Attached files
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
REGISTRATION
STATEMENT UNDER THE SECURITIES ACT OF 1933
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Global
Smoothie Supply, Inc.
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Texas
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5149
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20-2784-176
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(State
or jurisdiction of incorporation or organization)
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(Primary
Standard Industrial Classification Code Number)
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(I.R.S.
Employer Identification No.)
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4428
University Boulevard
Dallas,
TX 75205
214-769-0836
Fax: 214-521-4749
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Copies
to:
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Novi
& Wilkin
Attorneys
at Law
1325
Airmotive Way, Suite 140
Reno,
NV 89502
775-232-1950
Fax: 775-201-8331
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Approximate
date of proposed sale to the public: As soon as practicable after this
Registration Statement becomes effective.
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) under the Securities Act, please check the following box and list the
Securities Act Registration Statement number of the earlier effective
Registration Statement for the same offering. [ ]
_______________________________________
If this
Form is a post-effective amendment filed pursuant to Rule 462(c) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. [ ] ______________________________
If this
Form is a post-effective amendment filed pursuant to Rule 462(d) under the
Securities Act, check the following box and list the Securities Act Registration
Statement number of the earlier effective Registration Statement for the same
offering. [ ] ______________________________
If this
Form is filed to register securities for an offering to be made on a continuous
or delayed basis pursuant to Rule 415 under the Securities Act, please check the
following box. [X]
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filed or a smaller reporting
company
Large
accelerated
filer [ ]
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Accelerated
filer [ ]
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Non-accelerated
filer [ ]
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Smaller
reporting
company [X]
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i
CALCULATION
OF REGISTRATION FEE
Title
of Each Class
of
Securities to be
Registered
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Amount
to be
Registered
(1)
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Proposed
Maximum
Offering
Price
per
Share ($)
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Proposed
Maximum
Aggregate
Offering
Price
($)(2)
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Amount
of
Registration
Fee($)
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||||||||||||
Shares
of Common
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||||||||||||||||
Stock,
No par value
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20,000,000
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$
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0.25
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(2)
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$
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5,000,000
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$
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279.00
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||||||||
Shares
of Common
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||||||||||||||||
Stock,
No par value
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1,626,604
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$
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0.25
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(3)
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$
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406,651
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$
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28.99
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||||||||
Total
Fee Due
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$
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5,406,651
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$
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307.99
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1
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Of
the 21,626,604 shares registered pursuant to this registration statement,
20,000,000 shares are being offered by the Company, and 1,626,604 shares
are being offered by the selling shareholders.
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2
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Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457 of the Securities Act, based upon the fixed price of the shares
offered by the Company.
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3
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Estimated
solely for purposes of calculating the registration fee in accordance with
Rule 457 of the Securities Act, based upon the fixed price of the shares
offered by the Company. The Company will derive no financial
benefit from the sales of these shares. The shares will be
offered by the selling shareholders at prevailing market prices or
privately negotiated prices.
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The
Registrant hereby amends this Registration Statement on such date or dates as
may be necessary to delay its effective date until the Registrant shall file a
further amendment which specifically states that this Registration Statement
shall thereafter become effective in accordance with Section 8(a) of the
Securities Act of 1933 or until the Registration Statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved of these securities or passed upon the adequacy or
accuracy of the Prospectus. Any representation to the contrary is a criminal
offense.
ii
Prospectus
Global
Smoothie Supply, Inc.
20,000,000
Shares of Common Stock Offered by the Company
at $0.25
per share
$5,000,000
Aggregate Offering Price
Plus
1,626,604
Shares of Common Stock Offered by Selling Shareholders
at
prevailing market prices or privately negotiated prices
This is
the initial offering of Common Stock of Global Smoothie Supply,
Inc. and no public market currently exists for the securities being
offered.
Global
Smoothie Supply, Inc., a Texas corporation (“GSS” or the “Company”) is offering
20,000,000 shares of its Common Stock at a price of $0.25 per share, on a
“self-underwritten” best efforts basis, with no minimum. The officers
and directors of the Company intend to sell the shares on behalf of the
Company. The intended methods of communication include, without
limitation, telephone and personal contact. For more information, see
the section entitled “Plan of Distribution” herein.
The
proceeds from the sale of the shares offered by the Company, will be payable to
the Company.
The
offering of shares by the Company will end no later than 180 days from the date
of this Prospectus. If we sell the maximum number of shares prior to
180 days from the date of this Prospectus, the offering will end on or about the
date that we sell the maximum number of shares. If we abandon the
offering for any reason prior to 180 days from the date of this Prospectus, we
will terminate the offering.
In
addition, 1,626,604 shares of Common Stock of the Company are being offered by
existing shareholders of the Company. The Company will derive no
financial benefit from the sales of these shares. The shares will be
offered at prevailing market prices or privately negotiated prices.
Officers
and directors of the Company and affiliates thereof will not be purchasing any
shares offered pursuant to this Prospectus.
Prior to
this offering, there has been no public market for the Company’s Common
Stock.
Number
of Shares
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Offering
Price
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Underwriting
Discounts & Commissions
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Proceeds
to the Company
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||||||||||||
20,000,000 | $ | 0.25 | $ | 0.00 | $ | 5,000,000 | |||||||||
Proceeds
to the Selling Shareholders
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1,626,604 | $ | 0.25 | $ | 0.00 | $ | 406,651 |
This
investment involves a high degree of risk and you should purchase shares only if
you can afford a complete loss of your investment. See the section
titled “Risk Factors” beginning on Page 5 of this Prospectus.
Neither
the Securities and Exchange Commission nor any state securities commission has
approved or disapproved these securities, or determined if this Prospectus is
truthful or complete. Any representation to the contrary is a
criminal offense.
GOING CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of its
assets and the liquidation of its liabilities in the normal course of
business. However, the Company has generated minimal revenues, has
accumulated a deficit of $427,420 through September 30, 2009, and currently
lacks sufficient capital to pursue its business plan. The Company’s
auditors have raised substantial doubt about the Company’s ability to continue
as a going concern. The financial statements do not include any
adjustments that might result from this uncertainty.
The
information in this Prospectus is not complete and may be
changed. The shares of Common Stock of the Company may not be sold
until the registration statement (of which this Prospectus is a part) filed with
the Securities and Exchange Commission is declared effective. This
Prospectus is not an offer to sell these securities and it is not the
solicitation of an offer to buy these securities in any state where the offer or
sale is not permitted.
The
Company does not plan to use this offering Prospectus before the effective
date.
Subject
to Completion, Dated _________, 2010
1
TABLE
OF CONTENTS
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2
Global
Smoothie Supply, Inc.
4428
University Blvd
Dallas,
TX 75205
214-769-0836
SUMMARY OF PROSPECTUS
You
should read the following summary together with the more detailed business
information, financial statements and related notes that appear elsewhere in
this Prospectus regarding Global Smoothie Supply,
Inc. In this Prospectus, unless the context otherwise denotes,
references to “we,” “us” or “our” are to the Company.
GENERAL INFORMATION ABOUT OUR COMPANY
The
Global Smoothie Supply, Inc. business model contemplates that the Company will
generate revenue from three activities:
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1)
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The
sale of smoothie blending equipment
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2)
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The
sale of the puree to make the
smoothies
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3)
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The
sale of parts and service for the smoothie blending
equipment
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Global
Smoothie Supply has worked with Blendtec (a division of K-Tec, Inc.) to develop
a turnkey smoothie program designed for the convenience store distribution
channel as well as other distribution channels. Our agreement with
Blendtec gives GSS the first right to purchase all of Blendtec’s S3 Smoothie
Machine production.
The
Blendtec S3 Smoothie Machine is a self-serve smoothie machine specially designed
for GSS by Blendtec. The Company couples the S3 Smoothie Machine with
other equipment, including an ice machine that mounts to the top of the Blendtec
S3 Machine, a backup water heater, a custom cabinet and a puree
cart. The Company’s contractual arrangement with Blendtec
contemplates that the Company will purchase the S3 Smoothie Machine from
Blendtec, for resale to purchasing accounts. .
GSS
purchases the balance of the components directly from its supplier network and
the Company currently has no formal contractual arrangements with those
suppliers. The Company purchases proprietary formulas of the purees
developed specially for use with the S3 Blender, directly from its supplier
network, for resale to purchasing customers.
Additionally,
GSS provides for a fee the installation and service for the smoothie machine and
related equipment as an ongoing benefit to purchasing customers.
GSS began
receiving revenues from this self-serve smoothie program with the sale of puree
and blending equipment to Blockbuster in the 4th
Quarter of 2008. This sale came as the result of Blockbuster
contacting GSS, in order to offer Self-Serve Smoothies through Blockbuster’s new
in-store beverage bars in Reno, NV and Plano, TX.
On August
10, 2009, GSS entered into a formal testing agreement with 7-Eleven,
Inc. That agreement has expired; however, the parties have agreed
verbally to extend the term of the agreement indefinitely and 7-Eleven is
continuing to test the equipment in collaboration with the Company. We expect
the testing to be completed by the end of the second quarter of
2010.
Founded
by David C. Tiller, Donald M. Roberts and Harry B. Ireland, GSS was formed with
one goal: to become the dominant provider of fruit puree smoothie systems
for the convenience retail and other appropriate distribution
channels. The Company’s self-serve systems are installed in turnkey
fashion, are self-cleaning and require minimal attention and
maintenance.
Presently, David Tiller, the Company’s CEO, beneficially owns 38,250,000 shares of the outstanding Common Stock of the Company. Because of such ownership, investors in this offering will have limited control over matters requiring approval by GSS shareholders, including the election of directors. Assuming that all 20,000,000 shares of this offering are sold, Mr. Tiller would retain 39.2% ownership in the Company’s Common Stock and the officers and directors of the Company would collectively control 77.8% of the Company’s Common Stock.
3
Our
smoothie machine manufacturer, Blendtec, is a developer of automated
dispensing/blending equipment. The S3 Smoothie Machine, which is the
self-serve smoothie machine designed for GSS by Blendtec, has received
Electrical Testing Laboratories (ETL) and National Safety Federation (NSF)
certification.
The
machine is designed to accommodate easy-to-use modular “bag in box” cased
product, the puree. These puree formulations have been developed
exclusively for GSS and are manufactured on our behalf.
The
flavor line has the capacity for future expansion and modification, with an
initial menu that includes multiple fruit-based choices and one coffee-based
offering. GSS plans to promote, install, and maintain the self-serve
smoothie machines using a nationwide sales force, brokers, and a network of
trained service technicians.
Management
believes that an expansion strategy focusing on Convenience Stores and other
retail distribution channels would add significant scale to our business
model. These other channels include, but are not limited
to, Fast-Food Restaurants, sports venues, university campuses and
high schools, resorts and cruise ships, sports, racquetball, health and country
clubs, business and hospital complexes, as well as high-traffic portals such as
airports, sea ports, and train and bus stations.
In order
for the Company to achieve its annual goals, we believe the following key
activities will need to be accomplished and, as this is a “Best Efforts”
offering, we have built our “Use of Net Proceeds” based on the following
net funding levels:
At
25% of the Maximum Offering
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At
the Maximum Offering
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1.
Acquire Office/Warehouse Space
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$
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80,000
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$
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260,000
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2.
Purchase machines for training/marketing
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150,250
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751,250
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3.
Hire Staff
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518,294
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1,784,625
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4.
Sales and Marketing Activity
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215,000
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1,030,000
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6.
Build Administrative Systems
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149,500
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524,125
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7.
Legal and Professional Services
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76,656
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589,700
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Total
Use of Net Proceeds:
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$
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1,189,700
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$
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4,939,700
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The
offering scenarios presented are for illustrative purposes only and the actual
amount of net proceeds, if any, may differ.
Because
there is no minimum number of shares that must be sold in the offering, we can
provide no assurance regarding the amount of capital we will actually raise in
the offering. We intend to use the proceeds to improve our capital position, to
fund our business plan, and will retain the remainder of any proceeds for
working capital and general corporate purposes. We believe a strengthened
capital position will provide us with the flexibility to address market
conditions. Our management will retain broad discretion in deciding how to
allocate the net proceeds of this offering. The precise amounts and timing of
our use of the net proceeds will depend upon market conditions and other
factors.
The
Company is subject to substantially all the risks inherent in the creation of a
new business. As a result of its small size and capitalization and
limited operating history, the Company is particularly susceptible to adverse
effects of changing economic conditions and consumer tastes, competition, and
other contingencies or events beyond the control of the Company. At
this time, the Company has no plans or intentions to be acquired or to merge
with an operating company nor do we have plans to enter into a change of control
or similar transaction or to change the management of the Company.
4
THE OFFERING
Securities
Being Offered:
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20,000,000
Shares of Common Stock, No par value, at a price of $0.25 per share, and
an additional 1,626,604 Shares of Common Stock held by 57 selling
shareholders at prevailing market prices or privately negotiated prices,
for which the Company will receive no financial benefit.
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Offering
Price per Share:
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$0.25,
for those shares offered by the Company
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Offering
Period:
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The
shares are being offered by the Company for a period not to exceed 180
days
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Proceeds
to the Company:
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$5,000,000
Maximum. We will not receive proceeds from the sale of the
1,626,604 Shares of Common Stock offered by our selling
shareholders.
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Use
of Proceeds:
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We
intend to use the proceeds to continue/expand
operations
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Number
of Shares Outstanding
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Before
the Offering:
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77,626,604
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Number
of Shares Outstanding
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After
the Offering:
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97,626,604
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Our
officers, directors, control persons, and/or affiliates do not intend to
purchase any shares in this offering. There is no required minimum
number of shares to be purchased.
RISK FACTORS
RISKS ASSOCIATED WITH OUR COMPANY:
Investment
in the securities offered hereby involves certain risks and is suitable only for
investors of substantial financial means. Prospective investors
should carefully consider the following risk factors in addition to the other
information contained in this Prospectus, before making an investment decision
concerning the Common Stock.
The
Company is subject to the risks inherent in the creation of a new
business.
The
Company is subject to substantially all the risks inherent in the creation of a
new business. As a result of its small size and capitalization and
limited operating history, the Company is particularly susceptible to adverse
effects of changing economic conditions and consumer tastes, competition, and
other contingencies or events beyond the control of the Company. It
may be more difficult for the Company to prepare for and respond to these types
of risks and the risks described elsewhere in this Prospectus than for a company
with an established business and operating cash flow. If the Company
is not able to manage these risks successfully, the Company’s operations could
be negatively impacted. Due to changing circumstances, the Company
may be forced to change dramatically, or even terminate, its planned
operations.
Changes
in consumer preferences and discretionary spending may have a material adverse
effect on our revenue, results of operations and financial
condition.
Our
success depends, in part, upon the popularity of our products and our ability to
develop new smoothie and coffee beverages that appeal to
consumers. Shifts in consumer preferences away from our products, our
inability to develop new products that appeal to consumers, or changes in our
product mix that eliminate items popular with some consumers could harm our
business. Also, our success depends to a significant extent on
discretionary consumer spending, which is influenced by general economic
conditions and the availability of discretionary income. Accordingly,
we may experience declines in revenue during economic downturns or during
periods of uncertainty, similar to those which followed the terrorist attacks on
the United States. Any material decline in the amount of
discretionary spending could have a material adverse effect on our sales,
results of operations, business and financial condition.
5
Fluctuations
in various fruit, juice, puree, coffee, packaging and supply costs, particularly
fruit and coffee, could adversely affect our operating results.
The
prices of fruit and coffee, which are the main products in our puree offerings,
can be highly volatile. Fruit of the quality we seek tends to trade
on a negotiated basis, depending on supply and demand at the time of the
purchase. Supplies and prices of the various products that we use to prepare our
puree offerings can be affected by a variety of factors, such as weather,
seasonal fluctuations, demand, politics and economics in the producing
countries. An increase in pricing of any fruit that we use in our
products could have a significant adverse effect on our
profitability. Fruit price increased in fiscal year 2005 when
orange prices rose nearly 500% for nearly four months after several hurricanes
made landfall in Florida. In addition, higher diesel prices have, in
some cases, resulted in the imposition of surcharges on the delivery of
commodities to distributors. Additionally, higher diesel and gasoline
prices may affect our supply costs and may affect our sales going
forward. To help mitigate the risks of volatile commodity prices and
to allow greater predictability in pricing, we hope to enter into fixed price or
to-be-fixed priced purchase commitments for a portion of our fruit and coffee
requirements. We cannot assure you that these activities will be
successful or that they will not result in our paying substantially more for our
fruit and coffee supply than would have been required absent such
activities. We do not presently have any multi-year pricing
agreements (with fixed processing costs), and none with guaranteed volume
commitments.
Litigation
and publicity concerning product quality, health and other issues, could result
in liabilities and also cause customers to avoid our products, which could
adversely affect our results of operations, business and financial
condition.
Beverage
and food service businesses can be adversely affected by litigation and
complaints from customers or government authorities resulting from food and
beverage quality, illness, injury or other health concerns or operating issues
stemming from retail locations. Adverse publicity about these
allegations may negatively affect us, regardless of whether the allegations are
true, by discouraging customers from buying our products. We could
also incur significant liabilities, if a lawsuit or claim results in a decision
against us, and the related litigation costs, regardless of the
result.
Beverage
and food safety concerns and instances of food-borne illnesses could harm our
customers, result in negative publicity and cause the temporary closure of some
customers’ stores and, in some cases, could adversely affect the price and
availability of fruits, any of which could harm our brand reputation, result in
a decline in sales or an increase in costs.
We cannot
guarantee that controls and training will be fully effective in preventing all
beverage-borne illnesses. Furthermore, reliance on third-party suppliers and
distributors increases the risk that food-borne illness incidents (such as E.
coli, Hepatitis A, Salmonella, or Listeria) could occur outside of our control
and at multiple locations.
Instances
of food-borne illnesses, whether real or perceived, and whether at our
customers’ stores or those of our competitors, could harm consumers and
otherwise result in negative publicity about the Company or the products we
serve, which could adversely affect sales. If there is an incident
involving customers’ C-stores and other approved channels serving contaminated
products, consumers may be harmed, our sales may decrease and our brand name may
be impaired. If consumers become ill from food-borne illnesses, we
could be forced to temporarily suspend some operations. If we react
to negative publicity by changing our products or other key aspects of the GSS
experience, we may lose customers who do not accept those changes, and may not
be able to attract enough new customers to produce the revenue needed to make
our operations profitable. In addition, we may have different or
additional competitors for our intended consumers as a result of making any such
changes and may not be able to compete successfully against those
competitors. Food safety concerns and instances of food-borne
illnesses and injuries caused by food contamination have in the past, and could
in the future, adversely affect the price and availability of affected
ingredients and cause consumers to shift their preferences, particularly if we
choose to pass any higher ingredient costs along to consumers. As a
result, our costs may increase and our sales may decline. A decrease
in customer traffic as a result of these health concerns or negative publicity,
or as a result of a change in our products or the smoothie experience or a
temporary suspension of any of our customer operations, could materially harm
our business.
Any
failure to maintain adequate general liability, commercial, and product
liability insurance could subject us to significant losses of
income.
We
currently carry general liability, product liability, and commercial insurance,
and believe such insurance to be adequate. However, there can be no assurance
that such coverage will be adequate to cover any claim that may be filed. A
judgment significantly in excess of our insurance coverage for any claims could
materially and adversely affect our financial condition or results of
operations.
6
The
planned increase in the number of our customers’ stores may make our future
results unpredictable.
Our
future results depend on various factors, including successful selection of new
markets, market acceptance of the GSS product and service offerings, consumer
recognition of the quality of our products and willingness to pay our prices
(which reflect our often higher ingredient costs,) the quality and performance
of the GSS blending equipment and general economic conditions. In
addition, as with the experience of other retail food and beverage concepts
which have tried to expand nationally, we may find that the GSS product and
service offerings have limited or no appeal to customers in new markets or we
may experience a decline in the popularity of the GSS product and service
offerings. Newly opened customers’ stores may not succeed, future
markets may not be successful, and average store revenue may not meet
expectations.
Our
revenue growth rate depends primarily on our ability to satisfy C-store, Other
Relevant Channels and end-customer demands, identify suppliers of various fruit
and services and to coordinate those suppliers, all subject to many
unpredictable factors.
We may
not be able to identify and maintain the necessary relationships with suppliers
of product and services as planned. We may experience shortages of
fruit product and blending equipment, and experience delays in deliveries of
such fruit product and blending equipment. Delays or failures in
deliveries of fruit smoothie supplies or blending equipment could materially and
adversely affect our growth strategy and expected results. As we
supply more customers’ stores, our rate of expansion relative to the size of
such store base will decline. Our ability to execute our business
plan also depends on other factors, including:
1.
|
negotiating
distribution agreements and equipment leases with acceptable
terms;
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2.
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hiring
and training qualified installation personnel in local
markets;
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3.
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managing
marketing and development costs at affordable
levels;
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4.
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cost
and availability of labor;
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5.
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cost
and availability of blending
equipment;
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6.
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the
availability of, and our ability to obtain, adequate supplies of
ingredients that meet our quality
standards;
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7.
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securing
required governmental approvals (including sanitary, equipment safety and
other permits) in a timely manner;
and
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8.
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the
impact of inclement weather, natural disasters and other calamities, as
well as the adverse localized effects of global climate
change.
|
A
failure to manage our growth effectively could harm our business and operating
results.
Our plans
call for a significant increase in the number of self-serve smoothie machines
installed into the GSS customer base. Product supply and equipment
installation systems, financial and management controls and information systems
may be inadequate to support our expansion. Managing our growth
effectively will require us to continue to enhance these systems, procedures and
controls and to hire, train and retain management and staff. We may not respond
quickly enough to the changing demands that our expansion will impose on our
management, employees and existing infrastructure. We also place a
lot of importance on our culture, which we believe will be an important
contributor to our success. As we grow, however, we may have
difficulty maintaining our culture or adapting it sufficiently to meet the needs
of our operations. Our failure to manage our growth effectively could
harm our business and operating results.
New
customers’ stores’ sales of our products may not be profitable, and the
increases in average store revenue and comparable store revenue that we expect
may not be achieved.
We expect
our new customers’ stores to have an initial ramp-up period during which they
generate revenue and profit below the levels at which we or they expect them to
normalize. This is in part due to the time it takes to build a
customer base in a new product, as well as higher fixed costs relating to
start-up inefficiencies that are typical of introduction of new
products. Our ability to service and supply new customers’ stores
profitably and increase average store revenue and comparable store revenue will
depend on many factors, some of which are beyond our control,
including:
1.
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executing
our vision effectively;
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2.
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initial
sales performance of new product;
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3.
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competition,
either from our competitors in the smoothie industry, other C-stores and
other competitors;
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4.
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changes
in consumer preferences and discretionary
spending;
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5.
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consumer
understanding and acceptance of the fruit puree smoothie
experience;
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6.
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road
construction and other factors limiting access to C-stores and other
approved channels;
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7.
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general
economic conditions, which can affect store traffic, local labor costs and
prices we pay for the ingredients, equipment and other supplies we use;
and
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8.
|
changes
in government regulation.
|
7
Our
quarterly operating results may fluctuate significantly and could fall below the
expectations of investors due to various factors.
Our
quarterly operating results may fluctuate significantly because of various
factors, including:
1.
|
the
impact of inclement weather, natural disasters and other
calamities;
|
2.
|
unseasonably
cold or wet weather conditions;
|
3.
|
the
timing of new store openings and related revenue and
expenses;
|
4.
|
profitability
of our customers’ smoothie operation, especially in new
markets;
|
5.
|
changes
in customers’ comparable store sales and consumer visits, including as a
result of the introduction of new product
items;
|
6.
|
variations
in general economic conditions, including those relating to changes in
diesel and gasoline prices;
|
7.
|
negative
publicity about the ingredients we use or the occurrence of food-borne
illnesses or other problems at our customers’
stores;
|
8.
|
changes
in consumer preferences and discretionary
spending;
|
9.
|
increases
in infrastructure costs; and
|
10.
|
fluctuations
in supply prices.
|
Because
of these factors, results for any one quarter are not necessarily indicative of
results to be expected for any other quarter or for any year. Average
customers’ store revenue or comparable store revenue in any particular future
period may decrease. In the future, our operating results may fall
below the expectations of investors. In that event, the value of our
Common Stock would likely decrease.
Our
customers and suppliers could take actions that harm our reputation and reduce
our profits.
Customers
and suppliers are separate entities and are not our employees or
agents. Further, we do not exercise control over the day-to-day
operations of our customers and suppliers. Any operational
shortcomings of our customers and suppliers are likely to be attributed to our
system-wide operations and could adversely affect our reputation and have a
direct negative impact on our profits.
Our
revenue is subject to volatility based on weather and varies by
season.
Seasonal
factors could also cause our revenue to fluctuate from quarter to
quarter. Our revenue may be lower during the winter months and the
holiday season and during periods of inclement weather and higher during the
spring, summer and fall months. Our revenue will likely also vary
from quarter to quarter as a result of the number of trading days, that is, the
number of days in a quarter when stores are open.
We
could face liability from our customers, suppliers or government
agencies.
A
customer, supplier or government agency may bring legal action against us based
on the customer/ supplier relationships. Various state and federal
laws govern our relationship with customers and suppliers. If we fail
to comply with these laws, we could be liable for damages to customers or
suppliers, and fines or other penalties. Expensive litigation with
our customers/suppliers or government agencies may adversely affect both our
profits and relations with our customer/suppliers.
Litigation
could adversely affect us by distracting management, increasing our expenses or
subjecting us to material money damages and other remedies.
Our
customers could file complaints or lawsuits against us alleging that we are
responsible for some illness or injury their customers suffered at or after a
visit to their stores, or that we have problems with food quality or
operations. We are also subject to a variety of other claims arising
in the ordinary course of our business, including personal injury claims,
contract claims and claims alleging violations of federal and state law
regarding workplace and employment matters, discrimination and similar matters,
and we could become subject to class action or other lawsuits related to these
or different matters in the future. Regardless of whether any claims
against us are valid, or whether we are ultimately held liable, claims may be
expensive to defend and may divert time and money away from our operations and
hurt our performance. A judgment significantly in excess of our
insurance coverage for any claims could materially and adversely affect our
financial condition or results of operations. Any adverse publicity
resulting from these allegations may also materially and adversely affect our
reputation or prospects, which in turn could adversely affect our
results. The food and beverage services industry has been subject to
a growing number of claims based on the nutritional content of food products
they sell and disclosure and advertising practices. We may also be
subject to this type of proceeding in the future and, even if not, publicity
about these matters (particularly directed at C-stores and other approved
channels, the quick-service and fast-casual segments of the industry) may harm
our reputation or prospects and adversely affect our results.
