Attached files
file | filename |
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EX-21.1 - Attis Industries Inc. | v181296_ex21.htm |
EX-32.1 - Attis Industries Inc. | v181296_ex32-1.htm |
EX-31.1 - Attis Industries Inc. | v181296_ex31-1.htm |
UNITED
STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d)
OF
THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended: December 31,
2009
|
Commission File Number:
0-13984
|
BROOKLYN CHEESECAKE &
DESSERTS COMPANY, INC.
(Exact
name of registrant as specified in its charter)
NEW
YORK
|
13-3832215
|
|
(State
or other
jurisdiction of incorporation or organization)
|
(IRS
Employer Identification No.)
|
2070
Central Park Avenue 2nd
Fl.
Yonkers,
NY
|
10710
|
|
(Address
of principal executive offices)
|
(Zip
Code)
|
(914) 361-1420
(Registrant’s
Telephone Number, including Area Code)
Securities registered under Section
12(b) of the Exchange Act: None.
Securities
registered pursuant to
Section
12(g) of the Act:
Common
Stock, par value $.025 per share
Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes ¨ No
x
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes ¨ No
x
Indicate
by check mark whether the registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes x No
¨
Indicate
by check mark whether the registrant (1) has submitted electronically and posted
on its corporate Website, if any, every Interactive Data File required to be
submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding
12 months (or for such shorter period that the registrant was required to submit
and post such files). Yes ¨ No
¨
Indicate
by check mark if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K is not contained herein, and will not be contained, to
the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. x
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of “large accelerated filer,”
“accelerated filer” and “smaller reporting company” in Rule 12b-2 of the
Exchange Act.
Large
accelerated filer ¨
|
Accelerated
filer ¨
|
Non-accelerated
filer ¨
|
Smaller
reporting company x
|
(Do
not check if a smaller
|
|
Reporting
company)
|
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act) Yes ¨ No
x
The
aggregate market value of common stock, par value $.025 per share, held by
non-affiliates at June 30, 2009 (the last business day of the registrant’s most
recently completed second fiscal quarter) was $102,667. Such aggregate market
value was computed by reference to the closing price of the common stock of the
registrant on the Over-the-Counter Bulletin Board on June 30, 2009.
As of
April 15, 2010, 684,445 shares of registrant’s common stock, par value $.025 per
share, were issued and outstanding.
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
FORM
10-K
YEAR
ENDED DECEMBER 31, 2009
TABLE OF
CONTENTS
Page
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PART
I
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Item
1.
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Business
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3
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Item
1A.
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Risk
Factors
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4
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Item
1B.
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Unresolved
Staff Comments
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5
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Item
2.
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Properties
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5
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Item
3.
|
Legal
Proceedings
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5
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Item
4.
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[
Removed and Reserved ]
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5
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PART
II
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||
Item
5.
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Market
for Registrants Common Equity, Related Stockholder
|
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Matters
and Issuer Purchases of Equity Securities
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6
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Item
6
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Selected
Financial Data
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7
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Item
7.
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Management’s
Discussion and Analysis of
|
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Financial
Condition and Results of Operations
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7
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Item
7A.
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Quantitative
and Qualitative Disclosures About Market Risk
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9
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Item
8.
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Financial
Statements and Supplementary Data
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10
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Item
9.
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Changes
In and Disagreements With Accountants on
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Accounting
and Financial Disclosure
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23
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Item
9A(T).
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Controls
and Procedures
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23
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Item
9B.
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Other
Information
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23
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PART
III
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||
Item
10.
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Directors,
Executive Officers and Corporate Governance
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24
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Item
11.
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Executive
Compensation
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26
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Item
12.
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Security
Ownership of Certain Beneficial Owners and
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Management
and Related Stockholder Matters
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27
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Item
13.
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Certain
Relationships and Related Transactions, and
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Direct
Independence
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28
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Item
14.
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Principal
Accountant Fees and Services
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28
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Part
IV
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||
Item
15.
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Exhibits,
Financial Statement Schedules
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29
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SIGNATURES
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31
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2
PART
I
FORWARD
LOOKING STATEMENTS
Except
for historical information, this document contains various “forward-looking
statements” within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the
“Exchange Act”). These forward-looking statements involve risks and
uncertainties, including, among other things, statements regarding our revenue
mix, anticipated costs and expenses, development, relationships with strategic
partners and other factors discussed under “Business” and “Management's
Discussion and Analysis”. These forward-looking statements may
include declarations regarding our belief or current expectations of management,
such as statements indicating that “we expect,” “we anticipate,” “we intend,”
“we believe,” and similar language. We caution that any
forward-looking statement made by us in this Form 10-K or in other announcements
made by us are further qualified by important factors that could cause actual
results to differ materially from those projected in the forward-looking
statements, including without limitation the risk factors set forth in this Form
10-K beginning on page 4.
ITEM
1. BUSINESS
GENERAL
Brooklyn Cheesecake & Desserts
Company, Inc. was incorporated in November 1993. The Company's executive offices
are located at 2070 Central Park Avenue, 2nd Fl.
Yonkers, NY 10710 and its telephone number is (914) 361-1420. The Company
licenses its Brooklyn Cheesecake & Desserts Company trademark to Brooklyn
Cheesecake & Desserts Company, Inc., (a New Jersey
Corporation). These licensing fees are presently its only source of
revenue.
From
March 2002 through March 2006, the Company was a manufacturer of baking and
confectionary products. In March 2006, the Company entered into an
Exchange Agreement pursuant to which it exchanged its baking equipment and other
fixed assets and JMS Specialty, its wholly owned subsidiary, for the
satisfaction and assumption of approximately $1,145,000 of outstanding
liabilities and obligations owed to Ronald L. Schutte, its former president and
chief executive officer. The Company retained its trademarks and now licenses
these trademarks to a New Jersey corporation formed by Mr. Schutte to continue
the baking operations that were transferred to him pursuant to the Exchange
Agreement. This is the Company’s only present customer and there is
no certainty that the Company would be able to license these trademarks to other
third parties if its existing customer would permit it to do so.
TRADEMARKS
Brooklyn Cheesecake & Desserts
Company, Inc. trademarks with the United States Patent and Trademark office
include the mark The Healthy BakeryÒ
(US Registration No. 1,644,559), Brooklyn Cheesecake Company Inc. Ò (US
Registration No. 3,040,023) and Brooklyn Cheesecakes & Desserts Company,
Inc. Ò
(US Registration No. 3,017,300). The Company believes that the trademarks are a
significant asset, are valid, and enforceable, however there can be no assurance
as to the degree of protection its registered trademarks will afford the
Company.
PLAN
OF OPERATION
The Company licenses its trademarks to
Brooklyn Cheesecake, & Desserts Company, Inc. (a New Jersey Corporation).
Fees under the license agreement are calculated at one percent of sales of goods
bearing the Brooklyn Cheesecake & Desserts Company, Inc. trademark. The
license agreement expires on December 31, 2016.
EMPLOYEES
As of December 31, 2009, Brooklyn
Cheesecake & Desserts Company had one executive officer and no employees.
Anthony J. Merante is the Chairman, President, Chief Financial Officer, Chief
Executive Officer and Corporate Secretary.
3
ITEM
1A. RISK FACTORS
Our independent registered public
accounting firm has stated that our recurring losses from operations and our
working capital deficiency raise substantial doubt about our ability to continue
as a going concern.
The
reports of our Independent Registered Public Accounting Firm dated, April 14,
2010 and April 10, 2009 for the December 31, 2009 and 2008 condensed financial
statements, respectively contained an explanatory paragraph that states that our
recurring losses from operations and working capital deficit raise substantial
doubt about our ability to continue as a going concern. The condensed
financial statements do not include any adjustments that might result from the
outcome of that uncertainty. We believe we will need to raise more
money to finance our operations and sustain our business model. We
may not be able to obtain additional financing on acceptable terms, or at
all. Any failure to raise additional financing will likely
place us in significant financial jeopardy.
The Company and the price of its shares
may be adversely affected by the resale of a significant number of the shares
eligible for future sale.
