ | 50,500 | ||
Total
|
$ | 200,500 |
As
January 31, 2009, we had a working capital deficit of $3,340. We will require
financing before we can implement our scaled back business plan and generate
significant revenues. We intend to raise additional capital required to
implement our business plan.
We will
attempt to meet any additional needs through sales of our securities in
secondary offerings or private placements. We have no agreements in place to do
this at this time.
There are
no assurances that we will be able to obtain additional funds required for our
continued operations. In such event that we do not raise sufficient additional
funds by secondary offering or private placement, we will consider alternative
financing options, if any, or be forced to scale down or perhaps seven cease our
operations.
Recently
Issued Accounting Standards
The
adoption of recently issued pronouncements is not expected to have a material
effect on our financial position or results of operations.
-10-
APPLICATION
OF CRITICAL ACCOUNTING POLICIES
Our
financial statements and accompanying notes are prepared in accordance with
generally accepted accounting principles in the United States. Preparing
financial statements requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue, and expenses. These
estimates and assumptions are affected by management's application of accounting
policies. We believe that understanding the basis and nature of the estimates
and assumptions involved with the following aspects of our financial statements
is critical to an understanding of our financials.
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with an
original maturity of three months or less when purchased to be cash
equivalents.
Agricultural
Costs
Recurring
agricultural costs include costs relating to irrigation, fertilizing, seedling,
utility, farming wages and other ongoing crop and land maintenance activities.
Recurring agricultural costs are capitalized as inventory and expensed when the
crops are harvested and sold. Non-recurring agricultural costs, primarily
comprising of soil and farm improvements and other long-term crop growing costs
that benefit multiple harvests, including amortization of farm equipment are
capitalized as property and equipment and amortized over the estimated
production period.
Deferred Marketing and
Advertising Costs
Costs
incurring for producing marketing and advertising products including media,
production and other promotional cost are deferred until the marketing or
advertising first takes place. The Company’s marketing video was released during
the fourth quarter. The expenditures on advertisement production amounted to
$78,094 since inception, and are included with general and administrative
expenses in the accompanying financial statements.
Inventories
Inventories
are valued at the lower of cost or market. Costs related to inventory are
determined on the first-in, first-out basis. Specific identification and average
cost methods are also used primarily for certain packing materials and operating
supplies.
Property and
Equipment
Property
and equipment are stated at cost plus the fair value of asset retirement
obligations, if any, less accumulated depreciation. Depreciation is computed by
the straight-line method over the estimated useful lives of these assets. The
Company reviews long-lived assets to be held and used for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. If an evaluation of recoverability is required, the estimated
undiscounted future cash flows directly associated with the asset are compared
to the asset’s carrying amount. If this comparison indicates that there is an
impairment, the amount of the impairment is calculated by comparing the carrying
value to discounted expected future cash flows or comparable market values,
depending on the nature of the asset.
Farm
equipment is amortized over its estimated useful life for farm production and
recorded as farming costs.
Revenue
Recognition
Revenue
is recognized at the point title and risk of loss is transferred to the
customer, collection is reasonably assured, persuasive evidence of an
arrangement exists and the price is fixed or determinable. As of January 31,
2009 the Company has not generated sales.
-11-
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the balance sheet. Actual results could differ from those
estimates.
Basic Loss per
Share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
Income
Taxes
The
Company follows Statement of Financial Accounting Standards Number 109
(SFAS109)"Accounting for Income Taxes." Deferred income taxes reflect the net
effect of (a) temporary difference between carrying amounts of assets and
liabilities for financial purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carry forwards.
The asset
and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities. The Company records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.
Financial
Instruments
The
Company's financial instruments consist of cash, prepaid expenses, accounts
payable and due to related party. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The fair values of these
financial instruments approximate their carrying values, unless otherwise
noted.
Foreign Currency
Translation
The
financial statements are presented in United States dollars. In
accordance with Statement of Financial Accounting Standards No. 52, “Foreign
Currency Translation”, foreign denominated monetary assets and liabilities are
translated into their United States dollar equivalents using foreign exchange
rates which prevailed at the balance sheet date. Non monetary assets
and liabilities are translated at the exchange rates prevailing at the
transaction date. Revenue and expenses are translated at average rates of
exchange during the year. Gains or losses resulting from foreign
currency transactions are included in results of operations.
-12-
Item
8. Financial Statements.
Our
financial statements are stated in United States Dollars (US$) and are prepared
in accordance with United States Generally Accepted Accounting
Principles.
Report of
Independent Registered Public Accounting Firm, LBB & Associates Ltd., LLP
for the audited financial statements as of January 31, 2009 and 2008, and for
each of the years ended January 31, 2009 and 2008 and the period from September
27, 2004 (Inception) through January 31, 2009 is included herein immediately
preceding the audited financial statements.