8
We
are exposed to increased costs and risks associated with compliance with
changing laws, regulations and standards in general, and specifically with
increased and new regulation of corporate governance and disclosure
standards.
We expect
to spend an increased amount of management time and external resources to comply
with existing and changing laws, regulations and standards in general, and
specifically relating to corporate governance under the Sarbanes-Oxley Act of
2002. In particular, Section 404 of the Sarbanes-Oxley Act of 2002
requires management to annually review and evaluate all of our internal control
systems, and file attestations of the effectiveness of these systems by our
management and by our independent auditors. This process may require
us to hire additional personnel and use outside advisory services and result in
additional accounting and legal expenses. If in the future our chief
executive officer, chief financial officer or independent auditors determine
that our controls over financial reporting are not effective as defined under
Section 404, investor perceptions may be adversely affected and could cause a
decline in the value of our stock. If our independent auditors are
unable to provide an unqualified attestation of management’s assessment of our
internal control over financial reporting, or disclaim an ability to issue an
attestation, it could result in a loss of investor confidence in our financial
reports, adversely affect our stock value and our ability to access the capital
markets or borrow money. Failure to comply with other existing and
changing laws, regulations and standards could also adversely affect the
Company.
RISKS ASSOCIATED WITH THIS OFFERING
PURCHASERS
IN THIS OFFERING WILL HAVE LIMITED CONTROL OVER DECISION MAKING BECAUSE DAVID C.
TILLER, THE COMPANY’S CEO AND ITS OFFICERS AND DIRECTORS WILL CONTROL NOT LESS
THAN 77.8% OF THE COMPANY’S ISSUED AND OUTSTANDING COMMON STOCK.
Presently,
David Tiller, the Company’s CEO, beneficially owns 38,250,000 shares of the
outstanding Common Stock of the Company. Because of such ownership,
investors in this offering will have limited control over matters requiring
approval by GSS shareholders, including the election of
directors. Assuming that all 20,000,000 shares of the Company’s
offering are sold, Mr. Tiller would retain 39.2% ownership in the Company’s
Common Stock and the officers and directors of the Company would collectively
control 77.8% of the Company’s Common Stock. Such concentrated
control may also make it difficult for GSS stockholders to receive a premium for
their shares of GSS in the event the Company enters into transactions which
require stockholder approval. In addition, certain provisions of
Texas state law could have the effect of making it more difficult or more
expensive for a third party to acquire, or of discouraging a third party from
attempting to acquire control of the Company. For example, Texas law
provides that a majority of the stockholders is required to remove a director,
which may make it more difficult for a third party to gain control of the
Company. This concentration of ownership limits the power to exercise
control by the minority shareholders.
INVESTORS
MAY LOSE THEIR ENTIRE INVESTMENT IF GSS FAILS TO IMPLEMENT ITS BUSINESS
PLAN.
The
Company expects to face substantial risks, uncertainties, expenses, and
difficulties because it is a development-stage company. GSS was
formed in Texas on February 17, 2005. The Company has no demonstrable
operations record of substance upon which investors can evaluate the Company’s
business and prospects. GSS prospects must be considered in light of
the risks, uncertainties, expenses and difficulties frequently encountered by
companies in their early stages of development. The Company cannot
guarantee that it will be successful in accomplishing its
objectives.
As of the
date of this Prospectus, the Company has had only limited operations and has
generated minimal revenues. Considering these facts, the Company’s
independent auditors have expressed substantial doubt about the Company’s
ability to continue as a going concern, as reflected in the independent
auditors’ report to the financial statements included in this
Prospectus. In addition, the Company’s lack of operating capital
could negatively affect the value of its Common Stock and could result in the
loss of your entire investment.
THE
REPORT OF OUR INDEPENDENT AUDITORS INDICATES UNCERTAINTY CONCERNING OUR ABILITY
TO CONTINUE AS A GOING CONCERN AND THIS MAY IMPAIR OUR ABILITY TO RAISE CAPITAL
TO FUND OUR BUSINESS PLAN.
Our
independent auditors have raised substantial doubt about our ability to continue
as a going concern. We cannot assure you that this will not impair
our ability to raise capital on attractive terms. Additionally, we
cannot assure you that we will ever achieve significant revenues and therefore
remain a going concern.
9
COMPETITORS
WITH MORE RESOURCES MAY FORCE US OUT OF BUSINESS.
We
compete with many well-established companies in the food and beverage
services industry on the basis of taste, quality and price of product offered,
and customer service. Aggressive pricing by our competitors or the
entrance of new competitors into our markets could reduce our revenue and profit
margins.
GSS
MAY NOT BE ABLE TO ATTAIN PROFITABILITY WITHOUT ADDITIONAL FUNDING, WHICH MAY BE
UNAVAILABLE.
The
Company has limited capital resources. To date, the Company has
funded its operations from limited funding and has not generated sufficient cash
from operations to be profitable or to maintain sufficient
inventory. Unless the Company begins to generate sufficient revenues
to finance operations as a going concern, the Company may experience liquidity
and solvency problems. Such liquidity and solvency problems may force
the Company to cease operations if additional financing is not
available. No known alternative resources of funds are available to
the Company in the event it does not have adequate proceeds from this
offering.
THE
COSTS TO MEET OUR REPORTING AND OTHER REQUIREMENTS AS A PUBLIC COMPANY, ARISING
OUT OF COMPLIANCE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE
SARBANES-OXLEY ACT OF 2002, AND OTHER REGULATIONS WILL BE SUBSTANTIAL AND MAY
RESULT IN US HAVING INSUFFICIENT FUNDS TO EXPAND OUR BUSINESS OR EVEN TO MEET
ROUTINE BUSINESS OBLIGATIONS.
If we
become a public entity, subject to the reporting requirements of the Securities
Exchange Act of 1934, the Sarbanes-Oxley Act of 2002, and other regulations, we
will incur substantial and ongoing expenses associated with professional fees
for accounting, legal and a host of other expenses for annual reports and proxy
statements. These costs may result in us having insufficient funds to expand our
business or even to meet routine business obligations.
WE
MAY HAVE DIFFICULTY IN ATTRACTING AND RETAINING MANAGEMENT AND OUTSIDE
INDEPENDENT MEMBERS TO OUR BOARD OF DIRECTORS AS A RESULT OF THEIR CONCERNS
RELATING TO THEIR INCREASED PERSONAL EXPOSURE TO LAWSUITS AND STOCKHOLDER CLAIMS
BY VIRTUE OF HOLDING THESE POSITIONS IN A PUBLICLY-HELD COMPANY.
The
directors and management of publicly traded corporations are increasingly
concerned with the extent of their personal exposure to lawsuits and stockholder
claims, as well as governmental and creditor claims which may be made against
them, particularly in view of recent changes in laws imposing additional duties,
obligations and liabilities on management and directors. Due to these
perceived risks, directors and management are also becoming increasingly
concerned with the availability of directors and officers’ liability insurance
to pay on a timely basis the costs incurred in defending such
claims. Directors and officers’ liability insurance has recently
become much more expensive and difficult to obtain. If we are unable
to provide directors and officers’ liability insurance at affordable rates or at
all, it may become increasingly more difficult to attract and retain qualified
outside directors to serve on our board of directors.
We may
lose potential independent board members and management candidates to other
companies that have greater directors and officer’s liability insurance to
insure them from liability or to companies that have revenues or have received
greater funding to date, which can offer more lucrative compensation
packages. The fees of directors are also rising in response to their
increased duties, obligations, and liabilities as well as increased exposure to
such risks. As a company with a limited operating history and limited
resources, we will have a more difficult time attracting and retaining
management and outside independent directors than a more established company due
to these enhanced duties, obligations and liabilities.
WE
MAY NOT ACHIEVE RESULTS SIMILAR TO THE FINANCIAL PROJECTIONS IN THIS
REGISTRATION.
Any
projections and related assumptions discussed in this registration were based on
information about circumstances and conditions existing as of the date of this
Prospectus. The projections and estimated financial results are based
on estimates and assumptions that are inherently uncertain and, though
considered reasonable by us, are subject to significant business, economic, and
competitive uncertainties and contingencies, all of which are difficult to
predict and many of which are beyond our control. Accordingly, there
can be no assurance that the projected results will be realized or that actual
results will not be significantly lower than projected. We do not
intend to update the projections. The inherent uncertainties in
results increase materially for years closer to the end of the projected
period. Neither we nor any other person or entity assumes any
responsibility for the accuracy or validity of the projections.
10
OUR
DIRECTORS HAVE THE RIGHT TO AUTHORIZE THE ISSUANCE OF ADDITIONAL SHARES OF OUR
COMMON STOCK.
Our
directors, within the limitations and restrictions contained in our articles of
incorporation and without further action by our stockholders, have the authority
to issue additional shares of Common Stock from time to time. We do
not intend to issue additional shares of Common Stock, beyond the number of
shares contemplated for issuance in this offering, at the present
time. Any additional issuance of shares of Common Stock could
adversely affect the rights of holders of our Common Stock.
YOU
MAY NOT BE ABLE TO SELL YOUR SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR
THE COMPANY’S COMMON STOCK.
There is
currently no established public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not be
sustained. A broker-dealer potentially serving as market maker for the
Company’s Common Stock must file an application with FINRA in order to be able
to quote the shares of our Common Stock on the Over the Counter Bulletin Board
(“OTCBB”). The Company is seeking out a market maker to have our Common Stock
quoted on the OTCBB. The OTCBB is not a listing service or exchange,
but is instead a dealer quotation service for subscribing
members. There can be no assurance that the market maker’s
application will be accepted by FINRA, nor can we accurately predict the time
period that the application will require. If for any reason our Common
Stock is not quoted on the OTCBB or a public trading market does not otherwise
develop, purchasers of the shares of the Company’s Common Stock may have
difficulty selling their Common Stock should they desire to do so. No
market makers have committed to becoming market makers for our Common Stock at
this time and none may do so.
If the
Company’s Common Stock becomes tradable, the trading price of our Common Stock
could be subject to wide fluctuations in response to various events or factors,
many of which will be beyond the Company’s control. In addition, the
stock market may experience extreme price and volume fluctuations, which,
without a direct relationship to the operating performance, may affect the
market price of the Company’s Common Stock.
INVESTORS
IN THIS OFFERING WILL BEAR A SUBSTANTIAL RISK OF LOSS DUE TO IMMEDIATE AND
SUBSTANTIAL DILUTION
The
principal shareholder of GSS, David C. Tiller, who also serves as its CEO, owns
38,250,000 restricted shares of the Company’s Common Stock. Upon the sale
of the Common Stock offered hereby, the investors in this offering will
experience an immediate and substantial “dilution.” Therefore, the
investors in this offering will bear a substantial portion of the risk of
loss. Additional sales of the Company’s Common Stock in the future
could result in further dilution. Please refer to the section
entitled “DILUTION OF THE PRICE
YOU PAY FOR YOUR SHARES” herein.
ALL
OF GSS’ CURRENTLY ISSUED AND OUTSTANDING SHARES OF COMMON STOCK ARE RESTRICTED
SHARES UNDER RULE 144 OF THE SECURITIES ACT. WHEN THESE SHARES BECOME
ELIGIBLE FOR SALE AND ARE SOLD IN THE OPEN MARKET, THE PRICE OF GSS COMMON STOCK
COULD BE ADVERSELY AFFECTED.
All of
the presently outstanding shares of Common Stock, aggregating 77,626,604 shares
of Common Stock, are “restricted securities” as defined under Rule 144
promulgated under the Securities Act and may only be sold pursuant to an
effective registration statement or an exemption from registration, if
available. Rule 144 is an exemption that generally provides that a
person who has satisfied a holding period for such restricted securities may
sell, within any three month period (provided the company is current in its
reporting obligations under the Exchange Act), subject to certain manner of
resale provisions, an amount of restricted securities which does not exceed the
greater of 1% of a company’s outstanding Common Stock or the average weekly
trading volume in such securities during the four calendar weeks prior to such
sale. The Company currently has one shareholder who owns 38,250,000
restricted shares and three others who own 37,750,000 restricted shares of the
outstanding Common Stock. When these shares become unrestricted and
available for sale, the sale of these shares by these individuals, whether
pursuant to Rule 144 or otherwise, may have an immediate negative effect upon
the price of the Company’s Common Stock in any market that might
develop.
11
GSS
IS SELLING THE SHARES OFFERED IN THIS PROSPECTUS WITHOUT AN UNDERWRITER AND MAY
NOT BE ABLE TO SELL ANY OF THE SHARES OFFERED HEREIN.
The
Company’s officers and directors are offering the Common Stock on a best-efforts
basis on the Company’s behalf. There is no broker-dealer retained as
an underwriter and no broker-dealer is under any obligation to purchase any
Common Stock. There are no firm commitments to purchase any of the
shares in this offering. Consequently, there is no guarantee that the
Company is capable of selling all, or any, of the Common Stock offered
hereby.
IF
IN THE FUTURE WE ARE TRADING ON THE OTCBB AND WE FAIL TO REMAIN CURRENT ON OUR
PUBLIC COMPANY REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTCBB, WHICH
WOULD LIMIT THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY
OF STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.
Companies
trading on the OTCBB must be reporting issuers under Section 12 of the Exchange
Act, and must be current in their reports under Section 13 of the Exchange Act,
in order to maintain price quotation privileges on the OTCBB. If we
fail to remain current on our reporting requirements, we could be removed from
the OTCBB. As a result, the market liquidity for our securities could
be adversely affected by limiting the ability of broker-dealers to sell our
securities and the ability of stockholders to sell their securities in the
secondary market.
There is
currently no established public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not be
sustained. If for any reason our Common Stock is not quoted on the Over
The Counter Bulletin Board or a public trading market does not otherwise
develop, purchasers of the shares may have difficulty selling their Common Stock
should they desire to do so. No market makers have committed to becoming
market makers for our Common Stock and none may do so.
DIVIDEND
RISK
At
present, we are not in a financial position to pay dividends on our Common Stock
and future dividends will depend on our profitability. Investors are
advised that until such time the return on our Common Stock is restricted to an
appreciation in the share price.
OUR
COMMON STOCK IS SUBJECT TO THE “PENNY STOCK” RULES OF THE SECURITIES AND
EXCHANGE COMMISSION, AND THE TRADING MARKET IN OUR COMMON STOCK IS LIMITED,
WHICH MAKES TRANSACTIONS IN OUR STOCK CUMBERSOME AND MAY REDUCE THE INVESTMENT
VALUE OF OUR STOCK.
Our
shares of Common Stock are “penny stocks” because they are not registered on a
national securities exchange or listed on an automated quotation system
sponsored by a registered national securities association, pursuant to Rule
3a51-1(a) under the Exchange Act. For any transaction involving a
penny stock, unless exempt, the rules require:
·
|
That
a broker or dealer approve a person’s account for transactions in penny
stocks; and
|
·
|
That
the broker or dealer receives from the investor a written agreement to the
transaction, setting forth the identity and quantity of the penny stock to
be purchased.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Securities and Exchange Commission
relating to the penny stock market, which sets forth the basis on which the
broker or dealer made the suitability determination. Additionally,
the broker or dealer must receive a signed, written agreement from the investor
prior to the transaction.
·
|
Generally,
brokers may be less willing to execute transactions in securities subject
to the “penny stock” rules. This may make it more difficult for
investors to dispose of our Common Stock and cause a decline in the market
value of our stock.
|
·
|
Disclosure
also has to be made about the risks of investing in penny stocks in both
public offerings and in secondary trading, the commissions payable to both
the broker-dealer and the registered representative, current quotations
for the securities, and the rights and remedies available to an investor
in cases of fraud in penny stock transactions. Finally, monthly
statements have to be sent disclosing recent price information for the
penny stock held in the account and information on the limited market in
penny stocks.
|
12
Generally,
brokers may be less willing to execute transactions in securities subject to the
“penny stock” rules. This may make it more difficult for investors to
dispose of our Common Stock and cause a decline in the market value of our
stock.
THE
MARKET FOR PENNY STOCKS HAS SUFFERED IN RECENT YEARS FROM PATTERNS OF FRAUD AND
ABUSE.
Stockholders
should be aware that, according to SEC Release No. 34-29093, the market for
penny stocks has suffered in recent years from patterns of fraud and
abuse. Such patterns include:
·
|
Control
of the market for the security by one or a few broker-dealers that are
often related to the promoter or
issuer;
|
·
|
Manipulation
of prices through prearranged matching of purchases and sales and false
and misleading press releases;
|
·
|
Boiler
room practices involving high-pressure sales tactics and unrealistic price
projections by inexperienced
salespersons;
|
·
|
Excessive
and undisclosed bid-ask differential and markups by selling
broker-dealers; and
|
·
|
The
wholesale dumping of the same securities by promoters and broker-dealers
after prices have been manipulated to a desired level, along with the
resulting inevitable collapse of those prices and with consequential
investor losses.
|
Our
management is aware of the abuses that have occurred historically in the penny
stock market. Although we do not expect to be in a position to
dictate the behavior of the market or of broker-dealers who participate in the
market, management will strive within the confines of practical limitations to
prevent the described patterns from being established with respect to our
securities. The occurrence of these patterns or practices could
increase the volatility of our share price.
SHARES
ELIGIBLE FOR FUTURE SALE BY OUR CURRENT STOCKHOLDERS MAY ADVERSELY AFFECT OUR
STOCK PRICE.
To
date, we have had no trading volume in our Common
Stock. As long as this condition continues, the sale of a significant
number of shares of Common Stock at any particular time could be difficult to
achieve at the market prices prevailing immediately before such shares are
offered. In addition, sales of substantial amounts of Common
Stock, under Securities and Exchange Commission Rule 144 or otherwise,
could adversely affect the prevailing market price of our Common Stock and could
impair our ability to raise capital at that time through the sale of our
securities.
SOURCES
OF AND AVAILABILITY OF PRODUCTS
We are
primarily dependent upon sole suppliers for our fruit and coffee puree and sole
suppliers for the GSS blending equipment.
Sole
supplier arrangements subject us to enhanced business risk. If any
sole supplier has operational problems or ceases providing product, equipment or
distribution of products available to us, or if such blender equipment
substantially malfunctions, our operations could be adversely
affected.
We may
face difficulties entering into new or modified arrangements with existing or
new suppliers or new service providers.
As we
expand our operations, we may have to seek new and/or additional suppliers and
service providers or enter into new arrangements with existing ones, and we may
encounter difficulties or be unable to negotiate pricing or other terms as
favorable as those we initially enjoy, which could harm our business and
operating results.
DEPENDENCE
ON ONE OR A FEW MAJOR CUSTOMERS
Although
our initial target markets are the convenience stores in the US, in addition to
other relevant channels, early on we may be dependent on one or only a few
customers. To consolidate and contain costs, our initial strategy is
to concentrate on just a few of the nation’s largest convenience store
chains.
13
PATENTS
AND TRADEMARKS
The
Company currently has no registered patents.
GOVERNMENT
AND INDUSTRY REGULATION
We are
subject to various federal, state and local regulations. Our products
and equipment are subject to state and local regulation by health, sanitation,
food and workplace safety and other agencies. We may experience
material difficulties or failures in obtaining the necessary licenses or
approvals for new products and equipment, which could delay planned execution of
our business plan. Our operations are also subject to the U.S. Fair
Labor Standards Act, which governs such matters as minimum wages, overtime and
other working conditions, along with the U.S. Americans with Disabilities Act,
family leave mandates and a variety of similar laws enacted by the states that
govern these and other employment law matters. In addition, federal
proposals to introduce a system of mandated health insurance and flexible work
time and other similar initiatives could, if implemented, adversely affect our
operations. In recent years, there has been an increased legislative,
regulatory and consumer focus on nutrition and advertising practices in the food
industry. Establishments operating in C-stores and other approved
channels, the quick-service, and fast-casual segments have been a particular
focus. As a result, we may in the future become subject to
initiatives in the area of nutrition disclosure or advertising, such as
requirements to provide information about the nutritional content of our
products, which could increase our expenses.
RESEARCH
AND DEVELOPMENT ACTIVITIES
Our
Research & Development has been conducted with participation by the
Company, Management at 7-Eleven, Inc., K-Tec, Inc. (Blendtec,) and others
to assure our product offerings align most closely with the requirements of
7-Eleven and the needs of our initial target convenience store
market. However, this does not guarantee this chain will purchase the
Company’s programs or products or participate in the future. GSS
entered into a testing agreement with 7-Eleven dated August 10, 2009, which is
now expired. However, the parties have agreed verbally to extend the terms of
the agreement indefinitely. We expect the testing to be completed by the end of
the second quarter of 2010.
ENVIRONMENTAL
LAWS
Company
operations currently have no material effect on the environment.
SPECIAL
NOTE REGARDING FORWARD-LOOKING STATEMENTS
This
Prospectus contains forward-looking statements about the Company’s business,
financial condition, and prospects that reflect GSS management’s assumptions and
beliefs based on information currently available. The Company can
give no assurance that the expectations indicated by such forward-looking
statements will be realized. If any of the Company assumptions should
prove incorrect, or if any of the risks and uncertainties underlying such
expectations should materialize, the actual results may differ materially from
those indicated by the forward-looking statements.
The key
factors that are not within the Company’s control and that may have a direct
bearing on operating results include, but are not limited to, the Company’s
ability to establish a customer base, managements’ ability to raise capital in
the future, the retention of key employees and changes in the regulation of the
industry in which the Company functions.
There may
be other risks and circumstances that management may be unable to predict to
sustain operations. When used in this Prospectus, words such as
“believes,” “expects,” “intends,” “plans,” “anticipates,” “estimates” and
similar expressions are intended to identify and qualify forward-looking
statements, although there may be certain forward-looking statements not
accompanied by such expressions.
14
USE OF NET PROCEEDS
In the first 12 months, the projected use of funds has been forecasted and prioritized as follows:
At
25% Maximum Offering
|
At
50% Maximum Offering
|
At
75% Maximum Offering
|
At
the Maximum Offering
|
|||||||||||||
Compensation
|
518,294 | 1,151,588 | 1,671,538 | 1,784,625 | ||||||||||||
Total
G & A Compensation
|
518,294 | 1,151,588 | 1,671,538 | 1,784,625 | ||||||||||||
Legal
/ Professional Expense
|
76,656 | 213,613 | 350,569 | 589,700 | ||||||||||||
Insurance
|
50,000 | 50,000 | 50,000 | 75,000 | ||||||||||||
Travel
& Entertainment Expense
|
70,000 | 125,000 | 200,000 | 450,000 | ||||||||||||
Rent
and Utilities
|
50,000 | 50,000 | 75,000 | 100,000 | ||||||||||||
Office
Expenses
|
12,500 | 25,000 | 37,500 | 50,000 | ||||||||||||
Training
Expense
|
30,000 | 60,000 | 90,000 | 120,000 | ||||||||||||
Total
General & Administration
|
289,156 | 523,613 | 803,069 | 1,384,700 | ||||||||||||
Sales
& Marketing Expense
|
145,000 | 290,000 | 435,000 | 580,000 | ||||||||||||
Plant
and Equipment
|
||||||||||||||||
Furniture
and Fixtures
|
30,000 | 60,000 | 90,000 | 120,000 | ||||||||||||
Marketing
& Training Center
|
- | - | 30,000 | 40,000 | ||||||||||||
Machines
|
145,250 | 290,500 | 435,750 | 726,250 | ||||||||||||
Shipping
& Installation
|
5,000 | 10,000 | 15,000 | 25,000 | ||||||||||||
Other
|
10,000 | 20,000 | 68,344 | 91,125 | ||||||||||||
Plant
and Equipment
|
190,250 | 380,500 | 639,094 | 1,002,375 | ||||||||||||
Data
systems
|
47,000 | 94,000 | 141,000 | 188,000 | ||||||||||||
Capital
Expenditures
|
237,250 | 474,500 | 780,094 | 1,190,375 | ||||||||||||
Total
Startup Capital Needs
|
1,189,700 | 2,439,700 | 3,689,700 | 4,939,700 |
Without
realizing the offering proceeds, the Company will not be able to continue with
planned operations and implement its business plan.
The offering scenarios presented are
for illustrative purposes only and the actual amount of proceeds, if any, may
differ.
Because
there is no minimum number of shares that must be sold in the offering, we can
provide no assurance regarding the amount of capital we will actually raise in
the offering. We intend to use the proceeds to improve our capital position, to
fund our business plan, and to retain the remainder of any proceeds for working
capital and general corporate purposes. We believe a strengthened capital
position will provide us with the flexibility to address market conditions. Our
management will retain broad discretion in deciding how to allocate the net
proceeds of this offering. The precise amounts and timing of our use of the net
proceeds will depend upon market conditions and other factors.
Please
refer to the section entitled “Management’s Discussion and Analysis” (MD&A)
for further information.
15
DETERMINATION OF OFFERING PRICE
The
offering price of the Common Stock has been arbitrarily determined and bears no
relationship to any objective criterion of value. The price does not
bear any relationship to the Company’s assets, book value, historical earnings,
or net worth.
DILUTION OF THE PRICE YOU PAY FOR YOUR SHARES
“Dilution”
represents the difference between the offering price of the shares of Common
Stock and the net book value per share of Common Stock immediately after
completion of the offering. “Net Tangible Book Value” is the amount
that results from subtracting total liabilities and intangible assets from total
assets. In this offering, the level of dilution is increased as a
result of the relatively low book value of the Company’s issued and outstanding
stock. Please refer to the section entitled “Certain Transactions,”
herein, for more information. The Company’s net book value on
September 30, 2009, was $116,209. Assuming all the shares offered are
sold and, in effect, the Company receives the maximum estimated proceeds of this
offering, the Company’s net book value will be approximately $.00119 per
share. Therefore, any investor will incur an immediate and
substantial dilution of approximately $.24881 per share while the Company’s
present stockholders will receive an increase of $.24881 per share in the net
tangible book value of the shares that they hold. This will result in
99% dilution for purchasers of stock in this offering.
