Attached files
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EX-21 - Cono Italiano, Inc. | v183257_ex21.htm |
EX-5.1 - Cono Italiano, Inc. | v183257_ex5-1.htm |
EX-23.1 - Cono Italiano, Inc. | v183257_ex23-1.htm |
As
filed with the Securities and Exchange Commission on May 3,
2010
|
Registration
No. 333-164324
|
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1/A
REGISTRATION
STATEMENT
UNDER
THE SECURITIES ACT OF 1933
Amendment
No. 1
Cono
Italiano, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
|
2090
|
84-1665042
|
(State
or other jurisdiction of
|
(Primary
Standard Industrial
|
(I.R.S.
Employer
|
incorporation
or organization)
|
Classification
Code Number)
|
Identification
No.)
|
10
Main Street
Keyport,
NJ 07735
877-330-2666
(Address
and telephone number of principal executive offices and principal place of
business)
Corporate
Creations Network Inc.
8275
South Eastern Avenue, Suite 200-47
Las
Vegas, NV 89123
(800)
672-9110
(Name,
address and telephone number of agent for service)
Copies of
all communications to:
Travis
Gering, Esq.
Wuersch
& Gering LLP
100 Wall
Street, 21st Floor
New York,
New York 10005
Phone:
(212) 509-5050
Fax:
(610) 819-9104
Approximate
date of commencement of proposed sale to the public: From time to time after the
effective date of this Registration Statement.
If any of
the securities being registered on this Form are to be offered on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act of 1933, check
the following box. þ
If this
Form is filed to register additional securities for an offering pursuant to Rule
462(b) 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. o
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. o
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. o
Indicate
by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting
company:
Large
accelerated filer
|
¨
|
Accelerated
filer
|
¨
|
Non-accelerated
filer
|
¨
|
Smaller
reporting company
|
x
|
CALCULATION
OF REGISTRATION FEE
Title of securities to be registered
|
Amount to
be
registered
|
Proposed
maximum
offering
price per
unit (1)(2)
|
Proposed
maximum
aggregate
offering
price
|
Amount of
registration
fee
|
||||||||||||
Common
Stock for sale by selling stockholders
|
26,038,428 | $ | .55 | $ | 14,321,135 | $ | 1,021.10 |
|
(1)
|
Estimated solely for the
purpose of calculating the registration fee in accordance with Rule 457(c)
under the Securities Act on the basis of $1.01 per share as the last price
of the Registrant's common stock on April 29, 2010, as quoted on the
Over-the-Counter-Bulletin-Board quotation
system.
|
|
(2)
|
We will not receive proceeds from
the sale of shares by the selling
stockholders.
|
|
(3)
|
The
registration fee in respect of the securities registered herein was
previously paid in the Registration Statement filed by the Registrant with
the Securities and Exchange Commission on January 14,
2010.
|
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 Securities and Exchange Commission, acting
pursuant to said Section 8(a), may determine.
The
information in this prospectus is not complete and may be changed. The selling
stockholders may not sell these securities until the registration statement is
filed with the Securities and Exchange Commission and becomes effective. This
prospectus is not an offer to sell these securities and is not soliciting an
offer to buy these securities in any state where the sale is
not permitted.
Subject
to completion, dated ___________, 2010
CONO
ITALIANO, INC.
26,038,428
SHARES OF COMMON STOCK
This
prospectus relates to the sale of up to 26,038,428 shares of common stock by
certain shareholders of the Company.
The
resale of these shares is not being underwritten. We will not receive
any of the proceeds from the sale of those shares being sold by the selling
stockholders. The selling stockholders may sell or distribute the
shares, from time to time, depending on market conditions and other factors,
through underwriters, dealers, brokers or other agents, or directly to one or
more purchasers. The selling stockholders will offer their shares at
prevailing market prices or privately negotiated prices. Pursuant to
the registration rights granted by us to the selling stockholders, we are
obligated to register the shares held by the selling stockholders. We are paying
substantially all expenses incidental to the registration of the
shares.
Our
common stock is quoted for trading on the over-the-counter bulletin board under
the symbol CNOZ.OB.
Our
principal executive offices are located at 10 Main Street, Keyport,
NJ, 07735 and our telephone number is 877-330-2666.
Your
investment involves a high degree of risk. See “Risk Factors”
starting on page 3 for certain
information
you should consider before you purchase the shares.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS
APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS
TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The
date of this prospectus is _________, 2010.
ii
TABLE
OF CONTENTS
SUMMARY
OF OUR OFFERING
|
1
|
RISK
FACTORS
|
3
|
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
|
10
|
USE
OF PROCEEDS
|
10
|
DETERMINATION
OF OFFERING PRICE
|
10
|
DILUTION
|
10
|
SELLING
STOCKHOLDERS
|
11
|
PLAN
OF DISTRIBUTION
|
13
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DESCRIPTION
OF SECURITIES TO BE REGISTERED
|
15
|
INTERESTS
OF NAMED EXPERTS AND COUNSEL
|
16
|
BUSINESS
|
17
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DESCRIPTION
OF PROPERTY
|
22
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LEGAL
PROCEEDINGS
|
21
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MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS
|
23
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MANAGEMENT'S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS
|
24
|
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
|
28
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QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
28
|
MANAGEMENT
AND CERTAIN SECURITY HOLDERS
|
29
|
EXECUTIVE
COMPENSATION
|
31
|
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
|
34
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TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL
PERSONS
|
36
|
DIRECTOR
INDEPENDENCE
|
37
|
LEGAL
MATTERS
|
37
|
EXPERTS
|
37
|
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
|
37
|
INDEX
TO CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
You
should rely only on the information contained in this prospectus. We have not
authorized anyone to provide you with information different from the information
contained in this prospectus. We will not make an offer to sell these
securities in any jurisdiction where offers and sales are not permitted. The
information contained in this prospectus is accurate only as of the date of this
prospectus, regardless of when this prospectus is delivered or when any sale of
our common stock occurs.
iii
SUMMARY
OF OUR OFFERING
Prospectus
Summary
The
following summary highlights selected information contained in this prospectus.
This summary does not contain all the information you should consider
before investing in our securities. Before making an investment decision, you
should read the entire prospectus carefully, including the "risk factors"
section, the financial statements and the notes to the financial
statements.
The
Company recently indentified Cono Italiano, Inc., a Delaware corporation (“Cono
Italiano (Delaware)”) as a business venture that would be suitable for future
operations, and acquired all of the issued and outstanding shares of Cono
Italiano (Delaware) in exchange for shares of the Company’s common
stock. The Company now intends to operate Cono Italiano (Delaware) as
a wholly-owned subsidiary.
Cono
Italiano is licensed to distribute a food product called the “Pizza
Cono.” This Pizza Cone is designed to be a drip free, spill free
cone-shaped pizza made of a proprietary dough and filled with freshly selected
ingredients. The Company intends that the Pizza Cone will be
distributed through the fast food market (the fast food market is generally
defined as restaurants selling food and drinks for immediate consumption either
on the premises in designated eating areas, or for consumption
elsewhere). The Pizza Cone will be distributed to quick-service
restaurants, takeaways, mobile and street vendors, and leisure
locations. These establishments include typical fast food chains,
supermarkets, convenience stores, entertainment facilities and sports
arenas.
All of
the 26,038,428 shares offered by this prospectus are being sold by non-affiliate
selling stockholders. The selling stockholders will offer their shares at
prevailing market prices or privately negotiated prices. The
26,038,428 shares were issued as follows: (i) 5,786,428 shares were issued by
the Company pursuant to certain share exchange agreements entered into with the
shareholders of Cono Italiano (Delaware); (ii) 50,000 shares of its common stock
were issued by the Company in consideration of services rendered to the Company;
(iii) 202,000 shares were issued pursuant to subscription agreements entered
into by and between the Company and certain investors; and (iv) 20,000,000
shares of its common stock were issued by the Company upon the conversion of a
Convertible Promissory Note.
[The
Summary of Our Offering Continues on the Following Page]
The
Offering
Total
shares of common stock outstanding
|
81,880,988
as of April 29, 2010.
|
|
Common
stock being registered for sale by stockholders
|
26,038,428
shares, of which:
5,786,428
were issued to stockholders pursuant to share exchange agreements entered
into by and between the Company and Cono Italiano (Delaware);
and
50,000
were issued by the Company to stockholders in consideration of services
rendered to the Company.
202,000
shares were issued pursuant to subscription agreements entered into by and
between the Company and certain investors.
20,000,000
were issued by the Company to the holders of a Convertible Promissory
Note.
All
of the 26,038,428 shares offered by this prospectus are being sold by
non-affiliate selling stockholders. The selling stockholders will offer
their shares at prevailing market prices or privately negotiated
prices.
|
|
Risk
factors
|
The
shares involve a high degree of risk. Investors should carefully consider
the information set forth under “RISK FACTORS” beginning on page
3.
|
|
Use
of proceeds
|
We
will not receive any proceeds from the sale of our common stock offered
through this prospectus by the selling stockholders. All
proceeds from the sale of our common stock sold under this Prospectus will
go solely to the selling
stockholders.
|
[Remainder
of Page Intentionally Blank]
2
RISK
FACTORS
Our
business is subject to numerous risks. We caution you that the following
important factors, among others, could cause our actual results to differ
materially from those expressed in forward-looking statements made by us or on
our behalf in filings with the SEC, press releases, communications with
investors and oral statements. Any or all of our forward-looking statements in
this and in any other public statements we make may turn out to be wrong. They
can be affected by inaccurate assumptions we might make or by known or unknown
risks and uncertainties. Many factors mentioned in the discussion below will be
important in determining future results. Consequently, no forward-looking
statement can be guaranteed. Actual future results may vary materially from
those anticipated in forward-looking statements. We undertake no obligation to
update any forward-looking statements, whether as a result of new information,
future events or otherwise. You are advised, however, to consult any further
disclosure we make in our reports filed with the SEC.
An
investment in our Company involves a substantial risk of loss. You should
carefully consider the risks described below, before you make any investment
decision regarding our Company. Additional risks and uncertainties, including
those generally affecting the market in which we operate or that we currently
deem immaterial, may also impair our business. If any such risks actually
materialize, our business, financial condition and operating results could be
adversely affected. In such case, the trading price of our common stock could
decline.
The
following risk factors are not exhaustive and the risks discussed herein do not
purport to be inclusive of all possible risks but are intended only as examples
of possible investment risks. To facilitate understanding of the various
business risks applicable to our Company and the strategic alliance companies
through which we intend to operate our business during the foreseeable future,
the risk factors discussed herein address our Company together with the risks
applicable to our operations that we intend to conduct with our strategic
alliance partners.
Risks
Related to Our Business
We
are a small company with a limited operating history and limited capital
resources. We may not be able to raise additional capital to grow and
expand our business, which could materially and adversely affect the future of
our business.
We are
a small company with a limited history, limited capital and limited operating
resources. As of December 31, 2009, we had cash and cash equivalents
of approximately $10,658 (audited). While we believe we will be able to meet our
current needs for cash from revenues (as the Company is spending minimal cash,
and is not required to pay its suppliers until after orders are placed and
delivered), we may need additional capital to conduct business, grow and
expand.
The terms
and condition of any which we may receive financing could have a material
adverse affect on our business, results of operations, liquidity and financial
condition. Any investment in our shares is subject to the significant
risk that we will not be able to adequately capitalize our Company to enable us
to continue to develop and implement our business model. Even if we
are able to raise adequate capital, the cost of such capital may be burdensome
and may materially impair our ability to fully implement our business
plan.
Indebtedness
may burden us with high interest payments and highly restrictive terms which
could adversely affect our business.
Should we
borrow money to implement our business plans, we would be burdened with interest
payments. A significant amount of indebtedness could increase the
possibility that we may be unable to generate sufficient revenues to service the
payments on indebtedness, when due, including principal, interest and other
amounts. Agreements made in connection with any borrowings may
contain significant restrictions and covenants that, among other things, could
limit our ability to make investments, pay dividends or make distributions to
our shareholders, repurchase or redeem indebtedness, grant liens on our assets,
enter into transactions with our affiliates, merge or consolidate with other
entities or transfer all or substantially all of our assets, and restrict the
ability of our subsidiaries to pay dividends or to make other payments to
us.