Marley
Coffee Inc. (audited):
·
|
Report
of Independent Registered Public Accounting Firm, dated April 18,
2009.
|
·
|
Balance
Sheets at January 31, 2009 and 2008.
|
·
|
Statements
of Operations for the years ended January 31, 2009 and 2008, and for the
period from September 27, 2004 (inception) to January 31,
2009.
|
·
|
Statements
of Stockholders Equity from September 27, 2004 (inception) to January 31,
2009.
|
·
|
Statements
of Cash Flows for the years ended January 31, 2009 and 2008, and for the
period from September 27, 2004 (inception) to January 31,
2009.
|
·
|
Notes
to Financial Statements
|
-13-
Report of Independent
Registered Public Accounting Firm
To the
Board of Directors of
Marley
Coffee Inc.
(A
Development Stage Company)
Los
Angeles, California
We have
audited the accompanying balances sheets of Marley Coffee Inc. (the “Company”)
as of January 31, 2009 and 2008, and the related statements of operations,
stockholders' equity, and cash flows for each of the years then ended and for
the period from September 27, 2004 (inception) through January 31, 2009. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement. The
Company is not required to have, nor were we engaged to perform, an audit of its
internal control over financial reporting. Our audit included
consideration of internal control over financial reporting as a basis for
designing audit procedures that are appropriate in the circumstances, but not
for the purpose of expressing an opinion on the effectiveness of the Company’s
internal control over financial reporting. Accordingly, we express no
such opinion. An audit also includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our
opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Marley Coffee Inc. as of January
31, 2009 and 2008, and the results of its operations and its cash flows for each
of the years then ended and the period from September 27, 2004 (inception)
through January 31, 2009 in conformity with accounting principles generally
accepted in the United States of America.
As
discussed in Note 1 to the financial statements, the Company's absence of
significant revenues, recurring losses from operations, and its need for
additional financing in order to fund its projected loss in 2010 raise
substantial doubt about its ability to continue as a going concern. The 2009
financial statements do not include any adjustments that might result from the
outcome of this uncertainty.
LBB &
Associates Ltd., LLP
Houston,
Texas
April 18,
2009
F-1
MARLEY
COFFEE INC.
(A
DEVELOPMENT STAGE COMPANY)
BALANCE
SHEETS
January
31, 2009
|
January
31, 2008
|
|||||||
ASSETS
|
||||||||
Current
assets
|
||||||||
Cash
|
$ | 8,197 | $ | 89,802 | ||||
Prepaid
expenses
|
5,600 | 36,207 | ||||||
Total
current assets
|
13,797 | 126,009 | ||||||
Property
and equipment, net of accumulated depreciation
|
76,750 | 14,062 | ||||||
Total
assets
|
$ | 90,547 | $ | 140,071 | ||||
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||||||
Current
liabilities
|
||||||||
Accounts
payable
|
$ | 5,685 | $ | 18,887 | ||||
Accounts
payable to related party
|
11,452 | 19,588 | ||||||
Total
current liabilities
|
17,137 | 38,475 | ||||||
Total
liabilities
|
17,137 | 38,475 | ||||||
Commitments
and Contingencies
|
||||||||
STOCKHOLDERS'
EQUITY:
|
||||||||
Common
stock, $.001 par value, 1,704,287,175 shares authorized,
|
||||||||
32,570,198 and 86,956,587shares
issued and outstanding
|
||||||||
as of January 31, 2009 and 2008,
respectively
|
32,570 | 86,956 | ||||||
Additional
paid-in capital
|
334,944 | 108,058 | ||||||
Deficit
accumulated during the development stage
|
(294,104 | ) | (93,418 | ) | ||||
Total
Stockholders' Equity
|
73,410 | 101,596 | ||||||
TOTAL
LIABILITIES AND STOCKHOLDERS' EQUITY
|
$ | 90,547 | $ | 140,071 |
See
accompanying notes to financial statements.
F-2
MARLEY COFFEE
INC.
|
(A DEVELOPMENT STAGE
COMPANY)
|
STATEMENTS OF
OPERATIONS
|
Years Ended January 31, 2009
and 2008
|
and period from September 27,
2004 (Inception) through January 31, 2009
|
Year
|
Year
|
Inception
|
||||||||||
Ended
|
Ended
|
through
|
||||||||||
January
31, 2009
|
January
31, 2008
|
January
31, 2009
|
||||||||||
Expenses:
|
||||||||||||
General
and administrative
|
$ | 197,603 | $ | 67,378 | $ | 289,750 | ||||||
Farming
cost
|
3,083 | 1,271 | 4,354 | |||||||||
Net
loss
|
$ | (200,686 | ) | $ | (68,649 | ) | $ | (294,104 | ) | |||
Net
loss per share:
|
||||||||||||
Basic
and diluted
|
$ | (0.00 | ) | $ | (0.00 | ) | ||||||
Weighted
average shares outstanding:
|
||||||||||||
Basic
and diluted
|
45,643,975 | 86,846,614 |
See
accompanying notes to financial statements.
F-3
MARLEYCOFFEE
INC.