The
following table summarizes the per share dilution as of February 9,
2010:
Public
offering price per share
|
$
|
0.25
|
||
Net
tangible book value per share before this offering
|
$
|
0.0015
|
||
Increase
per share attributable to new investors
|
$
|
0.24881
|
||
Adjusted
net tangible book value per share after this offering
|
$
|
0.00119
|
||
Dilution
per share to new investors
|
$
|
0.24881
|
||
Percentage
dilution
|
99%
|
The
following tables set forth for the maximum number of shares offered hereby as of
February 9, 2010, (i) the number of shares of Common Stock purchased from the
Company, the total consideration paid to the Company and the average price per
share paid by the current shareholders, and (ii) the number of shares of Common
Stock offered by the Company and total consideration to be paid by new investors
in this offering at an offering price of $0.25 per share.
Shares
Purchased
|
Total
Consideration
|
Per
|
|||||
Number
|
Percent
|
Amount
|
Share
|
||||
Current
shareholders
|
77,626,604
|
79%
|
$
|
406,651
|
0.005
|
||
New
investors
|
20,000,000
|
21%
|
$
|
5,000,000
|
0.250
|
||
Total
|
97,626,604
|
100%
|
$
|
5,406,651
|
0.055
|
The
following dilution table is if only 25% of the Offering is sold as of
February 9, 2010
Shares
Purchased
|
Total
Consideration
|
Per
|
||||||||||||||
Number
|
Percent
|
Amount
|
Share
|
|||||||||||||
Current
shareholders
|
77,626,604 | 94 | % | $ | 406,651 | 0.005 | ||||||||||
New
investors
|
5,000,000 | 6 | % | $ | 1,250,000 | 0.250 | ||||||||||
Total
|
82,626,604 | 100 | % | $ | 1,656,651 | 0.02 |
16
SELLING
SHAREHOLDERS
The
following table sets forth the shares beneficially owned, as of February 9,
2010, by the selling shareholders prior to the offering contemplated by this
Prospectus, the number of shares each selling security holder is offering by
this Prospectus and the number of shares which each would own beneficially if
all such offered shares are sold.
Beneficial
ownership is determined in accordance with Securities and Exchange Commission
rules. Under these rules, a person is deemed to be a beneficial owner
of a security if that person has or shares voting power, which includes the
power to vote or direct the voting of the security, or investment power, which
includes the power to dispose of, or to direct the disposition of, the
security. The person is also deemed to be a beneficial owner of any
security of which that person has a right to acquire beneficial ownership within
60 days. Under the Securities and Exchange Commission rules, more
than one person may be deemed to be a beneficial owner of the same securities,
and a person may be deemed to be a beneficial owner of securities as to which he
or she may not have any pecuniary beneficial interest. Except as
noted below, each person has sole voting and investment power.
None of
the selling shareholders is a registered broker-dealer or an affiliate of a
registered broker-dealer. Each of the selling shareholders has
acquired his, her or its shares pursuant to a private placement solely for
investment and not with a view to or for resale or distribution of such
securities. The shares were offered and sold to the selling
shareholders at a purchase price of $0.15 per share in a private placement,
pursuant to the exemption from the registration under the Securities Act
provided by section 4(2) of the Securities Act and Regulation D. None
of the selling shareholders are affiliates or controlled by our affiliates and
none of the selling shareholders are now or were at any time in the past an
officer or Director of the Company or of any of our predecessors or
affiliates. None of the selling shareholders has had any material
relationship with the Company within the past three years.
The
percentages below are calculated based on 97,626,604 shares of our Common Stock
issued and outstanding. We do not have any outstanding options,
warrants or other securities presently exercisable for or convertible into
shares of our Common Stock.
Name
of Selling Stockholder, Position, Office or Material Relationship with
Company
|
Common
Stock Owned by the Selling Stockholder2
|
Total
Shares to be Registered Pursuant to this Offering and Percent of Common
Stock Before Offering
|
Number
of Shares Owned by Selling Stockholder After Offering and Percent of Total
Issued and Outstanding1
|
||||||||||||
1 |
Susan
M. Aldridge (Family #27)
|
10,000 | 10,000 | * | 0 | * | |||||||||
2 |
John
Bateman (Friend #108)
|
10,000 | 10,000 | * | 0 | * | |||||||||
3 |
John
L. Belsito (Friend #51)
|
33,334 | 33,334 | * | 0 | * | |||||||||
4 |
Nancy
C. Blackmore (Friend #55)
|
20,000 | 20,000 | * | 0 | * | |||||||||
5 |
George
Thomas Bohannon (Friend #75)
|
20,000 | 20,000 | * | 0 | * | |||||||||
6 |
Yvonne Britt
(Friend #2)
|
10,000 | 10,000 | * | 0 | * | |||||||||
6 |
Tee
Chan (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
7 |
Tee
Chan (Friend #17)
|
20,000 | 20,000 | * | 0 | * | |||||||||
7 |
Tee
Chan (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
7 |
Tee
Chan (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
7 |
Tee
Chan (Friend #NA)
|
40,000 | 40,000 | * | 0 | * | |||||||||
8 |
Kay
Cole (Friend #48)
|
20,000 | 20,000 | * | 0 | * | |||||||||
9 |
Cone
Family Trust (Friend #28)
|
10,000 | 10,000 | * | 0 | * | |||||||||
9 |
Cone
Family Trust (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
10 |
Duncan
and John Crabtree-Ireland as JTWROS (Family #52)
|
10,000 | 10,000 | * | 0 | * | |||||||||
11 |
Friley
S. Davidson (Friend #68)
|
30,000 | 30,000 | * | 0 | * | |||||||||
11 |
Friley
Davidson (Friend #NA)
|
30,000 | 30,000 | * | 0 | * | |||||||||
12 |
Yvonne
D. Doty (Friend #37)
|
10,000 | 10,000 | * | 0 | * | |||||||||
13 |
John
William Gardner (Friend #31)
|
10,000 | 10,000 | * | 0 | * | |||||||||
14 |
Gregory
George (Friend #45)
|
35,000 | 35,000 | * | 0 | * | |||||||||
15 |
Timothy
J. and Amy M. Graver (Family #97)
|
10,000 | 10,000 | * | 0 | * | |||||||||
16 |
Jeanie
Green (Friend #83)
|
10,000 | 10,000 | * | 0 | * |
17
16 |
Jeanie
Green (Friend #NA)
|
56,667 | 56,667 | * | 0 | * | |||||||||
17 |
Harriet
Halsell (Friend #67)
|
10,000 | 10,000 | * | 0 | * | |||||||||
18 |
Edward
F. Halsell, Jr. (Friend #18)
|
20,000 | 20,000 | * | 0 | * | |||||||||
19 |
Thane
Hayhurst (Friend #44)
|
42,001 | 42,001 | * | 0 | * | |||||||||
20 |
Shirley
James (Friend #61)
|
10,000 | 10,000 | * | 0 | * | |||||||||
21 |
Paul
M. Kester (Friend #64)
|
33,334 | 33,334 | * | 0 | * | |||||||||
21 |
Paul
M. Kester (Friend #NA)
|
6,667 | 6,667 | * | 0 | * | |||||||||
22 |
Michael
J. Kilhoffer (Friend #121)
|
70,000 | 70,000 | * | 0 | * | |||||||||
22 |
Gregory
N. Kilhoffer (Friend #NA)
|
30,000 | 30,000 | * | 0 | * | |||||||||
23 |
Gregory
Kilhoffer (Friend #19)
|
16,000 | 16,000 | * | 0 | * | |||||||||
23 |
Gregory
Kilhoffer (Friend #NA)
|
14,000 | 14,000 | * | 0 | * | |||||||||
23 |
Gregory
Kilhoffer (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
23 |
Patrick
King (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
24 |
Patrick
King (Friend #20)
|
10,000 | 10,000 | * | 0 | * | |||||||||
24 |
Patrick
King (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
24 |
Patrick
King (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
25 |
Judith
N. Kline (Family #58)
|
10,000 | 10,000 | * | 0 | * | |||||||||
26 |
Rodger
D. Kobes (Friend #5)
|
10,000 | 10,000 | * | 0 | * | |||||||||
27 |
Michael
Kutner (Friend #113)
|
10,000 | 10,000 | * | 0 | * | |||||||||
27 |
Michael
Kutner (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
28 |
Lynette
Felder Tiller Protection Trust (Family #81)
|
34,000 | 34,000 | * | 0 | * | |||||||||
29 |
Tom
Malin (Friend #71)
|
10,000 | 10,000 | * | 0 | * | |||||||||
30 |
Robert
Manza (Friend #14)
|
35,000 | 35,000 | * | 0 | * | |||||||||
31 |
David
F. Martineau (Friend #21)
|
20,000 | 20,000 | * | 0 | * | |||||||||
32 |
Audrey
W. May (Friend #6)
|
10,000 | 10,000 | * | 0 | * | |||||||||
33 |
Lynn
and Allan McBee (Friend #41)
|
10,000 | 10,000 | * | 0 | * | |||||||||
34 |
Thomas
E. McCullough (Friend #7)
|
30,000 | 30,000 | * | 0 | * | |||||||||
35 |
Bethany
Moffett (Family #34)
|
10,000 | 10,000 | * | 0 | * | |||||||||
35 |
Edward
P. Oakley (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
36 |
Edward
P. Oakley (Friend #22)
|
20,000 | 20,000 | * | 0 | * | |||||||||
36 |
Edward
P. Oakley (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
36 |
Edward
P. Oakley (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
36 |
Edward
P. Oakley (Friend #NA)
|
40,000 | 40,000 | * | 0 | * | |||||||||
37 |
M.
Anne O'Connell (Friend #72)
|
10,000 | 10,000 | * | 0 | * | |||||||||
38 |
Joetta
Phillips (Family #77)
|
10,000 | 10,000 | * | 0 | * | |||||||||
39 |
Marshall
Prichard (Friend #109)
|
10,000 | 10,000 | * | 0 | * | |||||||||
40 |
Julia
M. Prichard (Friend #110)
|
10,000 | 10,000 | * | 0 | * | |||||||||
41 |
Demetrius
B. Roberts (Family #8)
|
13,933 | 13,933 | * | 0 | * | |||||||||
42 |
Natalie
D. Roberts (Family #9)
|
10,000 | 10,000 | * | 0 | * | |||||||||
43 |
Emily
Roberts-Bernau (Family #36)
|
10,000 | 10,000 | * | 0 | * | |||||||||
44 |
Ron
Adams and Tim Ronan (Friend #40)
|
50,000 | 50,000 | * | 0 | * | |||||||||
45 |
Patricia
Salvaggio (Friend #120)
|
10,000 | 10,000 | * | 0 | * | |||||||||
45 |
Patricia
Salvaggio (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
46 |
Charles
F. Salvaggio (Friend #23)
|
10,000 | 10,000 | * | 0 | * | |||||||||
46 |
Charles
F. Salvaggio (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
46 |
Charles
F. Salvaggio (Friend #NA)
|
10,000 | 10,000 | * | 0 | * | |||||||||
46 |
Charles
F. Salvaggio (Friend #NA)
|
20,000 | 20,000 | * | 0 | * | |||||||||
47 |
Stephen
L. Shepherd (Friend #56)
|
10,000 | 10,000 | * | 0 | * | |||||||||
48 |
Jo
Ann Sloan (Friend #94)
|
10,000 | 10,000 | * | 0 | * | |||||||||
49 |
Suzanne
Slonim (Friend #10)
|
20,000 | 20,000 | * | 0 | * | |||||||||
50 |
Donald
Soloman (Friend #119)
|
10,000 | 10,000 | * | 0 | * | |||||||||
51 |
Jyri
Strandman (Friend #86)
|
200,000 | 200,000 | * | 0 | * | |||||||||
52 |
Jan
Strimple (Friend #76)
|
10,000 | 10,000 | * | 0 | * | |||||||||
53 |
MeLissa
Tambourine-Natale (Family #35)
|
10,000 | 10,000 | * | 0 | * | |||||||||
54 |
W.
J. & Martha J. Tiller (Family #11)
|
20,000 | 20,000 | * | 0 | * | |||||||||
55 |
Bryan Walker
(Friend #78)
|
13,334 | 13,334 | * | 0 | * | |||||||||
56 |
Clyde
James White (Friend #82)
|
20,000 | 20,000 | * | 0 | * | |||||||||
57 |
Robert
B. Yudkin (Friend #57)
|
13,334 | 13,334 | * | 0 | * | |||||||||
TOTAL
Selling Shareholders' Shares:
|
1,626,604 | 1,626,604 | 0 |
* Less
than 1%
1)
|
Assumes
all of the shares of Common Stock offered are sold, and 97,626,604 shares
of Common Stock are issued and
outstanding.
|
2)
|
Beneficial
ownership is determined in accordance with SEC rules and generally
includes voting or investment power with respect to
securities.
|
We may
require the selling shareholders to suspend the sales of the securities offered
by this Prospectus upon the occurrence of any event that makes any statement in
this Prospectus, or the related registration statement, untrue in any material
respect or that requires the changing of statements in these documents in order
to make statements in those documents not misleading. We will file a
post-effective amendment to this registration statement to reflect any material
changes to this Prospectus.
18
PLAN OF DISTRIBUTION
The
Company intends to have the Common Stock quoted on the Over the Counter Bulletin
Board upon completion of the offering.
There is
currently no established public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not be
sustained. A broker-dealer potentially serving as market maker for the
Company’s Common Stock must file an application with FINRA in order to be able
to quote the shares of our Common Stock on the Over the Counter Bulletin Board
(“OTCBB”). The Company is seeking out a market maker to have our Common Stock
quoted on the OTCBB. The OTCBB is not a listing service or exchange,
but is instead a dealer quotation service for subscribing
members. There can be no assurance that the market maker’s
application will be accepted by FINRA, nor can we accurately predict the time
period that the application will require. If for any reason our Common
Stock is not quoted on the OTCBB or a public trading market does not otherwise
develop, purchasers of the shares of the Company’s Common Stock may have
difficulty selling their Common Stock should they desire to do so. No
market makers have committed to becoming market makers for our Common Stock at
this time and none may do so. See “Risk Factors -- YOU MAY NOT BE
ABLE TO SELL YOUR SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR THE
COMPANY’S COMMON STOCK” and “Risk Factors -- IF IN THE FUTURE WE ARE
TRADING ON THE OTCBB AND WE FAIL TO REMAIN CURRENT ON OUR PUBLIC COMPANY
REPORTING REQUIREMENTS, WE COULD BE REMOVED FROM THE OTCBB, WHICH WOULD LIMIT
THE ABILITY OF BROKER-DEALERS TO SELL OUR SECURITIES AND THE ABILITY OF
STOCKHOLDERS TO SELL THEIR SECURITIES IN THE SECONDARY MARKET.”
Companies
trading on the OTCBB must be reporting issuers under Section 12 of the Exchange
Act, and must be current in their reports under Section 13 of the Exchange Act,
in order to maintain price quotation privileges on the OTCBB. If we
fail to remain current on our reporting requirements, we could be removed from
the OTCBB. As a result, the market liquidity for our securities could
be adversely affected by limiting the ability of broker-dealers to sell our
securities and the ability of stockholders to sell their securities in the
secondary market.
SHARES OFFERED BY THE COMPANY IN THIS OFFERING WILL BE
SOLD BY OUR OFFICERS AND DIRECTORS
This is a
self-underwritten offering with no minimum sale requirement. Our
officers and directors will sell the shares directly to the public, with no
commission or other remuneration payable to them for any shares that are sold by
them. There are no plans or arrangements to enter into any contracts
or agreements to sell the shares with a broker or dealer. Mr. Tiller
and our other officers and directors will sell the shares and intend to offer
them to friends, family members and business acquaintances. In
offering the securities on our behalf, they will rely on the safe harbor from
broker-dealer registration set out in Rule 3a4-1 under the Securities Exchange
Act of 1934.
Rule
3a4-1 sets forth those conditions under which a person associated with an Issuer
may participate in the offering of the Issuer’s securities and not be deemed to
be a broker-dealer. Those conditions are as follows:
a. Our
officers and directors are not subject to a statutory disqualification, as
that term is defined in Section 3(a)(39) of the Act, at the time of their
participation; and
b. Our
officers and directors will not be compensated in connection with their
participation by the payment of commissions or other remuneration based either
directly or indirectly on transactions in securities; and
c. Our
officers and directors are not, nor will they be at the time of their
participation
in the
offering, an associated person of a broker-dealer; and
d. Our
officers and directors meet the conditions of paragraph (a)(4)(ii) of Rule 3a4-1
of the Exchange Act, in that they (A) primarily perform, or intend primarily to
perform at the end of the offering, substantial duties for or on behalf of our
Company, other than in connection with transactions in securities; and (B) are
not a broker or dealer, or have been associated person of a broker or dealer,
within the preceding twelve months; and (C) have not participated in selling and
offering securities for any Issuer more than once every twelve months other than
in reliance on Paragraphs (a)(4)(i) and (a)(4)(iii).
Our
officers, directors, control persons and affiliates of same do not intend to
purchase any shares in this offering.
19
We are
bearing all costs relating to the registration of the shares of Common Stock
offered by the Company.
TERMS OF THE COMPANY’S OFFERING
The
shares will be sold at the fixed price of $0.25 per share until the completion
of this offering. There is no minimum amount of subscription required
per investor, and subscriptions, once received, are irrevocable.
This
offering will commence on the date of this Prospectus and continue for a period
not to exceed 180 days.
SALES
BY SELLING SHAREHOLDERS
The
selling shareholders also may sell up to 1,626,604 shares of Common Stock at
prevailing market prices or privately negotiated prices, once shares of our
Common Stock are quoted on the OTCBB, or listed for trading or quoted on any
other public market.
The
selling shareholders may sell some or all of their Common Stock in one or more
transactions, including block transactions once shares of GSS Common Stock are
quoted on the OTCBB:
·
|
on
such public markets as the Common Stock may be
trading;
|
·
|
in
privately negotiated transactions;
or
|
·
|
in
any combination of these methods of
distribution.
|
The sales
price to the public may be:
·
|
$0.25
as in this offering
|
·
|
the
market price prevailing at the time of
sale;
|
·
|
a
price related to such prevailing market price;
or
|
·
|
such
other price as the selling shareholders
determine.
|
The
selling shareholders will pay any commissions or other fees payable to brokers
or dealers in connection with any sale of the Common Stock.
The
selling shareholders must comply with the requirements of the Securities Act and
the Exchange Act in the offer and sale of the Common Stock. In
particular, during such times as the selling shareholders may be deemed to be
engaged in a distribution of the Common Stock, and therefore be considered an
underwriter, they must comply with applicable laws and may, among other
things:
·
|
not
engage in any stabilization activities in connection with our Common
Stock;
|
·
|
furnish
each broker or dealer through which common stock may be offered, such
copies of this Prospectus, as amended from time to time, as may be
required by such broker or dealer;
and
|
·
|
not
bid for or purchase any of our securities or attempt to induce any person
to purchase any of our securities other than as permitted under the
Exchange Act.
|
None of
the selling shareholders will engage in any electronic offer, sale, or
distribution of the shares. Further, neither we nor any of the
selling shareholders have any arrangements with a third party to host or access
our Prospectus on the Internet.
The
selling shareholders and any underwriters, dealers or agents that participate in
the distribution of our Common Stock may be deemed underwriters, and any
commissions or concessions received by any such underwriters, dealers or agents
may be deemed to be underwriting discounts and commissions under the Securities
Act. Shares may be sold from time to time by the selling shareholders
in one or more transactions at a fixed offering price, which may be changed, or
at any varying prices determined at the time of sale or at negotiated
prices. We may indemnify any underwriter against specific civil
liabilities, including liabilities under the Securities Act.
DEPOSIT OF OFFERING PROCEEDS FROM THE COMPANY’S
OFFERING
This is a
“best effort,” offering and, as such, we will be able to spend any of the
proceeds. The funds will be transferred to our business account for
use in the implementation of our business plans
20
PROCEDURES AND REQUIREMENTS FOR SUBSCRIPTION
If you
decide to subscribe for any shares in this offering, you will be required to
execute a Subscription Agreement and tender it, together with a check or
certified funds to us. Subscriptions, once received by the Company,
are irrevocable. All checks for subscriptions should be made payable
to the Company. There is no minimum purchase
requirement.
DESCRIPTION OF SECURITIES
COMMON
STOCK
Our
authorized capital stock consists of 100,000,000 shares of Common Stock, no par
value per share. The holders of Common Stock are entitled to one vote
for each share held of record on all matters submitted to a vote of the
stockholders and do not have cumulative voting rights. Upon liquidation,
dissolution or winding up of the Company, holders of Common Stock will be
entitled to share ratably in all of the Company’s assets that are legally
available for distribution, after payment of all debts and other liabilities.
The holders of the Common Stock have no preemptive, subscription, redemption or
conversion rights.
The board
of directors of the corporation is granted authority to, from time to time (1)
establish by resolution one or more series of unissued shares of the class of
preferred stock by specifying the designations, preferences, limitations, and
relative rights, including voting rights, of the series to be established and
(2) issue shares of the series of preferred stock so
established. However, GSS’ Board of Directors has no present
intention of authorizing the issuance of preferred stock by the
Company.”
NON-CUMULATIVE
VOTING
Holders
of shares of our Common Stock do not have cumulative voting rights, which means
that the holders of more than 50% of the outstanding shares, voting for the
election of directors, can elect all of the directors to be elected, if they so
choose, and, in such event, the holders of the remaining shares will not be able
to elect any of our directors. After this offering is completed, the
present stockholders will own 79.4% of our outstanding shares and the purchasers
in this offering will own 20.6%.
DIVIDEND
POLICY
The
Company does not anticipate paying dividends on the Common Stock at any time in
the foreseeable future. The Company’s Board of Directors currently
plans to retain earnings for the development and expansion of the Company’s
business. Any future determination as to the payment of dividends
will be at the discretion of the Board of Directors of the Company and will
depend on a number of factors including future earnings, capital requirements,
financial conditions and such other factors as the Board of Directors may deem
relevant.
INTERESTS OF NAMED EXPERTS AND COUNSEL
None of
the below described experts or counsel have been hired on a contingent basis and
none of them will receive a direct or indirect interest in the
Company.
Our
audited financial statements for the periods ended December 31, 2007(audit),
December 31, 2008 (audit), and September 30, 2009 (reviewed), included in this
Prospectus have been audited/reviewed by the firm of Seale & Beers, CPAs,
LLC. We include the financial statements in reliance on their report, given
upon their authority as experts in accounting and auditing.
The Law
Offices of Novi & Wilkin has passed upon the validity of the shares being
offered and certain other legal matters and is representing us in connection
with this offering.
DESCRIPTION OF OUR BUSINESS
GENERAL INFORMATION ABOUT OUR COMPANY
The
Global Smoothie Supply, Inc. business model contemplates that the Company will
generate revenue from three activities:
|
1)
|
The
sale of smoothie blending equipment
|
|
2)
|
The
sale of the puree to make the
smoothies
|
|
3)
|
The
sale of parts and service for the smoothie blending
equipment
|
21
Global
Smoothie Supply has worked with Blendtec to develop a turnkey smoothie program
designed for the convenience store channel as well as other
channels. Our agreement with Blendtec, among other things, gives GSS
the first right to purchase all of Blendtec’s S3 Smoothie Blender production.,
unless the Company declines to purchase such production.
The
Blendtec S3 Smoothie Machine is a self-serve smoothie machine specially designed
for GSS by Blendtec. The Company couples the S3 Smoothie Machine with
other equipment, including an ice machine that mounts to the top of the Blendtec
S3 Machine, a backup water heater, a custom cabinet and a puree
cart. The Company’s contractual arrangement with Blendtec
contemplates that the Company will purchase the S3 Smoothie Machine from
Blendtec, for resale to purchasing accounts. .
GSS
purchases the balance of the components directly from its supplier network and
the Company currently has no formal contractual arrangements with those
suppliers. The Company purchases proprietary formulas of the purees
developed specially for use with the S3 Blender, directly from its supplier
network, for resale to purchasing customers.
Additionally,
GSS provides for a fee the installation and service for the smoothie machine and
related equipment as an ongoing benefit to purchasing customers.
Our
practice is to purchase inventory as close to customers’ time of need as
possible. This practice has allowed GSS to carry minimal
inventory.
The
Global Smoothie Supply initial route-to-market focus will be against chain
convenience stores. GSS will use a direct sales force as well as
national convenience store brokers to secure business with chain convenience
stores.
|
1)
|
GSS
and its brokers will develop a target list of convenience stores to
pursue. We will work jointly to secure appointments and
market the blending equipment, bag-in-box puree, and attendant services to
these target accounts.
|
|
2)
|
GSS
will attend and present the S3 blender and our turnkey smoothie program at
various industry trade shows to introduce our turnkey smoothie program to
these various trades.
|
|
3)
|
Following
the sale of equipment and puree, GSS intends to offer various marketing
programs to develop our turnkey smoothie program with GSS
customers. These programs will include, among other things,
sampling programs, price promotions, and advertising and public relations
programs.
|
Upon
completion of our public offering, our specific goal is to profitably sell and
market our turnkey self -serve smoothie program. We intend to
accomplish the foregoing through the following milestones over the next 12 month
period:
Complete
our public offering. We believe this could take up to 180 days from
the date of this Prospectus. These costs are estimated at
$60,300.
After
completing the offering, we will begin to hire a staff focused against sales,
marketing and operations. We believe it will take approximately 12
months to complete hiring all staff; however, acquiring and retaining talent
will be an ongoing effort of the Company. The estimated cost for the
first 12 months is $1,784,625
The
Company, immediately after funding, will attempt to rent appropriate office
space and build the proper administrative systems to manage the business
effectively. We expect this process to take approximately 12
months. Estimated costs are $784,125.
As funds
from the offering become available, the Company will begin acquiring equipment
inventory for the purposes of reselling this equipment to purchasing
accounts. Additionally the Company will begin a training program for
employees to ensure all employees are knowledgeable about our product,
equipment, competition and our potential customers. These programs
will be ongoing; however, our estimated costs for the first 12 months of
operations are $751,250.
Since
sales and marketing behind our turnkey self-serve smoothie program is critical,
we will activate sales and marketing programs immediately after
funding. These programs will include, among other things, local
media, point-of-sale programs, introductory price promotions, attendance at
trade shows, website development, and on-line marketing
programs. Because of their importance, the sales and marketing
programs will be ongoing. Estimated cost for the first 12 months is
$1,030,000.