3
Our
ability to comply with any restrictions and covenants related to indebtedness in
the future is uncertain and would be affected by the levels of cash flow from
our operations and events or circumstances beyond our control. Our
failure to comply with any of restrictions and covenants under indebtedness
financing could result in a default under those facilities, and could cause all
of our existing indebtedness to be immediately due and payable. If any of our
indebtedness were to be accelerated, we may not be able to repay our
indebtedness or borrow sufficient funds to refinance it. Even if we were able to
obtain new financing, it may not be on commercially reasonable terms or on terms
that are acceptable to us. If any of our indebtedness is in default
for any reason, our business, financial condition and results of operations
could be materially and adversely affected. In addition, complying with any
restrictions and covenants may also cause us to take actions that are not
favorable to our shareholders and may make it more difficult for us to
successfully execute our business plan and compete against companies that are
not subject to such restrictions and covenants.
We
may have to price our products and services at low margins which could adversely
affect our business and any investment in our company.
Even if
we are able to compete with our competitors, we may have to price our products
and services at low gross margins in order to gain market share. Competitive
pricing pressures together with new or improved competing product introductions
by our competitors may adversely affect the average selling price of our
products and services and force us to make downward adjustments. If
we are unable to offset price decreases by increasing our sales volumes or by
adjusting our product offerings, our revenues and gross margins would
decline. To grow our business we generate revenues as soon as
possible and thereafter continue to develop and introduce new products, services
and improvements. If we cannot maintain reasonable gross margins, our financial
position may be harmed, our stock price may decline and we may
fail.
We
could have substantial difficulty addressing the challenges of rapid
growth.
If demand
for our products increases rapidly, we will need to either increase our internal
production capacity or implement additional outsourcing. Success in developing
and producing a limited volume of products does not guarantee that we will
experience comparable success in operations conducted on a larger scale.
Modifying our procedures and facilities to adjust to increased demand may delay
delivery of our products. Production efficiencies, yields and product
quality may decline as our Company expands over time. If we are unable to meet
the demand of our customers and deliver products quickly and cost effectively,
customers may turn to our competitors. The costs and risks associated with
implementing new technologies, methods and processes, including the purchase of
new equipment, and any resulting delays, inefficiencies and loss of sales, could
harm our results of operations.
We
expect that our anticipated future growth may strain our management,
administrative, operational and financial infrastructure. Failure of
our ability to reasonably manage anticipated growth could materially and
adversely affect our business.
We
anticipate that significant expansion of our present operations will be required
to capitalize on market opportunities. This expansion is expected to place a
significant strain on our management, operational and financial resources. We
expect to add a substantial number of additional key personnel in the future,
including key managerial employees who will have to be fully integrated into our
operations. In order to manage our growth, we will be required to continue to
implement and improve our operational and financial systems, to expand existing
operations, to attract and retain superior management, and to train, manage and
expand our employee base. We cannot assure you that we will be able to
effectively manage the expansion of our operations, that our systems, procedures
or controls will be adequate to support our operations or that our management
will be able to successfully implement our business plan. If we are unable to
manage growth effectively, our business, financial condition and results of
operations could be materially and adversely affected.
Our
success will depend heavily on our management. If we fail to hire and
retain qualified management and other key personnel, the implementation of our
business plan will be materially and adversely affected.
Our
performance is substantially dependent on the continued services and performance
of our executive officers and other key personnel, and our ability to retain and
motivate our officers and key employees. Our future success also depends on our
ability to identify, attract, hire, train, retain and motivate other highly
skilled technical, managerial and marketing personnel. Competition for qualified
personnel is intense, and we cannot assure you that we will be successful in
attracting and retaining such personnel. The failure to attract and retain our
officers or the necessary technical, managerial and marketing personnel could
have a material adverse effect on our business, prospects, financial condition
and results of operations.
4
Our
dependence on management creates risks. The loss of our experienced officers and
key employees could materially and adversely affect our ability to
professionally manage our business.
Our plan
for success is dependent, in large part, on the active participation of our
executive officers. The loss of their services would materially and adversely
affect our business and future success. We do not have key-man life
insurance in effect at the present time. Should any of our key
employees die or become incapacitated, we may not be able to replace them in a
timely or cost effective manner which could materially and adversely harm our
business, financial condition and results of operations.
We
may be sued for infringing on the intellectual property rights of
others.
Third
parties may claim that we are infringing on their intellectual property
rights. We may violate the rights of others without our knowledge. If
a litigant establishes that we are infringing its intellectual property rights,
or that our intellectual property rights are invalid, we may be forced to change
our products, services, or manufacturing processes, and such changes may be
expensive or impractical. We may then be forced to seek royalty or license
agreements from such litigant. If we are unable to agree on acceptable terms, we
may be required to discontinue the sale of key products or halt other aspects of
our operations. In addition, we may also be liable for significant financial
damages for a violation of intellectual property rights. Any adverse
result related to violation of third party intellectual property rights could
materially and adversely harm our business, financial condition and results of
operations. Even if intellectual property claims brought against us
are without merit, they may result in litigation which could be costly and time
consuming, and may divert our management and key personnel from operating our
business.
We
may be exposed to tax audits, which could be expensive for the Company and time
consuming for management.
At the
present time, the Company is not in compliance with its obligation to file
income tax returns, however, the Company intends to remediate this
non-compliance in the immediate future. Our U.S. federal and state
tax returns may be audited by the U.S. Internal Revenue Service (the “IRS”). An
audit may result in the challenge and disallowance of deductions claimed by us.
Further, an audit could lead to an audit of one or more of our investors and
ultimately result in attempts to adjust investors’ tax returns with respect to
items unrelated to us. We are unable to guarantee the
deductibility of any item that we acquire. We will claim all
deductions for federal and state income tax purposes which we reasonably believe
that we are entitled to claim. In particular, we will elect to treat as an
expense for tax purposes all interest, management fees, taxes and insurance. The
IRS may disallow any of the various elements used in calculating our expenses,
thereby reducing federal income tax benefits of an investment. To the extent
that any challenge or disallowance is raised in connection with a tax return
filed by an individual shareholder, the cost of any audit and/or litigation
resulting there from would be born solely by the affected shareholder. In the
event the IRS should disallow any of our deductions, the directors, in their
sole discretion, will decide whether to contest such disallowance. No assurance
can be given that in the event of such a contest the deductions would be
sustained by the courts. If the disallowance of any deductions results in an
underpayment of tax, investors could also be responsible for interest on the
underpayments.
Securities
compliance may be expensive and time consuming for our management.
Compliance
with the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated there under, including, the Sarbanes-Oxley Act of 2002
and related requirements will be costly and will place a significant burden on
our management. At the present time, the Company has only a limited history of
operating with the internal controls and procedures required of a public
company. Previously, the Company’s accounting predecessor, Janex International,
Inc. (the Delaware entity which later changed its name to Cono Italiano, Inc.
and was acquired by the Company) was registered with the U.S. Securities and
Exchange Commission. However, on March 23, 2009, the SEC took action
under Section 12(j) of the Securities Exchange Act of 1934 and revoked that
entity’s registration because it was seriously delinquent in its mandatory
reporting obligations. Should the Company fail to make its filings with the SEC
in a timely manner, its registration could be revoked as well.
We expect
to commence documenting, reviewing, and where appropriate, improving our
internal controls and procedures in anticipation of being subject to
Section 404 of the Sarbanes-Oxley Act of 2002, which will require
management assessments of the effectiveness of our internal control over
financial reporting. Management will be required to conduct an annual evaluation
of our internal control over financial reporting and include a management report
on our internal control over financial reporting, along with a report by our
independent registered public accounting firm addressing these assessments. We
cannot assure you that measures we have taken, or future measures we may take,
will enable us to provide accurate and timely financial reports, particularly if
we are unable to hire additional personnel in our accounting and financial
department, or if we lose personnel in this area. Any failure to maintain an
effective system of internal controls, or any other problems with our financial
systems or internal controls, could result in delays or inaccuracies in
reporting financial information or failure to comply with SEC reporting and
other regulatory requirements. Any of these situations could
adversely affect our business and stock price.
5
Securities
compliance will require the Company to spend considerable funds on legal and
accounting services. In addition, management time that might
otherwise be spent on the development of the Company’s products and training of
employees will need to be spent on compliance matters.
Estimates
must be made in connection with the preparation of our financial reports. If
changes must be made to financial reports, we could be adversely
affected.
We follow
accounting principles generally accepted in the United States in preparing our
financial statements. As part of this work, we must make many estimates and
judgments which affect the value of the assets and liabilities, contingent
assets and liabilities, and revenue and expenses reported in our financial
statements. We believe that our estimates and judgments are reasonable and we
make them in accordance with our accounting policies based on information
available at the time. However, actual results could differ from our estimates
and this could require us to record adjustments to expenses or revenues that
could be adversely material to our financial position and results of
operations.
A
significant percentage of our Common Stock is owned by a single Investor,
Mitchell Brown, our Chief Executive Officer and a member of our Board of
Directors, which may lead to the Company taking actions which conflict with
other shareholders.
Our Chief
Executive Officer, Mr. Mitchell Brown, owns 30,000,000 shares of the Company’s
common stock directly, and has sole voting power and sole power of disposition
over all 6,000,000 shares of the Company’s common owned by Lara Mac
Inc. Thus Mr. Brown controls the voting of approximately 44% of our
issued and outstanding shares. This concentration of ownership and control could
discourage a potential acquirer from making a tender offer or otherwise
attempting to obtain control of us, or could otherwise delay or prevent a change
in control transaction or other business combination, which could in turn have
an adverse effect on the market price of our common shares. As long as this
concentration of ownership persists, it is unlikely that any other holder or
group of holders of our common shares will be able to affect the way we are
managed or the direction of our business. The interests of the control group of
shareholders could conflict with the interests of other shareholders. In
addition, we may adopt amendments to our organizational documents and applicable
state law which have anti-takeover provisions that could delay or prevent a
change in control of our company.
A
majority of our stock is owned or controlled by three of our officers and
directors, and as such, they can exert complete control over all decisions where
a vote of shareholders is required.
51,750,000
shares of our Company’s common stock, equal to 63.2% of our issued and
outstanding shares, is owned or controlled by three individuals: (i) Mr.
Mitchell Brown, our Chief Executive Officer and a member of our Board of
Directors, owns 30,000,000 shares of the Company’s common stock directly, and
has sole voting power and sole power of disposition over all 6,000,000 shares of
the Company’s common owned by Lara Mac Inc.; (ii) Mr. Joseph Masselli, our
President, Chief Operating Officer and a member of our Board of Directors, owns
15,000,000 shares of the Company’s common stock; and (iii) Mr. Steve Savage, our
Secretary and a member of our Board of Directors owns 750,000 shares of the
Company’s common stock. As a result, these three individuals will be
able to control the direction the Company takes.
We
will indemnify our officers and directors which could cause our capital
resources to be used to defend and settle claims or legal actions against
them.
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers for expenses incurred in connection with the defense of
any action relating to their services. Costs, charges and expenses (including
attorneys' fees) incurred by such person in defending a civil or criminal
proceeding shall be paid by the Company in advance upon receipt of an
undertaking to repay all amounts advanced if it is ultimately determined that
the person is not entitled to be indemnified by the Company as authorized by the
bylaws, and upon satisfaction of other conditions required by current or future
legislation. To the extent that a director has been successful in
defense of any proceeding, the Nevada Revised Statutes provide that he shall be
indemnified against reasonable expenses incurred in connection therewith. These
provisions may limit the ability of our stockholders to recover damages against
our directors through legal proceeding or otherwise.
In
addition to the indemnification provided for in the Company’s bylaws, we may
enter into agreements to indemnify our directors and officers. Under these
agreements, we will be obligated to indemnify our directors and officers for
expenses, attorneys’ fees, judgments, fines and settlement amounts incurred by
any director or officer in any action or proceeding arising out of the
director’s or officer’s services as a director or officer of us, any of our
subsidiaries or any other company or enterprise to which the person provides
services at our request. We believe that these provisions and agreements are
necessary to attract and retain qualified individuals to serve as directors and
officers.