(A
DEVELOPMENT STAGE COMPANY)
STATEMENTS
OF STOCKHOLDERS' EQUITY
Period
from September 27, 2004 (Inception) through January 31, 2009
Deficit
accumulated
|
||||||||||||||||||||
Common
stock
|
Additional
|
during
the
|
||||||||||||||||||
Shares
|
Amount
|
paid-in
capital
|
development
stage
|
Total
|
||||||||||||||||
Issuance
of common stock for cash to founders
|
71,171,487 | $ | 71,171 | $ | (68,171 | ) | $ | - | $ | 3,000 | ||||||||||
Net
loss
|
- | - | - | (40 | ) | (40 | ) | |||||||||||||
Balance,
January 31, 2005
|
71,171,487 | 71,171 | (68,171 | ) | (40 | ) | 2,960 | |||||||||||||
Imputed
interest
|
- | - | 402 | - | 402 | |||||||||||||||
Net
loss
|
- | - | - | (11,549 | ) | (11,549 | ) | |||||||||||||
Balance,
January 31, 2006
|
71,171,487 | 71,171 | (67,769 | ) | (11,589 | ) | (8,187 | ) | ||||||||||||
Issuance
of common stock for cash
|
15,660,100 | 15,660 | 50,350 | - | 66,010 | |||||||||||||||
Imputed
interest
|
- | - | 602 | - | 602 | |||||||||||||||
Net
loss
|
- | - | - | (13,180 | ) | (13,180 | ) | |||||||||||||
Balance,
January 31, 2007
|
86,831,587 | 86,831 | (16,817 | ) | (24,769 | ) | 45,245 | |||||||||||||
Issuance
of common stock for cash
|
125,000 | 125 | 124,875 | - | 125,000 | |||||||||||||||
Net
loss
|
- | - | - | (68,649 | ) | (68,649 | ) | |||||||||||||
Balance,
January 31, 2008
|
86,956,587 | $ | 86,956 | $ | 108,058 | $ | (93,418 | ) | $ | 101,596 | ||||||||||
Issuance
of common stock for cash
|
125,000 | 125 | 124,875 | - | 125,000 | |||||||||||||||
Shares
returned to treasury for no consideration
|
(54,511,389 | ) | (54,511 | ) | 54,511 | - | - | |||||||||||||
Subscription
received
|
- | - | 47,500 | - | 47,500 | |||||||||||||||
Net
loss
|
- | - | - | (200,686 | ) | (200,686 | ) | |||||||||||||
Balance,
January 31, 2009
|
32,570,198 | $ | 32,570 | $ | 334,944 | $ | (294,104 | ) | $ | 73,410 |
See
accompanying notes to financial statements.
F-4
MARLEY COFFEE
INC.
|
(A DEVELOPMENT STAGE
COMPANY)
|
STATEMENTS OF CASH
FLOWS
|
Years Ended January 31, 2009
and 2008
|
and
the period from September 27, 2004 (Inception) through January 31,
2009
|
Year
|
Year
|
Inception
|
||||||||||
Ended
|
Ended
|
through
|
||||||||||
January
31,
|
January
31,
|
January
31,
|
||||||||||
2009
|
2008
|
2009
|
||||||||||
CASH
FLOWS FROM OPERATING ACTIVITIES:
|
||||||||||||
Net
loss
|
$ | (200,686 | ) | $ | (68,649 | ) | $ | (294,104 | ) | |||
Adjustments
to reconcile net loss to cash used by operating
|
||||||||||||
activities:
|
||||||||||||
Imputed interest on shareholder advance
|
- | - | 1,004 | |||||||||
Depreciation
|
1,268 | 271 | 1,539 | |||||||||
Net
change in:
|
||||||||||||
Prepaid
expenses
|
30,607 | (36,207 | ) | (5,600 | ) | |||||||
Accounts
payable
|
(13,202 | ) | 18,017 | 5,685 | ||||||||
Accounts
payable to related party
|
(8,136 | ) | 19,588 | 11,452 | ||||||||
CASH
FLOWS USED IN OPERATING ACTIVITIES
|
(190,149 | ) | (66,980 | ) | (280,024 | ) | ||||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||||||
Purchase
of property and equipment
|
(63,956 | ) | (14,333 | ) | (78,289 | ) | ||||||
CASH
FLOWS USED IN INVESTING ACTIVITIES
|
(63,956 | ) | (14,333 | ) | (78,289 | ) | ||||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||||||
Shareholder
advances, net
|
- | (6,024 | ) | - | ||||||||
Proceeds
from sale of common stock
|
125,000 | 125,000 | 319,010 | |||||||||
Subscription
received
|
47,500 | - | 47,500 | |||||||||
CASH
FLOWS PROVIDED BY FINANCING
|
172,500 | 118,976 | 366,510 | |||||||||
NET
INCREASE (DECREASE) IN CASH
|
(81,605 | ) | 37,663 | 8,197 | ||||||||
Cash,
beginning of period
|
89,802 | 52,139 | - | |||||||||
Cash,
end of period
|
$ | 8,197 | $ | 89,802 | $ | 8,197 | ||||||
SUPPLEMENTAL
CASH FLOW INFORMATION
|
||||||||||||
Cash
paid for interest
|
$ | - | $ | - | $ | - | ||||||
Cash
paid for income taxes
|
$ | - | $ | - | $ | - |
See
accompanying notes to financial statements.
F-5
MARLEY
COFFEE INC.