22
Because
of the complexity of being a publicly traded Company, we have budgeted a
significant amount of money to perform the activities necessary to remain
compliant with all applicable laws and regulations. This includes the
hiring of outside professionals and expert consultants to advise us in our
activities. These will be ongoing costs. Estimated costs
for the first 12 months are $589,700.
These
activities and milestones are reflective of the Company raising 100% of our
offering. In the event we are unsuccessful in raising 100% of our
offering, we will scale back our operation as outlined in the various use of
proceeds examples.
Because
there is no minimum number of shares that must be sold in the offering, we can
provide no assurance regarding the amount of capital we will actually raise in
the offering. We intend to use the proceeds to improve our capital position, to
fund our business plan, and to retain the remainder of any proceeds for general
corporate purposes. We believe a strengthened capital position will provide us
with the flexibility to address market conditions. Our management will retain
broad discretion in deciding how to allocate the net proceeds of this offering.
The precise amounts and timing of our use of the net proceeds will depend upon
market conditions and other factors.
INDUSTRY BACKGROUND
The
market for self-serve smoothies is well-defined. There were
144,875 convenience stores in the United States in 2008 and, according to
Convenience Store Decisions*, http://www.csdecisions.com/article/7125, a
resource for the food services industry, these stores accounted for nearly $174
billion in in-store sales. We believe this represents a great
opportunity for the GSS self-serve smoothie program.
According
to Mintel research*, the market for health-conscious products continues to grow
rapidly. In 2006, smoothie makers raked in more than $2 billion from
made-to-order and packaged smoothies, up more than 80 percent in the years
2001-2006. Smoothies have quickly become part of the American
landscape, with more than 4,000 retail locations reported in the U.S. in 2006,
and with more than half of Mintel respondents in the 18 to 34 year-old range
reporting that they had a smoothie in the last month. “Consumers are attracted
to smoothies because they are seen as a healthier option to most sweets and
on-the-go meals,” said David Lockwood, director of Mintel Reports. “Now that the
smoothie market is a proven success, companies are being pushed to the next
level — extreme differentiation. Similar to the coffee market, smoothie
companies need to continue developing innovative flavors and additives to keep
consumers engaged in the market, but also should consider expanding the menu as
some chains have done with sandwiches or coffee.”
__________________________
* http://www.foodprocessing.com/industrynews/2007/026.html.
The
smoothie industry’s new offerings are using emerging flavors, such as açaí and
green tea, and hybrids of smoothies with other drink types. New nutrient
“boosts” feed consumer need for evolving offerings as well. Smoothie companies
have also remained on track with current food trends, utilizing “all-natural,”
low-calorie and other key buzz properties to build sales.
“The
flavor combinations and possibilities are endless with the smoothie market,”
said Lockwood. “With functional foods and beverages having a strong marketplace
advantage, smoothies are in position to dominate the healthy beverages category.
Smoothies are seen as a pleasant health treat, and this will continue to take
the category far.” In contrast with yogurt drinks, 39 percent of Mintel
respondents agreed or strongly agreed that “smoothies are healthier than drinks
made with yogurt.” Similarly, more than half of consumers agreed or strongly
agreed that “smoothies taste better than yogurt drinks,” with yogurts getting
only 15 percent.
*All
facts and statistics presented in this Industry Background section are from
Convenience Store Decisions and foodprocessing.com. These reports and
studies are publicly available without cost or at a nominal expense. GSS has not
commissioned any of these reports.
On August
10, 2009, GSS entered into a formal testing agreement with 7-Eleven,
Inc. That agreement has expired; however, the parties have agreed
verbally to extend the term of the agreement indefinitely and 7-Eleven is
continuing to test the equipment in collaboration with the Company. We expect
the testing to be completed by the end of the second quarter of
2010. The Company is hopeful that a successful test with 7-Eleven,
Inc. will result in a more substantive commitment on the part of 7-Eleven, Inc.,
and a rollout of the Company’s business concept to other convenience store
chains.
23
PRINCIPAL PRODUCTS AND THEIR MARKETS
The GSS
idea is simple: to transform the fruit puree smoothie market by offering
consumers a new approach -- a “grab-and-go” convenience store
alternative. Therefore, the GSS smoothie machine is tailored to the
Convenience Store (C-store) environment.
Our
manufacturer, Blendtec, is a developer of automated dispensing/blending
equipment. The self-serve smoothie machine designed for GSS by
Blendtec has Electrical Testing Laboratories (ETL) and National Safety
Federation (NSF) certification.
DISTRIBUTION METHODS
The
machine is designed to accommodate easy-to-use modular “bag in box” cased
product, the puree. These puree formulations have been developed and
co-branded exclusively for GSS, and are manufactured and distributed on our
behalf.
The
flavor line has the capacity for future expansion and modification, with an
initial menu that includes multiple fruit-based choices and one coffee-based
offering. GSS hopes to promote, install, and maintain the machines
using a nationwide sales force and a network of trained service
technicians.
Management
believes that an expansion strategy focusing on Convenience Stores and other
channels would provide a great degree of quality and add significant scale to
our business model. We intend to follow a strategy of expanding store
locations in existing markets. We will grow our concept and brand
through several channels, including C-stores and other retail
channels. These other channels would include Fast-Food Restaurants,
sports venues, university campuses and high schools, resorts and cruise ships,
sports, racquetball, health and country clubs, business and hospital complexes,
as well as any high-traffic portals, like airports, sea ports, and train and bus
stations.
STATUS OF ANY PUBLICLY ANNOUNCED PRODUCTS
None at
this time
To the
best of the Company’s knowledge, there currently are no other companies offering
self-service smoothies from smoothie machines that are both self-cleaning and
self-sanitizing. Consequently, the Company will effectively be
establishing a new niche market for this smoothie machine and the related
services offered by the Company.
Of the
myriad companies offering smoothies throughout the U.S., including smoothie
shops and other retail smoothie outlets, no one provider is dominant in the
industry. The Company will not seek to open any retail shops, but
rather will seek to place its smoothie machines into businesses that would
become dominant in their respective markets. The Company considers
cost, quality and convenience to be major factors in an individual’s selection
of retail outlets from which to buy smoothies, and using those metrics, the
Company’s S3 Smoothie Machine is anticipated to help the Company’s customers
establish a dominant presence in their respective markets.
PATENTS AND TRADEMARKS
The
Company currently has no registered patents.
GOVERNMENT AND INDUSTRY REGULATION
We are
subject to various federal, state and local regulations. Our products
and equipment are subject to state and local regulation by health, sanitation,
food and workplace safety and other agencies. We may experience
material difficulties or failures in obtaining the necessary licenses or
approvals for new products and equipment, which could delay planned execution of
our business plan. Our operations are also subject to the U.S. Fair
Labor Standards Act, which governs such matters as minimum wages, overtime and
other working conditions, along with the U.S. Americans with Disabilities Act,
family leave mandates and a variety of similar laws enacted by the states that
govern these and other employment law matters. In addition, federal
proposals to introduce a system of mandated health insurance and flexible work
time and other similar initiatives could, if implemented, adversely affect our
operations. In recent years, there has been an increased legislative,
regulatory and consumer focus on nutrition and advertising practices in the food
industry. Establishments operating in C-stores and other approved
channels, the quick-service, and fast-casual segments have been a particular
focus. As a result, we may in the future become subject to
initiatives in the area of nutrition disclosure or advertising, such as
requirements to provide information about the nutritional content of our
products, which could increase our expenses.
24
RESEARCH AND DEVELOPMENT ACTIVITIES
Our
Research & Development has been conducted with participation by the Company,
Management at 7-Eleven, Inc, K-Tec, Inc. (Blendtec) and others to assure our
product offerings align most closely with the requirements of 7-Eleven and the
needs of our initial target convenience store market. However, these
research and development efforts do not guarantee 7-Eleven will purchase the
Company’s programs or products or participate in the future. GSS
entered into a testing agreement with 7-Eleven dated August 10, 2009, which is
now expired. However, the parties have agreed verbally to extend the terms of
the agreement indefinitely. We expect the testing to be completed by the end of
the second quarter of 2010.
ENVIRONMENTAL LAWS
Company
operations currently have no material effect on the environment.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
David C.
Tiller, Donald M. Roberts, Harry B. Ireland and John W. Gohsman have employment
agreements.
STATUS
OF ANY PUBLICLY ANNOUNCED NEW PRODUCTS
None at
this time
DESCRIPTION OF PROPERTY
The
Company currently maintains one showroom located at 1444 Oak Lawn in Dallas, TX,
on a month-to-month rental arrangement.
LEGAL PROCEEDINGS
There are
no lawsuits filed or pending against the Company by others, and no lawsuits
filed or pending against others by the Company. There are no
contingencies, sureties or guaranties in existence.
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER
MATTERS
YOU MAY NOT BE ABLE TO SELL YOUR
SHARES IN GSS BECAUSE THERE IS NO PUBLIC MARKET FOR THE COMPANY’S
STOCK.
The Company intends to have the Common Stock quoted on the Over the Counter Bulletin Board upon completion of the offering.
There is
currently no established public trading market for our securities and an active
trading market in our securities may not develop or, if developed, may not be
sustained. A broker-dealer potentially serving as market maker for the
Company’s Common Stock must file an application with FINRA in order to be able
to quote the shares of our Common Stock on the Over the Counter Bulletin Board
(“OTCBB”). The Company is seeking out a market maker to have our Common Stock
quoted on the OTCBB. The OTCBB is not a listing service or exchange,
but is instead a dealer quotation service for subscribing
members. There can be no assurance that the market maker’s
application will be accepted by FINRA, nor can we accurately predict the time
period that the application will require. If for any reason our Common
Stock is not quoted on the OTCBB or a public trading market does not otherwise
develop, purchasers of the shares of the Company’s Common Stock may have
difficulty selling their Common Stock should they desire to do so. No
market makers have committed to becoming market makers for our Common Stock at
this time and none may do so.
Companies
trading on the OTCBB must be reporting issuers under Section 12 of the Exchange
Act, and must be current in their reports under Section 13 of the Exchange Act,
in order to maintain price quotation privileges on the OTCBB. If we
fail to remain current on our reporting requirements, we could be removed from
the OTCBB. As a result, the market liquidity for our securities could
be adversely affected by limiting the ability of broker-dealers to sell our
securities and the ability of stockholders to sell their securities in the
secondary market.
25
STOCK TRANSFER
AGENT
Securities
Transfer Corporation
2591
Dallas Pkwy., Ste 102
Frisco,
TX 75034
Phone:
972-963-0001
Fax:
469-633-0088
www.stctransfer.com
REPORTS
We are
subject to certain reporting requirements and will furnish annual financial
reports to our stockholders, certified by our independent accountants, and will
furnish un-audited quarterly financial reports in our quarterly reports filed
electronically with the SEC. All reports and information filed by us
can be found at the SEC website, www.sec.gov.
Our
fiscal year end is December 31. We intend to provide financial
statements audited by an Independent Registered Accounting Firm (PCOAB) to our
shareholders in our annual reports. The audited financial statements
at December 31, 2007, December 31, 2008, and the reviewed financials for the 9
months ended September 30, 2009 immediately follow.
26
SEALE AND BEERS, CPAs
PCAOB & CPAB REGISTERED
AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Global
Smoothie Supply, Inc.
We have
audited the accompanying restated balance sheets of Global Smoothie Supply, Inc.
as of December 31, 2008 and December 31, 2007, and the related restated
statements of operations, stockholders’ equity (deficit) and cash flows for the
years ended December 31, 2008 and December 31, 2007. These financial statements
are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We
conduct our audits in accordance with standards of the Public Company Accounting
Oversight Board (United States). Those standards require that we plan
and perform the audits to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Global Smoothie Supply,
Inc. as of December 31, 2008 and December 31, 2007, and the related
statements of operations, stockholders’ equity (deficit) and cash flows for the
years ended December 31, 2008 and December 31, 2007, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has had an accumulated deficit of $1,007,
which raises substantial doubt about its ability to continue as a going
concern. Management’s plans concerning these matters are also
described in Note 7. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/
Seale and Beers, CPAs
Seale and
Beers, CPAs
Las
Vegas, Nevada
January
6, 2010 - Robert Seale 1/6/10
50 S. Jones Blvd. Suite 202
Las Vegas, NV 89107 Phone: (888)727-8251 Fax: (888)782-2351
27
GLOBAL
SMOOTHIE SUPPLY, INC.
BALANCE
SHEET
December
31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
||||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 6,848 | $ | 386 | ||||
Accounts
Receivable
|
4,118 | - | ||||||
Vertex
Factoring Holding Account
|
31,660 | - | ||||||
Total
Current Assets
|
$ | 42,626 | $ | 386 | ||||
Fixed
Assets
|
||||||||
Furniture
and Equipment
|
$ | 2,163 | $ | - | ||||
Accumulated
Depreciation
|
(433 | ) | - | |||||
Total
Net Fixed Assets
|
$ | 1,730 | $ | - | ||||
Total
Assets
|
$ | 44,356 | $ | 386 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Liabilities
|
||||||||
Accounts
Payable to Non Related Parties
|
$ | 12,922 | $ | - | ||||
Accounts
Payable to Related Parties
|
620 | - | ||||||
Payroll
Liabilities
|
8,000 | - | ||||||
Warranty
Liability
|
9,600 | - | ||||||
Sales
Tax Payable
|
9,727 | - | ||||||
Total
Current Liabilities
|
$ | 40,869 | $ | - | ||||
Total
Liabilities
|
$ | 40,869 | $ | - | ||||
Stockholders'
Equity
|
||||||||
Total
Common Shares Authorized 100,000,000
|
||||||||
Common
Stock issued at zero par as of
|
||||||||
12/31/2008:
50,000,000;
|
||||||||
12/31/2007:
50,000,000
|
||||||||
Paid
In Capital
|
$ | 4,494 | $ | - | ||||
Retained
Earnings
|
(1,007 | ) | 386 | |||||
Total
Stockholders Equity
|
$ | 3,488 | $ | 386 | ||||
Total
Liabilities and Stockholders' Equity
|
$ | 44,356 | $ | 386 |
The
accompanying notes are an integral part of these statements.
28
GLOBAL
SMOOTHIE SUPPLY, INC.
INCOME
STATEMENT
Year
Ended
|
||||||||
December
31
|
||||||||
2008
|
2007
|
|||||||
Restated
|
||||||||
Revenue
|
||||||||
Machine
Revenue
|
$ | 155,200 | $ | - | ||||
Puree
Revenue
|
11,746 | 4,645 | ||||||
Service
Revenue
|
- | - | ||||||
Parts
Revenue
|
- | 174 | ||||||
Shipping
Revenue
|
3,600 | - | ||||||
Total
Revenue
|
$ | 170,546 | $ | 4,819 | ||||
Cost
of Goods Sold
|
125,897 | 3,946 | ||||||
Gross
Margin
|
44,649 | 873 | ||||||
Expenses
|
||||||||
Advertising
and Promotion
|
5,765 | 675 | ||||||
Total
Payroll Expenses
|
8,000 | - | ||||||
Office,
Administrative & Miscellaneous Expense
|
7,824 | - | ||||||
Rent
Expense
|
14,300 | - | ||||||
Travel
Expense
|
5,112 | - | ||||||
Depreciation
Expense
|
433 | - | ||||||
Income
from Operations
|
3,215 | 198 | ||||||
Interest
Expense
|
4,608 | - | ||||||
Net
(Loss) Income
|
$ | (1,393 | ) | $ | 198 | |||
(Loss)
Earnings per Common Share
|
||||||||
Basic
and Diluted
|
** | ** | ||||||
Weighted
average common shares outstanding:
|
||||||||
Basic
and Diluted
|
50,000,000 | 50,000,000 |
** - Less
than $.01 per share
The
accompanying notes are an integral part of these notes
29
GLOBAL
SMOOTHIE SUPPLY, INC.
SHAREHOLDER
EQUITY
Common
Stock
|
Paid
in
|
Retained
|
Total
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
(Deficit)
|
Equity
|
||||||||||||||||
Balance,
December 31, 2006
|
50,000,000 | $ | - | $ | - | $ | 188 | $ | 188 | |||||||||||
Net Income (Loss)
|
198 | 198 | ||||||||||||||||||
Balance,
December 31, 2007
|
50,000,000 | - | - | 386 | 386 | |||||||||||||||
Founder Capital Contribution
|
- | 4,494 | - | 4,494 | ||||||||||||||||
January 2008 through September 2008
|
||||||||||||||||||||
Net Income (Loss)
|
(1,393 | ) | (1,393 | ) | ||||||||||||||||
Balance,
December 31, 2008
|
50,000,000 | $ | - | $ | 4,494 | $ | (1,007 | ) | $ | 3,488 |
The
accompanying notes are an integral part of these statements.
30
GLOBAL
SMOOTHIE SUPPLY, INC.
CONSOLIDATED
FINANCIALS
Year
Ended
|
||||||||
December
31,
|
||||||||
2008
|
2007
|
|||||||
Restated
|
||||||||
Operating
Activities
|
||||||||
Net
Income/(Loss)
|
$ | (1,393 | ) | $ | 198 | |||
Adjustments
to Reconcile Net (Loss) to Net Cash Used by Operating
Activities
|
||||||||
Change
in Accounts Receivable
|
(4,118 | ) | ||||||
Change
in Inventory Asset
|
||||||||
Change
in Vertex Holding Account
|
(31,660 | ) | ||||||
Change
in Accounts Payable
|
12,922 | |||||||
Change
in Payroll Liabilities
|
8,000 | |||||||
Change in
Sales Tax Payable
|
9,727 | |||||||
Change
Warranty Liability
|
9,600 | |||||||
Depreciation
|
433 | |||||||
Net
Cash Provided by (Used) in Operating Activities
|
$ | 3,510 | $ | 198 | ||||
INVESTING
ACTIVITIES
|
||||||||
Purchase
of Furniture and Equipment
|
(2,163 | ) | - | |||||
Net
cash used in Investing Activities
|
$ | (2,163 | ) | $ | - | |||
FINANCING
ACTIVITIES
|
||||||||
Related
Party Accounts Payable
|
620 | |||||||
Paid
In Capital
|
4,494 | |||||||
Cash
Provided by Financing Activities
|
$ | 5,115 | $ | - | ||||
Net
Increase in Cash
|
$ | 6,461 | $ | 198 | ||||
Cash,
Beginning of Period
|
$ | 386 | $ | 188 | ||||
Cash,
End of Period
|
$ | 6,848 | $ | 386 | ||||
Supplemental
Information:
|
||||||||
Interest
/ Factoring Fees Paid
|
$ | 4,608 | $ | - | ||||
Income
Taxes Paid
|
$ | - | $ | - |
The
accompanying notes are an integral part of these statements.
31
GLOBAL
SMOOTHIE SUPPLY, INC.
NOTES
TO FINANCIAL STATEMENTS
For
Years Ending 12/31/2008 and 12/31/2007
NOTE
1. GENERAL ORGANIZATION AND BUSINESS
Global
Smoothie Supply, Inc (the Company) was incorporated February 17, 2005, under the
laws of the State of Texas. The Company is engaged in the beverage
business and sells beverage machines. The Company’s fiscal year ends on December
31.
From its
inception and due to limited operations, Global Smoothie Supply, Inc elected to
be taxed under Subchapter S of Chapter 1 of the Internal Revenue
Code.
NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES
Accounting
Basis
These
financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
Cash and Cash
Equivalents
For the
purpose of the statement of cash flows, cash equivalents include all highly
liquid investments with maturity of three months or less.
Earnings (Loss) per
Share
The basic
earnings (loss) per share are calculated by dividing the Company’s net income
available to common shareholders by the weighted average number of common shares
outstanding during the year. The diluted earnings (loss) per share are
calculated by dividing the Company’s net income (loss) available to common
shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted as of the first of the year for any
potentially dilutive debt or equity. There are no diluted shares
outstanding.
Dividends
The
Company has not adopted any policy regarding payment of dividends. No dividends
have been paid during the period shown.
Receivables
As of
12/31/08, no allowance for doubtful accounts exists because as of the date of
filing all debts have been fully settled.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Net Income Per Common
Share
Net
income (loss) per common share is computed based on the weighted average number
of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive
common shares.
32
Revenue and Cost
Recognition
We
recognize revenue at the time the products are shipped to customers or third
parties. In the future, we expect to perform services under service contracts
revenue will be recognized upon the completion of the services on specified
machines. We follow EITF Issue 00-10, “Accounting for Shipping and Handling Fees
and Costs” (Issue 00-10). Issue 00-10 requires that all amounts billed to
customers related to shipping and handling should be classified as revenues. Our
product costs include amounts for shipping and handling, therefore, we charge
our customers shipping and handling fees at the time the products are shipped or
when services are performed. The cost of shipping products to the customer is
recognized at the time the products are shipped to the customer and our policy
is to classify them as shipping expenses. The cost of shipping products to the
customer is classified as shipping expense.
Staff
Accounting Bulletin No. 101, Revenue Recognition in Financial Statements (SAB
101) and Staff Accounting Bulletin No. 104, Revenue Recognition, corrected copy
(SAB 104) address certain criteria for revenue recognition. SAB 101 and SAB 104
outline the criteria that must be met to recognize revenue and provides guidance
for disclosures related to revenue recognition policies. Our revenue recognition
policies comply with the guidance contained in SABs 101 and 104.
Inventories
Inventories
are stated at the lower of cost or market value. Cost for inventory is based on
an average cost method. Reserves for
excess and obsolete inventories are based on an assessment of slow-moving and
obsolete inventories, determined by historical usage and demand. As
of 12/31/2008 and 12/31/2007 the Company held in inventory $0 and $0,
respectively.
Depreciation
Depreciation
used is 200DB, 5 yrs depreciation, ½ yr in year of acquisition, salvage value is
none.
NOTE
3. INCOME TAXES:
The
Company provides for income taxes under Statement of Financial Accounting
Standards No. 109, Accounting
for Income Taxes. SFAS No. 109 requires the use of an asset and liability
approach in accounting for income taxes. Deferred tax assets and liabilities are
recorded based on the differences between the financial statement and tax bases
of assets and liabilities and the tax rates in effect currently.
SFAS No.
109 requires the reduction of deferred tax assets by a valuation allowance if,
based on the weight of available evidence, it is more likely than not that some
or all of the deferred tax assets will not be realized. In the Company’s
opinion, it is uncertain whether they will generate sufficient taxable income in
the future to fully utilize the net deferred tax asset.
Global
Smoothie Supply has elected to be taxed under Subchapter S of Chapter 1 of the
Internal Revenue Code, tax liability is held by the individual stockholders
proportionate to their ownership percentages.
NOTE
4. STOCKHOLDERS’ EQUITY
Common
Stock
At the
time of inception 1,000 shares were authorized and all 1,000 shares were issued.
On December 26, 2006, the number of authorized shares was increased to
50,000,000 and the Company issued a stock split of 20,000:1, with the 1,000
shares outstanding being exchanged for 20,000,000. On 12/31/2008,
20,000,000 shares were outstanding. On March 19, 2009, the number of authorized
shares was increased to 100,000,000 and the Company issued a stock split of 5:2,
with the 20,000,000 shares outstanding being exchanged for
50,000,000. This March 19, 2009, stock split is being applied
retroactively to the financial statements.
In 2008,
the Company received an infusion of $4,494 of cash and paid in expense from its
founders group. The amount is a combination of cash paid in by founders group,
as well as expenses incurred by them personally on behalf of the Company and
submitted for inclusion in the capitalization of the business. The expenses and
cash infusion occurred in the time periods from inception and to the period
prior to the 4th
quarter of 2008.
33
NOTE
5. RELATED PARTY TRANSACTIONS
The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities that
become available. They may face a conflict in selecting between the
Company and other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
Any
amounts in Accounts Payable to Related Parties are for reimbursable expenses
including but not limited to travel expenses, postage, purchased office
supplies, and miscellaneous expenses.
NOTE 6. WARRANTY
COSTS
The
Company's financial statements reflect accruals for potential warranty claims
based on the Company's best estimation. Estimated product warranty costs are
accrued at the time products are sold. At the current time, we provide a 3 year
limited warranty on the machines we sell. Our manufacturer has taken the
position of warranting the machines for the 1st year
and Global Smoothie Supply covers the warranty for the 2nd and
3rd
years.
Accordingly,
we have reserved amounts for those potential warranty claims. As of 12/31/2008,
those amounts stood at $9,600. To date, no warranty claims have been made
against these amounts.
The need
for additional reserves is not known at this time. We do not have sufficient
historical knowledge as to determine whether our estimates are correct. As we
develop additional experience, our liability may change and these reserves may
be adjusted to meet the additional warranty costs.
NOTE 7. GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in the notes to the
financial statements, the Company has established a limited source of revenue.
As of December 31st, 2008, the Company has an accumulated deficit of $1,007.
This raises substantial doubt about the Company’s ability to continue as a going
concern. Without realization of additional capital, it would be
unlikely for the Company to continue as a going concern. The
financial statements do not include any adjustments that might result from this
uncertainty.
The
Company’s activities to date have been supported by equity financing and initial
preliminary sales. Management continues to seek funding from its
shareholders and other qualified investors to pursue its business
plan. In the alternative, the Company may be amenable to a sale,
merger or other acquisition in the event such transaction is deemed by
management to be in the best interests of the shareholders.
NOTE 8. CONCENTRATIONS
OF RISKS
Cash
Balances
The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured
balances up to $100,000 through October 13, 2008. As of October 14,
2008, all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all personal and business checking deposit accounts that
do not earn interest, are fully insured for the entire amount in the deposit
account. This unlimited insurance coverage is temporary and will
remain in effect for participating institutions until December 31,
2009.
All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2009. On January 1, 2010,
FDIC deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance
coverage for certain retirement accounts, which include all IRA deposit
accounts, will remain at $250,000 per depositor.
NOTE 9. ADVERTISING
AND PROMOTION COSTS
The
Company’s policy regarding advertising and promotion is to expense advertising
when incurred. The Company incurred $5,765 in advertising and promotion costs
for the period ending 12/31/2008.
34
NOTE 10. FACTORING
ACCOUNTS RECEIVABLE
On
October 10, 2008, the Company entered in to a one year agreement with Vertex
Financial, LTD (Vertex) to purchase the Company’s receivables with full
recourse. As of 12/31/2008, all factored receivables had been satisfied with
Vertex, and Vertex owed the Company $31,660. As of the period ending 6/30/2009
Vertex had satisfied all accounts with the Company.