All but a very small number of the
outstanding shares of our common stock are eligible for
resale. Resales of these shares of common stock in the public market
could have a material adverse affect on the market price of our common
stock. Such sales may also inhibit our ability to obtain future
equity or equity-related financing on acceptable terms. The issuance and
registration of additional shares could have a significant adverse effect on the
trading price of our common stock.
RISKS
RELATED TO THE MARKET FOR OUR COMMON STOCK
The
price of our common stock is subject to volatility
Our common stock has traded as low as
$.13 per share and as high as $.35 per share during the twelve months ended
December 31, 2009. Our average trading volume is extremely
low. As such, a significant sale of newly issued shares of our common
stock or resale of the issued and outstanding shares of our common stock may
result in a major fluctuation of the market price. Some other factors leading to
the volatility include:
|
·
|
Price
and volume fluctuation in the stock market at large which do not relate to
our operating performance;
|
|
·
|
Fluctuation
in our operating results;
|
|
·
|
Concerns
about our ability to finance our continuing
operations;
|
|
·
|
Financing
arrangements which may require the issuance of a significant number of
shares in relation to the number shares of our common stock currently
outstanding; or
|
|
·
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Fluctuations
in market demand and supply of our
products.
|
Our common stock is currently eligible
for quotation on the over-the-counter-bulletin-board and an investor’s ability
to trade our common stock may be limited by trading volume
The trading volume in our common shares
has been relatively limited. A consistently active trading market for
our common stock may not continue on the
Over-The-Counter-Bulletin-Board. The average daily trading volume in
our common stock on the Over-The-Counter-Bulletin-Board for the year ended
December 31, 2009 was negligible. Accordingly, the ability of our shareholders
to sell their shares of our common stock is extremely limited.
Possible
adverse effect of issuance of preferred stock
Our Restated Certificate of
Incorporation authorizes the issuance of 2,000,000 shares of Preferred Stock,
with designations, rights and preferences as determined from time to time by the
Board of Directors. As a result of the foregoing, the Board of Directors can
issue, without further shareholder approval, Preferred Stock with dividend,
liquidation, conversion, voting or other rights that could adversely affect the
voting power or other rights of the holders of Common Stock. The
issuance of Preferred Stock could, under certain circumstances, discourage,
delay or prevent a change in control of the Company.
4
ITEM
1B. UNRESOLVED STAFF COMMENTS
Not applicable.
ITEM
2. PROPERTIES
The Company occupies secured space at
2070 Central Park Avenue 2nd Fl.
Yonkers, NY 10710 as storage for Company records. As the Company no
longer has manufacturing operations, it believes that this space is sufficient
for its present operations.
ITEM
3. LEGAL PROCEEDINGS
None.
5
PART
II
ITEM
5. MARKET FOR THE REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND
ISSUER PURCHASES OF EQUITY SECURITIES
The Company's Common Stock is quoted on
the Over the Counter Bulletin Board (“OTCBB”) under the symbol "BCKE" effective
March 22, 2006. Prior to that, the Company’s Common Stock was quoted
on the OTCBB under the symbol “BCAK”. The following table sets forth
the range of quarterly high and low bid prices, as reported during the last two
fiscal years.
Period
|
High
|
Low
|
||||||
Fiscal
Year 2008:
|
||||||||
First
Quarter
|
.40 | .25 | ||||||
Second
Quarter
|
.25 | .25 | ||||||
Third
Quarter
|
.25 | .25 | ||||||
Fourth
Quarter
|
.25 | .25 | ||||||
Fiscal
Year 2009:
|
||||||||
First
Quarter
|
.25 | .15 | ||||||
Second
Quarter
|
.15 | .15 | ||||||
Third
Quarter
|
.35 | .15 | ||||||
Fourth
Quarter
|
.15 | .13 |
The above quotations reflect
inter-dealer prices, without retail mark-up, markdown or commission and may not
reflect actual transactions. On April 14, 2010, the closing bid price
for our common stock was $0.13 per share.
HOLDERS
As of March 31, 2010, we had 69
stockholders of record of our common stock. Such number of record holders was
derived from the records maintained by our transfer agent, Computershare Trust
Co.
DIVIDEND
POLICY
The Company has never paid cash
dividends on its Common Stock and does not anticipate paying dividends in the
foreseeable future. The payment of future cash dividends is subject to the
discretion of the Board of Directors and will depend upon the Company's earnings
(if any), general financial condition, cash flows, capital requirements and
other considerations deemed relevant by the Board of Directors.
RECENT
SALES OF UNREGISTERED SECURITIES
None.
6
SECURITIES
AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
Plan Category
|
Number of securities to be
issued upon exercise of
outstanding options,
warrants and rights
(a)
|
Weighted-average exercise
price of outstanding
options, warrants and
rights compensation plans
(excluding securities
reflected in column (a))
(b)
|
Number of securities
remaining available for
future issuance under
equity compensation plans
(excluding securities
reflected in column (a))
(c)
|
|||||||||
Equity
compensation plans approved by security holders
|
0 | N/A | 2,000,000 | |||||||||
Equity
compensation plans not approved by security holders
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0 | N/A | 0 | |||||||||
Total
|
0 | N/A | 2,000,000 |
ITEM
6. SELECTED FINANCIAL DATA
Brooklyn
Cheesecake and Desserts Company, Inc., a smaller reporting company, is not
required to provide information required by this item.
ITEM
7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
OVERVIEW
From
March 2002 through March 2006, the Company was a manufacturer of baking and
confectionary products. In March 2006, the Company entered into an
Exchange Agreement pursuant to which it exchanged its baking equipment and other
fixed assets and JMS Specialty, its wholly owned subsidiary, for the
satisfaction and assumption of approximately $1,145,000 of outstanding
liabilities and obligations owed to Ronald L. Schutte, its former president and
chief executive officer. The Company retained its trademarks and now licenses
these trademarks to a New Jersey corporation formed by Mr. Schutte to continue
the baking operations that were transferred to him pursuant to the Exchange
Agreement. As a result of this transaction, the Company's baking
operations have been treated as discontinued operations and its current business
of licensing its trademarks is treated as the Company's continuing
operations.
We
presently do not have sufficient cash to implement our business plan. We have
experienced this lack of liquidity throughout 2008 and 2009, causing
us to be unable to meet our obligations as they come due. We believe that we
need to raise or otherwise obtain at least $1,000,000 in additional financing in
order to satisfy our existing obligations and implement our business plan. If we are not
successful in obtaining such financing, we may not be able to continue to
operate our business.
Although
management is hopeful that 2010 licensing fees will be sufficient to pay related
expenses, they will also look for additional opportunities.
The
following discussion and analysis should be read in conjunction with the
financial statements and the related notes thereto included in this Form 10-K at
Item 8.
7
Critical Accounting
Policies
Revenue
Recognition:
Income from licensing
fees are recognized from the sale by our licensee of goods bearing the Brooklyn
Cheesecake & Desserts Company, Inc. trademark. The Company follows the
guidance of ASC 605 (formerly the Securities and Exchange Commission’s Staff
Accounting Bulletin No. 104) for revenue recognition. In general, the
Company records revenue when persuasive evidence of an arrangement exists,
services have been rendered or product delivery has occurred, the sales price to
the customer is fixed or determinable, and collectability is reasonably
assured.
Stock Based
Compensation:
Effective January 1, 2006, the Company
adopted the provisions of ASC 718( formerly SFAS No. 123(R), “Share-Based
Payment,” under the modified prospective method, SFAS No. 123(R) eliminates
accounting for share-based compensation transaction using the intrinsic value
method prescribed under APB Opinion No. 25 “Accounting for Stock Issued to
Employees,” and requires instead that such transactions be accounted for using a
fair-value-based method. Under the modified prospective method, the Company is
required to recognize compensation cost for share-based payments to employees
based on their grant-date fair value from the beginning of the fiscal period in
which the recognition provisions are first applied. For periods prior to
adoption, the financial statements are unchanged, and the pro forma disclosures
previously required by ASC 718, as amended by SFAS No. 148, will continue to be
required under ASC 718 to the extent those amounts differ from those in the
statement of operations.