(A
DEVELOPMENT STAGE COMPANY)
NOTES
TO FINANCIAL STATEMENTS
JANUARY
31, 2009
NOTE
1 –NATURE OF OPERATIONS AND BASIS OF PRESENTATION
Marley
Coffee Inc. (formerly Global Electronic Recovery Corp.) (the "Company") was
incorporated on September 27, 2004 under the laws of Nevada to engage in the
business of electronic waste recycling. Pursuant to a re-evaluation of its
business plan, the Company, in October 2007 commenced producing its own premium
organic coffee on leased farmland in the Blue Mountain region of Jamaica. On
February 5, 2008 the Company created a subsidiary called Marley Coffee Inc. On
February 25, 2008 the Company changed its name from Global Electronic Recovery
Corp. to Marley Coffee Inc. when the Company merged with its subsidiary Marley
Coffee Inc. to pursue the business of premium roasted coffee branded Marley
Coffee.
These
financial statements have been prepared on the basis of a going concern which
contemplates the realization of assets and the satisfaction of liabilities in
the normal course of business. As at January 31, 2009, the Company has incurred
significant losses since inception. Because of its recurring losses, the Company
will require additional working capital to develop its business
operations.
There are
no assurances that the Company will be able to either (1) achieve a level of
revenues adequate to generate sufficient cash flow from operations; or (2)
obtain additional financing through either private placement, public offerings
and/or bank financing necessary to support the Company's working capital
requirements. No assurance can be given that additional financing will be
available, or if available, will be on terms acceptable to the Company. If
adequate working capital is not available, the Company may not continue its
operations.
These
conditions raise substantial doubt about the Company's ability to continue as a
going concern. These financial statements do not include any adjustments
relating to the recoverability and classification of asset carrying amounts or
the amount and classification of liabilities that might be necessary should the
Company be unable to continue as a going concern.
NOTE
2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Cash and Cash
Equivalents
The
Company considers all highly liquid investments with an original maturity of
three months or less when purchased to be cash equivalents.
Agricultural Costs
Recurring
agricultural costs include costs relating to irrigation, fertilizing, seedling,
utility, farming wages and other ongoing crop and land maintenance activities.
Recurring agricultural costs are capitalized as inventory and expensed when the
crops are harvested and sold. Non-recurring agricultural costs, primarily
comprising of soil and farm improvements and other long-term crop growing costs
that benefit multiple harvests, including amortization of farm equipment are
capitalized as property and equipment and amortized over the estimated
production period.
Costs
incurring for producing marketing and advertising products including media,
production and other promotional cost are deferred until the marketing or
advertising first takes place. The Company’s marketing video was released during
the fourth quarter. The expenditures on advertisement production amounted to
$78,094 since inception, and are included with general and administrative
expenses in the accompanying financial statements.
Inventories
Inventories
are valued at the lower of cost or market. Costs related to inventory are
determined on the first-in, first-out basis. Specific identification and average
cost methods are also used primarily for certain packing materials and operating
supplies.
Property and
Equipment
Property
and equipment are stated at cost plus the fair value of asset retirement
obligations, if any, less accumulated depreciation. Depreciation is computed by
the straight-line method over the estimated useful lives of these assets. The
Company reviews long-lived assets to be held and used for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable. If an evaluation of recoverability is required, the estimated
undiscounted future cash flows directly associated with the asset are compared
to the asset’s carrying amount. If this comparison indicates that there is an
impairment, the amount of the impairment is calculated by comparing the carrying
value to discounted expected future cash flows or comparable market values,
depending on the nature of the asset.
Farm
equipment is amortized over its estimated useful life for farm production and
recorded as farming costs.
F-6
Revenue Recognition
Revenue
is recognized at the point title and risk of loss is transferred to the
customer, collection is reasonably assured, persuasive evidence of an
arrangement exists and the price is fixed or determinable. As of January 31,
2009 the Company has not generated sales.
Use of Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities at
the date of the balance sheet. Actual results could differ from those
estimates.
Basic Loss per Share
Basic
loss per share has been calculated based on the weighted average number of
shares of common stock outstanding during the period.
Income Taxes
The
Company follows Statement of Financial Accounting Standards Number 109
(SFAS109)"Accounting for Income Taxes." Deferred income taxes reflect the net
effect of (a) temporary difference between carrying amounts of assets and
liabilities for financial purposes and the amounts used for income tax reporting
purposes, and (b) net operating loss carry forwards.
The asset
and liability approach is used to account for income taxes by recognizing
deferred tax assets and liabilities for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of assets
and liabilities. The Company records a valuation allowance to reduce the
deferred tax assets to the amount that is more likely than not to be
realized.
Financial Instruments
The
Company's financial instruments consist of cash, prepaid expenses, accounts
payable and due to related party. Unless otherwise noted, it is management's
opinion that the Company is not exposed to significant interest, currency or
credit risks arising from these financial instruments. The fair values of these
financial instruments approximate their carrying values, unless otherwise
noted.
Foreign Currency
Translation
The
financial statements are presented in United States dollars. In accordance with
Statement of Financial Accounting Standards No. 52, “Foreign Currency
Translation”, foreign denominated monetary assets and liabilities are translated
into their United States dollar equivalents using foreign exchange rates which
prevailed at the balance sheet date. Non monetary assets and liabilities are
translated at the exchange rates prevailing at the transaction date. Revenue and
expenses are translated at average rates of exchange during the year. Gains or
losses resulting from foreign currency transactions are included in results of
operations. The Company’s functional currency is the United
States dollar.