The
agreement has set a monthly minimum discount fee. The contract would be
considered minimally fulfilled at a point where the Company factored and/or paid
the equivalent of the monthly minimum amount for a year. This minimum amount
does not preclude the factoring of invoices above this minimum amount. During
the period ending 12/31/2008 and 6/30/2009 the Company paid $4,608 and $3,421 in
factoring fees, respectively. All minimum obligations per the agreement have
been met by the end of the period ending 6/30/2009. All factoring fees are
treated as interest expense and factoring expenses (i.e. cost of credit reports,
wire fees, etc) are accounted for in Banking and Miscellaneous
Expense.
The
Company accounts for Factored Accounts Receivable in compliance with ASC
860.
NOTE 11. THE
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Recent Accounting
Pronouncements
June
2009, the FASB issued SFAS No. 166, “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“SFAS 166”).
The
provisions of SFAS 166, in part, amend the derecognition guidance in FASB
Statement No. 140, eliminate the exemption from consolidation for qualifying
special-purpose entities and require additional disclosures. SFAS 166 is
effective for financial asset transfers occurring after the beginning of an
entity’s first fiscal year that begins after November 15, 2009. The Company does
not expect the provisions of SFAS 166 to have a material effect on the financial
position, results of operations or cash flows of the Company.
In
June 2009, the FASB issued SFAS No. 167, “Amendments to FASB Interpretation No.
46(R) (“SFAS 167”). SFAS 167 amends the consolidation guidance applicable to
variable interest entities. The provisions of SFAS 167 significantly affect the
overall consolidation analysis under FASB Interpretation No. 46(R).
SFAS 167
is effective as of the beginning of the first fiscal year that begins after
November 15, 2009. SFAS 167 will be effective for the Company beginning in 2010.
The Company does not expect the provisions of SFAS 167 to have a material effect
on the financial position, results of operations or cash flows of the
Company.
In June
2009, the FASB issued SFAS No. 168, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 162” (“SFAS No. 168”). Under SFAS No. 168 the “FASB
Accounting Standards Codification” (“Codification”) will become the source of
authoritative U. S. GAAP to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and
Exchange Commission (“SEC”) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. SFAS No. 168 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. On the effective date, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative. SFAS No. 168 is effective for the
Company’s interim quarterly period beginning July 1, 2009. The Company does not
expect the adoption of SFAS No. 168 to have an impact on the financial
statements.
In June
2009, the Securities and Exchange Commission’s Office of the Chief Accountant
and Division of Corporation Finance announced the release of Staff Accounting
Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds
portions of the interpretive guidance included in the Staff Accounting Bulletin
Series in order to make the relevant interpretive guidance consistent with
current authoritative accounting and auditing guidance and Securities and
Exchange Commission rules and regulations. Specifically, the staff is updating
the Series in order to bring existing guidance into conformity with recent
pronouncements by the Financial Accounting Standards Board, namely, Statement of
Financial Accounting Standards No. 141 (revised 2007), Business Combinations,
and Statement of Financial Accounting Standards No. 160, Non-controlling
Interests in Consolidated Financial Statements. The statements in staff
accounting bulletins are not rules or interpretations of the Commission, nor are
they published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant in administering the disclosure
requirements of the Federal securities laws.
35
In April
2009, the FASB issued FSP No. FAS 107-1 and APB 28-1, Interim Disclosures about
Fair Value of Financial Instruments. This FSP amends FASB Statement No. 107,
Disclosures about Fair Value of Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28, Interim Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods.
This FSP shall be effective for interim reporting periods ending after June 15,
2009. The Company does not have any fair value of financial instruments to
disclose.
In April
2009, the FASB issued FSP No. FAS 115-2 and FAS 124-2, Recognition and
Presentation of Other-Than-Temporary Impairments.
This FSP
amends the other-than-temporary impairment guidance in U.S. GAAP for debt
securities to make the guidance more operational and to improve the presentation
and disclosure of other-than-temporary impairments on debt and equity securities
in the financial statements. The FSP does not amend existing recognition and
measurement guidance related to other-than-temporary impairments of equity
securities. The FSP shall be effective for interim and annual reporting periods
ending after June 15, 2009. The Company currently does not have any financial
assets that are other-than-temporarily impaired.
In April
2009, the FASB issued FSP No. FAS 141(R)-1, Accounting for Assets Acquired and
Liabilities Assumed in a Business Combination That Arise from Contingencies, to
address some of the application issues under SFAS 141(R). The FSP deals with the
initial recognition and measurement of an asset acquired or a liability assumed
in a business combination that arises from a contingency provided the asset or
liability’s fair value on the date of acquisition can be determined. When the
fair value can-not be determined, the FSP requires using the guidance under SFAS
No. 5, Accounting for Contingencies, and FASB Interpretation (FIN) No. 14,
Reasonable Estimation of the Amount of a Loss.
This FSP
was effective for assets or liabilities arising from contingencies in business
combinations for which the acquisition date is on or after January 1, 2009. The
adoption of this FSP has not had a material impact on our financial position,
results of operations, or cash flows during the six months ended June 30,
2009.
In April
2009, the FASB issued FSP No. FAS 157-4, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP FAS
157-4”). FSP FAS 157-4 provides guidance on estimating fair value
when market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not expect the adoption of FSP
FAS 157-4 will have a material impact on its financial condition or results of
operation.
In
October 2008, the FASB issued FSP No. FAS 157-3, “Determining the Fair Value of
a Financial Asset When the Market for That Asset is Not Active,” (“FSP FAS
157-3”), which clarifies application of SFAS 157 in a market that is not
active. FSP FAS 157-3 was effective upon issuance, including prior
periods for which financial statements have not been issued. The
adoption of FSP FAS 157-3 had no impact on the Company’s results of operations,
financial condition or cash flows.
In
December 2008, the FASB issued FSP No. FAS 140-4 and FIN 46(R)-8, “Disclosures
by Public Entities (Enterprises) about Transfers of Financial Assets and
Interests in Variable Interest Entities.” This disclosure-only FSP
improves the transparency of transfers of financial assets and an enterprise’s
involvement with variable interest entities, including qualifying
special-purpose entities. This FSP is effective for the first
reporting period (interim or annual) ending after December 15, 2008, with
earlier application encouraged. The Company adopted this FSP
effective January 1, 2009. The adoption of the FSP had no impact
on the Company’s results of operations, financial condition or cash
flows.
In
December 2008, the FASB issued FSP No. FAS 132(R)-1, “Employers’ Disclosures
about Postretirement Benefit Plan Assets” (“FSP FAS 132(R)-1”). FSP
FAS 132(R)-1 requires additional fair value disclosures about employers’ pension
and postretirement benefit plan assets consistent with guidance contained in
SFAS 157. Specifically, employers will be required to disclose
information about how investment allocation decisions are made, the fair value
of each major category of plan assets and information about the inputs and
valuation techniques used to develop the fair value measurements of plan assets.
This FSP is effective for fiscal years ending after December 15,
2009. The Company does not expect the adoption of FSP FAS 132(R)-1
will have a material impact on its financial condition or results of
operation.
36
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of SFAS No. 140, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ARB No. 51,” as well as other
modifications. While the proposed revised pronouncements have not
been finalized and the proposals are subject to further public comment, the
Company anticipates the changes will not have a significant impact on the
Company’s financial statements. The changes would be effective March
1, 2010, on a prospective basis.
In
June 2008, the FASB issued FASB Staff Position EITF 03-6-1, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, (“FSP EITF 03-6-1”). FSP EITF 03-6-1 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share under the two-class method as described in
FASB Statement of Financial Accounting Standards No. 128, “Earnings per
Share.” FSP EITF 03-6-1 is effective for financial statements issued for fiscal
years beginning on or after December 15, 2008 and earlier adoption is
prohibited. We are not required to adopt FSP EITF 03-6-1; neither do we believe
that FSP EITF 03-6-1 would have material effect on our consolidated financial
position and results of operations if adopted.
In
May 2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 163,
“Accounting for Financial Guarantee Insurance Contracts-and interpretation of
FASB Statement No. 60”. SFAS No. 163 clarifies how Statement 60
applies to financial guarantee insurance contracts, including the recognition
and measurement of premium revenue and claims liabilities. This statement also
requires expanded disclosures about financial guarantee insurance contracts.
SFAS No. 163 is effective for fiscal years beginning on or after December 15,
2008, and interim periods within those years. SFAS No. 163 has no effect on the
Company’s financial position, statements of operations, or cash flows at this
time.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”. SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
In March
2008, the Financial Accounting Standards Board, or FASB, issued SFAS No. 161,
Disclosures about Derivative Instruments and Hedging Activities—an amendment of
FASB Statement No. 133. This standard requires companies to provide
enhanced disclosures about (a) how and why an entity uses derivative
instruments, (b) how derivative instruments and related hedged items are
accounted for under Statement 133 and its related interpretations, and (c) how
derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. The Company has not yet
adopted the provisions of SFAS No. 161, but does not expect it to have a
material impact on its consolidated financial position, results of operations or
cash flows.
NOTE
12 . SUBSEQUENT EVENTS
On June
11, 2009, the Board of Directors of the Company awarded a grant of stock to
Mssrs. Tiller, Roberts, Ireland, and Gohsman totaling 26,000,000 shares. One
third of the shares will be relieved of restriction of sale on the 2nd,
3rd, and
4th
anniversary of the award respectively. These shares are awarded immediately, but
may be rescinded per the plan if certain conditions are not met.
Global
Smoothie Supply, Inc has begun the process of raising additional capital through
the sales of unregistered shares. Through December 15, 2009, the company has
sold 1,456,604 shares of stock.
Additional
sales of shares may be pursued upon registration of the stock of the
Company.
During
the period ending 6/30/2009 the Company paid $2,844 in factoring fees. All
minimum obligations per the Vertex agreement have been met by the end
of the period ending 6/30/2009.
In the
first Quarter of 2009, Global Smoothie Supply, Inc. petitioned the IRS to be
taxed as a C Corporation. This change was made to accommodate the needs of
current and future shareholders.
37
NOTE
13. RESTATEMENT
The
Company has restated its previously issued 2008 and 2007 financial statements
for matters related to the following previously reported items: cash,
depreciation policy, liabilities, paid in capital, sales and expenses. The
accompanying financial statements for 2008 and 2007 have been restated to
reflect the corrections.
The
following is a summary of the restatements for 2008:
Decrease
in Accumulated Depreciation
|
$ | 703 | ||
Increase
in Net Fixed Assets
|
703 | |||
Increase
in Accounts Payable
|
2,033 | |||
Increase
in Paid In Capital
|
2,708 | |||
Decrease
in Retained Earnings
|
4,039 | |||
Increase
in Sales Revenue
|
1,228 | |||
Increase
in Cost of Goods Sold
|
423 | |||
Increase
in Expenses
|
5,230 | |||
Decrease
in Net Income
|
4,425 |
The
effect on the Company’s previously issued 2008 financial statements is
summarized as follows:
Balance
Sheet as of December 31, 2008
Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
Fixed
Assets
|
$ | 1,027 | $ | 703 | $ | 1730 | ||||||
Total
Assets
|
43,653 | 703 | 44,356 | |||||||||
Accounts
Payable
|
11,509 | 2,033 | 13,542 | |||||||||
Paid
In Capital
|
1,786 | 2,708 | 4,494 | |||||||||
Stockholders’
Equity:
|
||||||||||||
Retained Earnings—
December 31, 2007
|
0 | 386 | 386 | |||||||||
Net Income (Loss) for 2008
|
3,032 | (4,425 | ) | (1,393 | ) | |||||||
Retained Earnings—
December 31, 2007
|
3,032 | (4039 | ) | (1007 | ) | |||||||
Total
Liabilities and
Stockholders’ Deficit
|
43,653 | 703 | 44,356 |
Statement
of Operations for the Year Ended December 31, 2008
Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
Net
Sales
|
$ | 169,318 | $ | 1,228 | $ | 170,546 | ||||||
Cost
of Sales
|
125,474 | 423 | 125,897 | |||||||||
Gross
Profit
|
43,844 | 805 | 44,649 | |||||||||
Office,
Admin, & Misc. Expense
|
5,791 | 2,033 | 7,824 | |||||||||
Rent
Expense
|
10,400 | 3,900 | 14,300 | |||||||||
Net
Income (Loss)
|
3,032 | (4,425 | ) | (1,393 | ) |
38
The
following is a summary of the restatements for 2007:
Increase
in cash as of the balance sheet date
|
$ | 386 | ||
Increase
in Sales Revenue
|
4,819 | |||
Increase
in Cost of Goods Sold
|
3,946 | |||
Increase
in Expenses
|
675 | |||
Increase
in Net Income
|
198 | |||
Increase
in Retained Earnings
|
386 |
The
effect on the Company’s previously issued 2007 financial statements is
summarized as follows:
Balance
Sheet as of December 31, 2007
Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
Current
Assets
|
$ | 0 | $ | 386 | $ | 386 | ||||||
Total
Assets
|
0 | 386 | 386 | |||||||||
Stockholders’
Equity:
|
||||||||||||
Retained Earnings—
December 31, 2006
|
0 | 188 | 188 | |||||||||
Net Income (Loss) for 2007
|
0 | 198 | 198 | |||||||||
Retained Earnings—
December 31, 2007
|
0 | 386 | 386 | |||||||||
Total
Liabilities and
Stockholders’ Deficit
|
0 | 386 | 386 |
Statement
of Operations for the Year Ended December 31, 2007
Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
Net
Sales
|
0 | $ | 4,819 | $ | 4,819 | |||||||
Cost
of Sales
|
0 | 3,946 | 3,946 | |||||||||
Gross
Profit
|
0 | 873 | 873 | |||||||||
Advertising
Expense
|
0 | 675 | 675 | |||||||||
Net
Income (Loss)
|
0 | 198 | 198 |
39
SEALE
AND BEERS, CPAs
PCAOB & CPAB REGISTERED
AUDITORS
www.sealebeers.com
REPORT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTING FIRM
To
the Board of Directors
Global
Smoothie Supply, Inc.
We have
reviewed the accompanying balance sheet of Global Smoothie Supply, Inc. as of
September 30, 2009, and the related statements of operations, and cash flows for
the three-month and nine-month periods ended September 30, 2009 and September
30, 2008. These interim financial statements are the responsibility of the
Corporation’s management.
We
conduct our reviews in accordance with the standards of the Public Company
Accounting Oversight Board (United States). A review of interim financial
information consists of principally applying analytical procedures and making
inquiries of persons responsible for the financials and accounting matters. It
is substantially less in scope than an audit conducted in accordance with the
standards of the Public Company Accounting Oversight Board (United States), the
objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an
opinion.
Based on
our reviews, we are not aware of any material modifications that should be made
to such financial statements for them to be in conformity with accounting
principles generally accepted in the United States of America.
The
accompanying financial statements have been reviewed assuming that the Company
will continue as a going concern. As discussed in Note 7 to the
financial statements, the Company has incurred losses of $427,420 since
inception to September 30, 2009, which raises substantial doubt about its
ability to continue as a going concern. Management’s plans concerning
these matters are also described in Note 7. The financial statements
do not include any adjustments that might result from the outcome of this
uncertainty.
/s/
Seale and Beers, CPAs
Seale and
Beers, CPAs
Las
Vegas, Nevada
January
28, 2010
6490 WEST DESERT INN RD, LAS
VEGAS, NEVADA 89146 (702) 253-7492 Fax: (702)253-7501
40
GLOBAL
SMOOTHIE SUPPLY, INC.
BALANCE
SHEET
September
30,
|
December
31,
|
|||||||
2009
|
2008
|
|||||||
Unaudited
|
Restated
|
|||||||
ASSETS
|
||||||||
Current
Assets
|
||||||||
Cash
|
$ | 102,152 | $ | 6,848 | ||||
Accounts
Receivable
|
1,461 | 4,118 | ||||||
Inventory
|
11,385 | |||||||
Deferred
Tax Asset
|
- | - | ||||||
Vertex
Factoring Holding Account
|
- | 31,660 | ||||||
Total
Current Assets
|
$ | 114,998 | $ | 42,626 | ||||
Fixed
Assets
|
||||||||
Furniture
and Equipment
|
$ | 2,163 | $ | 2,163 | ||||
Accumulated
Depreciation
|
(952 | ) | (433 | ) | ||||
Total
Net Fixed Assets
|
$ | 1,211 | $ | 1,730 | ||||
- | ||||||||
Total
Assets
|
$ | 116,209 | $ | 44,356 | ||||
LIABILITIES AND STOCKHOLDERS'
EQUITY
|
||||||||
Liabilities
|
||||||||
Accounts
Payable to Non Related Parties
|
$ | 14,045 | $ | 12,922 | ||||
Accounts
Payable to Related Parties
|
- | 620 | ||||||
Payroll
Liabilities
|
8,000 | 8,000 | ||||||
Warranty
Liability
|
9,600 | 9,600 | ||||||
Sales
Tax Payable
|
9,727 | |||||||
Total
Current Liabilities
|
$ | 31,645 | $ | 40,869 | ||||
Total
Liabilities
|
$ | 31,645 | $ | 40,869 | ||||
Stockholders'
Equity
|
||||||||
Total
Common Shares Authorized 100,000,000
|
||||||||
Common
Stock issued at zero par as of
|
||||||||
9/30/2009: 77,216,604
|
||||||||
12/31/2008: 50,000,000
|
||||||||
Additional
Paid In Capital
|
$ | 511,985 | $ | 4,494 | ||||
Accumulated
Deficit
|
(427,420 | ) | (1,007 | ) | ||||
Total
Stockholders Equity
|
$ | 84,565 | $ | 3,487 | ||||
Total
Liabilities and Stockholders' Equity
|
$ | 116,209 | $ | 44,356 |
The
accompanying notes are an integral part of these statements.
41
GLOBAL
SMOOTHIE SUPPLY, INC
INCOME
STATEMENT
3
Months Ended
|
9
Months Ended
|
|||||||||||||||
September
30,
|
September
30,
|
|||||||||||||||
2009
|
2008
|
2009
|
2008
|
|||||||||||||
Unaudited
|
Unaudited
|
|||||||||||||||
Revenue
|
||||||||||||||||
Machine
Revenue
|
$ | - | $ | - | $ | - | $ | - | ||||||||
Puree
Revenue
|
9,044 | 1,396 | 18,443 | 1,889 | ||||||||||||
Service
Revenue
|
- | - | 800 | - | ||||||||||||
Parts
Revenue
|
- | - | 535 | - | ||||||||||||
Shipping
Revenue
|
- | - | 455 | - | ||||||||||||
Total
Revenue
|
$ | 9,044 | $ | 1,396 | $ | 20,234 | $ | 1,889 | ||||||||
Cost
of Goods Sold
|
6,405 | 1,090 | 13,372 | 1,512 | ||||||||||||
Gross Margin
|
2,639 | 306 | 6,861 | 377 | ||||||||||||
Expenses
|
||||||||||||||||
Advertising
and Promotion
|
$ | 36,344 | $ | - | $ | 42,323 | $ | - | ||||||||
Total
Payroll Expenses
|
243,750 | - | 325,000 | - | ||||||||||||
Banking and
Miscellaneous Expense
|
110 | - | 565 | - | ||||||||||||
Office
& Administrative Expense
|
4,074 | 2,560 | 7,832 | 2,860 | ||||||||||||
Professional
Fees
|
15,735 | - | 27,015 | - | ||||||||||||
Rent
Expense
|
3,900 | 5,000 | 11,700 | 8,900 | ||||||||||||
Travel
Expense
|
8,035 | 894 | 14,900 | 894 | ||||||||||||
Depreciation
Expense
|
173 | - | 519 | - | ||||||||||||
Income
(Loss) from Operations
|
$ | (309,482 | ) | $ | (8,148 | ) | $ | (422,992 | ) | $ | (12,277 | ) | ||||
Interest
Expense
|
- | - | 3,421 | - | ||||||||||||
Net
(Loss)
|
$ | (309,482 | ) | $ | (8,148 | ) | $ | (426,413 | ) | $ | (12,277 | ) | ||||
(Loss)
Earnings per Common Share
|
||||||||||||||||
Basic
and Diluted
|
** | ** | ** | ** | ||||||||||||
Weighted
average common shares outstanding:
|
||||||||||||||||
Basic
and Diluted
|
77,030,466 | 50,000,000 | 62,107,075 | 50,000,000 |
** - Less
than $.01 per share
The
accompanying notes are an integral part of these statements.
42
GLOBAL
SMOOTHIE SUPPLY, INC
SHAREHOLDER
EQUITY
Common
Stock
|
Paid
in
|
Retained
|
Total
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Earnings
(Deficit)
|
Equity
|
||||||||||||||||
Balance,
December 31, 2008 (Restated)
|
50,000,000 | $ | - | $ | 4,494 | $ | (1,007 | ) | $ | 3,488 | ||||||||||
Common
Shares issued to Directors (Note 4)
|
||||||||||||||||||||
$0.15/Share
|
26,000,000 | - | 325,000 | 325,000 | ||||||||||||||||
Common
Shares issued @ $0.15/Share
|
1,216,604 | 182,491 | 182,491 | |||||||||||||||||
Net Gain
(Loss)
|
(426,413 | ) | (426,413 | ) | ||||||||||||||||
Balance,
September 30, 2009
|
77,216,604 | $ | - | $ | 511,985 | $ | (427,420 | ) | $ | 84,565 |
The
accompanying notes are an integral part of these statements.
43
GLOBAL
SMOOTHIE SUPPLY, INC
CONSOLIDATED
FINANCIALS
9
Months
|
||||||||
Ended
|
||||||||
September
30,
|
||||||||
2009
|
2008
|
|||||||
Unaudited
|
||||||||
Operating
Activities
|
||||||||
Net
Income/(Loss)
|
$ | (426,413 | ) | $ | (12,277 | ) | ||
Adjustments
to Reconcile Net (Loss) to Net Cash Used by Operating
Activities
|
||||||||
Change
in Accounts Receivable
|
2,657 | - | ||||||
Change
in Inventory Asset
|
(11,385 | ) | - | |||||
Change
in Vertex Holding Account
|
31,660 | - | ||||||
Change
in Accounts Payable
|
502 | 8,950 | ||||||
Change in
Sales Tax Payable
|
(9,727 | ) | - | |||||
Depreciation
|
519 | - | ||||||
Payroll
Expense in Exchange for Equity
|
325,000 | - | ||||||
Net
Cash Provided /(Used) by Operating Activities
|
$ | (87,186 | ) | $ | (3,328 | ) | ||
INVESTING
ACTIVITIES
|
||||||||
Net
cash used in Investing Activities
|
$ | - | $ | - | ||||
FINANCING
ACTIVITIES
|
||||||||
Capital
Contribution /Stock
|
182,490 | 4,494 | ||||||
Cash
Provided by Financing Activities
|
$ | 182,490 | $ | 4,494 | ||||
Net
Increase in Cash
|
$ | 95,304 | $ | 1,166 | ||||
Cash,
Beginning of Period
|
$ | 6,848 | $ | 386 | ||||
Cash,
End of Period
|
$ | 102,152 | $ | 1,553 | ||||
Supplemental
Information:
|
||||||||
Interest
/ Factoring Fees Paid
|
$ | 3,421 | $ | - | ||||
Depreciation
Expense
|
$ | 519 | - | |||||
Equity
Issued for Services
|
$ | 325,000 | $ | - |
The
accompanying notes are an integral part of these statements.
44
GLOBAL
SMOOTHIE SUPPLY, INC.
NOTES
TO FINANCIAL STATEMENTS
For
9 Month Period Ending 9/30/2009
Unaudited
NOTE
1. GENERAL ORGANIZATION AND BUSINESS
Global
Smoothie Supply, Inc (the Company) was incorporated February 17, 2005, under the
laws of the State of Texas. The Company is engaged in the beverage
business and sells beverage machines. The Company’s fiscal year ends on December
31.
From its
inception though the fiscal year ending December 31, 2008, due to limited
operations, Global Smoothie Supply, Inc elected to be taxed under Subchapter S
of Chapter 1 of the Internal Revenue Code. In the first Quarter of 2009, Global
Smoothie Supply, Inc. petitioned the IRS to be taxed as a C Corporation. This
change was made to accommodate the needs of current and future
shareholders.
NOTE 2. SUMMARY
OF SIGNIFICANT ACCOUNTING PRACTICES
Accounting
Basis
These
financial statements are prepared on the accrual basis of accounting in
conformity with accounting principles generally accepted in the United States of
America.
Cash and Cash
Equivalents
For the
purpose of the statement of cash flows, cash equivalents include all highly
liquid investments with maturity of three months or less.
Earnings (Loss) per
Share
The basic
earnings (loss) per share are calculated by dividing the Company’s net income
available to common shareholders by the weighted average number of common shares
outstanding during the year. The diluted earnings (loss) per share are
calculated by dividing the Company’s net income (loss) available to common
shareholders by the diluted weighted average number of shares outstanding during
the year. The diluted weighted average number of shares outstanding is the basic
weighted number of shares adjusted as of the first of the year for any
potentially dilutive debt or equity. There are no diluted shares
outstanding.
Dividends
The
Company has not adopted any policy regarding payment of dividends. No dividends
have been paid during the period shown.
Use of
Estimates
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
Net Income Per Common
Share
Net
income (loss) per common share is computed based on the weighted average number
of common shares outstanding and common stock equivalents, if not
anti-dilutive. The Company has not issued any potentially dilutive
common shares.
45
Revenue and Cost
Recognition
We
recognize revenue at the time the products are shipped to customers or third
parties. In the future, we expect to perform services under service contracts
revenue will be recognized upon the completion of the services on specified
machines. We follow ASC 605, “Revenue Recognition. ASC 605 requires that all
amounts billed to customers related to shipping and handling should be
classified as revenues. Our product costs include amounts for shipping and
handling, therefore, we charge our customers shipping and handling fees at the
time the products are shipped or when services are performed. The cost of
shipping products to the customer is recognized at the time the products are
shipped to the customer and our policy is to classify them as shipping expenses.
The cost of shipping products to the customer is classified as shipping
expense.