RESULTS
OF OPERATIONS
The
Company’s licensing fees were $16,518 and $10,698 for the years ended December
31, 2009 and 2008 respectively, an increase of $5,820 or 54%. The increase is
attributable to additional sales of baking goods by the licensee of the
Company’s trademarks.
Selling,
general and administrative expenses were $27,474 and $54,606 for the years ended
December 31, 2009 and 2008 respectively, a decrease of $27,132 or 50%. The
decrease was attributable to a reduction of legal fees and public company
related costs in 2009 as compared to 2008.
Interest
expense was unchanged in 2009 at $105,950 as the amount of debt outstanding was
unchanged and our obligations are all fixed rate loans.
SEGMENT
INFORMATION
Not
applicable.
LIQUIDITY
AND CAPITAL RESOURCES
Since its
inception, the Company’s only source of working capital has been the $8,455,000
received from the issuance of its securities.
As of
December 31, 2009, the Company had a negative working capital of $1,315,827 as
compared to a negative working capital of $1,204,979 at December 31,
2008.
Net Cash
Used in Operating Activities for the year ended December 31, 2009 of $14,594 was
due to our loss from continuing operations of $116,906 and a decrease in
accounts payable of $8,370, offset by an increase in accrued expenses of
$102,200 and amortization expense of $6,000 and by a decrease in fees receivable
of $2,482.
Net Cash
Provided by Financing Activities during the year ended December 31, 2009 of
$10,691 was due to cash advances from the officer.
As of
March 31, 2010, the Company had cash of $311. We do not have sufficient cash on
hand to fund our operations for the next twelve months. Current operations are
being funded by licensing fees and cash advances from our chief executive
officer.
8
INFLATION
AND SEASONALITY:
Licensing revenue may vary based on
peak baking seasons for the licensee of our trademarks. Revenues may be affected
by holiday seasons such as Thanksgiving, Christmas, Jewish New Year, Easter and
Passover.
OFF-BALANCE
SHEET ARRANGEMENTS
There were no off-balance sheet
arrangements during the year ended December, 31 2009 that have or are reasonably
likely to have, a current or future effect on our financial condition, changes
in financial condition, revenues or expenses, results of operations, liquidity,
capital expenditures or capital resources that is material to our
interests.
ITEM
7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Brooklyn
Cheesecake and Desserts Company, Inc., a smaller reporting company, is not
required to provide information required by this item.
9
ITEM
8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
TABLE
OF CONTENTS
Management’s
Report on Internal Control Over Financial Reporting
|
11
|
Report
of Independent Registered Public Accounting Firm
|
12
|
Balance
Sheets
|
13
|
Statements
of Operations
|
14
|
Statements
of Changes in Stockholders' Deficiency
|
15
|
Statements
of Cash Flows
|
16
|
Notes
to Financial Statements
|
17-22
|
10
MANAGEMENT’S
REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
Our
management is responsible for establishing and maintaining adequate internal
control over financial reporting, as defined in Rule 13a-15(f) under the
Securities Exchange Act of 1934. Our internal control over financial reporting
is designed to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for external
purposes in accordance with accounting principles generally accepted in the
United States and include those policies and procedures that:
|
•
|
Pertain
to the maintenance of records that, in reasonable detail, accurately and
fairly reflect the transactions and dispositions of our
assets;
|
|
•
|
Provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with accounting
principles generally accepted in the United
States;
|
|
•
|
Provide
reasonable assurance that our receipts and expenditures are being made
only in accordance with authorization of our management and directors;
and
|
|
•
|
Provide
reasonable assurance regarding prevention or timely detection of
unauthorized acquisition, use, or disposition of our assets that could
have a material effect on the financial
statements.
|
Because
of its inherent limitations, such as resource constraints, human error, lack of
knowledge or awareness and the possibility of intentional circumvention of these
controls, internal control over financial reporting may not prevent or detect
misstatements. Furthermore, the design of any control system is based, in part,
upon assumptions about the likelihood of future events, which assumptions may
ultimately prove to be incorrect. Therefore, even those systems determined to be
effective can provide only reasonable assurance with respect to financial
statement preparation and presentation.
Our
management assessed the effectiveness of its internal control over financial
reporting as of December 31, 2009. In making this assessment, management
used the criteria established in Internal Control-Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO). Based on its assessment, management has concluded
that the Company’s internal control over financial reporting was effective as of
December 31, 2009.
This
Annual Report on Form 10-K does not include an attestation report of the
Company’s registered public accounting firm regarding internal control over
financial reporting. Management’s report was not subject to attestation by the
Company’s registered public accounting firm pursuant to temporary rules of the
Securities and Exchange Commission that permit the Company to provide only
management’s report in this Annual Report on Form 10-K.
Date:
April 14, 2010
/s/ Anthony J. Merante
|
Anthony
J. Merante
President,
Chief Executive Officer and Chief Financial Officer
11
Report of Independent
Registered Public Accounting Firm
To The
Board of Directors and Shareholders
Brooklyn
Cheesecake & Desserts Company, Inc.
We
have audited the accompanying balance sheets of Brooklyn Cheesecake &
Desserts Company, Inc. as of December 31, 2009 and 2008, and the related
statements of operations, changes in stockholders' deficiency, and cash flows
for the years then ended. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The Company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal
control over financial reporting as a basis for designing audit procedures that
are appropriate in the circumstances, but not for the purposes of expressing an
opinion on the effectiveness of the Company’s internal control over financial
reporting. Accordingly, we express no such opinion. 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 Brooklyn Cheesecake & Desserts
Company, Inc. as of December 31, 2009 and 2008, and the results of its
operations and cash flows for the years then ended, in conformity with
accounting principles generally accepted in the United States of
America.
The
accompanying financial statements have been prepared assuming the Company will
continue as a going concern. As shown in the accompanying financial
statements, the Company incurred significant losses from operations for the
years ended December 31, 2009 and 2008 and as of December 31, 2009 has a working
capital deficiency in the amount of $1,315,827, which raises substantial doubt
about the Company's ability to continue as a going concern. The
accompanying financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/
Sherb & Co., LLP
|
|
Certified
Public Accountants
|
Boca
Raton, Florida
April 14,
2010
12
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
BALANCE
SHEETS
Years Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
ASSETS
|
||||||||
Current
assets:
|
||||||||
Cash
|
$ | 155 | $ | 4,058 | ||||
Accounts
receivable
|
22,732 | 25,214 | ||||||
Total
current assets
|
22,887 | 29,214 | ||||||
Other
assets:
|
||||||||
Trademark,
net of amortization
|
43,125 | 49,125 | ||||||
Total
other assets
|
43,125 | 49,125 | ||||||
$ | 66,012 | $ | 78,397 | |||||
LIABILITIES
AND STOCKHOLDERS' DEFICIENCY
|
||||||||
Current
liabilities:
|
||||||||
Accounts
payable
|
$ | 35,951 | $ | 44,321 | ||||
Accrued
expenses
|
403,863 | 301,663 | ||||||
Notes
payable
|
815,000 | 815,000 | ||||||
Cash
advances, officer
|
83,900 | 73,209 | ||||||
Total
current liabilities
|
1,338,714 | 1,234,193 | ||||||
Stockholders'
deficiency:
|
||||||||
Preferred
stock $.001 par value, authorized 2,000,000 shares, none
issued
|
- | - | ||||||
Common
stock, $.025 par value, authorized 30,000,000 shares, issued and
outstanding 684,445 shares
|
17,110 | 17,110 | ||||||
Additional
paid-in capital
|
12,254,135 | 12,254,135 | ||||||
Accumulated
deficit
|
(13,543,947 | ) | (13,427,041 | ) | ||||
Total
stockholders' deficiency
|
(1,272,702 | ) | (1,155,796 | ) | ||||
$ | 66,012 | $ | 78,397 |
See notes
to financial statements.