Recent Accounting
Pronouncements
The
Company does not expect the adoption of recently issued accounting
pronouncements to have a significant impact on the Company’s results of
operations, financial position or cash flow.
F-7
NOTE
3 – PROPERTY AND EQUIPMENT
Property
and equipment consist of farm improvements and farm equipment. The farm
equipment is amortized using straight-line method over their estimated useful
life of two years. The farm improvements will be amortized beginning when the
first coffee crop is ready for harvest over the then estimated useful
life.
January
31, 2009
|
January
31, 2008
|
|||||||
Farm
improvements
|
$ | 73,905 | $ | 12,166 | ||||
Equipment
|
4,384 | 2,167 | ||||||
78,289 | 14,333 | |||||||
Less:
accumulated depreciation
|
(1,539 | ) | (271 | ) | ||||
$ | 76,750 | $ | 14,062 |
Depreciation
expense for the years ending January 31, 2009 and 2008 is $1,268 and $271,
respectively.
NOTE
4 – RELATED PARTY TRANSACTIONS
In
October 2004, a director and shareholder of the Company advanced the Company
approximately $4,000 with no specific terms of repayment. The same advance was
increased by $2,000 in January 2006. In the year ended January 31, 2008 the
entire advance of $6,024 was repaid to the shareholder.
At
January 31, 2008, $19,588 was owed to a director of the Company for the
Company’s expenditures. During the year ended January 31, 2009, a net repayment
of $8,136 was made to this director, reducing the amount owed to this director
at January 31, 2009 to $11,452. The advance is unsecured, non-interest bearing
and has no specific terms of repayment.
F-8
NOTE
5 – STOCKHOLDERS’ EQUITY
On
October 23, 2007, the Company completed a 23 (approximate) for one (1) forward
stock split of the Company's authorized, issued and outstanding shares of common
stock. As a result, the Company's authorized capital increased from 75,000,000
to 1,704,287,175 shares of common stock with a par value of $0.001 each, and
issued and outstanding share capital increased from 3,660,100 shares of common
stock to 86,831,587 shares of common stock.
All
references in these financial statements to number of common shares, price per
share and weighted average number of common shares outstanding prior to the 23:1
forward split have been adjusted to reflect these stock splits on a retroactive
basis, unless otherwise noted.
In
December 2007, the Company issued 125,000 shares of the Company’s common stock
at $1.00 per share for gross proceeds of $125,000.
In
February 2008, the Company received $125,000 as subscription for private
placement of 125,000 shares of the Company’s common stock at $1.00 per share.
The related common shares were issued in May, 2008. These
shares were acquired from us in private placements that were exempt from
registration under Regulation S of the Securities Act of
1933.
In April,
2008, David O’Neill transferred 13,660,099 common shares to Rohan Marley for no
consideration, and transferred 3,000,000 common shares to Shane Whittle for cash
consideration of $20,000. During the same period, Rohan Marley transferred
1,026,507 shares to Jonathan Forster for no consideration, and David O’Neill
returned 54,511,389 common shares to the treasury of the Company for no
consideration.
In
November 2008 the Company received $47,500 as subscription for private placement
of 38,000 shares of the Company’s common stock at $1.25 per share. The related
common shares were not issued by January 31, 2009.
NOTE
6 – INCOME TAXES
No net
provision for refundable Federal income tax has been made in the accompanying
statement of operations because no recoverable taxes were paid previously.
Similarly, no deferred tax asset attributable to the net operating loss carry
forward has been recognized, as it is not deemed likely to be
realized.
F-9
The
provision for Federal income tax consists of the following:
Year
ended
January
31, 2009
|
Year
ended
January
31, 2008
|
|||||||
Federal
income tax attributable to:
|
||||||||
Current
operations
|
$ | 68,000 | $ | 23,000 | ||||
Less,
change in valuation allowance
|
(68,000 | ) | (23,000 | ) | ||||
Net
provision
|
$ | - | $ | - |
The
cumulative tax effect at the expected rate of 34% of significant items
comprising the Company’s net deferred tax amount is as follows:
January
31, 2009
|
||||
Deferred
tax asset attributable to:
|
||||
Net
operating loss carryover
|
$ | 100,000 | ||
Valuation
allowance
|
(100,000 | ) | ||
Net
deferred tax asset
|
$ | - |
NOTE
7 – COMMITMENTS
On
October 31, 2007, the Company entered into a farm lease agreement with a Company
owned by one of the directors, HM Estates (the “Landowner”), of Chepstowe
Portland Farm, Jamaica to grow coffee on a farm situated in the Blue Mountain
Coffee region of Jamaica. The term of the lease is from February 15, 2008 to
February 15, 2015, renewable with extension agreement signed four month before
the end of the lease term. The lease payment is $1,000 per year with the first
payment due upon execution of the agreement (paid) and the subsequent annual
payments due on every December 15 (2008 payment made). The cost of the lease is
recorded as farming expense.
In
November 2007, the Company entered into a car lease for the benefit of one of
the directors. The lease expires in October 2011, and requires monthly payments
of approximately $400 per month.