ASC 605
addresses certain criteria for revenue recognition. ASC 605 outlines the
criteria that must be met to recognize revenue and provides guidance for
disclosures related to revenue recognition policies. Our revenue recognition
policies comply with the guidance contained in ASC 605.
Inventories
Inventories
are stated at the lower of cost or market value. Cost for inventory is based on
an average cost method. Reserves for excess and obsolete inventories are based
on an assessment of slow-moving and obsolete inventories, determined by
historical usage and demand. As of 12/31/2008 and 12/31/2007 the
Company held in inventory $0 and $0, respectively. As of 9/30/2009 the Company
held $11,385 in inventory.
Depreciation
Depreciation
used is 200DB, 5 yrs depreciation, ½ yr in year of acquisition, salvage value is
none.
NOTE
3. INCOME TAXES:
The
Company provides for income taxes under ASC 740, Income Taxes. ASC 740
requires the use of an asset and liability approach in accounting for income
taxes. Deferred tax assets and liabilities are recorded based on the differences
between the financial statement and tax bases of assets and liabilities and the
tax rates in effect currently.
ASC 740
requires the reduction of deferred tax assets by a valuation allowance if, based
on the weight of available evidence, it is more likely than not that some or all
of the deferred tax assets will not be realized. In the Company’s opinion, it is
uncertain whether they will generate sufficient taxable income in the future to
fully utilize the net deferred tax asset.
In the
first Quarter of 2009, Global Smoothie Supply, Inc. petitioned the IRS to be
taxed as a C Corporation.
NOTE
4. STOCKHOLDERS’ EQUITY
Common
Stock
At the
time of inception 1,000 shares were authorized and all 1,000 shares were issued.
On December 26, 2006, the number of authorized shares was increased to
50,000,000 and the Company issued a stock split of 20,000:1, with the 1,000
shares outstanding being exchanged for 20,000,000. On 12/31/2008,
there were 20,000,000 shares outstanding. On March 19, 2009, the number of
authorized shares was increased to 100,000,000 and the Company issued a stock
split of 5:2, with the 20,000,000 outstanding shares being exchanged for
50,000,000. This March 19, 2009, stock split is being applied
retroactively to the financial statements.
In 2008,
the Company received an infusion of $4,494 of cash and paid in expense from its
founders group. The amount is a combination of cash paid in by founders group,
as well as expenses incurred by them personally on behalf of the Company and
submitted for inclusion in the capitalization of the business. The expenses and
cash infusion occurred in the time periods from inception and to the period
prior to the 4th
quarter of 2008.
On June
1, 2009, the Board of Directors of the Company awarded a grant of stock to
Mssrs. Tiller, Roberts, Ireland, and Gohsman totaling 26,000,000 shares. One
third of the shares will be relieved of restriction of sale on the 2nd, 3rd, and
4th anniversary of the award, respectively. These shares are awarded
immediately, but may be rescinded per the plan if certain conditions are not
met. The fair value of each share granted was estimated on the date
of grant using external market based sales on or near the date of grant. In
accordance with the guidance in ASC 505 “Equity” concerning unvested and
forfeitable shares issued for services, the Company recognizes the equity
issuance and corresponding expense as services are performed by the
grantees.
46
As of
September 30, 2009, the Company had one (1) share based compensation plan, which
is described above. The compensation cost that has been charged
against income for that plan was $325,000.00, and $0.00, for the nine months
ended September 2009 and 2008, respectively.
Weighted-Average
|
||||||||
Grant-Date
|
||||||||
Nonvested Shares
|
Shares (000)
|
Fair Value
|
||||||
Nonvested
at January 1, 2009
|
0 | $ | 0.00 | |||||
Granted
|
26,000 | 0.15 | ||||||
Vested
|
0 | 0.00 | ||||||
Forfeited
|
0 | 0.00 | ||||||
Nonvested
at September 30, 2009
|
26,000 | $ | 0.15 |
Global
Smoothie Supply, Inc. has begun the process of raising additional capital
through the sales of unregistered shares. Through September 30, 2009, the
company has sold 1,216,604 shares of stock.
Additional
sales of shares may be pursued upon registration of the stock of the
Company.
NOTE
5. RELATED PARTY TRANSACTIONS
The
officers and directors of the Company are involved in other business activities
and may, in the future, become involved in other business opportunities that
become available. They may face a conflict in selecting between the
Company and other business interests. The Company has not formulated a policy
for the resolution of such conflicts.
Any
amounts in Accounts Payable to Related Parties are for reimbursable expenses
including but not limited to travel expenses, postage, purchased office
supplies, and miscellaneous expenses.
NOTE 6. WARRANTY
COSTS
The
Company's financial statements reflect accruals for potential warranty claims
based on the Company's best estimation. Estimated product warranty costs are
accrued at the time products are sold. At the current time, we provide a 3 year
limited warranty on the machines we sell. Our manufacturer has taken the
position of warranting the machines for the 1st year
and Global Smoothie Supply covers the warranty for the 2nd and
3rd
years.
Accordingly,
we have reserved amounts for those potential warranty claims. As of 12/31/2008,
those amounts stood at $9,600. To date, no warranty claims have been made
against these amounts.
The need
for additional reserves is not known at this time. We do not have sufficient
historical knowledge as to determine whether our estimates are correct. As we
develop additional experience, our liability may change and these reserves may
be adjusted to meet the additional warranty costs.
NOTE 7. GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in the notes to the
financial statements, the Company has established a limited source of
revenue. This raises substantial doubt about the Company’s ability to
continue as a going concern. Without realization of additional
capital, it would be unlikely for the Company to continue as a going
concern. The financial statements do not include any adjustments that
might result from this uncertainty.
The
Company’s activities to date have been supported by equity financing and initial
preliminary sales. Management continues to seek funding from its
shareholders and other qualified investors to pursue its business
plan. In the alternative, the Company may be amenable to a sale,
merger or other acquisition in the event such transaction is deemed by
management to be in the best interests of the shareholders.
NOTE 8. CONCENTRATION
OF RISKS
Cash
Balances
The
Company maintains its cash in institutions insured by the Federal Deposit
Insurance Corporation (FDIC). This government corporation insured
balances up to $100,000 through October 13, 2008. As of October 14,
2008, all non-interest bearing transaction deposit accounts at an FDIC-insured
institution, including all personal and business checking deposit accounts that
do not earn interest, are fully insured for the entire amount in the deposit
account. This unlimited insurance coverage is temporary and will
remain in effect for participating institutions until December 31,
2009.
47
All other
deposit accounts at FDIC-insured institutions are insured up to at least
$250,000 per depositor until December 31, 2009. On January 1, 2010,
FDIC deposit insurance for all deposit accounts, except for certain retirement
accounts, will return to at least $100,000 per depositor. Insurance
coverage for certain retirement accounts, which include all IRA deposit
accounts, will remain at $250,000 per depositor.
NOTE 9. ADVERTISING
AND PROMOTION COSTS
The
Company’s policy regarding advertising and promotion is to expense advertising
when incurred. The Company incurred $42,323 in advertising and promotion costs
for the period ending 9/30/2009.
NOTE 10. FACTORING
ACCOUNTS RECEIVABLE
On
October 10, 2008, the Company entered in to a one year agreement with Vertex
Financial, LTD (Vertex) to purchase the Company’s receivables with full
recourse. As of 12/31/2008, all factored receivables had been satisfied with
Vertex, and Vertex owed the Company $31,660. As of the period ending 6/30/2009
Vertex had satisfied all accounts with the Company.
The
agreement has set a monthly minimum discount fee. The contract would be
considered minimally fulfilled at a point where the Company factored and/or paid
the equivalent of the monthly minimum amount for a year. This minimum amount
does not preclude the factoring of invoices above this minimum amount. During
the period ending 12/31/2008 and 6/30/2009 the Company paid $4,608 and $3,421 in
factoring fees, respectively. All minimum obligations per the agreement have
been met by the end of the period ending 6/30/2009. All factoring fees are
treated as interest expense and factoring expenses (i.e. cost of credit reports,
wire fees, etc) are accounted for in Banking and Miscellaneous
Expense.
The
Company accounts for Factored Accounts Receivable in compliance with ASC
860.
NOTE 11. THE
EFFECT OF RECENTLY ISSUED ACCOUNTING STANDARDS
Recent Accounting
Pronouncements
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”. SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
June
2009, the FASB issued ASC No. 860, “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“ASC 860”). The
provisions of ASC 860, in part, amend the de-recognition guidance in FASB
Statement No. 140, eliminate the exemption from consolidation for qualifying
special-purpose entities and require additional disclosures. ASC 860 is
effective for financial asset transfers occurring after the beginning of an
entity’s first fiscal year that begins after November 15, 2009. The Company does
not anticipate the adoption of ASC No. 860 will have an impact on its financial
position.
In June
2009, the FASB issued ASC No. 810, “Amendments to FASB Interpretation No. 855
(“ASC 810”). ASC 810 amends the consolidation guidance applicable to variable
interest entities. The provisions of ASC 810 significantly affect the overall
consolidation analysis under FASB Interpretation No.855. ASC 810 is
effective as of the beginning of the first fiscal year that begins after
November 15, 2009. ASC 810 will be effective for the Company beginning in 2010.
The Company does not anticipate the adoption of ASC No. 810 will have an impact
on its financial position.
48
In June
2009, the FASB issued ASC No. 105, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 105-10” (“ASC No. 105”). Under ASC No. 105 the
“FASB Accounting Standards Codification” (“Codification”) will become the source
of authoritative U. S. GAAP to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and
Exchange Commission (“SEC”) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. ASC No. 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. On the effective date, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative. ASC No. 105 is effective for the
Company’s interim quarterly period beginning July 1, 2009. The Company does not
anticipate the adoption of ASC No. 105 will have an impact on its financial
position.
In June
2009, the Securities and Exchange Commission’s Office of the Chief Accountant
and Division of Corporation Finance announced the release of Staff Accounting
Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds
portions of the interpretive guidance included in the Staff Accounting Bulletin
Series in order to make the relevant interpretive guidance consistent with
current authoritative accounting and auditing guidance and Securities and
Exchange Commission rules and regulations. Specifically, the staff is updating
the Series in order to bring existing guidance into conformity with recent
pronouncements by the Financial Accounting Standards Board, namely, Statement of
Financial Accounting Standards No. 141 (revised 2007), Business Combinations,
and Statement of Financial Accounting Standards No. 160, Non-controlling
Interests in Consolidated Financial Statements. The statements in staff
accounting bulletins are not rules or interpretations of the Commission, nor are
they published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant in administering the disclosure
requirements of the Federal securities laws.
In April
2009, the FASB issued FSP No. 825 and 825-10-50, Interim Disclosures about Fair
Value of Financial Instruments. This FSP amends FASB Statement No.825,
Disclosures about Fair Value of Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28, Interim Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods.
This FSP shall be effective for interim reporting periods ending after June 15,
2009. The Company does not anticipate the adoption of ASC No. 825 and 825-10-50
will have an impact on its financial position.
In April
2009, the FASB issued FSP No. ASC 320 and ASC 320-10, Recognition and
Presentation of Other-Than-Temporary Impairments. This FSP amends the
other-than-temporary impairment guidance in U.S.GAAP for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. The FSP does not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. The FSP shall
be effective for interim and annual reporting periods ending after June 15,
2009. The adoption of ASC 320 and ASC 320-10 did not have a material impact on
the Company’s financial statements.
In April
2009, the FASB issued FSP No. ASC 820, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP ASC
820”). FSP ASC 820 provides guidance on estimating fair value when
market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not anticipate the adoption of ASC
No. 820 will have an impact on its financial position.
In
December 2008, the FASB issued FSP No. ASC 932 and FIN 46(R)-8, “Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities.” This disclosure-only FSP improves the
transparency of transfers of financial assets and an enterprise’s involvement
with variable interest entities, including qualifying special-purpose
entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1,
2009. There was no impact upon adoption.
In
December 2008, the FASB issued FSP No. ASC 715-20-65, “Employers’ Disclosures
about Post retirement Benefit Plan Assets” (“FSP ASC 715-20-65”). FSP
ASC 715-20-65 requires additional fair value disclosures about employers’
pension and postretirement benefit plan assets consistent with guidance
contained in ASC 820. Specifically, employers will be required to
disclose information about how investment allocation decisions are made, the
fair value of each major category of plan assets and information about the
inputs and valuation techniques used to develop the fair value measurements of
plan assets. This FSP is effective for fiscal years ending after
December 15, 2009. There was no impact upon adoption.
49
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of ASC No.808, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ASC 808,” as well as other modifications. While the
proposed revised pronouncements have not been finalized and the proposals are
subject to further public comment, changes would be effective March 1, 2010, on
a prospective basis. The Company is currently evaluating the impact, if any, of
adoption of ASC 808 on its financial statements.
In
September 2008, the FASB issued FASB Staff Position ASC 260, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, (“FSP ASC 260”). FSP ASC 260 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share, “Earnings per Share.” FSP ASC 260 is
effective for financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. There was no impact
upon adoption.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued ASC No. 944,
“Accounting for Financial Guarantee Insurance Contracts”. ASC No. 944
clarifies how Statement 60 applies to financial guarantee insurance contracts,
including the recognition and measurement of premium revenue and claims
liabilities. This statement also requires expanded disclosures about financial
guarantee insurance contracts. ASC No. 944 is effective for fiscal years
beginning on or after December 15, 2008, and interim periods within those years.
There was no impact upon adoption.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued ASC No. 105, “The
Hierarchy of Generally Accepted Accounting Principles”. ASC No. 105
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. ASC No.105 will become
effective 60 days after the SEC approves the PCAOB’s amendments to AU Section
411 of the AICPA Professional Standards. There was no impact upon
adoption.
In March
2008, the Financial Accounting Standards Board, or FASB, issued ASC No. 815,
Disclosures about Derivative Instruments and Hedging Activities. This
standard requires companies to provide enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. There was no impact upon
adoption.
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) ASC No. 855
regarding the use of a "simplified" method, as discussed in ASC 718 (ASC 718),
in developing an estimate of expected term of "plain vanilla" share options in
accordance with ASC No. 718, Share-Based Payment. In particular, the
staff indicated in ASC 718 that it will accept a company's election to use the
simplified method, regardless of whether the company has sufficient information
to make more refined estimates of expected term. At the time ASC 718 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in ASC 718 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of ASC 865 for fiscal year 2009 There was no impact upon
adoption.
In
December 2007, the FASB issued ASC No. 810, Non-controlling Interests in
Consolidated Financial Statements—an amendment of ASC No. 808. This
statement amends ASC 808 to establish accounting and reporting standards for the
non controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a non-controlling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was
issued, limited guidance existed for reporting non-controlling interests. As a
result, considerable diversity in practice existed. So-called minority interests
were reported in the consolidated statement of financial position as liabilities
or in the mezzanine section between liabilities and equity. This statement
improves comparability by eliminating that diversity. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 (that is, January 1, 2009, for entities
with calendar year-ends). Earlier adoption is
prohibited. The effective date of this statement is the same as that
of the related ASC 805. The Company will adopt this Statement
beginning March 1, 2009 There was no impact upon adoption.
50
In
December 2007, the FASB, issued FAS ASC 805, ‘Business
Combinations’. This Statement establishes principles and requirements
for how the acquirer: (a) recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquire; (b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This statement applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The effective date of this statement is the same as
that of the related FASB ASC 810, Non-controlling Interests in Consolidated
Financial Statements. The Company will adopt this statement beginning
March 1, 2009. There was no impact upon adoption.
In
February 2007, the FASB, issued SFAS No. 825, The Fair Value Option for
Financial Assets and Liabilities—Including an Amendment of FASB Statement No.
825-10. This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in ASC 825 are elective;
however, an amendment to 825-10 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. ASC No. 825 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of ASC No. 820 Fair Value Measurements. There was no
impact upon adoption.
In
September 2006, the FASB issued ASC No. 820, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. There was no impact upon adoption.
NOTE
12. RESTATEMENT
The
Company has restated its previously issued 2008 financial statements for matters
related to the following previously reported items: depreciation policy,
liabilities, paid in capital, sales and expenses. The accompanying financial
statements for 2008 have been restated to reflect the corrections.
Decrease
in Accumulated Depreciation
|
$ | 703 | ||
Increase
in Net Fixed Assets
|
703 | |||
Increase
in Accounts Payable
|
2,033 | |||
Increase
in Paid In Capital
|
2,708 | |||
Decrease
in Retained Earnings
|
4,039 | |||
Increase
in Sales Revenue
|
1,228 | |||
Increase
in Cost of Goods Sold
|
423 | |||
Increase
in Expenses
|
5,230 | |||
Decrease
in Net Income
|
4,425 |
The
effect on the Company’s previously issued 2008 financial statements is
summarized as follows:
Balance
Sheet as of December 31, 2008
Previously
Reported
|
Increase
(Decrease)
|
Restated
|
||||||||||
Fixed
Assets
|
$ | 1,027 | $ | 703 | $ | 1730 | ||||||
Total
Assets
|
43,653 | 703 | 44,356 | |||||||||
Accounts
Payable
|
11,509 | 2,033 | 13,542 | |||||||||
Paid
In Capital
|
1,786 | 2,708 | 4,494 | |||||||||
Stockholders’
Equity:
|
||||||||||||
Retained Earnings — December 31, 2007
|
0 | 386 | 386 | |||||||||
Net Income (Loss) for 2008
|
3,032 | (4,425 | ) | (1,393 | ) | |||||||
Retained Earnings — December 31, 2007
|
3,032 | (4039 | ) | (1007 | ) | |||||||
Total Liabilities and Stockholders’ Deficit | 43,653 | 703 | 44,356 |
51
MANAGEMENT’S DISCUSSION AND ANALYSIS
You
should read this section in conjunction with our financial statements and the
related notes included in this Prospectus. Some of the information
contained in this section or set forth elsewhere in this Prospectus, including
information with respect to our plans and strategies for our business,
statements regarding the industry outlook, our expectations regarding the future
performance of our business, and the other non-historical statements contained
herein are forward-looking statements.
OVERVIEW/BUSINESS
OF ISSUER/ PLAN OF OPERATION
The
Global Smoothie Supply, Inc. business model contemplates that the Company will
generate revenue from three activities:
1) The
sale of smoothie blending equipment
2) The
sale of the puree to make the smoothies
3) The
sale of parts and service for the smoothie blending equipment
Global
Smoothie Supply has worked with Blendtec to develop a turnkey smoothie program
designed for the convenience store channel as well as other
channels. Our agreement with Blendtec, among other things, gives GSS
the first right to purchase all of Blendtec’s S3 Smoothie Blender
production.
The
Blendtec S3 Smoothie Machine is a self-serve smoothie machine specially designed
for GSS by Blendtec. The Company couples the S3 Smoothie Machine with
other equipment, including an ice machine that mounts to the top of
the Blendtec S3 Machine, a backup water heater, a custom cabinet and
a puree cart. The Company’s contractual arrangement with
Blendtec contemplates that the Company will purchase the S3 Smoothie Machine
from Blendtec, for resale to purchasing accounts. .
GSS
purchases the balance of the components directly from its supplier network and
the Company currently has no formal contractual arrangements with those
suppliers. The Company purchases proprietary formulas of the purees
developed specially for use with the S3 Blender, directly from its supplier
network, for resale to purchasing customers.
Additionally,
GSS provides for a fee the installation and service for the smoothie machine and
related equipment as an ongoing benefit to purchasing customers.
Our
practice is to purchase inventory as close to customers’ time of need as
possible. This practice has allowed GSS to carry minimal
inventory.
GSS began
receiving revenues from this self-serve smoothie program with the sale of puree
and machines to Blockbuster in the 4th Quarter of 2008. These sales
came as the result of Blockbuster contacting GSS, in an effort to offer
Self-Serve Smoothies through Blockbuster’s new in-store beverage bars in Reno,
NV and Plano, TX. We received purchase orders from Blockbuster and/or
its wholesaler, Continental Concession Supply, Inc (“CCSI”) to fill these
orders. There are currently no written agreements covering the
Company’s arrangement with Blockbuster.
Founded
by David C. Tiller, Donald M. Roberts, and Harry B. Ireland, GSS was formed with
one goal: to become the dominant provider of fruit puree smoothie
systems for the convenience store (“C-store”) and other appropriate
channels. These self-serve systems are installed in turn-key fashion,
are self-cleaning, and require minimal attention and maintenance.
The GSS
idea is simple: to transform the fruit puree smoothie market by offering
consumers a new approach - a “grab-and-go” convenience store
alternative. Therefore, the GSS smoothie machine is initially
targeted to the convenience store environment.
In order
for the Company to achieve its goals, we believe the following key activities
will need to be accomplished and, as this is a “Best Efforts” offering, we have
built our “Use of Net Proceeds” based on the following Net funding
levels:
52
At
25% of the Maximum Offering
|
At
the Maximum Offering
|
|||||||
1.
Acquire Office/Warehouse Space
|
$ | 80,000 | $ | 260,000 | ||||
2.
Purchase machines for training/marketing
|
150,250 | 751,250 | ||||||
3.
Hire Staff
|
518,294 | 1,784,625 | ||||||
4.
Sales and Marketing Activity
|
215,000 | 1,030,000 | ||||||
6.
Build Administrative Systems
|
149,500 | 524,125 | ||||||
7.
Legal and Professional Services
|
76,656 | 589,700 | ||||||
Total
Use of Net Proceeds:
|
$ | 1,189,700 | $ | 4,939,700 |
The offering scenarios presented are
for illustrative purposes only and the actual amount of net proceeds, if any,
may differ.
Because
there is no minimum number of shares that must be sold in the offering, we can
provide no assurance regarding the amount of capital we will actually raise in
the offering. We intend to use the proceeds to improve our capital position, to
fund our business plan, and to retain the remainder of any proceeds for general
corporate purposes. We believe a strengthened capital position will provide us
with the flexibility to address market conditions. Our management will retain
broad discretion in deciding how to allocate the net proceeds of this offering.
The precise amounts and timing of our use of the net proceeds will depend upon
market conditions and other factors.
While
some of the Sales and Marketing Activity began in 4th
Quarter, 2008, on day one of funding we will be able to significantly increase
our efforts against achieving the Company’s 1st year
goals. Securing office space, staged machine purchases and staged
staffing will begin immediately. These activities and the balance of
the above activities will be ongoing. Receiving any level that is
less than the maximum will require the Company to set less aggressive 1st year
goals.
Our
manufacturer, Blendtec (Div. of K-Tec, Inc.) is a developer of automated
dispensing/blending equipment. The self-serve smoothie machine
designed for GSS by Blendtec has received Electrical Testing Laboratories (ETL)
and National Safety Federation (NSF) certification.
The
machine is designed to accommodate easy-to-use modular “bag in box” cased
product, the puree. These puree formulations have been developed and
co-branded exclusively for GSS and are manufactured on our
behalf.
The
flavor line has the capacity for future expansion and modification, with an
initial menu that includes eleven fruit-based choices and one coffee-based
offering. GSS will promote, install, and maintain the machines using
a nationwide sales force and a network of trained service
technicians.
Management
believes that an expansion strategy focusing on C-stores and other approved
channels would provide a great degree of quality and add significant scale to
our business model,. We intend to follow a strategy of expanding
store locations in existing markets. We will grow our concept and
brand through several channels, including C-stores and other retail
channels.
RESULTS OF OPERATIONS FOR THE PERIOD
ENDED DECEMBER 31, 2008
The
Company commenced sales operations of its fruit puree smoothie system in 2008
with the sale of a supply of puree, GSS Self-Serve Smoothie machines, and the
ensuing shipment to an initial customer, Blockbuster and/or its wholesaler,
Continental Concession Supply, Inc (CCSI). Revenue for puree sales
was $11,746; machine sales $155,200, and shipping revenue of
$3,600. These machines were purchased as part of a program for their
stores.
The Cost
of Goods Sold (COGS) was $125,897 and the Company had a gross margin of
$44,649. Additionally the Company had expenses of $41,434 including
depreciation of $433 on the purchase of $2,163 of furniture and
equipment.
53
Due to
the limited cash on hand and the ability to provide sufficient working capital,
the Company entered in to an agreement with Vertex Financial, LTD (Vertex) to
factor our receivables from Blockbuster to ensure we could meet our immediate
financial needs. (see note 10 of the Notes to Financial
Statements). The factor fees were $4,608 for the time period and are
treated as interest expense.
Total
interest and depreciation were $5,041 and total expenses, depreciation and taxes
were $46,042. Net loss for the period was ($1,393).
At the
end of the year we had $42,626 in current assets made up of $6,848 in cash, and
$4,118 in Accounts Receivable. Additionally, we held $31,660 in a
Vertex holding account.
We had
$1,730 in net fixed assets for $44,356 in total assets.
Accounts
payable balance was $12,922 for non related parties and $620 for related
parties. The Board of Directors approved a bonus to
Mssrs. Kline and Gohsman of $8,000 to be paid at some future date and
is shown as a payroll liability. A liability of $9,600 was recorded
for future warranty work in accordance with our warranty policy. Some
of our transactions require us to collect and remit sales and use taxes to the
appropriate state taxing authorities. As of the end of the year we
held $9,727 in taxes collected but not yet remitted to the appropriate taxing
authority. Total Liabilities were $40,869.
Total
Stockholders equity was $3,488 including ($1,007) of retained earnings and
$4,494 in capital contribution. Total shares issued to founders were
50,000,000.
Net Cash
Flow for the year was $6,461. Net cash provided by operating activities was
$3,510 and investing use of funds was ($2,163). Capital contribution
by the founders was $4,494, Accounts payable to related parties was $620,
creating a $6,461 increase in cash.
In 2007,
the Company had a net cash flow of $198.
RESULTS
OF OPERATIONS FOR THE 9 MONTHS ENDED SEPTEMBER 30, 2009
The
Company has limited revenue and significant expenses.
Puree
sales were $18,443, Service revenue $800, Parts revenue $535, shipping revenue
$455, COGS $13,372 and Gross Margin was $6,861. During this time
period the Company spent $104,854 in administrative and business development
expense. Payroll expenses were $325,000 for a restricted stock grant
given to Tiller, Roberts, Ireland and Gohsman. Interest Expense (Factor Fees)
was $3,421 for a total expense of $433,275. The Company had a net
loss of ($426,413).
At the
end of the period, we had $114,998 in current assets made up of $102,152 in
cash, $1,461 in Accounts Receivable and $11,385 in inventory.