If
our food products become contaminated, we may be subject to product liability
claims, product recalls and increased scrutiny by regulators, any of which could
adversely affect our business.
Food products like Pizza Cones are
vulnerable to contamination leading to food-related illness. There is
a risk that our products could become contaminated and then ultimately consumed
by purchasers. Purchasers who suffer, or claim to suffer, as a result
of consuming our products may sue us, and such suits could be expensive and time
consuming for the Company and its management. While Cono Italiano
believes that it has adequate insurance to mitigate the potential risk of losses
for product liability claims, such insurance may prove to be
insufficient.
6
A
decline in the economy may lead to a decline in demand for our
products.
Should
the U.S. economy experience a further decline, demand for our product may not
grow and may even decrease, and accordingly, our ability to generate revenues
may be impaired.
Increased
costs for the raw materials used to produce the Pizza Cone may reduce our
profits.
The
Company is unable to predict the extent to which the raw materials used to
produce the Pizza Cone may increase in the future. Significant cost
increase may substantially reduce our profits.
A
material disruption at our processing plant could seriously harm our financial
condition and operating results.
In the
event that the processing plant at which our products are made was to be damaged
due to natural disaster or disrupted by labor disputes, the Company could
experience difficulties in finding an alternative production
location. Such difficulty and delay could impact the profitability of
the Company.
The
failure of Pino Gelato, Inc. to effectively sell our products could reduce that
portion of our sales and profits attributable to retail sales.
The
Company will be reliant on Pino Gelato, Inc. and its management in the near
future for the sale of its product to retail outlets. Should Pino
Gelato, Inc. fail to accomplish its goals, the Company will be adversely
impacted.
The
Company’s sole focus is on the sale of cones. Should there be a lack
of demand for the cones we sell, we will not be able to rely on alternative
products for revenue.
The
Company’s product is a cone can be marketed as an empty vessel and filled with
fresh ingredients. There are currently over 100 recipes that can be
used in the cones. However, should there be a lack of demand for
cones in general, the Company will not receive revenues from other product
lines.
Risks
Related To Investing In Our Common Shares
You
may have difficulty selling our common shares and may therefore lose all or a
significant portion of your investment.
Our
common shares trades on the OTC Bulletin Board. The stock price may
be volatile. The market price of our common shares may be subject to wide
fluctuations in response to several factors including the
following:
·
|
Our ability to execute our
business plan and significantly grow our
business;
|
·
|
Increased competition from
competitors who offer competing services;
and
|
·
|
Our financial condition and
results of operations.
|
As a
result, our shareholders may find it more difficult to obtain accurate
quotations concerning the market value of the stock. Shareholders also may
experience greater difficulties in attempting to sell our common shares than if
they were listed on a self-regulated national stock exchange.
We
may need to raise additional capital. If we are unable to raise additional
capital, our business may fail.
We may
need to raise additional capital to provide cash for our operations. The fact
that we have generated only $12,600 in sales during the twelve months ended
December 31, 2009 (audited) may deter potential investors from providing
financing. Uncertainty regarding our ability to generate revenues may
make it difficult for us to find financing on acceptable terms. If we
are unable to obtain adequate funding, we may not be able to successfully
develop and market our products and our business may fail. To secure
additional financing, we may need to borrow money or sell more
securities. Under the current circumstances, we may be unable to
secure additional financing on favorable terms, if available at
all.
7
We
do not currently intend to pay dividends on our common stock and, consequently,
the ability to achieve a return on your investment in our common stock will
depend on appreciation in the price of our common stock. If our
common stock does not appreciate in value, investors could suffer losses in
their investment in our common stock.
We do not
expect to pay cash dividends on our common stock. Any future dividend payments
are within the absolute discretion of our Board of Directors and will depend on,
among other things, our results of operations, working capital requirements,
capital expenditure requirements, financial condition, contractual restrictions,
business opportunities, anticipated cash needs, provisions of applicable law and
other factors that our Board of Directors may deem relevant. We may not generate
sufficient cash from operations in the future to pay dividends on our common
stock. As a result, the success of your investment in our common
stock will depend on future appreciation in its value. The price of
our common stock may not appreciate in value or even maintain the price at which
you purchased our shares. If our common stock does not appreciate in
value, investors could suffer losses in their investment in our common
stock.
Because
the market for our common shares is limited, investors may not be able to resell
their common shares. Investors should therefore assume that any
investment in our company will be illiquid for the foreseeable
future.
Our
common shares trade on the Over-the-Counter-Bulletin-Board quotation system.
Trading in our shares has historically been subject to very low volumes and wide
disparity in pricing. Investors may not be able to sell or trade their common
shares because of thin volume and volatile pricing with the consequence that
they may have to hold your shares for an indefinite period of time.
There
are legal restrictions on the resale of the common shares offered, including
penny stock regulations under the U.S. Federal Securities Laws. These
restrictions may adversely affect your ability to resell your
stock.
We
anticipate that our common stock will continue to be subject to the penny stock
rules under the Securities Exchange Act of 1934, as amended. These rules
regulate broker/dealer practices for transactions in "penny stocks." Penny
stocks are generally equity securities with a price of less than $5.00. The
penny stock rules require broker/dealers to deliver a standardized risk
disclosure document that provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker/dealer must also
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker/dealer and its salesperson and monthly account
statements showing the market value of each penny stock held in the customer's
account. The bid and offer quotations and the broker/dealer and salesperson
compensation information must be given to the customer orally or in writing
prior to completing the transaction and must be given to the customer in writing
before or with the customer's confirmation. In addition, the penny stock rules
require that prior to a transaction, the broker and/or dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written agreement to the transaction.
The transaction costs associated with penny stocks are high, reducing the number
of broker-dealers who may be willing to engage in the trading of our shares.
These additional penny stock disclosure requirements are burdensome and may
reduce all of the trading activity in the market for our common stock. As long
as the common stock is subject to the penny stock rules, our shareholders may
find it more difficult to sell their shares.
Our
future sales of our common shares could cause our stock price to
decline.
There is
no contractual restriction on our ability to issue additional shares. We cannot
predict the effect, if any, that market sales of our common shares or the
availability of shares for sale will have on the market price prevailing from
time to time. Sales by us of our common shares in the public market, or the
perception that our sales may occur, could cause the trading price of our stock
to decrease or to be lower than it might be in the absence of those sales or
perceptions.
You
may experience dilution of your ownership interests due to the future issuance
of additional shares of our common stock which could be materially adverse to
the value of our common stock.
We
currently have 81,880,988 shares of our common stock issued and
outstanding. We are authorized to issue up to 100,000,000 shares of
common stock. Our Board of Directors may authorize the issuance of additional
common or preferred shares under applicable state law without shareholder
approval. We may also issue additional shares of our common stock or
other securities that are convertible into or exercisable for common stock in
connection with the hiring of personnel, future acquisitions, future private
placements of our securities for capital raising purposes or for other business
purposes. Future sales of substantial amounts of our common stock, or the
perception that sales could occur, could have a material adverse effect on the
price of our common stock. If we need to raise additional capital to
expand or continue operations, it may be necessary for us to issue additional
equity or convertible debt securities. If we issue equity or
convertible debt securities, the net tangible book value per share may decrease,
the percentage ownership of our current stockholders may be diluted and such
equity securities may have rights, preferences or privileges senior or more
advantageous to our common stockholders.
8
Grants
of stock options and other rights to our employees may dilute your stock
ownership.
We plan
to attract and retain employees in part by offering stock options and other
purchase rights for a significant number of common shares. We have granted stock
options to certain officers and directors. The issuance of common
shares pursuant to these options, and options issued in the future, will have
the effect of reducing the percentage of ownership in us of our then existing
shareholders.
The
market price of our common stock may be volatile which could adversely affect
the value of your investment in our common stock.
The
trading price of our common stock may be highly volatile and could be subject to
wide fluctuations in response to various factors. Some of the factors that may
cause the market price of our common stock to fluctuate include:
|
·
|
fluctuations in our quarterly
financial results or the quarterly financial results of companies
perceived to be similar to
us;
|
|
·
|
changes in estimates of our
financial results or recommendations by securities
analysts;
|
|
·
|
failure of any of our products to
achieve or maintain market
acceptance;
|
|
·
|
changes in market valuations
of similar companies;
|
|
·
|
significant products, contracts,
acquisitions or strategic alliances of our
competitors;
|
|
·
|
Success of competing products or
services;
|
|
·
|
changes in our capital
structure, such as future issuances of securities or the incurrence of
additional debt;
|
|
·
|
regulatory
developments;
|
|
·
|
litigation involving our company,
our general industry or
both;
|
|
·
|
additions or departures of key
personnel;
|
|
·
|
investors’ general perception of
us; and
|
|
·
|
changes in general economic,
industry and market
conditions.
|
Absence
of equity research reports or unfavorable reports could adversely affect the
price of our stock.
The
trading market for our common shares will rely in part on the research and
reports that equity research analysts publish about us and the industry segments
in which we operate. The public price of our publicly traded common shares could
decline if one or more securities analysts downgrades investment in our common
shares or if those analysts issue other unfavorable commentary about our
industry or other major participants in our industry, or if they decline to
publish reports about us. At the current time there are no analysts
providing coverage of the Company’s securities.
9
CAUTIONARY
NOTE REGARDING FORWARD-LOOKING STATEMENTS
Statements
in this prospectus may be “forward-looking statements.” Forward-looking
statements include, but are not limited to, statements that express our
intentions, beliefs, expectations, strategies, predictions or any other
statements relating to our future activities or other future events or
conditions. These statements are based on current expectations, estimates and
projections about our business based, in part, on assumptions made by
management. These statements are not guarantees of future performance and
involve risks, uncertainties and assumptions that are difficult to predict.
Therefore, actual outcomes and results may, and are likely to, differ materially
from what is expressed or forecasted in the forward-looking statements due to
numerous factors, including those described above and those risks discussed from
time to time in this prospectus, including the risks described under “Risk
Factors,” “Management’s Discussion and Analysis” and “Our
Business.”
There are
important factors that could cause our actual results to differ materially from
those in the forward-looking statements. These factors, include, without
limitation, the following: our ability to develop our technology platform and
our products; our ability to protect our intellectual property; the risk that we
will not be able to develop our technology platform and products in the current
projected timeframe; the risk that our products will not achieve performance
standards in clinical trials; the risk that the clinical trial process will take
longer than projected; the risk that our products will not receive regulatory
approval; the risk that the regulatory review process will take longer than
projected; the risk that we will not be unsuccessful in implementing our
strategic, operating and personnel initiatives; the risk that we will not be
able to commercialize our products; any of which could impact sales, costs and
expenses and/or planned strategies. Additional information regarding factors
that could cause results to differ can be found in this prospectus and in our
other filings with the Securities and Exchange Commission.
USE
OF PROCEEDS
We will
not receive any proceeds from the sale of our common stock offered through this
prospectus by the selling stockholders.
DETERMINATION
OF OFFERING PRICE
The
selling stockholders will sell their shares at prevailing market prices on the
over the counter bulletin board or privately negotiated prices.
Consequently, we cannot determine what the actual value of our common stock will
be either now or at the time of sale. We will not receive proceeds
from the sale of shares from the selling stockholders.
DILUTION
The
common stock to be sold by the selling stockholders is common stock that is
currently issued and outstanding. Accordingly, there will be no dilution to our
existing shareholders with respect to the shares offered for sale by the selling
stockholders.
10
SELLING
STOCKHOLDERS
The
common stock which is the subject of this registration statement is being
registered to permit public secondary trading of the shares, and the selling
stockholders, or their pledgees, donees, transferees or other successors-in
interest, may offer all or any portion of the shares for resale from time to
time. To the best of our knowledge, none of the selling stockholders
is a registered broker-dealer or an affiliate of a registered
broker-dealer.
The
table below lists the selling stockholders and other information regarding the
beneficial ownership of the common stock by each of the selling stockholders.