NOTE
8 – LEGAL SETTLEMENT
In August
2007, the Company signed an agreement with M&A Ventures Ltd. (“M&A”) for
developing a business plan and marketing strategies and related services. Total
fees for the services are $45,558 (CAN $50,000) payable in two installments of
$22,779 (CAN $25,000), with the first installment payable upon signing the
agreement (paid), and the second and final installment payable upon completion
and presentation of the business plan.
However,
management deemed M&A’s delivered product to be deficient and declined to
pay the outstanding balance of $22,779 (CAN$25,000), for which M&A filed a
claim against the Company in the British Columbia Small Claims Court in
Canada.
The
Company has defended the action and asserted a counterclaim seeking the return
of $24,425 (CAN $25,000) already paid to M&A. On June 10, 2008, the parties
attended a mediation and the parties reached a settlement where both parties
have agreed to withdraw their respective claims.
F-10
Item
9. Changes In and Disagreements With Accountants on Accounting and Financial
Disclosure.
None
Item
9A. Controls and Procedures.
Management’s
Annual Report on Internal Control over Financial Reporting
Internal
control over financial reporting refers to the process designed by, or under the
supervision of, our Chief Executive Officer and Chief Financial Officer, and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with
generally accepted accounting principles, and includes those policies and
procedures that:
(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 authorization of our management and
directors; and
(3)
Provide reasonable assurance regarding prevention or timely detection of
unauthorized acquisitions, use or disposition of our assets that could have a
material effect on the financial statements.
Internal
control over financial reporting cannot provide absolute assurance of achieving
financial reporting objectives because of its inherent limitations. Internal
control over financial reporting is a process that involves human diligence and
compliance and is subject to lapses in judgment and breakdowns resulting from
human failures. Internal control over financial reporting also can be
circumvented by collusion or improper management override. Because of such
limitations, there is a risk that material misstatements may not be prevented or
detected on a timely basis by internal control over financial reporting.
However, these inherent limitations are known features of the financial
reporting process. Therefore, it is possible to design into the process
safeguards to reduce, though not eliminate, this risk. Management is responsible
for establishing and maintaining adequate internal control over financial
reporting for the Company.
Management,
with the participation of our principal executive and financial officers,
conducted an evaluation of the effectiveness of our internal control over
financial reporting, as of January 31, 2009, based on the framework set forth in
the report entitled Internal
Control-Integrated Framework published by the Committee of Sponsoring
Organizations of the Treadway Commission, known as COSO, to evaluate the
effectiveness of our internal control over financial reporting. Based on this
assessment, management has concluded that our internal control over financial
reporting was effective as of January 31, 2009.
This
Annual Report does not include an attestation report of our independent
registered public accounting firm regarding internal control over financial
reporting. Our internal control over financial reporting was not subject to
attestation by our independent registered public accounting firm pursuant to
temporary rules of the SEC that permit us to provide only management’s report in
this Annual Report.
There has
been no change in our internal controls over financial reporting during our most
recent fiscal quarter that has materially affected, or is reasonably likely to
materially affect, our internal controls over financial reporting.
-14-
Item
9B. Other Information
None.
PART
III
Item
10. Directors, Executive Officers, Promoters and Control Persons; Compliance
with Section16 (a) of the Exchange Act.
Directors
and Executive Officers, Promoters and Control Persons
Our
directors, executive officers and other significant employees, their ages,
positions held and duration each person has held that position, are as
follows:
Name
|
Position
Held with the
Company
|
Age
|
Date
First Elected
or
Appointed
|
Shane
Whittle
|
President,
Treasurer, Secretary & Director
|
33
|
August
22, 2007
|
Rohan
Marley
|
Director
|
33
|
March
7, 2008
|
Business
Experience
The
following is a brief account of the education and business experience of each
director, executive officer and key employee during at least the past five
years, indicating each person's principal occupation during the period, and the
name and principal business of the organization by which he or she was
employed.
Shane
Whittle, President, Treasurer, Secretary and Director
Mr.
Whittle is currently the CEO of Privatekits.com a provider of health diagnostic
kits and the President of Whittle Investments, areal estate development
company.
Rohan
Marley, Director
Rohan
Marley is the son of late reggae artist Bob Marley. Rohan Marley is heavily
involved in all of the family businesses including 56 Hope Road Music, Bob
Marley Music, Zion Rootswear as well as various land and resort holdings across
the globe. Rohan Marley founded Tuff Gong Clothing in 2004.
Involvement
in Certain Legal Proceedings
Our
directors, executive officers and control persons have not been involved in any
of the following events during the past five years:
1.
|
any
bankruptcy petition filed by or against any business of which such person
was a general partner or executive officer either at the time of the
bankruptcy or within two years prior to that time;
|
2.
|
any
conviction in a criminal proceeding or being subject to a pending criminal
proceeding (excluding traffic violations and other minor
offenses);
|
3.
|
being
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting his
involvement in any type of business, securities or banking activities;
or
|
4.
|
being
found by a court of competent jurisdiction (in a civil action), the
Commission or the Commodity Futures Trading Commission to have violated a
federal or state securities or commodities law, and the judgment has not
been reversed, suspended, or
vacated.
|
-15-
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 401(e) of Regulation S-B, and is” independent" as the term is used in Item
7(d)(3)(iv) of Schedule 14Aunder the Securities Exchange Act of 1934, as
amended.