13
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
STATEMENTS
OF OPERATIONS
Years Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Licensing
fees
|
$ | 16,518 | $ | 10,698 | ||||
Selling,
general and administrative expenses
|
27,474 | 54,606 | ||||||
(Loss)
from Operations
|
(10,956 | ) | (43,908 | ) | ||||
Other
Income (Expenses):
|
||||||||
Interest
expense
|
105,950 | 105,950 | ||||||
Net
Loss
|
$ | (116,906 | ) | $ | (149,858 | ) | ||
Earnings
per common share Basic and diluted:
|
$ | (0.17 | ) | $ | (0.22 | ) | ||
Weighted
average number of common shares outstanding basic and
diluted
|
$ | 684,445 | $ | 684,445 |
See notes
to financial statements.
14
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
STATEMENTS
OF CHANGES IN STOCKHOLDERS’ DEFICIENCY
YEARS
ENDED DECEMBER 31, 2009 AND 2008
Common Stock
|
||||||||||||||||||||
Number
|
Additional
|
Total
|
||||||||||||||||||
of
|
Paid-in
|
Accumulated
|
Stockholders’
|
|||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
Deficiency
|
||||||||||||||||
Balance
at December 31, 2007
|
684,445 | $ | 17,110 | $ | 12,254,135 | $ | (13,277,183 | ) | $ | (1,005,938 | ) | |||||||||
Net
loss for the year ended December 31, 2008
|
- | - | - | (149,858 | ) | (149,858 | ) | |||||||||||||
Balance
at December 31, 2008
|
684,445 | 17,110 | 12,254,135 | (13,427,041 | ) | (1,155,796 | ) | |||||||||||||
Net
loss for the year ended December 31, 2009
|
- | - | - | (116,906 | ) | (116,906 | ) | |||||||||||||
Balance
at December 31, 2009
|
684,445 | $ | 17,110 | $ | 12,254,135 | $ | (13,543,947 | ) | $ | (1,272,702 | ) |
See notes to financial
statements.
15
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
STATEMENTS
OF CASH FLOWS
Year Ended December 31,
|
||||||||
2009
|
2008
|
|||||||
Operating
activities:
|
||||||||
Net
Loss
|
$ | (116,906 | ) | $ | (149,858 | ) | ||
Amortization
|
6,000 | 6,000 | ||||||
Increase
(decrease) in operating assets and liabilities:
|
||||||||
Fees
receivable
|
2,482 | (6,343 | ) | |||||
Accounts
payable
|
(8,370 | ) | 19,008 | |||||
Accrued
expenses
|
102,200 | 106,350 | ||||||
Net
cash used in operating activities
|
(14,594 | ) | (24,843 | ) | ||||
Financing
activities:
|
||||||||
Proceeds
from cash advances, officer
|
10,691 | 27,308 | ||||||
Net
cash provided by financing activities
|
10,691 | 27,308 | ||||||
Net
(decrease) increase in cash and cash equivalents
|
(3,903 | ) | 2,465 | |||||
Cash
and cash equivalents, beginning of year
|
4,058 | 1,593 | ||||||
Cash
and cash equivalents, end of year
|
$ | 155 | $ | 4,058 | ||||
Supplemental
disclosures:
|
||||||||
Cash
paid during the year for:
|
||||||||
Taxes:
|
$ | - | $ | - | ||||
Interest:
|
$ | - | $ | - |
See notes
to financial statements.
16
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
1.
|
Description
of business and going concern:
|
The
Company was a manufacturer of baking and confectionery products, which were sold
to supermarkets, food distributors, educational institutions, restaurants, mail
order and to the public. Although the Company sold its products
throughout the United States, its main customer base was on the East Coast of
the United States. The Company has now become a holder and licensor of
intellectual property.
During
the years ended December 31, 2009 and 2008, the Company incurred losses from
continuing operations in the amount of $116,906 and $149,858, respectively, and
as of December 31, 2009 had a net working capital deficiency of
$1,315,827.
2.
|
Summary
of significant accounting policies:
|
Cash and
cash equivalents:
|
For
the purpose of the statement of cash flows, the Company considers all
short-term debt securities purchased with a maturity of three months or
less to be cash equivalents.
|
Accounts
receivable and allowances:
|
Accounts
receivable are reported at net realizable value. Management considers the
need for an allowance for doubtful accounts related to its accounts
receivable that are deemed to have potential collectability issues.
Management reviews its accounts receivable on a quarterly basis. The
Company includes any receivables balances determined to be uncollectible
along with a general reserve for doubtful accounts. No allowance was
considered necessary at December 31,
2009.
|
Use of
estimates:
|
The
process of preparing financial statements in conformity with generally
accepted accounting principles requires the use of estimates and
assumptions regarding certain types of assets, liabilities, revenues and
expenses. Such estimates primarily relate to unsettled
transactions and events as of the date of the financial
statements. Accordingly, upon settlement, actual results may
differ from estimated amounts.
|
Net
(Loss) Income per Share:
|
The
Company computes basic net (loss) income per share based on the weighted
average common shares outstanding during the same period. Diluted
net (loss) income per share adjusts the weighted average for potential
dilution that could occur if securities or other contracts to issue common
stock were exercised or converted into common stock or resulted in the
issuance of common stock, which would then share in the earnings of the
Company. At December 31, 2009, the Company had no such securities
outstanding.
|
Revenue
Recognition:
|
Income
from licensing fees are recognized from the sale by our licensee of goods
bearing the Brooklyn Cheesecake & Desserts Company, Inc.
trademark. The Company records revenue when persuasive evidence of
an arrangement exists, services have been rendered or product delivery has
occurred, the sales price to the customer is fixed or determinable, and
collectability is reasonably
assured.
|
Income
Taxes:
Income
taxes are accounted for using an asset and liability approach that requires the
recognition of deferred tax asset and liabilities for the expected future tax
consequences of events that have been recognized in the Company's financial
statements or tax returns. In estimating future tax consequences, the Company
generally considers all expected future events other than changes in the tax law
or rates. A valuation allowance is recorded when it is deemed more likely than
not that a deferred tax asset will not be realized.
17
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
2.
|
Summary
of significant accounting policies
(continued):
|
Impairment
of Long-Lived Assets:
The
Company reviews long-lived assets for impairment whenever circumstances and
situations change such that there is an indication that the carrying amounts may
not be recovered. The recoverability of assets held and used in operations is
measured by a comparison of the carrying amount of the assets to the future net
cash flows expected to be generated by the assets. If such assets are considered
to be impaired, the impairment to be recognized is measured by the amount by
which the carrying amount of the assets exceeds the fair value of the
assets.
Stock
Based Compensation:
Prior to
October 1, 2005, we accounted for stock options issued under the Plan under the
recognition and measurement provisions of APB Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations, as permitted by ASC Topic 718,
“Compensation – Stock Compensation (Formerly SFAS No. 123 (R), “Share-Based
Payments. No stock- based compensation cost related to employee stock options
was recognized in the Consolidated Statement of Operations for the year ended
September 30, 2005 as all options granted under the Plan had an exercise price
equal to the market value of the underlying common stock on the date of
grant.
Effective
October 1, 2005, we adopted the fair value recognition provisions of ASC Topic
718, “Compensation – Stock Compensation (Formerly SFAS No. 123 (R), “Share-Based
Payments using the modified-prospective-transition method. Under that transition
method, compensation cost recognized in the year ended September 30, 2006
includes: (a) compensation cost for all share-based payments granted prior to,
but not yet vested as of September 30, 2005, based on the grant date fair value
estimated in accordance with the original provisions of Statement 123, and (b)
compensation cost for all share-based payments granted subsequent to October 1,
2005, based on the grant-date fair value estimated in accordance with the
provisions of Statement 123(R). Financial results for the year ended September
30, 2005 have not been restated.
Fair
Value of Financial Instruments:
The
Company’s financial instruments consist of, accounts receivable, accounts
payable, accrued expenses, and notes payable. The carrying amounts of the
financial instruments reported in the balance sheet approximate fair value based
on the short-term maturities of these instruments.
Recent
accounting pronouncements:
In June
2009, the Financial Accounting Standards Board (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 establishes the FASB Accounting Standards Codification as the source of
authoritative accounting principles and the framework for selecting the
principles used in the preparation of financial statements of nongovernmental
entities that are presented in conformity with generally accepted accounting
principles in the United States. This SFAS is effective for financial statements
issued for interim and annual periods ending after September 15, 2009, and is
not expected to have a material impact on our financial statements.