The second column lists the number of common stock beneficially owned by each
selling stockholder, based on its ownership of the common stock, as of the date
of this prospectus. The third column lists the common stock being offered by
this prospectus by the selling stockholders. The fourth and fifth columns assume
the sale of all of the shares offered by the selling stockholders pursuant to
this prospectus.
The table
and the other information contained under the captions “Selling Stockholders”
and “Plan of Distribution” has been prepared based upon information furnished to
us by or on behalf of the selling stockholders.
The named
party beneficially owns and has sole voting and investment power over all shares
or rights to these shares.
Name of Selling
Shareholder
|
Shares Owned
Prior to this
Offering
|
Total Number of
Shares
to be offered for
Selling
Stockholders
Account
|
Total Shares
Owned Upon
Completion of
this
Offering
|
Percent Owned
Upon
Completion of
this Offering
|
||||||||||||
(1)
Akat Global
|
4,500,000 | 4,500,000 | 0 | 0 | % | |||||||||||
(2)
Kurt Ancey
|
14,285 | 14,285 | 0 | 0 | % | |||||||||||
(3)
Kevin Barry
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(4)
Wendy Bartels
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(5)
Basik Funding
|
2,150,000 | 2,150,000 | 0 | 0 | % | |||||||||||
(6)
Eugene Brown
|
500,000 | 500,000 | 0 | 0 | % | |||||||||||
(7)
Carlo Caruso
|
57,143 | 57,143 | 0 | 0 | % | |||||||||||
(8)
William Coe
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(9)
Thomas Costello
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(10)
David Davidson
|
140,000 | 140,000 | 0 | 0 | % | |||||||||||
(11)
Sal Fiorellino
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(12)
Anthony Fontana
|
40,000 | 40,000 | 0 | 0 | % | |||||||||||
(13)
Charles Hart
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(14)
Homestead Funding Group
|
150,000 | 150,000 | 0 | 0 | % | |||||||||||
(15)
Rick Israel
|
150,000 | 150,000 | 0 | 0 | % | |||||||||||
(16)
Dan Kennedy
|
40,000 | 40,000 | 0 | 0 | % | |||||||||||
(17)
Leigh J. Kremer
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(18)
Chuck Luciano
|
400,000 | 400,000 | 0 | 0 | % | |||||||||||
(19)
Joan Masselli
|
500,000 | 500,000 | 0 | 0 | % | |||||||||||
(20)
William Michalski
|
50,000 | 50,000 | 0 | 0 | % | |||||||||||
(21)
Ocean Consultants
|
200,000 | 200,000 | 0 | 0 | % | |||||||||||
(22)
Georgia Pannucci
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(23)
John Jay Perrone
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(24)
Karen Saracen
|
6,000 | 6,000 | 0 | 0 | % | |||||||||||
(25)
Debra Smith
|
25,000 | 25,000 | 0 | 0 | % | |||||||||||
(26)
Lee Smith
|
4,000 | 4,000 | 0 | 0 | % | |||||||||||
(27)
Spencer Taustine
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(28)
Spencer Taustine & Jessica Kiston
|
150,000 | 150,000 | 0 | 0 | % | |||||||||||
(29)
Temmco Inc.
|
2,190,000 | 2,190,000 | 0 | 0 | % | |||||||||||
(30)
Steve Waldie
|
100,000 | 100,000 | 0 | 0 | % | |||||||||||
(31)
Claude Pellerin
|
10,000 | 10,000 | 0 | 0 | % | |||||||||||
(32)
John Green
|
10,000 | 10,000 | 0 | 0 | % | |||||||||||
(33)
John Mattone
|
12,000 | 12,000 | 0 | 0 | % | |||||||||||
(34)
Victor Del Monico
|
40,000 | 40,000 | 0 | 0 | % | |||||||||||
(35)
Lyn M. Klaybor
|
20,000 | 20,000 | 0 | 0 | % | |||||||||||
(36)
Mike Molloy
|
40,000 | 40,000 | 0 | 0 | % | |||||||||||
(37)
Dawn Kaplan
|
140,000 | 40,000 | 100,000 | .12 | % | |||||||||||
(38)
JTV Management & Consulting LLC
|
1,500,000 | 1,500,000 | 0 | 0 | % | |||||||||||
(39)
Paradise Holdings Ltd.
|
2,000,000 | 2,000,000 | 0 | 0 | % | |||||||||||
(40)
Horizon Capital LLC
|
2,250,000 | 2,250,000 | 0 | 0 | % | |||||||||||
(41)
A Muse Productions LLC
|
2,250,000 | 2,250,000 | 0 | 0 | % | |||||||||||
(42)
Barbara Morelli
|
500,000 | 500,000 | 0 | 0 | % | |||||||||||
(43)
Resultz Media Group Corp.
|
2,500,000 | 2,500,000 | 0 | 0 | % | |||||||||||
(44)
Oceanic Consulting LLC
|
2,500,000 | 2,500,000 | 0 | 0 | % |
11
None of
the selling stockholders has, since the incorporation of the Company or our
wholly owned subsidiary Cono Italiano (Delaware), held any position, office or
material relationship with us or with any of our predecessors or
affiliates.
(1)
Antonio Katz is the natural person having sole voting and investment
control over the securities held by AKAT Global LLC.
(5)
Frank Hemberger is the natural person having sole voting and investment
control over the securities held by Basik Funding Inc.
(13)
Ramona Fantini is the natural person having sole voting and investment
control over the securities held by Pino Gelato.
(14)
Tom Gross is the natural person having sole voting and investment control
over the securities held by Homestead Funding Group Inc.
(21)
Sheri Staffenberg is the natural person having sole voting and investment
control over the securities held by Ocean Consultants.
(29)
Nadine Albine is the natural person having sole voting and investment
control over the securities held by Temmco Inc.
(38)
Tina Vasquez is the natural person having sole voting and investment
control over the securities held by JTV Management.
(39)
Puai Wichman is the natural person having sole voting and investment
control over the securities held by Paradise Holdings.
(40)
Jeff Weinfurter is the natural person having sole voting and investment
control over the securities held by Horizon Capital LLC.
(41)
Anna Abbott is the natural person having sole voting and investment control
over the securities held by A Muse Productions LLC.
(43)
Kevin Gray is the natural person having sole voting and investment control
over the securities held by Resultz Media Group Corp.
(44)
Rich Roon is the natural person having sole voting and investment control
over the securities held by Oceanic Consulting LLC.
[Remainder
of Page Intentionally Blank]
12
PLAN
OF DISTRIBUTION
The
selling stockholders and any of their pledgees, donees, assignees and
successors-in-interest may, from time to time, sell any or all of their shares
of common stock being offered under this prospectus on any stock exchange,
market or trading facility on which shares of our common stock are traded or in
private transactions. These sales may be at fixed or negotiated
prices. The selling stockholders may use any one or more of the
following methods when disposing of shares:
|
·
|
ordinary brokerage transactions
and transactions in which the broker-dealer solicits
purchasers;
|
|
·
|
block trades in which the
broker-dealer will attempt to sell the shares as agent but may position
and resell a portion of the block as principal to facilitate the
transaction;
|
|
·
|
purchases by a broker-dealer as
principal and resale’s by the broker-dealer for its
account;
|
|
·
|
an exchange distribution in
accordance with the rules of the applicable
exchange;
|
|
·
|
privately negotiated
transactions;
|
|
·
|
broker-dealers may agree with the
selling stockholders to sell a specified number of such shares at a
stipulated price per share;
|
|
·
|
a combination of any of these
methods of sale; and
|
|
·
|
any other method permitted
pursuant to applicable law.
|
The
shares may also be sold under Rule 144 under the Securities Act of 1933, as
amended (“Securities Act”), if available, rather than under this
prospectus. The selling stockholders have the sole and absolute
discretion not to accept any purchase offer or make any sale of shares if they
deem the purchase price to be unsatisfactory at any particular
time.
The
selling stockholders may pledge their shares to their brokers under the margin
provisions of customer agreements. If a selling security holder
defaults on a margin loan, the broker may, from time to time, offer and sell the
pledged shares at any price.
Broker-dealers
engaged by the selling stockholders may arrange for other broker-dealers to
participate in sales. Broker-dealers may receive commissions or discounts from
the selling stockholders (or, if any broker-dealer acts as agent for the
purchaser of shares, from the purchaser) in amounts to be negotiated, which
commissions as to a particular broker or dealer may be in excess of customary
commissions to the extent permitted by applicable law.
If sales
of shares offered under this prospectus are made to broker-dealers as
principals, we would be required to file a post-effective amendment to the
registration statement of which this prospectus is a part. In the
post-effective amendment, we would be required to disclose the names of any
participating broker-dealers and the compensation arrangements relating to such
sales.
The
selling stockholders and any broker-dealers or agents that are involved in
selling the shares offered under this prospectus may be deemed to be
“underwriters” within the meaning of the Securities Act in connection with these
sales. Commissions received by these broker-dealers or agents and any
profit on the resale of the shares purchased by them may be deemed to be
underwriting commissions or discounts under the Securities Act. Any
broker-dealers or agents that are deemed to be underwriters may not sell shares
offered under this prospectus unless and until we set forth the names of the
underwriters and the material details of their underwriting arrangements in a
supplement to this prospectus or, if required, in a replacement prospectus
included in a post-effective amendment to the registration statement of which
this prospectus is a part.
The
selling stockholders and any other persons participating in the sale or
distribution of the shares offered under this prospectus will be subject to
applicable provisions of the Exchange Act, and the rules and regulations under
that act, including Regulation M. These provisions may restrict
activities of, and limit the timing of purchases and sales of any of the shares
by, the selling stockholders or any other person. Furthermore, under
Regulation M, persons engaged in a distribution of securities are prohibited
from simultaneously engaging in market making and other activities with respect
to those securities for a specified period of time prior to the commencement of
such distributions, subject to specified exceptions or
exemptions. All of these limitations may affect the marketability of
the shares.
13
If any of
the shares of common stock offered for sale pursuant to this prospectus are
transferred other than pursuant to a sale under this prospectus, then subsequent
holders could not use this prospectus until a post-effective amendment or
prospectus supplement is filed, naming such holders. We offer no
assurance as to whether any of the selling stockholders will sell all or any
portion of the shares offered under this prospectus.
We have
agreed to pay all fees and expenses we incur incident to the registration of the
shares being offered under this prospectus. However, each selling
security holder and purchaser is responsible for paying any discounts,
commissions and similar selling expenses they incur.
We and
the selling stockholders have agreed to indemnify one another against certain
losses, damages and liabilities arising in connection with this prospectus,
including liabilities under the Securities Act.
Penny
Stock
We
anticipate that we will initially be a “penny stock.” The Commission
has adopted Rule 15g-9 which establishes the definition of a "penny stock," for
the purposes relevant to us, as any equity security that has a market price of
less than $5.00 per share or with an exercise price of less than $5.00 per
share, subject to certain exceptions. 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
|
|
·
|
the broker or dealer receive from
the investor a written agreement to the transaction, setting forth the
identity and quantity of the penny stock to be
purchased.
|
In order
to approve a person's account for transactions in penny stocks, the broker or
dealer must
|
·
|
obtain financial information and
investment experience objectives of the person;
and
|
|
·
|
make a reasonable determination
that the transactions in penny stocks are suitable for that person and the
person has sufficient knowledge and experience in financial matters to be
capable of evaluating the risks of transactions in penny
stocks.
|
The
broker or dealer must also deliver, prior to any transaction in a penny stock, a
disclosure schedule prescribed by the Commission relating to the penny stock
market, which, in highlight form:
|
·
|
sets forth the basis on which the
broker or dealer made the suitability determination;
and
|
|
·
|
that the broker or dealer
received a signed, written agreement from the investor prior to the
transaction.
|
Disclosure
also must be made about the risks of investing in penny stocks in both public
offerings and in secondary trading and about 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.
14
DESCRIPTION
OF SECURITIES TO BE REGISTERED
Our
authorized capital stock consists of 100,000,000 shares of common stock at a par
value of $.001 per share. As of the date of this prospectus, there
were 81,880,988 shares of our common stock issued and outstanding.