We had
$1,211 in net fixed assets for $116,209 in total assets.
Accounts
payable balance was $14,045 to non related parties and $0 to related
parties. $8,000 remained to be paid at some future date for a bonus
authorized by the Board of Directors from a previous period and is shown as a
payroll liability. A liability of $9,600 remains for future warranty
work in accordance with our warranty policy. Some of our transactions
require us to collect and remit sales and use taxes to the appropriate state
taxing authorities. As of the end of the period, we had remitted all
funds due to the appropriate taxing authorities. Total Liabilities
were $31,645.
Stockholders
Equity was $84,565. The Board of Directors initiated a limited sale
of stock in the Company during the period and sold 1,216,604 shares for
$182,491. The restricted stock grant to Tiller, Roberts Ireland, Gohsman
increased paid in capital by $325,000. This combined with the ($426,413) loss
for the period, and combined with the $4,494 of Capital Contributions / Stock
equaled our Stockholders Equity.
By
converting Accounts Receivable to cash, and limiting our use of cash in Accounts
Payable and converting our Vertex Holding account to cash we provided $34,819 in
cash, however, we needed to grow our Inventory and we invested an incremental
$11,385. We added $325,000 due to a payroll expense in exchange for equity. We
paid our sales tax of $9,727 and had depreciation of $519, providing us
($87,186) from operations. Our financing activities
provided $182,490 creating a net increase in cash of $95,304. This
combined with our previous cash balance allowed us to end the period to with
$102,152 in cash, an increase of $95,304.
54
LIQUIDITY
We have
cash assets at September 30, 2009, of $102,152. We will be reliant
upon private placements or public offerings of equity to fund any kind of
operations. We have secured no sources of loans other than for our
factoring arrangements with Vertex, which were terminated by the Company as of
September 16, 2009. We had cash flow during the period ended
September 30, 2009, of $95,304 and revenue of $20,234.
In order
for the Company to achieve its 1st year
goals, we believe the following key activities will need to be accomplished and,
as this is a “Best Efforts” offering, we have built our “Use of Net Proceeds”
based on the following Net funding levels:
At
25% of the Maximum Offering
|
At
the Maximum Offering
|
|||||||
1.
Acquire Office/Warehouse Space
|
$ | 80,000 | $ | 260,000 | ||||
2.
Purchase machines for training/marketing
|
150,250 | 751,250 | ||||||
3.
Hire Staff
|
518,294 | 1,784,625 | ||||||
4.
Sales and Marketing Activity
|
215,000 | 1,030,000 | ||||||
6.
Build Administrative Systems
|
149,500 | 524,125 | ||||||
7.
Legal and Professional Services
|
76,656 | 589.700 | ||||||
Total
Use of Net Proceeds:
|
$ | 1,189,700 | $ | 4,939,700 |
The offering scenarios presented are
for illustrative purposes only and the actual amount of Net proceeds, if any,
may differ.
Because
there is no minimum number of shares that must be sold in the offering, we can
provide no assurance regarding the amount of capital we will actually raise in
the offering. We intend to use the proceeds to improve our capital position, to
fund our business plan, and to retain the remainder of any proceeds for general
corporate purposes. We believe a strengthened capital position will provide us
with the flexibility to address market conditions. Our management will retain
broad discretion in deciding how to allocate the net proceeds of this offering.
The precise amounts and timing of our use of the net proceeds will depend upon
market conditions and other factors.
While
some of the Sales and Marketing Activity began in 4th
Quarter, 2008, on day one of funding we hope to increase our efforts
against achieving the Company’s 1st year
goals. Securing office space, staged machine purchases and staged
staffing will begin immediately. These activities and the balance of
the above activities will be ongoing and will enable GSS to make the sales calls
necessary to penetrate its key markets. Receiving any level that is
less than the maximum will require the Company to set less aggressive 1st year
goals.
SHORT
TERM
On a
short-term basis, we have generated revenues. However, we will have
insufficient revenue to satisfy current and recurring liabilities as we continue
to build the business. For short term needs we will be dependent on
receipt, if any, of public offering or private placement proceeds.
Our
assets consist of a checking account with a balance of $102,152, as of September
30, 2009, with total current assets of $114,998 including active
inventory.
Our total
liabilities were $31,645 at September 30, 2009. Subsequently, we are
incurring significant liabilities in connection with our registration statement
on Form S-1.
The
following table sets forth an estimate of the costs and expenses payable by the
registrant in connection with the issuance and distribution of the Common Stock
being registered.
SEC
registration fee
|
$ | 308 | ||
Blue
Sky Expense
|
3,000 | |||
Legal
fees and expenses
|
45,000 | |||
Accountants’
fees and expenses
|
7,000 | |||
Printing
expenses
|
5,000 | |||
Total
|
$ | 60,308 |
All
amounts except the SEC registration fee are estimated. All of the
expenses set forth above are being paid by the Company.
55
CAPITAL
RESOURCES
We have
only Common Stock as our capital resource.
As we
continue to build markets for GSS products and programs, substantial capital
will be needed to pay for sales and marketing, website development, development
of a service network, equipment and product, plus usual start up and normal
operating costs.
NEED
FOR ADDITIONAL FINANCING
We do not
have capital sufficient to meet our expected cash requirements; therefore, we
will have to seek loans or equity placements.
No
commitments to provide additional funds have been made by our management or
other stockholders. Accordingly, there can be no assurance that any additional
funds will be available to us to allow it to cover our expenses as they may be
incurred.
We will
need additional capital to support our proposed future
development. We have minimal revenues. We have no
committed source for additional funding. No representation is made
that any funds will be available when needed. In the event funds
cannot be raised when needed, we may not be able to carry out our business plan,
may never achieve sales or income, and could fail in business as a result of
these uncertainties.
For total
start-up capital needs, we have budgeted $5,000,000 for our first 12 months of
operations to build the requisite infrastructure to support our initial sales
goals. The funds allocated are intended to be used for the daily
operation of the business, such as legal expenses, insurance, travel and
entertainment, rent, office and training expenses.
LIMITED
FINANCING
We
may borrow money
to finance our future operations. Any such
borrowing will increase the risk of loss to the investor in the event we are
unsuccessful in repaying such loans.
We may
issue additional shares to finance our future operations, although the Company
does not currently contemplate doing so. Any such issuance will
reduce the control of previous investors and may result in substantial
additional dilution to investors purchasing shares from this
offering.
OFF-BALANCE
SHEET ARRANGEMENTS
The
Company maintains no off-balance sheet arrangements.
GOING
CONCERN
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern, which contemplates the realization of its
assets and the liquidation of its liabilities in the normal course of
business. However, the Company has generated minimal revenues, has
accumulated a deficit of ($427,420) to date, and currently lacks the capital to
pursue its business plan. This raises substantial doubt about the
Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might result from this
uncertainty.
We do not
have any debt or long-term commitments. We need to raise
approximately $5,000,000 to execute our initial sales goals. We
continue to seek financing, but there are no guarantees that we will be able to
do so.
In the
month of November, 2008, Blockbuster Video announced the placement of the GSS
Self-Serve Smoothie Program into new Blockbuster Media locations throughout the
Reno, Nevada, area. However, this does not guarantee this chain will
purchase or participate in the future.
56
RESEARCH AND
DEVELOPMENT
Our
Research & Development has been conducted with participation by the
Company, Management at 7-Eleven, Inc, K-Tec, Inc. (Blendtec,) and others to
assure our product offerings align most closely with the requirements of
7-Eleven and the needs of our initial target convenience store
market. However, this does not guarantee this chain will purchase the
Company’s programs or products or participate in the future. GSS entered into a
testing agreement with 7-Eleven dated August 10, 2009, which is now expired.
However, the parties have agreed verbally to extend the terms of the agreement
indefinitely. We expect the testing to be completed by the end of the second
quarter of 2010.
At this
time we know of no specific events or uncertainties that would materially impact
our current business plan
In the
4th quarter of 2008, Blockbuster and through its wholesaler Continental
Concession Supplies, Inc (“CCSI”) became the initial customer for GSS’ self
service smoothie system. In 2008 sales to Blockbuster were $10,100 and
$155,200, for puree, and machines respectively. Puree sales to other
customers were $1,646. Total Gross Margin was
$44,649. During this time period the Company spent $40,304 in
administrative and business development expense. Interest Expense
(Factor Fees) was $4,608 for a total expense of $44,912. The Company
had a net loss of ($63).
In
the 9 months period ending 9/30/2009, the Company did not sell any additional
machines to Blockbuster; however the Company did sell $6,996 of puree to CCSI
providing $543 of Gross Margin. Puree sales to other customers were
$11,447, as well as $535 for parts, $800 for service and $455 in shipping
revenue. During this time period the Company spent $104,854 in
administrative and business development expense, $325,000 in payroll
expenses.. Interest Expense (Factor Fees) was $3,421 for a total
expense of $433,275.The Company had a net loss of ($426,413).
For the
period ending 12/31/2007, the Company had puree sales $4,645 and parts sales of
$174. Gross Margin was $873, total expenses were $675 and the Company
had a net income of $198.
The
Company has had limited operations over the past years and has not seen a
significant impact from inflation and changing prices. However, one
can only assume as the Company grows it would need to make necessary adjustments
to higher prices and future market conditions, as would all of its competitors
to stay competitive in the market place.
CRITICAL
ACCOUNTING POLICIES
BASIS OF
ACCOUNTING
The
statements were prepared following generally accepted accounting principles of
the United States of America consistently applied.
BASIC
EARNINGS PER SHARE
The basic
earnings (loss) per share is calculated by dividing the Company’s net income
available to Common shareholders by the weighted average number of Common Shares
during the year. The diluted earnings (loss) per share is calculated
by dividing the Company’s net income (loss) available to Common Shareholders by
the diluted weighted average number of shares outstanding during the
year. The diluted weighted average number of shares outstanding is
the basic weighted number of shares adjusted for any potentially dilutive debt
or equity.
CASH
EQUIVALENTS
The
Company considers all highly liquid investments purchased with an original
maturity of three months or less to be cash equivalents.
DEPRECIATION
The
company uses 200% Declining Balance, 5-year lifespan, with a ½ year convention
in the year of acquisition with no salvage value at end of life, where
appropriate.
DIVIDENDS
The
Company has not adopted any policy regarding payment of dividends. No
dividends have been paid.
57
USE OF
ESTIMATES AND ASSUMPTIONS
The
preparation of financial statements in conformity with accounting principles
generally accepted in the United States of America requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those
estimates.
REVENUE
AND COST RECOGNITION
We
recognize revenue at the time the products are shipped to customers or third
parties. In the future, we expect to perform services under service contracts
revenue will be recognized upon the completion of the services on specified
machines. We follow ASC 605, “Revenue Recognition. ASC 605 requires that all
amounts billed to customers related to shipping and handling should be
classified as revenues. Our product costs include amounts for shipping and
handling, therefore, we charge our customers shipping and handling fees at the
time the products are shipped or when services are performed. The cost of
shipping products to the customer is recognized at the time the products are
shipped to the customer and our policy is to classify them as shipping expenses.
The cost of shipping products to the customer is classified as shipping
expense.
ASC 605
addresses certain criteria for revenue recognition. ASC 605 outlines the
criteria that must be met to recognize revenue and provides guidance for
disclosures related to revenue recognition policies. Our revenue recognition
policies comply with the guidance contained in ASC 605.
WARRANTY
COSTS
The
Company's financial statements reflect accruals for potential warranty claims
based on the Company's best estimation. Estimated product warranty
costs are accrued at the time products are sold. At the current time,
we provide a 3-year limited warranty on the machines we sell. Our
manufacture has taken the position of warranting the machines for the 1st year
and Global Smoothie Supply covers the warranty for the 2nd and
3rd
years.
Accordingly,
we have reserved amounts for those potential warranty claims. As of
9/30/2009 and 12/31/2008, those amounts stood at $9,600 and $9,600
respectively. To date, no warranty claims have been made against
these amounts.
The need
for additional reserves is not known at this time. We do not have
sufficient historical knowledge as to determine whether our estimates are
correct. As we develop additional experience, our liability may
change and these reserves may be adjusted to meet the additional warranty
costs.
INCOME
TAXES
At
December 31, 2008, the Company had net operating loss of ($1,393).
NEW
ACCOUNTING PRONOUNCEMENTS
Below is
a listing of the most recent Statement of Financial Accounting Standards (SFAS)
SFAS 155, 157, and 158 and their effect on the Company.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 162,
“The Hierarchy of Generally Accepted Accounting Principles”. SFAS No.
162 sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. SFAS No. 162 will
become effective 60 days after the SEC approves the PCAOB’s amendments to AU
Section 411 of the AICPA Professional Standards. SFAS No. 162 has no effect on
the Company’s financial position, statements of operations, or cash flows at
this time.
June
2009, the FASB issued ASC No. 860, “Accounting for Transfers of Financial
Assets—an amendment of FASB Statement No. 140” (“ASC 860”). The
provisions of ASC 860, in part, amend the de-recognition guidance in FASB
Statement No. 140, eliminate the exemption from consolidation for qualifying
special-purpose entities and require additional disclosures. ASC 860 is
effective for financial asset transfers occurring after the beginning of an
entity’s first fiscal year that begins after November 15, 2009. The Company does
not anticipate the adoption of ASC No. 860 will have an impact on its financial
position.
58
In June
2009, the FASB issued ASC No. 810, “Amendments to FASB Interpretation No. 855
(“ASC 810”). ASC 810 amends the consolidation guidance applicable to variable
interest entities. The provisions of ASC 810 significantly affect the overall
consolidation analysis under FASB Interpretation No.855. ASC 810 is
effective as of the beginning of the first fiscal year that begins after
November 15, 2009. ASC 810 will be effective for the Company beginning in 2010.
The Company does not anticipate the adoption of ASC No. 810 will have an impact
on its financial position.
In June
2009, the FASB issued ASC No. 105, “The FASB Accounting Standards Codification
and the Hierarchy of Generally Accepted Accounting Principles – a replacement of
FASB Statement No. 105-10” (“ASC No. 105”). Under ASC No. 105 the
“FASB Accounting Standards Codification” (“Codification”) will become the source
of authoritative U. S. GAAP to be applied by nongovernmental
entities. Rules and interpretive releases of the Securities and
Exchange Commission (“SEC”) under authority of federal securities laws are also
sources of authoritative GAAP for SEC registrants. ASC No. 105 is effective for
financial statements issued for interim and annual periods ending after
September 15, 2009. On the effective date, the Codification will
supersede all then-existing non-SEC accounting and reporting standards. All
other non-grandfathered non-SEC accounting literature not included in the
Codification will become non-authoritative. ASC No. 105 is effective for the
Company’s interim quarterly period beginning July 1, 2009. The Company does not
anticipate the adoption of ASC No. 105 will have an impact on its financial
position.
In June
2009, the Securities and Exchange Commission’s Office of the Chief Accountant
and Division of Corporation Finance announced the release of Staff Accounting
Bulletin (SAB) No. 112. This staff accounting bulletin amends or rescinds
portions of the interpretive guidance included in the Staff Accounting Bulletin
Series in order to make the relevant interpretive guidance consistent with
current authoritative accounting and auditing guidance and Securities and
Exchange Commission rules and regulations. Specifically, the staff is updating
the Series in order to bring existing guidance into conformity with recent
pronouncements by the Financial Accounting Standards Board, namely, Statement of
Financial Accounting Standards No. 141 (revised 2007), Business Combinations,
and Statement of Financial Accounting Standards No. 160, Non-controlling
Interests in Consolidated Financial Statements. The statements in staff
accounting bulletins are not rules or interpretations of the Commission, nor are
they published as bearing the Commission's official approval. They represent
interpretations and practices followed by the Division of Corporation Finance
and the Office of the Chief Accountant in administering the disclosure
requirements of the Federal securities laws.
In April
2009, the FASB issued FSP No. 825 and 825-10-50, Interim Disclosures about Fair
Value of Financial Instruments. This FSP amends FASB Statement No.825,
Disclosures about Fair Value of Financial Instruments, to require disclosures
about fair value of financial instruments for interim reporting periods of
publicly traded companies as well as in annual financial statements. This FSP
also amends APB Opinion No. 28, Interim Financial Reporting, to require those
disclosures in summarized financial information at interim reporting periods.
This FSP shall be effective for interim reporting periods ending after June 15,
2009. The Company does not anticipate the adoption of ASC No. 825 and 825-10-50
will have an impact on its financial position.
In April
2009, the FASB issued FSP No. ASC 320 and ASC 320-10, Recognition and
Presentation of Other-Than-Temporary Impairments. This FSP amends the
other-than-temporary impairment guidance in U.S.GAAP for debt securities to make
the guidance more operational and to improve the presentation and disclosure of
other-than-temporary impairments on debt and equity securities in the financial
statements. The FSP does not amend existing recognition and measurement guidance
related to other-than-temporary impairments of equity securities. The FSP shall
be effective for interim and annual reporting periods ending after June 15,
2009. The adoption of ASC 320 and ASC 320-10 did not have a material impact on
the Company’s financial statements.
In April
2009, the FASB issued FSP No. ASC 820, “Determining Fair Value When the Volume
and Level of Activity for the Asset or Liability Have Significantly Decreased
and Identifying Transactions That Are Not Orderly” (“FSP ASC
820”). FSP ASC 820 provides guidance on estimating fair value when
market activity has decreased and on identifying transactions that are not
orderly. Additionally, entities are required to disclose in interim
and annual periods the inputs and valuation techniques used to measure fair
value. This FSP is effective for interim and annual periods ending
after June 15, 2009. The Company does not anticipate the adoption of ASC
No. 820 will have an impact on its financial position.
59
In
December 2008, the FASB issued FSP No. ASC 932 and FIN 46(R)-8, “Disclosures by
Public Entities (Enterprises) about Transfers of Financial Assets and Interests
in Variable Interest Entities.” This disclosure-only FSP improves the
transparency of transfers of financial assets and an enterprise’s involvement
with variable interest entities, including qualifying special-purpose
entities. This FSP is effective for the first reporting period
(interim or annual) ending after December 15, 2008, with earlier application
encouraged. The Company adopted this FSP effective January 1,
2009. There was no impact upon adoption.
In
December 2008, the FASB issued FSP No. ASC 715-20-65, “Employers’ Disclosures
about Post retirement Benefit Plan Assets” (“FSP ASC 715-20-65”). FSP
ASC 715-20-65 requires additional fair value disclosures about employers’
pension and postretirement benefit plan assets consistent with guidance
contained in ASC 820. Specifically, employers will be required to
disclose information about how investment allocation decisions are made, the
fair value of each major category of plan assets and information about the
inputs and valuation techniques used to develop the fair value measurements of
plan assets. This FSP is effective for fiscal years ending after
December 15, 2009. There was no impact upon adoption.
.
In
September 2008, the FASB issued exposure drafts that eliminate qualifying
special purpose entities from the guidance of ASC No.808, “Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities,” and FASB Interpretation 46 (revised December 2003),
“Consolidation of Variable Interest Entities − an
interpretation of ASC 808,” as well as other modifications. While the
proposed revised pronouncements have not been finalized and the proposals are
subject to further public comment, changes would be effective March 1, 2010, on
a prospective basis. The Company is currently evaluating the impact, if any, of
adoption of ASC 808 on its financial statements.
In
September 2008, the FASB issued FASB Staff Position ASC 260, Determining
Whether Instruments Granted in Share-Based Payment Transactions Are
Participating Securities, (“FSP ASC 260”). FSP ASC 260 addresses whether
instruments granted in share-based payment transactions are participating
securities prior to vesting, and therefore need to be included in the
computation of earnings per share, “Earnings per Share.” FSP ASC 260 is
effective for financial statements issued for fiscal years beginning on or after
December 15, 2008 and earlier adoption is prohibited. There was no impact
upon adoption.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued ASC No. 944,
“Accounting for Financial Guarantee Insurance Contracts”. ASC No. 944
clarifies how Statement 60 applies to financial guarantee insurance contracts,
including the recognition and measurement of premium revenue and claims
liabilities. This statement also requires expanded disclosures about financial
guarantee insurance contracts. ASC No. 944 is effective for fiscal years
beginning on or after December 15, 2008, and interim periods within those years.
There was no impact upon adoption.
In May
2008, the Financial Accounting Standards Board (“FASB”) issued ASC No. 105, “The
Hierarchy of Generally Accepted Accounting Principles”. ASC No. 105
sets forth the level of authority to a given accounting pronouncement or
document by category. Where there might be conflicting guidance between two
categories, the more authoritative category will prevail. ASC No.105 will become
effective 60 days after the SEC approves the PCAOB’s amendments to AU Section
411 of the AICPA Professional Standards. There was no impact upon
adoption.
In March
2008, the Financial Accounting Standards Board, or FASB, issued ASC No. 815,
Disclosures about Derivative Instruments and Hedging Activities. This
standard requires companies to provide enhanced disclosures about (a) how and
why an entity uses derivative instruments, (b) how derivative instruments and
related hedged items are accounted for and its related interpretations, and (c)
how derivative instruments and related hedged items affect an entity’s financial
position, financial performance, and cash flows. This Statement is effective for
financial statements issued for fiscal years and interim periods beginning after
November 15, 2008, with early application encouraged. There was no impact upon
adoption.
In
December 2007, the SEC issued Staff Accounting Bulletin (SAB) ASC No. 855
regarding the use of a "simplified" method, as discussed in ASC 718 (ASC 718),
in developing an estimate of expected term of "plain vanilla" share options in
accordance with ASC No. 718, Share-Based Payment. In particular, the
staff indicated in ASC 718 that it will accept a company's election to use the
simplified method, regardless of whether the company has sufficient information
to make more refined estimates of expected term. At the time ASC 718 was issued,
the staff believed that more detailed external information about employee
exercise behavior (e.g., employee exercise patterns by industry and/or other
categories of companies) would, over time, become readily available to
companies. Therefore, the staff stated in ASC 718 that it would not expect a
company to use the simplified method for share option grants after December 31,
2007. The staff understands that such detailed information about employee
exercise behavior may not be widely available by December 31, 2007. Accordingly,
the staff will continue to accept, under certain circumstances, the use of the
simplified method beyond December 31, 2007. The Company currently uses the
simplified method for “plain vanilla” share options and warrants, and will
assess the impact of ASC 865 for fiscal year 2009 There was no impact upon
adoption.
60
In
December 2007, the FASB issued ASC No. 810, Non-controlling Interests in
Consolidated Financial Statements—an amendment of ASC No. 808. This
statement amends ASC 808 to establish accounting and reporting standards for the
non controlling interest in a subsidiary and for the deconsolidation of a
subsidiary. It clarifies that a non-controlling interest in a subsidiary is an
ownership interest in the consolidated entity that should be reported as equity
in the consolidated financial statements. Before this statement was
issued, limited guidance existed for reporting non-controlling interests. As a
result, considerable diversity in practice existed. So-called minority interests
were reported in the consolidated statement of financial position as liabilities
or in the mezzanine section between liabilities and equity. This statement
improves comparability by eliminating that diversity. This statement is
effective for fiscal years, and interim periods within those fiscal years,
beginning on or after December 15, 2008 (that is, January 1, 2009, for entities
with calendar year-ends). Earlier adoption is
prohibited. The effective date of this statement is the same as that
of the related ASC 805. The Company will adopt this Statement
beginning March 1, 2009 There was no impact upon adoption.
In
December 2007, the FASB, issued FAS ASC 805, ‘Business
Combinations’. This Statement establishes principles and requirements
for how the acquirer: (a) recognizes and measures in its financial statements
the identifiable assets acquired, the liabilities assumed, and any
non-controlling interest in the acquire; (b) recognizes and measures the
goodwill acquired in the business combination or a gain from a bargain purchase;
and (c) determines what information to disclose to enable users of the financial
statements to evaluate the nature and financial effects of the business
combination. This statement applies prospectively to business combinations for
which the acquisition date is on or after the beginning of the first annual
reporting period beginning on or after December 15, 2008. An entity may not
apply it before that date. The effective date of this statement is the same as
that of the related FASB ASC 810, Non-controlling Interests in Consolidated
Financial Statements. The Company will adopt this statement beginning
March 1, 2009. There was no impact upon adoption.
In
February 2007, the FASB, issued SFAS No. 825, The Fair Value Option for
Financial Assets and Liabilities—Including an Amendment of FASB Statement No.
825-10. This standard permits an entity to choose to measure many
financial instruments and certain other items at fair value. This option is
available to all entities. Most of the provisions in ASC 825 are elective;
however, an amendment to 825-10 Accounting for Certain Investments in Debt and
Equity Securities applies to all entities with available for sale or trading
securities. Some requirements apply differently to entities that do not report
net income. ASC No. 825 is effective as of the beginning of an entity’s first
fiscal year that begins after November 15, 2007. Early adoption is permitted as
of the beginning of the previous fiscal year provided that the entity makes that
choice in the first 120 days of that fiscal year and also elects to apply the
provisions of ASC No. 820 Fair Value Measurements. There was no
impact upon adoption.
In
September 2006, the FASB issued ASC No. 820, Fair Value Measurements. This
statement defines fair value, establishes a framework for measuring fair value
in generally accepted accounting principles (GAAP), and expands disclosures
about fair value measurements. This statement applies under other accounting
pronouncements that require or permit fair value measurements, the Board having
previously concluded in those accounting pronouncements that fair value is the
relevant measurement attribute. Accordingly, this statement does not require any
new fair value measurements. However, for some entities, the application of this
statement will change current practice. This statement is effective
for financial statements issued for fiscal years beginning after November 15,
2007, and interim periods within those fiscal years. Earlier application is
encouraged, provided that the reporting entity has not yet issued financial
statements for that fiscal year, including financial statements for an interim
period within that fiscal year. There was no impact upon adoption.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
None
OFFICERS AND KEY PERSONNEL OF THE
COMPANY
The
address of each executive officer and director is c/o:
Global
Smoothie Supply, Inc.
4428
University Blvd.
Dallas,
TX 75205
61
David C. Tiller - Founder, Chairman and CEO (Director,
Age: 70)
A
graduate of the University of Texas at Austin and former U.S. Army Captain, Mr.