In June
2009, the FASB issued Accounting Standards Update No. 2009-01, “Generally
Accepted Accounting Principles” (ASC Topic 105) which establishes the
FASB Accounting Standards Codification (“the Codification” or “ASC”)
as the official single source of authoritative U.S. generally accepted
accounting principles (“GAAP”). All existing accounting standards are
superseded. All other accounting guidance not included in the Codification will
be considered non-authoritative. The Codification also includes all relevant
Securities and Exchange Commission (“SEC”) guidance organized using the same
topical structure in separate sections within the Codification.
18
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
2.
|
Summary
of significant accounting policies
(continued):
|
Following
the Codification, the Board will not issue new standards in the form of
Statements, FASB Staff Positions or Emerging Issues Task Force Abstracts.
Instead, it will issue Accounting Standards Updates (“ASU”) which will serve to
update the Codification, provide background information about the guidance and
provide the basis for conclusions on the changes to the
Codification.
The
Codification is not intended to change GAAP, but it will change the way GAAP is
organized and presented. The Codification is effective for our fiscal year
ending 2009 financial statements and the principal impact on our financial
statements is limited to disclosures as all future references to authoritative
accounting literature will be referenced in accordance with the Codification. In
order to ease the transition to the Codification, we are providing the
Codification cross-reference alongside the references to the standards issued
and adopted prior to the adoption of the Codification.
In April
2009, the FASB issued FASB Staff Positions FAS 115-2 and FAS 124-2, “Recognition
and Presentation of Other-Than-Temporary Impairments” (ASC Topic 320-10-65).
This update provides guidance for allocation of charges for other-than-temporary
impairments between earnings and other comprehensive income. It also
revises subsequent accounting for other-than-temporary impairments and expands
required disclosure. The update was effective for interim and annual periods
ending after June 15, 2009. The adoption of FAS 115-2 and FAS 124-2 did not have
a material impact on the results of operations and financial
condition
In May
2009, the FASB issued SFAS No. 165, “Subsequent Events” (ASC Topic 855). This
guidance is intended to establish general standards of accounting for and
disclosure of events that occur after the balance sheet date but before
financial statements are issued or available to be issued. It is effective for
interim and annual reporting periods ending after June 15, 2009. The
adoption of this guidance did not have a material impact on
our consolidated financial statements. The Company evaluated all
events and transactions that occurred after September 30, 2009 up through
December 22, 2009. During this period no material subsequent events
came to our attention.
Other
accounting standards that have been issued or proposed by the FASB or other
standards-setting bodies that do not require adoption until a future date are
not expected to have a material impact on the consolidated financial statements
upon adoption.
19
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
3.
|
Concentration
of credit risk and major customers:
|
The
Company maintains all of its cash balances in a New Jersey financial
institution. The balances are insured by the Federal Deposit
Insurance Company (FDIC) up to $250,000. At December 31, 2009, the
Company had no uninsured cash balances.
For the
years ended December 31, 2009 and 2008 one customer, Brooklyn Cheesecake &
Desserts Company, Inc. (New Jersey), represented 100% of our total revenues,
$16,518 and $10,698 respectively. As of December 31, 2009 and 2008,
respectively, accounts receivable from this customer was $22,732 and
$25,214.
4.
|
Trademark
and licensing agreements:
|
On March
7, 2002, the Company purchased the rights to the tradenames Brooklyn Cheesecake
Company, Inc. and Brooklyn Cheesecake & Desserts Company, Inc. and the
related corporate logo in exchange for 300,000 shares of the Company's common
stock, valued on the purchase date at $90,000. The tradename rights
are being amortized on the straight-line basis over a fifteen-year
term. Amortization expense was $6,000 and $6,000, respectively, for
the years ended December 31, 2009 and 2008.
On March
28, 2006, the Company entered into a licensing agreement with its former
Chairman and CEO, whereby a one percent of sales fee would be charged for the
use of the Brooklyn Cheesecake and Desserts Company, Inc.
tradenames.
2009
|
2008
|
|||||||
Tradename
|
$ | 90,000 | $ | 90,000 | ||||
Acc
Amort
|
46,875 | 40,875 | ||||||
Tradename,
Net
|
$ | 43,125 | $ | 49,125 |
The
following is a schedule of future amortizations on the trade name:
Years Ended December 31,
|
||||
2010
|
6,000 | |||
2011
|
6,000 | |||
2012
|
6,000 | |||
2013
|
6,000 | |||
2014
|
6,000 | |||
Thereafter
|
13,125 | |||
$ | 43,125 |
5.
|
Notes
payable:
|
A
promissory note dated January 31, 2006 was issued and is payable to Ronald L.
Schutté the former Chairman and CEO payable on demand, with interest at the rate
of 13%, per annum, and secured by the Company’s trademarks. The
original amount of the loan was $995,818 of which $195,818 plus additional loans
and accrued interest was satisfied upon completion of an exchange agreement
dated March, 28, 2006 (see note 9). Mr. Schutté also advanced $15,000 to cover
additional expenses during that period.
6.
|
Cash
Advances Officer:
|
Anthony
Merante, the Company’s Chairman, President and CEO, makes cash advances to the
Company from time to time to enable it to meet its payment
obligations. These advances bear no interest and are payable on
demand.
20
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
7
|
Common
stock:
|
The Company did not issue any common
stock during the years ended December 31, 2009 and 2008.
8.
|
Income
taxes:
|
|
The
Company accounts for income taxes in accordance with ASC 740
(formerly SFAS No. 109) "Accounting for Income Taxes", which requires
an asset and liability approach to financial accounting and reporting for
income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and
income tax basis of assets and liabilities that will result in taxable or
deductible amounts in the future based on enacted tax laws and rates
applicable to the periods in which the differences are expected to affect
taxable income.
|
|
The
Company had a net loss of $116,906 during the year ended December 31, 2009
and had no Federal or State income tax obligations. The Company had no
significant deferred tax effects resulting from the temporary differences
that give rise to deferred tax assets and deferred tax liabilities for the
year ended December 31, 2009 other than net operating
losses.
|
|
Valuation
allowances are established when necessary to reduce deferred tax assets to
the amount expected to be realized. Income tax expense is the
tax payable or refundable for the period, plus or minus the change during
the period in deferred tax assets and liabilities. There was no
cumulative effect of adoption or current effect in continuing operations
mainly because the Company has accumulated a net operating loss carry
forward of approximately $4,000,000. The Company has made no
provision for a deferred tax asset nor for increase in such due to a
valuation allowance has been provided which is equal to the deferred tax
asset. It cannot be determined at this time that a deferred tax
asset is more likely that not to be
realized.
|
|
The
Company's loss carry forward of approximately $4,000,000 may be offset
against future taxable income. The carry forward losses expire
at the end of the years 2012 through
2024.
|
|
The
utilization of the above loss carry forwards, for federal income tax
purposes, may be subject to limitation resulting from changes in
ownership.
|
|
The
table below summarizes the differences between the Company’s effective tax
rate and the statutory federal rate as follows for the periods ended
December 31, 2009 and 2008:
|
2009
|
2008
|
|||||||
Computed
“expected” benefit
|
$ | (39,748 | ) | $ | (50,952 | ) | ||
Increase
in valuation allowance
|
39,748 | 50,952 | ||||||
$ | - | $ | - |
|
Deferred
tax assets and liabilities are provided for significant income and expense
items recognized in different years for tax and financial reporting
purposes. The Components of the net deferred tax assets for the years
ended December 31, 2009 and 2008 were as
follows:
|
2009
|
2008
|
|||||||
Net
operating loss carry forward
|
$ | (1,364,890 | ) | $ | (2,115,925 | ) | ||
Less:
Valuation allowance
|
1,364,890 | 2,115,925 | ||||||
$ | - | $ | - |
21
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
NOTES TO
FINANCIAL STATEMENTS
YEARS
ENDED DECEMBER 31, 2009 AND 2008
9.