The
holders of our common stock:
|
·
|
have equal ratable rights to
dividends from funds legally available if and when declared by our board
of directors;
|
|
·
|
do not have cumulative voting
rights;
|
|
·
|
are entitled to share ratably in
all of our assets available for distribution to holders of common stock
upon liquidation, dissolution or winding up of our affairs;
and
|
|
·
|
do not have preemptive,
subscription or conversion rights and there are no redemption or sinking
fund provisions or rights.
|
All
shares of common stock now outstanding are fully paid for and non-assessable.
The full scope of the terms, rights and liabilities holders of our securities
possess are set forth in our Company's Articles of Incorporation, Bylaws and the
applicable statutes of the state of Nevada.
Dividend
Policy
As of the
date of this prospectus, we have not paid any cash dividends to stockholders.
The declaration of any future cash dividend will be at the discretion of our
board of directors and will depend upon our earnings, if any, our capital
requirements and financial position, our general economic conditions, and other
pertinent conditions. It is our present intention not to pay any cash dividends
in the foreseeable future, but rather to reinvest earnings, if any, in our
business operations.
Limitation
on the liabilities of Directors
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers for expenses incurred in connection with the defense of
any action relating to their services. Costs, charges and expenses (including
attorneys' fees) incurred by such person in defending a civil or criminal
proceeding shall be paid by the Company in advance upon receipt of an
undertaking to repay all amounts advanced if it is ultimately determined that
the person is not entitled to be indemnified by the Company as authorized by the
bylaws, and upon satisfaction of other conditions required by current or future
legislation. To the extent that a director has been successful in
defense of any proceeding, the Nevada Revised Statutes provide that he shall be
indemnified against reasonable expenses incurred in connection therewith. These
provisions may limit the ability of our stockholders to recover damages against
our directors through legal proceeding or otherwise.
Nevada
Anti-Takeover Laws
Nevada
Revised Statutes sections 78.378 to 78.379 provide state regulation over the
acquisition of a controlling interest in certain Nevada corporations unless the
articles of incorporation or bylaws of the corporation provide that the
provisions of these sections do not apply. Our articles of incorporation and
bylaws do not state that these provisions do not apply. The statute creates a
number of restrictions on the ability of a person or entity to acquire control
of a Nevada company by setting down certain rules of conduct and voting
restrictions in any acquisition attempt, among other things. The statute is
limited to corporations that are organized in the state of Nevada and that have
200 or more stockholders, at least 100 of whom are stockholders of record and
residents of the State of Nevada; and does business in the State of Nevada
directly or through an affiliated corporation. Because of these conditions, the
statute currently does not apply to our company.
15
INTERESTS
OF NAMED EXPERTS AND COUNSEL
No expert
or counsel acting for the Company or its wholly-owned subsidiary Cono Italiano
(Delaware) or any of the selling security holders named herein was employed for
such purpose on a contingent basis, or at the time of such preparation,
certification or opinion or at any time thereafter, through the date of
effectiveness of the registration statement had, or is to receive in connection
with the offering, a substantial interest, direct or indirect, in the Company or
Cono Italiano (Delaware) or any of its parents, subsidiaries or affiliates, or
was connected with the Company or Cono Italiano (Delaware) or any of its
parents, subsidiaries or affiliates as a promoter, underwriter, voting trustee,
director, officer, or employee. Neither the Company nor Cono Italiano
(Delaware) has engaged any experts, other than the independent accounting firm
who audited the consolidated financial statements, to prepare or certify any
part of this prospectus or any other report or valuation for use in connection
with the registration statement of which this prospectus is a part.
[Remainder
of Page Intentionally Blank]
16
BUSINESS
Introduction
The
Company was incorporated in the State of Nevada on September 9, 2004 as Arch
Management Services Inc. A change of control of the Company occurred on June 5,
2006 and the Company changed its name from “Arch Management Services Inc.” to
“Tiger Ethanol International Inc.” on November 24, 2006. On February
11, 2008 the Company changed its name to “Tiger Renewable Energy Ltd.” Another
change of control of the Company occurred on June 4, 2009. On August
10, 2009, the Company changed its name to “Cono Italiano, Inc.” and its symbol
changed to CNOZ.
On
August 10, 2009, the Company conducted a one for sixty reverse stock
split. As of such date, all of the outstanding shares of common
stock of the Company have been consolidated such that stockholders of
record hold one share of post-split common stock for every sixty shares owned
prior to the reverse stock split. All fractional shares resulting
from the reverse stock split have been rounded up to the next whole
share.
The
Company identified Cono Italiano, Inc. a Delaware corporation (“Cono Italiano
(Delaware)”), as a business venture that would be suitable for the Company’s
future operations. On November 12, 2009, the Company entered into
agreement with the shareholders of Cono Italiano (Delaware) pursuant to which
the Company acquired all of the issued and outstanding shares of the Cono
Italiano (Delaware) and we will now operate Cono Italiano (Delaware) as a
wholly-owned subsidiary of our Company.
Our
principal business address is 10 Main Street, Keyport, NJ 07735 and our
telephone number is 877-330-2666.
Our
Business
The
Company was previously party to a joint venture named Xinjiang Yajia Distillate
Company Limited (the “Venture”) to produce ethanol in the People’s Republic of
China. The Company’s board of directors determined that it was in our best
interest to initiate a withdrawal from the ethanol business as of January 31,
2009 and assess alternative businesses.
On June
4, 2009, an Affiliate Stock Purchase Agreement (the “Stock Purchase Agreement”)
was entered into by and between Gallant Energy International Inc. (“Gallant”),
the owner of 5,000,000 shares of the Company’s common stock (prior to the
Company’s one for sixty reverse stock split) and Lara Mac Inc. (“Lara
Mac”), an entity controlled by Mitchell Brown (who is now the Chief
Executive Officer of the Company and a member of the Company’s Board of
Directors). Pursuant to the Stock Purchase Agreement, Gallant sold all of its
5,000,000 shares of the Company’s common stock to Lara Mac. The
Gallant transaction with Lara Mac resulted in a change in control of the largest
voting block of the Company effective as of June 4, 2009.
Under the
terms of the Stock Purchase Agreement, the Board appointed five individuals to
fill vacancies on the Board. These new directors commenced their service on June
19, 2009. The Board also appointed four new officers of the
Company.
On
June 22, 2009, Lara Mac entered into a Management Services Agreement with the
Company (the “Management Services Agreement”). Pursuant to the
Management Services Agreement, Lara Mac would render to the Company
consulting and other advisory services in relation to developing strategic plans
for inception of operations, corporate management, the operations of the
Company, strategic planning, domestic and international marketing and sales,
financial advice, including, without limitation, advisory and consulting
services in relation to the selection and retention of candidates for senior
management of the Company and its subsidiaries, prospective strategic alliance
partners, preparing acquisition growth plans, identifying prospective merger and
acquisition candidates, developing value propositions for the Company and
acquisition candidates, analyzing financial implications of potential
transactions, advising on negotiations regarding terms and conditions of
transactions, outlining and managing due diligence issues and due diligence
processes, introductions to prospective customers, selection of investment
bankers or other financial advisors or consultants, and advice with respect to
the capital structure of the Company, equity participation plans, employee
benefit plans and other incentive arrangements for certain key executives of the
Company (collectively, the “Services”). In exchange for the Services,
Lara Mac received 9,553,377 shares of the Company’s common stock (these
9,553,377 shares were issued prior to the Company’s August 10, 2009 one for
sixty reverse stock split, and accordingly, Lara Mac’s ownership of 14,553,377
shares was reduced to 242,557 shares pursuant to such reverse stock
split). The parties to the Management Services Agreement also agreed
that Lara Mac may render other services beyond the scope of activities which the
parties contemplate as part of the Services, as to which Lara Mac shall be
entitled to separate compensation that shall be negotiated in good faith by the
parties on a case-by-case basis. The Company identified Cono
Italiano, Inc. a Delaware corporation (“Cono Italiano (Delaware)”), as a
business venture that would be suitable for the Company’s future
operations. On November 12, 2009, the Company entered into agreement
with the shareholders of Cono Italiano (Delaware) pursuant to which the Company
acquired all of the issued and outstanding shares of the Cono Italiano
(Delaware) and we will now operate Cono Italiano (Delaware) as a wholly-owned
subsidiary of our Company. As an inducement to the shareholders of
Cono Italiano (Delaware) to enter into the exchange described above, Lara Mac
agreed to the cancellation of these 242,557 shares of the Company’s common stock
and Termination of the Management Services Agreement.
17
On August 10, 2009, the Company
conducted a one for sixty reverse stock split. As of such date, all of
the outstanding shares of common stock of the Company have been consolidated
such that stockholders of record hold one share of post-split common stock
for every sixty shares owned prior to the reverse stock split. All fractional
shares resulting from the reverse stock split have been rounded up to the next
whole share.
Cono
Italiano (Delaware)
In
February 2006 Cono Italiano LLC, a New Jersey limited liability company, entered
into an agreement with Kono Italia S.R. L., an Italian company doing business as
“Pizza Hands.” Kono Italia S.R.L owns the designs, recipes and
technology for the “Pizza Cono,” a food product for quick service restaurants
consisting of a cone shaped pizza dough. Cono Italiano (Delaware), as
the successor to Cono Italiano, LLC, holds a distribution agreement for North
America from Kono Pizza in Italy. This distribution agreement grants
the licensee an exclusive license to exploit this product in the United States,
Canada and Mexico for a twenty-five (25) year term. The product is
patented in the United States and Europe as is the cone production machine which
is proprietary. In 2007 Cono Italiano, LLC introduced the product
into the North American market by building an alliance with Center Plate, a food
service provider to stadiums and arenas throughout North America. The
Center Plate agreement was subsequently cancelled. At the present
time, the Company has no contractual agreements with Center
Plate.
Cono
Italiano (Delaware) was formed through the merger of Cono Italiano LLC, a New
Jersey limited liability company, and Janex International, Inc., a Delaware
corporation, on January 14, 2008. The combined entity changed its
name to “Cono Italiano, Inc.” on that date.
Cono
Italiano is licensed to distribute a food product called the “Pizza
Cono.” This Pizza Cone is designed to be a drip free, spill free
cone-shaped pizza made of a proprietary dough and filled with freshly selected
ingredients. The Company intends that the Pizza Cone will be
distributed through the fast food market (the fast food market is generally
defined as restaurants selling food and drinks for immediate consumption either
on the premises in designated eating areas, or for consumption
elsewhere). The Pizza Cone will be distributed to quick-service
restaurants, takeaways, mobile and street vendors, and leisure
locations. These establishments include typical fast food chains,
supermarkets, convenience stores, entertainment facilities and sports
arenas.
On
July 9, 2008, Cono Italiano (Delaware) entered into a distribution and licensing
agreement (the “Distribution Agreement”) with Pino Gelato, Inc., a South
Carolina corporation presently involved in retail sales of Italian gelato and
sales of franchises for the sale of gelato. Under the terms of the
Distribution Agreement, we have granted to Pino Gelato, Inc. the rights in the
United States, Canada and Mexico to sell and distribute our products through
immediate consumption retail channels, such as a restaurant, snack bar, kiosk,
or other similar setting. The initial term of the Distribution
Agreement is for ten (10) years and shall be automatically renewed for
additional ten (10) year terms if neither party is in material breach of the
Distribution Agreement at the expiration date of each ten (10) year
term. The Distribution Agreement includes the right to market Pizza
Cones and establish Pizza Cone and Pino Gelato Cafes. Cono Italiano
(Delaware) has received $100,000 in cash in consideration for such Distribution
Agreement. There have been five retail channels established through
Pino Gelato to date and Cono Italiano (Delaware) products have been sold to
various sub-distributors throughout the country for distribution. As
an inducement to buy the distribution and franchise rights by Pino Gelato, Inc.
the Company agreed to issue 375,000 shares of common stock to Pino
Gelato. Common stock amounting to 250,000 shares were issued to Pino
Gelato, with the remaining 125,000 shares to be issued.