Tiller has held key staff positions in both the Texas Governor’s office and the
United States Senate. He then served as VP for Administration and
Corporate Communications for both Wylain Corporation (NYSE) and Sunshine Mining
Company (NYSE) from 1976 through 1982. In these positions his
duties included marketing, advertising, public and investor
relations. From 1995 until 2005, together with business partner Don
Roberts, Mr. Tiller developed The Workout Warehouse, an on-line
sports nutrition store for the US health club industry.
In 2005,
with his partners Don Roberts and Harry Ireland, David Tiller began developing
the Global Smoothie Supply Self-Serve Smoothie program.
Donald M. Roberts -
Founder, Vice-Chairman, Chief
Financial Officer and Treasurer (Director, Age: 58)
As a
business analyst at Hewlett-Packard and ExxonMobil, Mr. Roberts has designed,
supervised, and implemented numerous unit- and enterprise-wide projects in
Accounts Receivables/Payables, Banking/Finance, Tax/Tax Audit, Wholesale
Marketing/Manufacturing, Supply Chain/ Distribution and
Logistics. From 1995 until 2005, together with business partner David
Tiller, Mr. Roberts developed The Workout Warehouse, an on-line sports nutrition
stores for the US health club industry.
In 2005,
with his partners David Tiller and Harry Ireland, Don Roberts began developing
the Global Smoothie Supply Self-Serve Smoothie program.
Harry B. Ireland -
Founder, Vice-Chairman, Chief
Legal Officer, and Secretary (Director, Age: 71)
Since
1990, Mr. Ireland has engaged in the private practice of law. Mr. Ireland served
in various capacities with Sunshine Mining Company, an NYSE registered company,
as Vice President and General Counsel and as Managing Director of its
international operations based in London from 1979 until 1989. Mr. Ireland was
vice President and General Counsel of Cook International, Inc., an AMEX
registered ‘Fortune 100 Company’ from 1968 until 1978.
In 2005,
with his partners Don Roberts and David Tiller, he began developing the Global
Smoothie Supply Self-Serve Smoothie program. He serves as Vice
Chairman, Chief Legal Officer and Secretary.
John W. Gohsman President and COO (Director,
Age: 51)
Mr.
Gohsman was employed by Cadbury Schweppes Americas Beverages from 1988-2007. Mr.
Gohsman served as Vice President of Commercial Integration for Cadbury Schweppes
Americas Beverages from 2006 to 2007. For the years of 2001-2006 Mr.
Gohsman served as Vice President and General Manager of The Slush Puppie Frozen
Drink Division, an independent operating unit of the Dr Pepper/Seven Up Company
within Cadbury Schweppes Americas Beverages. In 2006, he led the
divestiture of Slush Puppie Brands. Other significant positions
included;
Vice
President, Franchise 1996-2001
Division
Sales Manager 1995-1996
Jim Kline Controller (Age:
52)
Mr. Kline
served as Category Business Manger with 7-Eleven (2003-2006), Director of
Operations Planning with SourceCorp (2006-2007,) Manager of Pricing and
Inventory with NBC (2007-2008,) and a financial consultant
(2008-2009.) Mr. Kline has been associated with Global Smoothie
Supply in a financial planning and Controller role since 2007. His
professional affiliations include the Institute of Management Accountants and
the Financial Executive Network Group.
DIRECTORS
OF THE COMPANY
Number of
Directors: 4
Directors
are elected annually and all have been in office through 2009.
David C.
Tiller, 71 years, Chairman of the Board and CEO, has served as a director
since February 17, 2005, and continues until his replacement is elected
and his directorship is subject to no understanding, written or
unwritten.
62
Donald M.
Roberts, 58 years, director and CFO, has served as director since February
17, 2005, and continues until his replacement is elected and his
directorship is subject to no understanding, written or unwritten.
Harry B.
Ireland, 71 years, director and CLO, has served as director since February 17,
2005, and continues until his replacement is elected and his
directorship is subject to no understanding, written or unwritten.
John W.
Gohsman, 51 years, director, President and COO, has served as director since
January 2, 2009, and continues until his replacement is elected
and his directorship is subject to no understanding, written or
unwritten.
List
of Outside/Independent Directors
None
Have
any of the Officers or Directors ever worked for or managed a company in the
same business as the Company?
Yes (See
Messrs. Gohsman and Kline, above)
If
any of the Officers, Directors or other key personnel have ever worked for or
managed a company in the same business or industry as the Company or in a
related business or industry, describe what precautions, if any, (including the
obtaining of releases or consents from prior employers) have been taken to
preclude claims by prior employers for conversion or theft of trade secrets,
know-how or other proprietary information.
No action
has been taken in this regard.
If
the Company has never conducted operations or is otherwise in the development
stage, indicate whether any of the Officers or Directors has ever managed any
other company in the start-up or development stage and describe the
circumstances, including relevant dates.
David
Tiller, together with business partner Don Roberts, developed The Workout
Warehouse, one of the first on-line sports nutrition stores for the US health
club industry. By the time they sold the company in 2004, over 600
health club facilities and related websites used this service - a figure
representing an opt-in database of over one million consumers
worldwide.
If
any of the Company's key personnel are not employees but are consultants or
other independent contractors, state the details of their engagement by the
Company.
Kevin Cooper - Senior Industry Consultant to
GSS
From 2004
to 2006, Mr. Cooper was the 7-Eleven National Category Manager for Slurpee® and
Fountain Beverages, where his duties covered the procurement, merchandising, and
marketing of Slurpee® and Big Gulp® beverage brands for 7-Eleven’s 5,800 U.S.
locations. Some of his major responsibilities included:
·
|
sourcing
and distribution of all beverage supplies and dispensing
equipment;
|
·
|
negotiating
national supply agreements;
|
·
|
leading
innovation meetings with key vendors, including Hershey’s, Kraft, and
Pepsi;
|
·
|
developing
pricing strategy, consistently achieving category budget goals;
and
|
·
|
coordinating
all advertising initiatives, including media planning efforts for
Slurpee.com.
|
Mr.
Cooper has negotiated sponsorship and beverage partnerships with major companies
such as Apple, AOL, Nintendo, LucasFilms, Warner Brothers, and
Disney.
From 2001
to 2004, he served as National Category Manager for Retail
Services. On his watch, retail sales revenue surpassed $351 million,
becoming the fastest growing retail category within 7-Eleven stores from 2001 to
2003. He envisioned and implemented the company’s successful addition
of the first national private-brand MVNO prepaid wireless program, 7-Eleven
Speak Out Wireless.
63
SECTION
16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section
16(a) of the Securities Exchange Act of 1934 requires our directors and
executive officers, and persons who own more than ten percent of our Common
Stock, to file with the Securities and Exchange Commission initial reports of
ownership and reports of change of ownership of our Common
Stock. Officers, directors and greater than ten percent stockholders
are required by SEC regulation to furnish us with copies of all Section 16(a)
forms they file.
We intend
to ensure to the best of our ability that all Section 16(a) filing requirements
applicable to our officers, directors and greater than ten percent beneficial
owners are complied with in a timely fashion.
EXECUTIVE COMPENSATION
The
following table sets forth for the fiscal year ended December 31, 2009, the cash
and non-cash compensation awarded to or earned by the chief executive officer of
the Company and other senior executives.
Summary
Compensation Table
Long
Term Compensation
|
||||||||||||||||||||||||
Awards
|
Payouts
|
|||||||||||||||||||||||
Annual
Compensation
|
Restricted
|
Securities
|
||||||||||||||||||||||
Other
Annual
|
Stock
|
Underlying
|
LTIP
|
Other
Annual
|
||||||||||||||||||||
Name
and
|
Salary
|
Compensation
|
Awards(1)(2)(3)
|
Options/
|
Payouts
|
Compensation
|
||||||||||||||||||
Principal
Position
|
($)
|
SARs
(#)
|
($)
|
($)
|
||||||||||||||||||||
David Tiller
Chairman,
CEO
|
0 | 0 | 12,750,000 | 0 | 0 | 0 | ||||||||||||||||||
Donald Roberts
Treasurer,
CFO
|
0 | 0 | 6,250,000 | 0 | 0 | 0 | ||||||||||||||||||
Harry
Ireland
Secretary,
CLO
|
0 | 0 | 6,000,000 | 0 | 0 | 0 | ||||||||||||||||||
John
Gohsman President
COO
|
0 | 0 | 1,000,000 | 0 | 0 | 0 |
There are no other stock option plans, retirement, pension, or profit sharing plans for the benefit of our officers other than as described herein.
|
1.
|
This
award was granted as of the 1st
day of June 2009. Subject to the terms of the Restricted Stock Plan (the
“Plan”), the restrictions placed on the shares provided under this Grant
lapse as follows:
|
|
a.
|
Restrictions
on 1/3 of the above shares shall expire on the 2nd
anniversary of the date of grant;
|
|
b.
|
Restrictions
on 1/3 of the above shares shall expire on the 3rd
anniversary of the date of grant;
and
|
|
c.
|
Restrictions
on all the remaining shares shall expire on the 4th
anniversary of the date of grant.
|
|
2.
|
The
Company has the right to deduct from all payments any taxes required by
law to be withheld.
|
|
3.
|
Subject
to the terms of the Plan and the agreement evidencing the grant, the
shares awarded to the Grantee may not be sold, transferred, pledged,
assigned, or otherwise alienated or hypothecated, or otherwise disposed of
than by will or by the laws of descent and distribution, until all
restrictions on the shares have
lapsed.
|
RESTRICTED
STOCK PLAN
Global
Smoothie Supply, Inc. adopted the Plan to enable the Company to retain and
motivate key employees and consultants who have or will provide valuable service
to the Company.
64
DIRECTORS’
COMPENSATION
For the
fiscal year ended December 31, 2009, the Company’s directors received no
compensation for their services as directors. GSS has not established any
standard arrangements pursuant to which directors have been compensated for
their services, although all directors are reimbursed for out-of-pocket
expenses, including those incurred in connection with attendance at Board of
Directors meetings. GSS may establish a compensation plan for
its directors in the future.
EMPLOYMENT
CONTRACTS
David C.
Tiller, Donald M. Roberts, Harry B. Ireland and John W. Gohsman have employment
agreements which become effective upon the Company’s receipt of funding of not
less than $1 million. The following is a description of the material
terms of these agreements.
GLOBAL
SMOOTHIE SUPPLY, INC
Employment
Agreement
This Employment Agreement ("Agreement")
is made and entered into by and between David C. Tiller ("TILLER") and Global
Smoothie Supply, Inc. ("GSS"), collectively "the parties." The
effective date of this Agreement is upon receipt of funding by GSS in an amount
of not less than $1,000,000 in the aggregate (the "Effective
Date").
|
l.
|
Position:
During the term of this Agreement, TILLER shall be employed by GSS as its
Chief Executive Officer and shall be elected a director of GSS’ Board of
Directors (the "Board").
|
|
2.
|
Term:
|
|
(a)
GSS’ Commitment to TILLER: The initial term shall commence on the
Effective Date and continue until October 30,
2014.
|
|
(b)
TILLER's Commitment to GSS: TILLER commits to work for GSS during the
initial term (i.e., from the Effective Date through October 15,
2014).
|
|
3.
|
Annual
Salary: TILLER's annual salary shall be One Hundred Fifty Thousand Dollars
($150,000.00), paid prorata in approximately equal amounts on the first
and fifteenth day of each calendar month, commencing on the Effective
Date. Such salary may be increased in the discretion of the
Board, but cannot be reduced.
|
GLOBAL
SMOOTHIE SUPPLY, INC
Employment
Agreement
This Employment Agreement ("Agreement")
is made and entered into by and between Donald M. Roberts ("Roberts") and The
Global Smoothie Supply, Inc. ("GSS"), collectively "the parties." The
effective date of this Agreement is upon receipt of funding by GSS in an amount
of not less than $1,000,000 in the aggregate (the "Effective
Date").
|
l.
Position: During the term of this Agreement, Roberts shall be employed by
GSS as its Chief Financial Officer and shall be elected a director of GSS’
Board of Directors (the "Board").
|
|
2.
Term:
|
|
(a)
GSS’ Commitment to Roberts: The initial term shall commence on the
Effective Date and continue until October 30,
2014.
|
|
(b)
Roberts' Commitment to GSS: Roberts commits to work for GSS during the
initial term (i.e., from the Effective Date through October 15,
2014).
|
|
3.
Annual Salary: Roberts' annual salary shall be One Hundred Fifty Thousand
Dollars ($150,000.00), paid prorata in approximately equal amounts on the
first and fifteenth day of each calendar month, commencing on the
Effective Date. Such salary may be increased in the discretion
of the Board, but cannot be
reduced.
|
65
GLOBAL
SMOOTHIE SUPPLY, INC
Employment
Agreement
This Employment Agreement ("Agreement")
is made and entered into by and between Harry B. Ireland ("IRELAND") and Global
Smoothie Supply, Inc. ("GSS"), collectively "the parties." The
effective date of this Agreement is upon receipt of funding by GSS in an amount
of not less than $1,000,000 in the aggregate (the "Effective
Date").
|
l.
Position: During the term of this Agreement, IRELAND shall be employed by
GSS as its Chief Legal Officer and shall be elected a director of GSS’
Board of Directors (the "Board").
|
|
2.
Term:
|
|
(a)
GSS’ Commitment to IRELAND: The initial term shall commence on the
Effective Date and continue until October 30,
2014.
|
|
(b)
IRELAND's Commitment to GSS: IRELAND commits to work for GSS during the
initial term (i.e., from the Effective Date through October 15,
2014).
|
|
3.
Annual Salary: IRELAND' annual salary shall be One Hundred Fifty Thousand
Dollars ($150,000.00), paid prorata in approximately equal amounts on the
first and fifteenth day of each calendar month, commencing on the
Effective Date. Such salary may be increased in the discretion
of the Board, but cannot be
reduced.
|
GLOBAL
SMOOTHIE SUPPLY, INC
Employment
Agreement
This Employment Agreement ("Agreement")
is made and entered into by and between John W. Gohsman ("GOHSMAN") and Global
Smoothie Supply, Inc. ("GSS"), collectively "the parties." The
effective date of this Agreement is upon receipt of funding by GSS in an amount
of not less than $1,000,000 in the aggregate (the "Effective
Date").
|
l.
Position: During the term of this Agreement, GOHSMAN shall be employed by
GSS as its President and shall be elected a director of GSS’ Board of
Directors (the "Board").
|
|
2.
Term:
|
|
(a)
GSS’ Commitment to GOHSMAN: The initial term shall commence on the
Effective Date and continue until October 30,
2014.
|
|
(b)
GOHSMAN's Commitment to GSS: GOHSMAN commits to work for GSS during the
initial term (i.e., from the Effective Date through October 15,
2014).
|
|
3.
Annual Salary: GOHSMAN's annual salary shall be Two Hundred Twenty-Five
Thousand Dollars ($225,000.00), paid prorata in approximately equal
amounts on the first and fifteenth day of each calendar month, commencing
on the Effective Date. Such salary may be increased in the
discretion of the Board, but cannot be
reduced.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth, as of the date of this Prospectus, the total number
of shares owned beneficially by our directors, officers and key employees,
individually and as a group, and the present owners of 5% or more of our total
outstanding shares. The officers and directors currently own
76,000,000 shares of Common Stock. The table also reflects what the
percentage of ownership will be assuming completion of the sale of all shares in
this offering, which we cannot guarantee. The stockholders listed
below have direct ownership of their shares and possess sole voting and
dispositive power with respect to the shares.
66
Percent
of
|
Number
of
|
|||||||
Voting
|
Common
|
|||||||
Beneficial
Owner Officer/Directors (1)
|
Shares
Owned (2)
|
Shares
Owned (3)
|
||||||
David
C. Tiller – Chief Executive Officer
|
39.2 | % | 38,250,000 | |||||
Donald
M. Roberts – Chief Strategy Officer
|
19.2 | % | 18,750,000 | |||||
Harry
B. Ireland – Chief Legal Officer
|
18.4 | % | 18,000,000 | |||||
John
W. Gohsman – Chief Operating Officer
|
1.0 | % | 1,000,000 |
Total
Shares Outstanding
|
97,626,604 | |||
Total
Shares Authorized
|
100,000,000 | |||
Total
Shares Owned by Officers and
Directors as a Group (4 persons)
|
76,000,000 |
The
address of each executive officer and director is c/o the Company.
(1) As
used in this table, “beneficial ownership” means the sole or shared power to
vote, or to direct the voting of, a security, or the sole or share investment
power with respect to a security (i.e., the power to dispose of, or to direct
the disposition of, a security.)
(2)
Assumes the sale of the maximum amount of this offering (the Company shares of
Common Stock) by the Company.
(3) The
aggregate amount of shares to be issued by the Company and outstanding after the
offering is 97,626,604.
CERTAIN RELATIONSHIPS AND RELATED
TRANSACTIONS
Since
January 1, 2009, there have been no transactions, and there are no currently
proposed transactions, in which GSS was or is to be a participant with any
related person to GSS or in which any related person had or will have a direct
or indirect material interest.
Pursuant
to the Articles of Incorporation and By-Laws of the Corporation, we may
indemnify an officer or director who is made a party to any proceeding,
including a lawsuit, because of his position, if he acted in good faith and in a
manner he reasonably believed to be in our best interest. In certain
cases, we may advance expenses incurred in defending any such
proceeding. To the extent that the officer or director is successful
on the merits in any such proceeding as to which such person is to be
indemnified, we must indemnify him against all expenses incurred, including
attorney’s fees. With respect to a derivative action, indemnity may
be made only for expenses actually and reasonably incurred in defending the
proceeding, and if the officer or director is judged liable, only by a court
order. The indemnification is intended to be to the fullest extent
permitted by the laws of the State of Texas.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to our directors, officers and controlling persons pursuant to the
provisions above, or otherwise, we have been advised that in the opinion of the
Securities and Exchange Commission, such indemnification is against public
policy as expressed in the Securities Act, and is, therefore,
unenforceable.
In the
event that a claim for indemnification against such liabilities (other than the
payment by us of expenses incurred or paid by one of our directors, officers, or
controlling persons in the successful defense of any action, suit or proceeding)
is asserted by one of our directors, officers, or controlling person in
connection with the securities being registered, we will, unless in the opinion
of our counsel the matter has been settled by controlling precedent, submit to a
court of appropriate jurisdiction the question whether such indemnification is
against public policy as expressed in the Securities Act, and we will be
governed by the final adjudication of such issue.
AVAILABLE INFORMATION
We have
filed a registration statement on Form S-1, of which this Prospectus is a part,
with the U.S. Securities and Exchange Commission. Upon completion of
the registration, we will be subject to the informational requirements of the
Exchange Act and, in accordance therewith, will file all requisite reports, such
as Forms 10-K, 10-Q, and 8-K, proxy statements, under Section 14 of the Exchange
Act and other information with the Commission. Such reports, proxy
statements, this registration statement and other information, may be inspected
and copied at the public reference facilities maintained by the Commission at
100 F Street NE, Washington, D.C. 20549. Copies of all materials may
be obtained from the Public Reference Section of the Commission’s Washington,
D.C. office at prescribed rates. You may obtain information regarding
the operation of the Public Reference Room by calling the SEC at
1-800-SEC-0330. The Commission also maintains a Web site that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission at http://www.sec.gov.
67
GLOBAL
SMOOTHIE SUPPLY, INC.
21,626,604 SHARES OF COMMON
STOCK
PROSPECTUS
YOU
SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE
REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION
THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON STOCK AND IS
NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE THE OFFER OR SALE
IS NOT PERMITTED.
Until
_____________, all dealers that effect transactions in these securities whether
or not participating in this offering may be required to deliver a prospectus.
This is in addition to the dealer’s obligation to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
The Date of This Prospectus is_____,
2010
PART
II – INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND
DISTRIBUTION
The
following table sets forth an estimate of the costs and expenses, other than the
underwriting discounts and commissions, payable by the registrant in connection
with the issuance and distribution of the Common Stock being
registered.
SEC
registration fee
|
$
|
308
|
||
Blue
Sky Expense
|
3,000
|
|||
Legal
fees and expenses
|
45,000
|
|||
Accountants’
fees and expenses
|
7,000
|
|||
Printing
expenses
|
5,000
|
|||
Total
|
$
|
60,308
|
All
amounts except the SEC registration fee are estimated. All of the
expenses set forth above are being paid by us.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND
OFFICERS
Article 4
of the Articles of Incorporation (as amended) addresses indemnification of
Directors and Officers and provides for the following:
“No
director of the corporation will be liable to the corporation or its
shareholders for monetary damages for an act or omission in the director's
capacity as a director, except as provided by the Code; and, the corporation
will indemnify its directors and officers to the fullest extent permitted by the
Code and may, of and to the extent authorized by the board of directors,
indemnify any other person whom it has the power to indemnify against liability,
reasonable expense, or any other matter whatever; and, the corporation may at
the discretion of the board of directors purchase and maintain insurance on behalf of
the corporation and any person whom it has the power to indemnify pursuant to
law, the certificate of formation, or these bylaws, or otherwise.”
ITEM
15. RECENT SALES OF UNREGISTERED SECURITIES
From
March 1, 2009, through February 9, 2010, the Company sold 1,626,604 shares of
Common Stock to 57 individual shareholders at a price of $0.15 per share
utilizing the exemption afforded by Regulation D.
(See
table in section titled “SELLING
SHAREHOLDERS”)
68
ITEM
16. EXHIBITS
The
following exhibits are included with this registration statement:
Exhibit
Number
|
Name/Identification
of Exhibit
|
||
3.1 |
Articles
of Incorporation
|
||
3.2 |
Bylaws
|
||
3.3 |
Amendment
to Articles of Incorporation
|
||
5.1 |
Opinion
of Novi & Wilkin, Esq. Attorneys at Law
|
||
10.1 |
Blendtec
Agreement
|
||
10.2 |
Blendtec
First Rights Agreement
|
||
10.3 |
Convenience
Store Decisions Report
|
||
10.4 |
7-Eleven
Store Test Agreement
|
||
10.5 |
Tiller
Employment Agreement
|
||
10.6 |
Ireland
Employment Agreement
|
||
10.7 |
Roberts
Employment Agreement
|
||
10.8 |
Gohsman
Employment Agreement
|
||
10.9 |
Cooper
Consulting Agreement
|
||
10.10 |
Foodprocessing.com
Article
|
||
10.11 |
Restricted
Stock Plan
|
||
10.12 |
Subscription
Agreement (Sample)
|
||
10.13 |
ETL
Listing
|
||
10.14 |
NSF
Listing
|
||
23.1 |
Consent
of Independent Auditor
|
||
23.2 |
Consent
of Counsel (See Exhibit 5.1)
|
ITEM
17. UNDERTAKINGS
The
undersigned Registrant hereby undertakes:
(1) To
File, during any period in which it offers or sells securities, a
post-effective amendment to this registration statement to:
(i)
Include any prospectus required by Section 10(a)(3) of the Securities
Act;
(ii)
Reflect in the prospectus any facts or events which, individually or together,
represent a fundamental change in the information in the registration
statement. Notwithstanding the foregoing, any increase or decrease in
volume of securities offered (if the total dollar value of securities offered
would not exceed that which was registered) and any deviation from the low or
high end of the estimated maximum offering range may be reflected in the form of
prospectus filed with the Commission pursuant to Rule 424(b) if, in the
aggregate, the changes in volume and price represent no more than a 20 percent
change in the maximum aggregate offering price set forth in the “Calculation of
Registration Fee” table in the effective registration statement;
(iii)
Include any additional or changed material information on the plan of
distribution.
(2) That,
for determining liability under the Securities Act, each post-effective
amendment shall be deemed to be a new registration statement of the securities
offered, and the offering of the securities at that time shall be deemed to be
the initial bona fide offering.
(3) To
file a post-effective amendment to remove from registration any of the
securities that remain unsold at the end of the offering.
(4) That,
for determining liability of the undersigned Registrant under the Securities Act
to any purchaser in the initial distribution of the securities, the undersigned
Registrant undertakes that in a primary offering of securities of the
undersigned Registrant pursuant to this registration statement, regardless of
the underwriting method used to sell the securities to the purchaser, if the
securities are offered or sold to such purchaser by means of any of the
following communications, the undersigned Registrant will be a seller to the
purchaser and will be considered to offer or sell such securities to such
purchaser:
69
(i) Any
preliminary prospectus or prospectus of the undersigned Registrant relating to
the offering required to be filed pursuant to Rule 424;
(ii) Any
free writing prospectus relating to the offering prepared by or on behalf of the
undersigned Registrant or used or referred to by the undersigned
Registrant;
(iii) The
portion of any other free writing prospectus relating to the offering containing
material information about the undersigned Registrant or its securities provided
by or on behalf of the undersigned Registrant; and
(iv) Any
other communication that is an offer in the offering made by the undersigned
Registrant to the purchaser.
(5) That,
for the purpose of determining liability under the Securities Act to any
purchaser:
If the
Registrant is subject to Rule 430C, each prospectus filed pursuant to Rule
424(b) as part of a registration statement relating to an offering, other than
registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A, shall be deemed to be part of and included in the
registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document
incorporated or deemed incorporated by reference into the registration statement
or prospectus that is part of the registration statement will, as to a purchaser
with a time of contract of sale prior to such first use, supersede or modify any
statement that was made in the registration statement or prospectus that was
part of the registration statement or made in any such document immediately
prior to such date of first use.
70
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, in the City of Dallas, State of Texas, on February 9,
2010
Global Smoothie Supply, Inc.
|
(Registrant)
|
By:
/s/ David C. Tiller
|
David
C. Tiller
|
Chairman
and CEO
|
In
accordance with the requirements of the Securities Act of 1933, this
Registration Statement was signed by the following persons in the capacities and
on the dates indicated.
Signature
|
Title
|
Date
|
/s/ David C.
Tiller
David
C. Tiller
|
Chairman
and CEO, Director (principal executive officer)
|
February
9, 2010
|
/s/ Donald M.
Roberts
Donald
M. Roberts
|
Vice-Chairman,
CFO and Treasurer, Director (principal financial officer)
|
February
9, 2010
|
/s/ Harry B.
Ireland
Harry
B. Ireland
|
Vice-Chairman,
CLO and Secretary, Director (principal legal officer)
|
February
9, 2010
|
/s/ John W.
Gohsman
John
W. Gohsman
|
President
and COO, Director (principal operating officer)
|
February
9, 2010
|
/s/ Jim
Kline
Jim
Kline
|
Controller
(principal accounting manager)
|
February
9, 2010
|
71