We
believe that the members of our Board of Directors are collectively capable of
analyzing and evaluating our financial statements and understanding internal
controls and procedures for financial reporting. In addition, 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 generated limited revenues to date.
Code
of Ethics
Effective
October 30, 2005, our company's board of directors adopted a Code of Business
Conduct and Ethics that applies to, among other persons, our company’s president
(being our principal executive officer) and our company’s secretary (being our
principal financial and accounting officer and controller), as well as persons
performing similar functions. As adopted, our Code of Business Conduct and
Ethics sets forth written standards that are designed to deter wrongdoing and to
promote:
1.
|
honest
and ethical conduct, including the ethical handling of actual or apparent
conflicts of interest between personal and professional
relationships;
|
2.
|
full,
fair, accurate, timely, and understandable disclosure in reports and
documents that we file with, or submit to, the Securities and Exchange
Commission and in other public communications made by
us;
|
3.
|
compliance
with applicable governmental laws, rules and
regulations;
|
4.
|
the
prompt internal reporting of violations of the Code of Business Conduct
and Ethics to an appropriate person or persons identified in the Code of
Business Conduct and Ethics; and
|
5.
|
accountability
for adherence to the Code of Business Conduct and
Ethics.
|
Our Code
of Business Conduct and Ethics requires, among other things, that all of our
company's personnel shall be accorded full access to our president and secretary
with respect to any matter which may arise relating to the Code of Business
Conduct and Ethics. Further, all of our company's personnel are to be accorded
full access to our company's board of directors if any such matter involves an
alleged breach of the Code of Business Conduct and Ethics by our president or
secretary.
In
addition, our Code of Business Conduct and Ethics emphasizes that all employees,
and particularly managers and/or supervisors, have a responsibility for
maintaining financial integrity within our company, consistent with generally
accepted accounting principles, and federal, provincial and state securities
laws. Any employee who becomes aware of any incidents involving financial or
accounting manipulation or other irregularities, whether by witnessing the
incident or being told of it, must report it to his or her immediate supervisor
or to our company's president or secretary. If the incident involves an alleged
breach of the Code of Business Conduct and Ethics by the president or secretary,
the incident must be reported to any member of our board of directors. Any
failure to report such inappropriate or irregular conduct of others is to be
treated as a severe disciplinary matter. It is against our company policy to
retaliate against any individual who reports in good faith the violation or
potential violation of our company's Code of Business Conduct and Ethics by
another
-16-
Our Code of Business Conduct and
Ethics is filed herewith with the Securities and Exchange Commission as
Exhibit 14.1 to this annual report. We will provide a copy of the Code of
Business Conduct and Ethics to any person without charge, upon request. Requests
can be sent to: Marley Coffee Inc., Suite 321 357 South Fairfax Avenue, Los
Angeles California 90036.
Section
16(a) Beneficial Ownership Compliance
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 registered class of
our equity securities to file with the Securities and Exchange Commission
initial statements of beneficial ownership, reports of changes in ownership and
annual reports concerning their ownership of our 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 Securities and Exchange
Commission regulations to furnish us with copies of all Section 16(a) reports
they file.
To the
best of our knowledge, all executive officers, directors and greater than 10%
shareholders filed the required reports in a timely manner.
Item
11. Executive Compensation.
Neither
of our executive officers received any cash or other compensation during the
fiscal years ended January 31, 2009 and 2008.
There
were no grants of stock options or stock appreciation rights made during the
fiscal years ended January 31, 2009 and 2008 to our executive officers and
directors. There were no stock options outstanding as at January31, 2009. To
date, we have not granted stock options or stock appreciation rights to any of
our employees, consultants, directors or executive officers.
We intend
to pay consulting fees to our directors and officers in the future as we
determine necessary. In addition, we intend to compensate our directors in the
future with stock options to purchase common shares as awarded by our board of
directors or (as to future stock options) a compensation committee that may be
established. Directors are entitled to reimbursement for reasonable travel and
other out-of-pocket expenses incurred in connection with attendance at meetings
of our board of directors. Our board of directors may also award special
remuneration to any director undertaking any special services on our behalf
other than services ordinarily required of a director. No director received
and/or accrued any compensation for their services as a director, including
committee participation and/or special assignments.
There are
no formal management agreements with our directors or executive
officers.
We have
no plans or arrangements in respect of remuneration received or that may be
received by our executive officers to compensate such officers in the event of
termination of employment (as a result of resignation, retirement, change of
control) or a change of responsibilities following a change of control, where
the value of such compensation exceeds $60,000 per executive
officer.
There are
no arrangements or plans in which we provide pension, retirement or similar
benefits for directors or executive officers. We have no material bonus or
profit sharing plans pursuant to which cash or non-cash compensation is or may
be paid to our directors or executive officers, except that stock options may be
granted at the discretion of the Board of Directors or a committee
thereof.
-17-
Item
12. Security Ownership of Certain Beneficial Owners and Management and Related
Stockholder Matters.