|
Common
stock options:
|
On
August 4, 2004, our shareholders approved the 2004 Stock Incentive
Plan. The plan reserves 2,000,000 shares of common stock for issuance
as approved by our board of directors. There are no outstanding options at
December 31, 2009.
|
The
Board of Directors has full authority and discretion to determine the
eligible participants to be granted stock options, the exercise option
price, the date of issuance and the date of expiration. The
Company did not grant any options during the calendar years 2009 and
2008.
|
Information
relating to stock option activity is as follows:
Shares
Underlying
Options
|
Weighted
Average
Exercise
Price
|
|||||||
Outstanding
at December 31, 2007
|
- | - | ||||||
Granted and
Cancelled
|
- | - | ||||||
Outstanding
at December 31, 2008
|
- | - | ||||||
Granted and
Cancelled
|
- | - | ||||||
Outstanding
at December 31, 2009
|
- | - | ||||||
Options
exercisable at December 31, 2008
|
- | - | ||||||
Options
exercisable at December 31, 2009
|
- | - |
10.
|
Exchange
Agreement:
|
|
On
March 28, 2006, the Company entered into an exchange agreement with Ronald
L. Schutté its former Chairman and CEO whereby the Company exchanged
$1,145,315 in assets in exchange for $1,145,315 of the $1,945,315
liabilities of the company which included some of the debt due to Mr.
Schutté. The balance of the Company’s $800,000 obligation to
Mr. Schutté will be extinguished upon the Company raising additional
capital. Mr. Schutté also assumed the balance of the building
lease and various equipment leases. The Company also entered into an
exclusive licensing agreement with Mr. Schutté and a company owned by Mr.
Schutté whereby, the Company receives one percent of sales as a royalty
for use of the Company’s trademarks. Mr. Schutté also acquired
the stock of the Company’s J.M. Specialty, Inc.
subsidiary. Licensing fees were $16,518 and $10,698 for 2009
and 2008 respectively.
|
11.
|
Subsequent
Events
|
For
purposes of determining whether a post-balance sheet event should be evaluated
to determine whether it has as effect on the financial statements for the year
ending December 31, 2009, subsequent events were evaluated by the Company as of
April 15, 2010, the date on which the audited consolidated financial statements
for the year ended December 31, 2009, were available to be issued.
22
ITEM
9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE.
None.
ITEM
9A(T). CONTROLS AND PROCEDURES
EVALUATION
OF DISCLOSURE CONTROLS AND PROCEDURES.
As of
December 31, 2009, we carried out an evaluation of the effectiveness of the
design and operation of our “disclosure controls and procedures” (as defined in
the Exchange Act Rules 13a-15(e) and 15d-15(e)) under the supervision and with
the participation of our management, including Anthony J. Merante,
our Chief Executive Officer and Chief Financial Officer. Based upon that
evaluation, Mr. Merante concluded that our disclosure controls and
procedures are effective. There were no significant changes in our disclosure
controls and procedures that have materially affected or are reasonably likely
to materially affect our internal controls over financial reporting during the
year ended December 31, 2009.
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in our reports filed or
submitted under the Exchange Act are recorded, processed, summarized and
reported, within the time periods specified in the Securities and Exchange
Commission’s rules and forms. Disclosure controls and procedures include,
without limitation, controls and procedures designed to ensure that information
required to be disclosed in our reports filed under the Exchange Act is
accumulated and communicated to management to allow timely decisions regarding
required disclosure.
CHANGES
IN INTERNAL CONTROLS
There
have not been any changes in the issuer’s internal control over financial
reporting identified in connection with the evaluation required by paragraph (d)
of Rule 13a-15 or Rule 15d-15 under the Exchange Act that occurred during the
issuer’s last fiscal year that has materially affected, or is reasonable likely
to materially affect, the issuer’s internal control over financial
reporting.
LIMITATIONS
ON THE EFFECTIVENESS OF CONTROLS.
A control
system, no matter how well conceived and operated, can provide only reasonable,
not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are
resource constraints, and the benefits of controls must be considered relative
to their costs. Because of the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, within the Company have been detected. These
inherent limitations include the realities that judgments in decision-making can
be faulty, and that breakdowns can occur because of simple error or mistake.
Additionally, controls can be circumvented by the individual acts of some
persons, by collusion of two or more people, or by management override of the
control. The design of any system of controls also is based in part upon certain
assumptions about the likelihood of future events, and there can be no assurance
that any design will succeed in achieving its stated goals under all potential
future conditions; over time, control may become inadequate because of changes
in conditions, or the degree of compliance with the policies or procedures may
deteriorate. Because of the inherent limitations in a cost effective control
system, misstatements due to error or fraud may occur and not be detected. The
Company conducts periodic evaluations of its internal controls to enhance, where
necessary, its procedures and controls.
CONCLUSIONS.
Based on
this evaluation, the CEO/CFO concluded that the issuer’s disclosure, controls
and procedures are effective to ensure that information required to be disclosed
in reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified in the
Securities Exchange Commission rules and forms.
ITEM
9B. OTHER INFORMATION
None.
23
PART
III
ITEM
10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE
GOVERNANCE
Information
Concerning the Board of Directors and Executive Officers
The
following table sets forth certain information concerning the Board of
Directors, persons nominated to be elected as directors and executive officers
of the Company:
Name
of Director or
Executive
Officer,
Age
and Position
Held with Company
|
Principal
Occupation
For Previous Five Years
|
Date
of Initial Election
as Director
|
||
Anthony
J. Merante, 49
|
||||
Chairman,
President, Chief Financial
|
Certified
Public Accountant
|
January
2003
|
||
Officer,
Chief Executive Officer, and
|
Chief
Financial Officer
|
|||
Corporate
Secretary
|
||||
Carmelo
Foti, 57
|
VP
& Manager Credit & Marketing
|
January
2003
|
||
Director
|
National
Bank Of Egypt, NY Branch
|
|||
Liborio
Borsellino, 54
|
Partner,
RBC and Associates
|
August
2004
|
||
Director
|
||||
David
Rabe, 48
|
President,
Interpro Systems, Inc.
|
August
2004
|
||
Director
|
||||
Donald
O’Toole, 58
|
Vice
President of Sales of HRP, Inc.
|
August
2005
|
||
Director
|
All
directors hold office until the next annual meeting of shareholders and until
their successors are elected and qualified.
Officers
are appointed by the Board of Directors and serve at the discretion of the
Board.
Anthony Merante was appointed
as director in January 2003 and was subsequently elected as a director in August
2004. He was appointed Chief Financial Officer of the Company in
January 2005. Mr. Merante was subsequently appointed Chairman of the
Board of Directors as well as Chief Executive Officer, President, and Corporate
Secretary in March 2006. Mr. Merante is a Certified Public Accountant
self employed since July 1, 2009,was a partner with the firm of Reda, Romano
& Company, LLP CPA’s in Rye Brook, NY from October 2001until July
2009. Mr. Merante graduated from St. John’s University in 1982 with a
Bachelor’s of Science in Accounting. Among other attributes, skills, experiences
and qualifications the Board believes that Mr. Merante’s accounting background
as well as his eight years as accountant and director of the Company are the
attributes, skills experiences and qualifications that qualify him as a director
of the company.
Liborio Borsellino was elected
as a director in August 2004. Mr. Borsellino works for RBC and
Associates. Mr. Borsellino has been employed there since
1994. Mr. Borsellino is a manufacturer representative for Gear Sports
Apparel, Johnson & Johnson Sports Medicine, and Gatorade
Athletic. Mr. Borsellino received his Bachelor’s degree from
Manhattan College in 1977. Among other attributes, skills, experiences and
qualifications the Board believes that Mr. Borsellino’s background in marketing
as well as his seven years as director of the Company are the attributes, skills
experiences and qualifications that qualify him as a director of the
company.