Cono
Italiano (Delaware) has reserved distribution rights regarding the sale of
products on a wholesale basis to grocery stores, convenience stores, and other
similar establishments which do not resell the products to customers in a
restaurant, snack bar, kiosk, or other similar setting. By way of
example, Cono Italiano (Delaware) has retained the rights to sell the products
on a wholesale basis to big box stores, convenience stores, and other chains
that sell “frozen” packaged products.
As part
of Cono Italiano (Delaware)’s marketing strategy, Cono Italiano (Delaware) paid
$8,500 in September of 2008 to develop retail packaging and conducted a photo
shoot for the product in October of 2008 at a cost of $1,500.
There
have been five licenses sold to date and there are currently five such cafes in
operation, located in South Carolina, Tennessee, Pittsburgh and
Ohio. These cafes are presently selling the Pizza Cone
product.
Since
March of 2009, Cono Italiano (Delaware)’s marketing and distribution efforts
have also included giving free samples of its product away at the Indianapolis
Speedway, presenting the product to potential distributors at a trade show, and
selling the product at an Italian festival in Indianapolis.
18
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" in Indianapolis
Indiana. Mitchell Brown transferred his ownership interests in Edesia
Emprise, LLC to his father, Gene Brown, later that month. Taylor's Bakery was
contracted as a third party manufacturer for this project in January of 2009,
and in March of 2009, Dough Bros., Inc., an entity established by Taylor’s
Bakery, entered into an agreement with Edesia Emprise, LLC and Cono Italiano
(Delaware).
In the
first quarter of 2009, a production facility was established in Indianapolis,
Indiana by Taylor’s Bakery with proprietary baking equipment purchased from
Italy. Cono Italiano (Delaware) has been working together with the
TurboChef Brand of ovens to develop cooking settings to bake the Cono Italiano
(Delaware) product in retail distribution settings. Major food
establishments including Subway, Dunkin Donuts, and Quick Chek currently use
TurboChef Brand ovens to cook frozen products in their
establishments. Cono Italiano (Delaware) shipped its initial orders
for products in the second quarter of 2009. Cono Italiano (Delaware)
buys and resells the TurboChef Brand ovens as needed. An alternative
supplier, Amana, makes similar ovens at similar prices which the management of
Cono Italiano (Delaware) believes it can rely upon if there is any disruption in
supply of ovens from TurboChef Brand.
On
October 22, 2009, Dough Bros., Inc., John Allen, Drew Allen, Matt Allen, Edesia
Emprise, LLC, Cono Italiano (Delaware), Mitchell Brown, John Jacobs and Ramona
Fantini entered into an agreement to terminate the relationship between Cono
Italiano (Delaware), Edesia Emprise, LLC and Dough Bros., Inc.
On
November 9, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of our shareholders, Lara Mac has agreed to provide
financing to Cono Italiano, Inc., with such funds as the Company’s Board of
Directors shall deem to be sufficient to maintain the Company’s ordinary course
of business operations (the “Commitment Amount”). We may draw on the
Commitment Amount in monthly tranches in accordance with our operating
requirements as set forth in our business plan. The available Commitment
Amount will be reduced by the aggregate cash proceeds received by the Company
which are derived from the issuance of any equity securities and Company gross
revenues. Draws on the Commitment Amount will be made on terms of unsecured
notes, with interest set on each note as of the date of the draw at prime rate
plus two percent per annum. The notes will mature and become repayable thirty
calendar days after demand at any time following the earlier of (a) December 31,
2010 or (b) the date upon which we are in receipt of revenues or proceeds from
the sales of equity securities. We will give Lara Mac customary representations
and warranties regarding the good standing of our Company and status of progress
in respect of our Company business plan prior to each draw on the Commitment
Amount, and we will provide certifications and covenants regarding use of
proceeds of each draw, which will be in customary forms reasonably requested by
Lara Mac as determined by reference to similar lenders making similar loans to
similar companies. Lara Mac will not be required to make any loans under the
Commitment Amount to us if we are unable to make the representations,
warranties, certifications or covenants, or if we are in breach of any
previously given representations, warranties, certifications or covenants. If we
breach any of the notes, the default rate will be 15% per annum and Lara Mac may
seek recourse against our company for repayment of all of the
notes. To date, there have been no borrowings under the Commitment
Letter.
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master
Manufacturing Agreement, Edesia Emprise, LLC will produce the Company’s Pizza
Cono product. Cono Italiano (Delaware) has agreed to pay Edesia
Emprise, LLC the costs of production plus fifteen percent (15%). This
Master Manufacturing Agreement has a five (5) year term and will automatically
renew unless cancelled by one of the parties pursuant to its
terms. This Master Manufacturing Agreement is exclusive within the
United States. Edesia Emprise, LLC may either produce this product directly or
through a subcontractor. On December 8, 2009, the Company was advised
that Edesia Emprise had entered into its first subcontract agreement with
Sunrise Baking Acquisition Company, based in Brooklyn, New
York.
19
Distribution
The
Company intends to contact food distributors who sell to the restaurant
community to distribute the product. The Company will seek to develop
relationships with independent commissioned sales representatives throughout the
country to sell and market the product to the retail community and specialty
customers. The Pizza Cone will be targeted at a substantial number of
potential customers, including quick service restaurants, takeaways, mobile and
street vendors, and leisure locations such as typical fast food chains,
supermarkets, convenience stores, entertainment facilities, and sports
arenas. The Company therefore does not anticipate depending on a
single or a few major customers.
Cono
Italiano’s marketing and distribution efforts have also included giving free
samples of its product away at the Indianapolis Speedway, presenting the product
to potential distributors at a trade show, and selling the product at an Italian
festival in Indianapolis.
Competitive
Position
Cono
Italiano is a relatively new company introducing a new product into the market
place for quick service pizza. The market in the United States for
quick service pizza is large, highly fragmented and intensely
competitive. There are no assurances that the product will be
generally accepted.
We intend
to do business under our new business model in highly competitive markets. There
are many competitors, some of which are significantly larger, have access to
much more important resources or capital than us, or have established
reputations among potential customers. We may not be able to compete effectively
against other industry participants.
Raw
Materials
The raw
materials used in production of the Pizza Cones include readily available food
products which are purchased in bulk by third party contract
bakers. All raw materials are supplied by the third party contract
bakers pursuant to proprietary recipes and standards of Cono Italiano and baked
into the product. Cono Italiano pays Edesia Emprise, LLC for the
product following shipping.
Compliance
with Government Regulations
At the
present time, Cono Italiano does not need and has not requested government
approval on any products and services. Edesia Emprise, LLC and the
third party contract bakers of Edesia Emprise, LLC are responsible for operation
of production facilities which make our cones and fillings, and they are subject
to various federal state, and local laws, including various health sanitation,
fire, and safety standards and may be subject to licensing and regulations by a
number of governmental authorities.
Research
and Development
The
Company does note presently engage in spending on research and
development. The Company’s anticipates that it may engage in such
activity in the future.
Compliance
with Environmental Laws
The costs
and effects of compliance with federal, state and local environmental laws have
not been material to our business from inception through the date of this
Report.
Intellectual
Property
Our
success and ability to compete are dependent, in part, upon our ability to
establish and adequately protect our intellectual property rights. We
intend to rely on a combination of patent, copyright, trademark and trade secret
laws, as well as confidentiality agreements to establish and protect our
proprietary rights. We expect to license certain proprietary rights
from third parties. We also intend to protect our proprietary rights, in part,
through the terms of license agreements and by confidentiality agreements with
our employees, consultants, customers and others.
20
Employees
As of the
date hereof, the Company has four (4) officers, Mitchell Brown (our Chief
Executive Officer), Joseph Masselli, (our President and Chief Operating
Officer), Alex J. Kaminski (our Chief Financial Officer and Treasurer) and Steve
Savage (our Secretary).
Where
You Can Find More Information
We do not
currently maintain an internet website .
The
Company is and expects to remain a “reporting company.” We will therefore be
required to continue to file annual, quarterly and other filings with the U.S.
Securities and Exchange Commission (the “SEC”). Members of the public may read
and copy any materials which we file with the SEC at the SEC’s Public Reference
Room at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. Members of the
public may obtain additional information on the operation of the Public
Reference Room by calling the SEC at 1-800-SEC-0330. The SEC also maintains an
internet site that contains reports, proxy and information statements, as well
as other information regarding issuers that file electronically with the SEC.
This site is located at http://www.sec.gov.
You may
also request a copy of our filings at no cost, by writing or telephoning us
at:
Cono
Italiano, Inc.
10 Main
Street
Keyport,
NJ 07735
Telephone:
877-330-2666
Attn:
Mitchell Brown
Chief
Executive Officer
21
DESCRIPTION
OF PROPERTY
Our
principal executive offices are located at 10 Main Street, Keyport, NJ
07735. We are not paying rent for this location, which is being provided
by our Chief Executive Officer at no expense. We believe that this
property is adequate for our current and immediately foreseeable operating
needs. At the present time, we do not own any real estate. We do not
have any policies regarding investments in real estate, securities or other
forms of property.
LEGAL
PROCEEDINGS
We are
not aware of any pending or threatened litigation against us that we expect will
have a material adverse effect on our business, financial condition, liquidity,
or operating results. We cannot assure you that we will not be adversely
affected in the future by legal proceedings.
22
MARKET
PRICE OF AND DIVIDENDS ON THE REGISTRANT’S COMMON EQUITY
AND
RELATED STOCKHOLDER MATTERS
Market
Information
Our
common stock trades on the over-the-counter bulletin board quotation system
(OTCBB) under the symbol “CNOZ”. The following table shows the range of
high and low bids per share of our Common Stock as reported by the
Over-the-Counter Bulletin Board for the fiscal year periods indicated. Such
over-the-counter market quotations reflect inter-dealer prices, without retail
mark-up, markdown or commission, and may not necessarily represent actual
transactions.
2009
|
||||||||
High
|
Low
|
|||||||
4th
Quarter ended December 31
|
$
|
3.49
|
1.50
|
|||||
3rd
Quarter ended September 30
|
$
|
6.60
|
0.06
|
|||||
2nd
Quarter ended June 30
|
$
|
0.15
|
0.06
|
|||||
1st
Quarter ended March 31
|
$
|
0.20
|
0.03
|
|||||
2008
|
||||||||
High
|
Low
|
|||||||
4th
Quarter ended December 31
|
$
|
0.20
|
0.06
|
|||||
3rd
Quarter ended September 30
|
$
|
0.56
|
0.09
|
|||||
2nd
Quarter ended June 30
|
$
|
1.45
|
0.52
|
|||||
1st
Quarter ended March 31
|
$
|
2.03
|
0.90
|
Holders
As of
April 29, 2010 there were 81,880,988 shares of common stock issued and
outstanding.
As of
April 29, 2010 there were 67 holders of record of our common
stock.
Dividend
Policy
We have
not paid any dividends to the holders of our common stock and we do not expect
to pay any such dividends in the foreseeable future as we expect to retain our
future earnings for use in the operation and expansion of our
business.
Securities
Authorized for Issuance Under Equity Compensation Plans
At the
present time, we have no securities authorized for issuance under equity
compensation plans.
23
MANAGEMENT'S
DISCUSSION AND ANALYSIS OF
FINANCIAL
CONDITIONS AND RESULTS OF OPERATIONS
Selected
Financial Data
Pursuant
to permissive authority under Regulation S-K, Rule 301, we have omitted selected
financial data.
Management’s
Discussion and Analysis of Financial Condition and Results of
Operations
The
following discussion of the financial condition and results of operations of the
Company should be read in conjunction with the financial statements and the
related notes thereto included elsewhere in this Report. This Report contains
certain forward-looking statements and the Company's future operating results
could differ materially from those discussed herein. Certain statements
contained in this Report, including, without limitation, statements containing
the words "believes", "anticipates," "expects" and the like, constitute
"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”). However, as the Company intends to issue “penny
stock,” as such term is defined in Rule 3a51-1 promulgated under the Exchange
Act, the Company is ineligible to rely on these safe harbor provisions. Such
forward-looking statements involve known and unknown risks, uncertainties and
other factors which may cause the actual results, performance or achievements of
the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Given
these uncertainties, readers are cautioned not to place undue reliance on such
forward-looking statements. The Company disclaims any obligation to update any
such factors or to announce publicly the results of any revisions of the
forward-looking statements contained or incorporated by reference herein to
reflect future events or developments.