Beneficial
Ownership
The
following table sets forth, as of May 15, 2009, certain information with respect
to the beneficial ownership of our common shares by each shareholder known to us
to be the beneficial owner of 5% of our common shares, and by each of our
officers and directors. Each person has sole voting and investment power with
respect to the common shares, except as otherwise indicated. Beneficial
ownership consists of a direct interest in the common shares, except as
otherwise indicated.
Name
and Address of
Beneficial
Owner
|
Amount
and Nature of
Beneficial
Ownership
|
Percentage
of
Class(1)
|
Rohan
Marley
|
12,635,592
common shares
|
39%
|
Shane
Whittle
|
3,000,000
common shares
|
9%
|
Directors
and Officers
(as
a group)
|
15,635,592
common shares
|
48%
|
(1)Based
on 32, 570,198 shares outstanding as of April 30, 2009.
Changes
in Control
We are
unaware of any contract or other arrangement the operation of which may at a
subsequent date result in a change in control of our company.
Item
13. Certain Relationships and Related Transactions.
In
October 2004, a director and shareholder of the Company advanced the Company
approximately $4,000 with no specific terms of repayment. The same advance was
increased by $2,000 in January 2006. In the year ended January 31, 2008 the
entire advance of $6,024 was repaid to the shareholder.
At
January 31, 2008, $19,588 was owed to a director of the Company for the
Company’s expenditures. During the year ended January 31, 2009, a net repayment
of $8,136 was made to this director, reducing the amount owed to this director
at January 31, 2009 to $11,452. The advance is unsecured, non-interest bearing
and has no specific terms of repayment.
Effective
February 15, 2008 Marley Coffee entered into a lease agreement for 52 acres of
coffee farmland in the Jamaican Blue Mountains. The term is eight
years and has an annual lease payment of $1,000. The lease is with
one of our directors Rohan Marley.
Item
14. Exhibits.
Exhibits required by Item 601 of
Regulation S-B
(3)
Articles of Incorporation and By-laws
3.1
Articles of Incorporation (incorporated by reference from our Registration
Statement on Form SB-2, filed on August 3, 2005).
3.2
Bylaws (incorporated by reference from our Registration Statement on Form SB-2,
filed on August 3, 2005).
(10)
Material Contracts
10.1
Farm Lease between Rohan Marley and the Company.
10.2
Subscription Agreement dated November 2008.
(31)
|
Section302
Certification
|
31.1
|
Certification
of Shane Whittle.
|
(32)
|
Section906
Certification
|
32.1
|
Certification
of Shane Whittle.
|
-18-
Item
15. Principal Accountant Fees and Services
Audit
Fees
The
aggregate fees billed by LBB & Associates Ltd., LLP for professional
services rendered for the audit of our annual financial statements included in
our Annual Report on Form 10-K for the fiscal years ended January 31, 2009 and
2008 were $7,100 and $9,500, respectively.
Audit
Related Fees
For the
fiscal years ended January 31, 2009 and 2008, the aggregate fees billed for
assurance and related services by LBB & Associates Ltd., LLP relating to the
performance of the audit of our financial statements which are not reported
under the caption "Audit Fees" above, was $9,870 and $5,800,
respectively.
Tax
Fees
For the
fiscal year ended January 31, 2009, the aggregate fees billed by LBB &
Associates Ltd., LLP for other non-audit professional services, other than those
services listed above, totaled $0.
We do not
use LBB & Associates Ltd., LLP for financial information system design and
implementation. These services, which include designing or implementing a system
that aggregates source data underlying the financial statements or generates
information that is significant to our financial statements, are provided
internally or by other service providers. We do not engage LBB & Associates
Ltd., LLP to provide compliance outsourcing services.
Effective
May 6, 2003, the Securities and Exchange Commission adopted rules that require
that before LBB & Associates Ltd., LLP is engaged by us to render any
auditing or permitted non-audit related service, the engagement be:
·
|
approved
by our audit committee (which consists of entire Board of Directors);
or
|
·
|
entered
into pursuant to pre-approval policies and procedures established by the
audit committee, provided the policies and procedures are detailed as to
the particular service, the audit committee is informed of each service,
and such policies and procedures do not include delegation of the audit
committee's responsibilities to
management.
|
The audit
committee pre-approves all services provided by our independent auditors. The
pre-approval process has just been implemented in response to the new rules, and
therefore, the audit committee does not have records of what percentage of the
above fees were pre-approved. However, all of the above services and fees were
reviewed and approved by the audit committee either before or after the
respective services were rendered.
The audit
committee has considered the nature and amount of fees billed bulb &
Associates, LLP and believes that the provision of services for activities
unrelated to the audit is compatible with maintaining LBB &Associates Ltd.,
LLP’s independence.
-19-
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
MARLEY
COFFEE INC.
By:/s/Shane
Whittle
Shane
Whittle President, Treasurer, Secretary and Director
Date:
November 10, 2009
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
By:/s/Shane
Whittle
Shane
Whittle President, Treasurer, Secretary and Director (Principal Executive
Officer),
Principal Financial Officer and Principal Accounting
Officer)
Date:
November 10, 2009
By:/s/
Rohan
Marley
Rohan
Marley, Director
Date:
November 10, 2009
-20-