24
Carmelo L. Foti was appointed
as director in January 2003 and elected as a director in August
2004. Mr. Foti has served as President and Chief Operating Officer of
the Bank of Southeastern Connecticut since March 2006. Previously, he
served as Vice President, Manager Credit and Marketing of the National Bank of
Egypt, NY Branch. Mr. Foti was employed there since
1995. Mr. Foti earned his Masters in Arts from Johns Hopkin
University in 1976. Mr. Foti received his Bachelor’s of Arts degree
from Fordham University in 1974. Among other attributes, skills,
experiences and qualifications the Board believes that Mr. Foti’s
banking background as well as his seven years as director
of the Company are the attributes, skills experiences and qualifications that
qualify him as a director of the company.
David Rabe was elected as a
director in August 2004. Mr. Rabe is the President of Interpro
Systems, Inc. Mr. Rabe has been with the company since January
1998. Mr. Rabe received his Bachelor’s of Science degree in 1984 from
New York University. Among other attributes, skills, experiences and
qualifications the Board believes that Mr.
Rabe’s background as a self employed business owner as
well as his eight years as director of the Company are the attributes, skills
experiences and qualifications that qualify him as a director of the
company
Donald O’Toole was appointed
as a director in August 2005. Mr. O’Toole is a Vice President of
Sales of HRP, Inc. Prior to that he served as a Senior Vice-President
at Petry TV, Inc. from March 1981 to June 2006. Prior to this
position, he served as National Sales Manager for WGN TV in Chicago,
IL. Mr. O’Toole holds a BA degree from Southern New Hampshire
University and an MBA from Iona College. Among other attributes, skills,
experiences and qualifications the Board believes that Mr. O’Toole’s background
in marketing as well as his six years as director of the Company are the
attributes, skills experiences and qualifications that qualify him as a director
of the company.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Securities Exchange Act of 1934 requires the Company’s officers and
directors, and persons who own more than ten percent (10%) of a registered class
of the Company’s equity securities to file reports of ownership and changes in
ownership with the Securities and Exchange Commission (“SEC”). Officers,
directors and greater than ten percent stockholders are required by SEC
regulations to furnish the Company with copies of all Section 16(a) forms they
file.
To the best of the Company’s knowledge,
based solely on review of the copies of such forms furnished to the Company, we
do not believe that any of our officers, directors or greater than ten percent
stockholders had any delinquent filings pursuant to section 16(a) of the
Securities Exchange Act in 2009.
Audit
Committee
We have
not designated an audit committee of the board of directors since there are no
complicated accounting or auditing issues.
Code of
Ethics
We have
not adopted a code of ethics that applies to our principal executive officer,
principal financial officer, principal accounting officer, controller or persons
performing similar functions. As Anthony J. Merante is our President,
Chief Executive Officer and Chief Financial Officer, we did not believe that a
formal written Code of Ethics was necessary to regulate his
conduct.
25
ITEM
11. EXECUTIVE COMPENSATION
Executive
Compensation
The following Summary Compensation
Table sets forth all compensation earned, in all capacities, during the fiscal
years ended December 31, 2009 and 2008 by each of the executive officers (the
“Named Executive Officers”).
SUMMARY
COMPENSATION TABLE
Name and Principal Position
|
Year
|
Salary ($)
|
Option
Awards ($)
|
Other
Compensation
|
Total
|
|||||||||||||
Anthony
J. Merante
|
2009
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 | |||||||||
President,
Chief Executive
Officer
and Chief Financial
Officer
|
2008
|
$ | 0 | $ | 0 | $ | 0 | $ | 0 |
Option
Grants
We did not grant any options to any of
our Named Executive Officers during the years ended December 31, 2009 and
2008.
Compensation
of Directors
Our directors receive a fee of $1,000
for physical attendance at each meeting of the Board of Directors or a committee
thereof. In addition, all directors are reimbursed for their reasonable
out-of-pocket expenses incurred in connection with attending such meetings.
There were no meetings in 2009 and 2008 in which physical attendance was
required.
Name
|
Fees Earned
Or Paid in Cash
|
Stock Awards
|
Total
|
|||||||||
2009
|
||||||||||||
Anthony
J. Merante
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Carmelo
Foti
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Liberio
Borsellino
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
David
Rabe
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Donald
O’ Toole
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
2008
|
||||||||||||
Anthony
J. Merante
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Carmelo
Foti
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Liberio
Borsellino
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
David
Rabe
|
$ | 0.00 | $ | 0.00 | $ | 0.00 | ||||||
Donald
O’ Toole
|
$ | 0.00 | $ | 0.00 | $ | 0.00 |
On
December 31, 2009, each of our directors held the following number of shares of
our common stock that were received as stock awards during their respective
tenures as directors:
Name
|
Number of Shares
|
|||
Anthony
J. Merante
|
12,739 | |||
Carmelo
Foti
|
12,739 | |||
Liberio
Borsellino
|
11,024 | |||
David
Rabe
|
11,024 | |||
Donald
O’ Toole
|
9,381 |
Employment
Contracts, Termination of Employment and Change in Control
Arrangements
We do not have any employment contracts
or change in control arrangements with our named executive
officer.
26
ITEM
12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED
STOCKHOLDER MATTERS
Securities Authorized for
Issuance Under Equity Compensation
Plans
The 2004
Stock Incentive Plan authorizes the issuance of up to 2,000,000 shares of common
stock, none of which are presently issued and outstanding. The 2004
Stock incentive Plan was approved by our shareholders.
Owners of our Common
Stock
The
following table sets forth, as of March 31, 2010, certain information with
respect to beneficial ownership of our common stock as of March 31,
2010 by:
|
·
|
each
person known to us to be the beneficial owner of more than 5% of our
common stock;
|
|
·
|
each
of our directors;
|
|
·
|
each
of our executive officers; and
|
|
·
|
all
of our executive officers and directors as a
group.
|
Name and Address
|
Title
|
Amount and Nature of
Beneficial Ownership
|
Percent of Class(1)
|
|||||||
Anthony
J. Merante
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Executive
Officer, Director and Beneficial Owner
|
59,854 | (2) | 8.7 | % | |||||
Liberio
Borsellino
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Director
|
11,024 | 1.6 | % | ||||||
Carmelo
L. Foti
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Director
|
12,739 | 1.9 | % | ||||||
David
Rabe
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Director
|
11,024 | 1.6 | % | ||||||
Donald
O’Toole
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Director
|
9,381 | 1.4 | % | ||||||
Ronald
L. Schutté
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Beneficial
Owner
|
125,369 | (3) | 18.3 | % | |||||
Wachovia
Corporation
c/o
2070 Central Park Ave 2Fl
Yonkers,
NY 10710
|
Beneficial
Owner
|
34,680 | 5.1 | % | ||||||
Directors
and Named Executive Officers as a Group (5 persons)
|
104,022 | 15.2 | % |
(1)
|
Beneficial
ownership has been determined in accordance with Rule 13d-3 under the
Securities Exchange Act of 1934. Unless otherwise noted, we
believe that all persons named in the table have sole voting and
investment power with respect to all shares of common stock beneficially
owned by them.
|
27
(2)
|
Does
not include 56,000 shares owned by two individuals Charles Brofman and
James Bruchetta over which Mr. Merante holds voting rights pursuant to a
website development agreement by and between us and the two individuals
dated March 1, 2005.
|
(3)
|
Includes
2,400 shares which Mr. Schutté owns jointly with his
wife.
|
ITEM
13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
INDEPENDENCE
Exchange
of Assets
On March
28, 2006, the Company entered into an exchange agreement with Ronald L. Schutté
its former Chairman and CEO whereby the Company exchanged certain assets in
exchange for a majority of liabilities of the company and a portion of the
secured debt due to Mr. Schutté. The balance of the Company’s
obligation to Mr. Schutté will be extinguished upon the Company raising
additional capital. The Company also entered into an exclusive
licensing agreement with Mr. Schutté and a company owned by Mr. Schutté whereby,
the Company receives one percent of sales as a royalty for use of the Company’s
trademarks. Mr. Schutté also acquired the stock of the Company’s J.M.
Specialty, Inc. subsidiary.
Director
Independence
Our Board
of Directors has determined that each of the current directors is independent
with the exception of Mr. Merante, who serves as our Chairman and
Chief Executive Officer. In making the foregoing determination, with respect to
our non-employee directors, the Board did not identify any matters,
transactions, relationships or arrangements that needed to be considered in
determining independence of these directors.