Introduction
The
Company was incorporated in the State of Nevada on September 9, 2004 as Arch
Management Services Inc. A change of control of the Company occurred on June 5,
2006 and the Company changed its name from “Arch Management Services Inc.” to
“Tiger Ethanol International Inc.” on November 24, 2006. On February 11,
2008 the Company changed its name to “Tiger Renewable Energy Ltd.” Another
change of control of the Company occurred on June 4, 2009. On August 10,
2009, the Company changed its name to “Cono Italiano, Inc.” and its symbol
changed to CNOZ.
On
August 10, 2009, the Company conducted a one for sixty reverse stock
split. As of such date, all of the outstanding shares of common stock
of the Company have been consolidated such that stockholders of record hold
one share of post-split common stock for every sixty shares owned prior to the
reverse stock split. All fractional shares resulting from the reverse stock
split have been rounded up to the next whole share.
Our
principal business address is 10 Main Street, Keyport, NJ 07735 and our
telephone number is 877-330-2666.
Our
Business
The
Company was previously involved in the production of ethanol from agricultural
products. The Company’s board of directors determined that it was in our
best interest to initiate a complete and total withdrawal from the ethanol
business as of January 31, 2009. The Company subsequently began seeking
new business opportunities.
We
recently identified Cono Italiano (Delaware) as a business venture that would be
suitable for future operation. On November 12, 2009, we entered into
agreement with the shareholders of Cono Italiano (Delaware) pursuant to which we
acquired all of the issued and outstanding shares of the Cono Italiano
(Delaware) and we will now operate Cono Italiano (Delaware) as a wholly-owned
subsidiary of our Company.
Cono
Italiano (Delaware)
In
February 2006 Cono Italiano LLC, a New Jersey limited liability company, entered
into an agreement with Kono Italia S.R. L., an Italian company doing business as
“Pizza Hands.” Kono Italia S.R.L owns the designs, recipes and technology
for the “Pizza Cono,” a food product for quick service restaurants consisting of
a cone shaped pizza dough. Cono Italiano (Delaware) (as the successor to
Cono Italiano, LLC) holds a distribution agreement for North America from Kono
Pizza in Italy. This distribution agreement grants the licensee an
exclusive license to exploit this product in the United States, Canada and
Mexico for a twenty-five (25) year term. The product is patented in the
United States and Europe as is the cone production machine which is
proprietary. In 2007 Cono Italiano, LLC introduced the product into the
North American market by building an alliance with Center Plate, a food service
provider to stadiums and arenas throughout North America. At the present
time, Cono Italiano (Delaware) has no contractual agreements with Center
Plate.
24
Cono
Italiano (Delaware) was formed through the merger of Cono Italiano LLC, a New
Jersey limited liability company, and Janex International, Inc., a Delaware
corporation, in January, 2008. Cono Italiano (Delaware) was formed as
Janex International, Inc. on July 6, 2007 in the State of Delaware.
On January 8, 2008 Janex International Inc. changed its name to Cono
Italiano, Inc. Cono Italiano, LLC (Cono, LLC) was formed on June 27, 2007
as a limited liability company in the State of New Jersey. Cono, LLC
had no operations and its primary assets were the license rights to manufacture,
market, and distribute “pizza cono”, a unique pizza style food product. In
March 2007, the license rights held by the individual founders of Cono, LLC was
sold to The Total Luxury Group (“TLG”), an unrelated entity. Subsequently,
on January 8, 2008 the license rights were transferred to Mitchell Brown, our
Company’s Chief Executive Officer, for the total consideration of
$312,000. The transfer of Cono, LLC (which includes the license rights)
was effected in settlement of an obligation due to Mitchell Brown by TLG.
On January 14, 2008, Cono, LLC was sold to Cono Italiano (Delaware) for the
total consideration of $426,000. In exchange for the 100% interest in
Cono, LLC, the sole member of the LLC received 6,000,000 shares of Cono Italiano
(Delaware) valued at $114,700 and was issued a promissory note for
$312,000. Mitchell Brown is also a principal stockholder in the
Company.
Cono
Italiano (Delaware) is licensed to distribute a food product called the “Pizza
Cono.” The Pizza Cone is designed to be a drip free, spill free
cone-shaped pizza made of a proprietary dough and filled with freshly selected
ingredients. The Company intends that the Pizza Cone will be distributed
through the fast food market (the fast food market is generally defined as
restaurants selling food and drinks for immediate consumption either on the
premises in designated eating areas, or for consumption elsewhere). The
Pizza Cone will be distributed to quick-service restaurants, takeaways, mobile
and street vendors, and leisure locations. These establishments include
typical fast food chains, supermarkets, convenience stores, entertainment
facilities and sports arenas.
On
July 9, 2008, Cono Italiano (Delaware) entered into a distribution and licensing
agreement (the “Distribution Agreement”) with Pino Gelato, Inc., a South
Carolina corporation presently involved in retail sales of Italian gelato and
sales of franchises for the sale of gelato. Under the terms of the
Distribution Agreement, we have granted to Pino Gelato, Inc. the rights in the
United States, Canada and Mexico to sell and distribute our products through
retail channels. The initial term of the Distribution Agreement is for ten
(10) years and shall be automatically renewed for additional ten (10) year terms
if neither party is in material breach of the Distribution Agreement at the
expiration date of each ten (10) year term. The Distribution Agreement
includes the right to market Pizza Cones and establish Pizza Cone and Pino
Gelato Cafes. Cono Italiano (Delaware) has received $100,000 in cash in
consideration for such Distribution Agreement. There have been five retail
channels established to date for a licensing fee of $25,000. Product has
been sold to various distributors throughout the country for distribution.
As an inducement to buy the distribution and franchise rights by Pino Gelato,
Inc. the Company agreed to issue 375,000 shares of common stock to Pino
Gelato. Common stock amounting to 250,000 shares were issued to Pino
Gelato, with the remaining 125,000 shares to be issued.
As part
of Cono Italiano (Delaware)’s marketing strategy, Cono Italiano (Delaware) paid
$8,500 in September of 2008 to develop retail packaging and conducted a photo
shoot for the product in October of 2008 at a cost of $1,500.
There
have been five licenses sold to date and there are currently five such cafes in
operation, located in South Carolina, Tennessee, Pittsburgh and Ohio.
These cafes are presently selling the Pizza Cone product.
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" in Indianapolis Indiana. Mitchell
Brown transferred his ownership interests in Edesia Emprise, LLC to his father,
Gene Brown, later that month. Taylor's Bakery was contracted as a third party
manufacturer for this project in January of 2009, and in March of 2009, Dough
Bros., Inc., an entity established by Taylor’s Bakery, entered into an agreement
with Edesia Emprise, LLC and Cono Italiano (Delaware).
Since
March of 2009, Cono Italiano (Delaware)’s marketing and distribution efforts
have also included giving free samples of its product away at the Indianapolis
Speedway, presenting the product to potential distributors at a trade show, and
selling the product at an Italian festival in Indianapolis.
In the
first quarter of 2009, a production facility was established in Indianapolis,
Indiana by Taylor’s Bakery with proprietary baking equipment purchased from
Italy. Cono Italiano (Delaware) has been working together with the
TurboChef Brand of ovens to develop cooking settings to bake the Cono Italiano
product in retail distribution settings. Major food establishments
including Subway, Dunkin Donuts, and Quick Chek currently use TurboChef Brand
ovens to cook frozen products in their establishments. Cono Italiano
(Delaware) shipped its initial orders for products in the second quarter of
2009. Cono Italiano (Delaware) buys and resells the TurboChef Brand ovens
as needed. An alternative supplier, Amana, makes similar ovens at similar
prices which the management of Cono Italiano (Delaware) believes it can rely
upon if there is any disruption in supply of ovens from TurboChef
Brand.
On
October 22, 2009, Dough Bros., Inc., John Allen, Drew Allen, Matt Allen, Edesia
Emprise, LLC, Cono Italiano (Delaware), Mitchell Brown, John Jacobs and Ramona
Fantini entered into an agreement to terminate the relationship between Cono
Italiano (Delaware), Edesia Emprise, LLC and Dough Bros., Inc.
25
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master Manufacturing
Agreement, Edesia Emprise, LLC will produce the Company’s Pizza Cono
product. Cono Italiano (Delaware) has agreed to pay Edesia Emprise, LLC
the costs of production plus fifteen percent (15%). This Master
Manufacturing Agreement has a five (5) year term and will automatically renew
unless cancelled by one of the parties pursuant to its terms. This Master
Manufacturing Agreement is exclusive within the United States. Edesia
Emprise, LLC may either produce this product directly or through a
subcontractor. On December 8, 2009, the Company was advised that Edesia
Emprise had entered into its first subcontract agreement with Sunrise Baking
Acquisition Company, based in Brooklyn, New York.
Financial
Information in this Report
The
acquisition of Cono Italiano (Delaware) by our Company is for accounting
purposes treated as a reverse acquisition where Cono Italiano (Delaware) is the
accounting survivor. As such, all financial information discussed and
presented herein is the historical and current information pertaining only
to Cono Italiano (Delaware) except as otherwise indicated. The financial
statements and notes included as part of this Report pertain only to Cono
Italiano (Delaware) as the accounting survivor and disregard the historical
financial statements filed by our Company prior to the acquisition of Cono
Italiano (Delaware).
In
connection with the acquisition of Cono Italiano (Delaware), the Company changed
its fiscal year end from January 31st to
December 31st.
Revenues
In the
twelve month period ended December 31, 2009, Cono Italiano (Delaware) had total
sales of $12,600, compared to total sales of $11,285 in the twelve month period
ended December 31, 2008.
Financial
Condition, Liquidity and Capital Resources
Through
December 31, 2009, Cono Italiano (Delaware) has accrued total liabilities of
$1,280,647 in the course of developing its operations. The Company’s
expenditures are expected to increase as the Company expands its operations,
expends additional funds on marketing, administration and new staff, and
commences the payment of salaries to existing officers and directors (although
the Company’s officers and directors have agreed that they will not receive any
salary through December 31, 2010). Total liabilities increased from $831,838 on
December 31, 2008 to $1,280,647 at December 31, 2009.
The
total assets of Cono Italiano (Delaware) increased from $240,497 on December 31,
2008 to $322,041 on December 31, 2009. The Company’s largest asset as of
December 31, 2009 was the value of its licensing rights, net of accumulated
amortization of $137,004. This was a decrease from December 31, 2008 of
$143,502.
As of
December 31, 2009, Cono Italiano (Delaware) had $10,658 in cash and cash
equivalents on hand, as compared to $724 on hand as of December 31, 2008. The
main source of this cash was loans from an officer; our Chief Executive Officer,
Mitchell Brown, was owed $624,366 as of December 31, 2009, which total loan
amount had increased from $568,828 at December 31, 2008.
Total
expenses for the twelve month period ended December 31, 2009 were $446,470. This
included, in part, selling expenses of $48,735, compensation expenses of
$140,005, general and administrative expenses of $240,634 and interest expense
of $20,296. This was a decrease from the twelve month period ended December 31,
2008, in which total expenses were $935,412, consisting of selling expenses of
$121,631, compensation expense of $280,000, general and administrative expenses
of $521,863 and interest expenses of $11,918.
The
net loss for the twelve month period ended December 31, 2009 was $437,325.
This was a decrease from the twelve month period ended December 31, 2008, in
which the net loss was $929,795.
The
Company’s management believes that Cono Italiano will need additional capital to
conduct business, grow and expand the Company. The terms and condition of
any which we may receive financing could have a material adverse affect on our
business, results of operations, liquidity and financial condition.