ITEM
14. PRINCIPAL ACCOUNTANTING FEES AND SERVICES
The
following table shows the fees that we paid or accrued for the audit and other
services provided by Sherb and Co., LLP our present Accountants during 2009 and
2008.
Fiscal 2009
|
Fiscal 2008
|
|||||||
Audit
Fees
|
$ | 9,000 | $ | 15,500 | ||||
Audit-Related
Fees
|
0 | 0 | ||||||
Tax
Fees
|
0 | 0 | ||||||
All
Other Fees
|
0 | 0 | ||||||
Total
|
$ | 9,000 | $ | 15,500 |
Audit
Fees — This category includes the audit of our annual financial statements,
review of financial statements included in our Form 10-Q Quarterly Reports and
services that are normally provided by the independent auditors in connection
with engagements for those fiscal years. This category also includes advice on
audit and accounting matters that arose during, or as a result of, the audit or
the review of interim financial statements.
Audit-Related
Fees — This category consists of assurance and related services by the
independent auditors that are reasonably related to the performance of the audit
or review of our financial statements and are not reported above under “Audit
Fees.” The services for the fees disclosed under this category include
consultation regarding our correspondence with the SEC and other accounting
consulting.
Tax Fees
— This category consists of professional services rendered by our independent
auditors for tax compliance and tax advice. The services for the fees disclosed
under this category include tax return preparation and technical tax
advice.
All Other
Fees — This category consists of fees for other miscellaneous
items.
Our Board
of Directors has adopted a procedure for pre-approval of all fees charged by our
independent auditors. Under the procedure, the Board approves the engagement
letter with respect to audit, tax and review services. Other fees are subject to
pre-approval by the Board, or, in the period between meetings, by a designated
member of Board. Any such approval by the designated member is disclosed to the
entire Board at the next meeting. The audit and tax fees paid to the auditors
with respect to fiscal years 2009 and 2008 were pre-approved by the entire Board
of Directors.
28
PART
IV
ITEM
15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following Exhibits are filed as
part of this report.
Exhibit
Number
|
Description
|
|
2.1
|
Purchase
and Sale Agreement, dated June 2, 1995, by and among the Company,
Greenberg Dessert Associates Limited Partnership, SMG Baking Enterprises,
Inc. and its limited partners. Incorporated by reference to the
Company's Registration Statement on Form SB-2 Registration Number
33-96094.
|
|
2.2
|
Stock
Purchase Agreement, dated as of January 17, 1997, by and between the
Company and Philip Grabow, without exhibits. Incorporated by
reference to Schedule 13-D filed by Philip Grabow on SEC File Number
005-48185.
|
|
3.1
|
Restated
Certificate of Incorporation. Incorporated by reference to the
Company's Registration Statement on Form SB-2 Registration Number
33-96094.
|
|
3.2
|
Amended
and Restated By-laws. Incorporated by reference to the
Company's Registration Statement on Form SB-2 Registration Number
33-96094.
|
|
3.3
|
Amendment
to Certificate of Incorporation. Incorporated by reference to
the Company's Current Report on Form 8-K, dated February 23,
2005.
|
|
3.4
|
Amendment
to Certificate of Incorporation. Incorporated by reference to
the Company's Current Report on Form 8-K, dated March 22,
2006.
|
|
4.1
|
Form
of certificate for shares of Common Stock. Incorporated by
reference to the Company's Registration Statement on Form SB-2
Registration Number 33-96094.
|
|
4.2
|
Form
of Representatives Warrant. Incorporated by reference to the
Company's Registration Statement on Form SB-2 Registration Number
33-96094.
|
|
4.3
|
2004
Stock Incentive Plan. Incorporated by reference to the
Company's Definitive Proxy Statement filed on Form Schedule 14A dated July
15, 2004.
|
|
10.1
|
Modification
agreement between the Company and Ronald L. Schutté dated April 30, 2005.
Incorporated by reference to the Company’s Current Report on Form 8-K
dated May 5, 2005.
|
|
10.2
|
Modification
agreement between the Company and Ronald L. Schutté dated May 20, 2005.
Incorporated by reference to the Company’s Current Report on Form 8-K
dated May 26, 2005.
|
|
10.3
|
Modification
agreement between the Company and Ronald L. Schutté dated June 17, 2005.
Incorporated by reference to the Company’s Current Report on Form 8-K
dated June 23, 2005.
|
|
10.4
|
Modification
agreement between the Company and Ronald L. Schutté dated July 31, 2005.
Incorporated by reference to the Company’s Current Report on Form 8-K
dated August 4, 2005.
|
|
10.5
|
Factoring
Agreement between the Company and Rockland Credit Finance LLC, dated
August 26, 2005. Incorporated by reference to the Company’s Current Report
on Form 8-K dated September 1, 2005.
|
|
10.6
|
Financing
Agreement between the Company and Rockland Credit Finance LLC, dated
August 26, 2005. Incorporated by reference to the Company’s Current Report
on Form 8-K dated September 1, 2005.
|
|
10.7
|
Modification
agreement between the Company and Ronald L. Schutté dated November 30,
2005. Incorporated by reference to the Company’s Current Report on Form
8-K dated December 7,
2005.
|
29
10.8
|
Note
dated January, 31 2006 between the Company and Ronald L. Schutté.
Incorporated by reference to the Company’s Current Report on Form 8-K
dated February 3, 2006.
|
||
10.9
|
Note
dated January, 31 2006 between the Company and Anthony J.
Merante. Incorporated by reference to the Company’s Current
Report on Form 8-K dated February 3, 2006.
|
||
10.10
|
Amendment
to Articles of Incorporation to implement the reverse stock split of the
outstanding shares of the Company’s common stock at a ratio of
1:25. Incorporated by reference to the Company’s Current Report
on Form 8-K dated March 22, 2006.
|
||
10.11
|
Departure
of Director and principal officer Ronald L. Schutté; election of director
and appointment of principal officer Anthony J. Merante. Incorporated by
reference to the Company’s Current Report on Form 8-K dated March 29,
2006.
|
||
10.12
|
Asset
Exchange Agreement, tenant’s lease assignment, and exclusive licensing
agreement with the Company’s former Chairman, Chief Executive Officer, and
President Ronald L. Schutté. Incorporated by reference to the Company’s
Current Report on Form 8-K dated March 31, 2006.
|
||
*21.1
|
Subsidiaries
of Brooklyn Cheesecake & Desserts Company, Inc.
|
||
*31.1
|
Certification
dated April 15, 2010 pursuant to Exchange Act Rule 13a-14(a) or 15d-14(a)
of the Principal Executive Officer and Principal Financial Officer as
adopted pursuant to Section 302 of the Sarbanes Oxley-Act of 2002 by
Anthony J. Merante, President, Chief Executive Officer, and Chief
Financial Officer.
|
||
*32.1
|
|
Certification
dated April 15, 2010 pursuant to 18 U.S.C. Section 1350 as adopted
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 made by Anthony
J. Merante, President, Chief Executive Officer, and Chief Financial
Officer.
|
|
*
|
Filed
Herewith.
|
30
SIGNATURES
Pursuant
to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
BROOKLYN
CHEESECAKE & DESSERTS COMPANY, INC.
|
||
By:
|
/s/Anthony J. Merante
|
|
Chairman, President, Chief Financial Officer and Chief Executive Officer | ||
April 15, 2010 |
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated.
Signatures
|
Title
|
|
/s/
Anthony J. Merante
|
President,
Chief Executive Officer and Chief
Financial
Officer
|
|
Anthony
J. Merante
April
15, 2010
|
||
/s/
Carmelo Foti
|
Director
|
|
Carmelo
Foti
April
15, 2010
|
||
/s/Liborio
Borsellino
|
Director
|
|
Liborio
Borsellino
April
15, 2010
|
||
/s/David
Rabe
|
Director
|
|
David
Rabe
April
15, 2010
|
||
/s/Donald
O’Toole
|
Director
|
|
Donald
O’Toole
April
15, 2010
|
31