26
On
November 9, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of our shareholders, Lara Mac has agreed to provide
financing to Cono Italiano, Inc., with such funds as the Company’s Board of
Directors shall deem to be sufficient to maintain the Company’s ordinary course
of business operations (the “Commitment Amount”). We may draw on the
Commitment Amount in monthly tranches in accordance with our operating
requirements as set forth in our business plan. The available Commitment
Amount will be reduced by the aggregate cash proceeds received by the Company
which are derived from the issuance of any equity securities and Company gross
revenues. Draws on the Commitment Amount will be made on terms of unsecured
notes, with interest set on each note as of the date of the draw at prime rate
plus two percent per annum. The notes will mature and become repayable thirty
calendar days after demand at any time following the earlier of (a) December 31,
2010 or (b) the date upon which we are in receipt of revenues or proceeds from
the sales of equity securities. We will give Lara Mac customary representations
and warranties regarding the good standing of our Company and status of progress
in respect of our Company business plan prior to each draw on the Commitment
Amount, and we will provide certifications and covenants regarding use of
proceeds of each draw, which will be in customary forms reasonably requested by
Lara Mac as determined by reference to similar lenders making similar loans to
similar companies. Lara Mac will not be required to make any loans under the
Commitment Amount to us if we are unable to make the representations,
warranties, certifications or covenants, or if we are in breach of any
previously given representations, warranties, certifications or covenants. If we
breach any of the notes, the default rate will be 15% per annum and Lara Mac may
seek recourse against our company for repayment of all of the notes. As of
the end of the period covered by this Report, there had been no borrowings under
the Commitment Letter.
The
independent auditor's reports of EFP Rotenberg LLP for the period ended December
31, 2009 contained "going concern" qualifications, noting that there was an
accumulated deficit of $980,085 at December 31, 2008 and $1,417,410 at December
31, 2009. Cono Italiano (Delaware)’s auditors expressed the opinion that
such entity’s continued existence is dependent upon its ability to raise
capital. The financial statements do not include any adjustments that
might be necessary should Cono Italiano (Delaware) be unable to continue as a
going concern.
Critical
Accounting Policies and Estimates
Our
consolidated financial statements are prepared in accordance with U.S. Generally
Accepted Accounting Principles (“GAAP”). The preparation of the financial
statements requires us to make estimates and assumptions that affect the
reported amounts of assets, liabilities, revenues, expenses, and related
disclosures. Though we evaluate our estimates and assumptions on an ongoing
basis, our actual results may differ from these estimates.
Intangible
Assets
Intangible
assets consist of licensing rights. The Company applies an impairment evaluation
whenever events or changes in business circumstances indicate that the carrying
value of the intangible assets may not be recoverable. Other intangible assets
are amortized on a straight-line basis over their estimated economic lives. The
Company believes that the straight-line method of amortization reflects an
appropriate allocation of the cost of the intangible assets to earnings in
proportion to the amount of economic benefits obtained annually by the
Company.
Stock-Based
Compensation
Stock-based
compensation related to non-employees is recognized as compensation expense in
the accompanying consolidated statements of operations and is based on the fair
value of the services received or the fair value of the equity instruments
issued, whichever is more readily determinable. The Company’s accounting policy
for equity instruments issued to consultants and vendors in exchange for goods
and services follows the provisions of FASB ASC 505, “Equity Based Payments to
Non-Employees.” The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii) the
date at which the consultant or vendor’s performance is complete. In the case of
equity instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting
agreement.
Off
Balance Sheet Arrangements
The
Company does not have any off balance sheet arrangements that have or are
reasonably likely to have a current or future effect on the Company's financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
27
CHANGES
IN AND DISAGREEMENTS WITH
ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE
On
November 12, 2009, the Company dismissed its independent auditor, Paritz and
Company P.A. and appointed EFP Rotenberg LLP, as its independent
auditor. The decision to change auditors was approved by the Company's
Board of Directors.
During
the Company's fiscal years ended January 31, 2009 and January 31, 2008, and the
interim period between January 31, 2009 and November 12, 2009, the opinion of
Paritz and Company P.A. on the Company's financial statements did not contain an
adverse opinion or disclaimer of opinion and was not qualified or modified as to
uncertainty, audit scope or accounting principles, except as follows: the
independent auditor's report of Paritz and Company P.A. dated May 18, 2009 (for
the year ended January 31, 2009) contained "going concern" qualifications. These
qualifications questioned the Company’s ability to raise additional funds
through either the sale of equity securities or issuance and stressed the
absence of any resulting adjustments in the financial statements; thus raising
substantial doubts regarding the Company's ability to continue as a going
concern. During the Company's two most recent fiscal years, and through the date
of their dismissal, there were no disagreements with Paritz and Company P.A.,
whether or not resolved, on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to Paritz and Company P.A.’s satisfaction, would
have caused it to make reference to the subject matter of the disagreement(s) in
connection with its report.
During
the years ended January 31, 2009 and January 31, 2008, and the interim period
between January 31, 2009 and the appointment of EFP Rotenberg LLP, neither the
Company nor anyone acting on the Company’s behalf consulted with EFP Rotenberg
LLP regarding (i) the application of accounting principles to a specific
transaction, either completed or proposed, or the type of audit opinion that
might be rendered on the Company’s financial statements, or (ii) any matter
that was either the subject of a disagreement as that term is used in
Item 304 (a)(1)(iv) of Regulation S-K and the related instructions to
Item 304 of Regulation S-K or a reportable event as that term is used
in Item 304(a)(1)(v) and the related instructions to Item 304 of
Regulation S-K.
QUANTITATIVE
AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We did
not have any operations which implicated market risk as of the end of the latest
fiscal year. We intend to implement an analysis and assessment program
which will on a regular basis determine exposures of the Company to future
risks. We expect to report the results of all such quantitative and
qualitative risk assessments prior to entering into any material agreements, and
on a regular monthly and annual basis to our audit committee so that responsive
risk management measures can be discussed and actions taken to the extent
reasonably feasible. Inflationary factors in the future, such as increases
in overhead costs, may adversely affect our operating results. A high rate
of inflation in the future may have an adverse effect on our ability to manage
selling, general and administrative expenses as a percentage of net revenues if
our revenues do not increase with these increased costs.
28
MANAGEMENT
AND CERTAIN SECURITY HOLDERS
Directors,
Executive Officers, Promoters and Control Persons
The
following table presents information with respect to our officers, directors and
significant employees as of April 29, 2010:
Name
|
Age
|
Position
|
||
Mitchell
Brown
|
45
|
Chief
Executive Officer and Director
|
||
Joseph
Masselli
|
45
|
President,
Chief Operating Officer and Director
|
||
Alex
J. Kaminski
|
44
|
Chief
Financial Officer, Treasurer and Director
|
||
Steve
Savage
|
52
|
Secretary
and Director
|
||
Scott
Smith
|
42
|
Director
|
Each of
our directors serves until his or her successor is elected and qualified. Each
of our officers is elected by the board of directors to a term of one (1) year
and serves until his or her successor is duly elected and qualified, or until he
or she is removed from office.
Biographical
Information Regarding Officers and Directors
Mitchell
Brown, Chief Executive Officer and Director
Mr. Brown
was appointed Chief Executive Officer on June 4, 2009 and commenced serving as a
director on June 19, 2009. From 2004 through 2007, Mr. Brown served as the
President of Discount Direct, a marketing company which served various cell
phone providers. From 2007 through the date hereof, Mr. Brown has served
as the Chairman and Chief Executive Officer of Cono Italiano, Inc., a company
which has acquired the North American rights to sell certain food
products.
Joseph
Masselli, President, Chief Operating Officer and Director
Mr.
Masselli was appointed President and Chief Operating Officer on June 4, 2009 and
commenced serving as a director on June 19, 2009. From 2004 through 2008,
Mr. Masselli was the Owner-General Managing Partner of a restaurant/club.
Since 2008, Mr. Masselli has been employed by Cono Italiano, Inc., where he
leads the Marketing and Public Relations efforts to establish Cono
Italiano’s brand.
Alex
J. Kaminski, Chief Financial Officer, Treasurer and Director
Mr.
Kaminski was appointed Treasurer of the Company on June 4, 2009. He
commenced serving as Chief Financial Officer on June 22, 2009 and Director on
June 19, 2009. Mr. Kaminski is a Certified Public Accountant. Since
1989, he has had his own practice. From 2002 to 2008 he served as the
Chief Financial Officer and President of Basik Funding Inc. Since 2005, he
has also served as the President of Homestead Funding Group
Inc.
Steve
Savage, Secretary and Director
Mr.
Savage commenced serving as Secretary and Director on June 19, 2009. For
the past 5 years Mr. Savage has served as President and owner of Ocean
Consultants Inc. a Real Estate Investment company. The purpose of the
business was to locate, purchase, remodel and market various residential
properties.
29
Scott
Smith, Director
Mr.
Smith commenced serving as a director on June 19, 2009. Since 1997, Mr.
Smith has served as the owner and manufacturer’s representative for S.J. Smith
Distributors Inc. Since 2002, Mr. Smith has served as the Corporate Sales
Manager for Ray Catena Motor Car in Edison, NJ.
Family
Relationships
None of
the Company’s officers or directors have any family relationships with the
Company’s other officers or directors or persons nominated or chosen by the
Company to become officers or directors.
Involvement
in Certain Legal Proceedings
During
the past five years no director, person nominated to become a director,
executive officer, promoter or control person of the Company has: (i) had any
bankruptcy petition filed by or against any business of which such person was a
general partner or executive officer either at the time of the bankruptcy or
within two years prior to that time; (ii) been convicted in a criminal
proceeding or been subject to a pending criminal proceeding (excluding traffic
violations and other minor offenses); (iii) been subject to any order, judgment,
or decree, not subsequently reversed, suspended or vacated, of any court of
competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; or (iv) been found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.
30
EXECUTIVE
COMPENSATION
Executive
Compensation
The
following table sets forth compensation for each of the past three fiscal years
with respect to each person who served as Chief Executive Officer of the Company
and each of the four most highly-compensated executive officers of the Company
who earned a total annual salary and bonuses that exceeded $100,000 in any of
the three preceding fiscal years.
Summary
Compensation Table
Name and Principal
Position
|
Year (1)(2)
|
Salary ($)
|
Stock Awards ($)
|
Total
|
|||||||||
Mitchell
Brown, Chief Executive Officer and Director (3)
|
2009
|
0 | $ | 140,005 | 140,005 | ||||||||
2008
|
0 | 280,000 | 280,000 | ||||||||||
Joseph
Masselli, President, Chief Operating Officer and
|
2009
|
0 | 0 | 0 | |||||||||
Director
(3)
|
2008
|
0 | 40,000 | 40,000 | |||||||||
Alex
J. Kaminski, Chief Financial Officer, Treasurer
|
2009
|
0 | 0 | 0 | |||||||||
and
Director (3)
|
2008
|
0 | 0 | 0 | |||||||||
Steve
Savage, Secretary and Director (3)
|
2009
|
0 | 0 | 0 | |||||||||
2008
|
0 | 20,000 | 20,000 | ||||||||||
Officers
serving the Company prior to the acquisition of Cono Italiano
(Delaware):
|
|||||||||||||
James Pak Chiu Leung former CEO, former President,
|
2009
|
70,000 | 0 | 70,000 | |||||||||
former Director (4)
|
2008
|
131,000 | 0 | 131,000 | |||||||||
Robert
G. Clarke, former CEO(5)
|
2009
|
0 | 0 | 0 | |||||||||
Michel
St-Pierre, former CFO (6)
|
2009
|
116,694 | 0 | 116,694 | |||||||||
2008
|
109,359 | 0 | 109,359 |
(1)
|
No
officers earned over $100,000 in any of the three preceding fiscal years,
other than as set forth above.
|
(2)
|
The
Company’s fiscal year previously ended on January 31st.
The Company changed its fiscal year-end from November 30, 2006 to January
31, 2007, and on November 12, 2009 the Company changed its fiscal year end
to December 31st. The 2009 and 2008 fiscal years for Mitchell
Brown, Joseph Masselli, Alex J. Kaminski and Steve Savage refer to the
fiscal years ended December 31, 2009 and December 31, 2008. The 2009 and
2008 fiscal years for Mr. Leung, Mr. Clarke and Mr. St-Pierre refer to the
fiscal years ended January 31, 2009 and January 31,
2008.
|
(3)
|
To
date, each of Mitchell Brown, Joseph Masselli, Alex J. Kaminski and Steve
Savage have not been paid cash compensation by either the Company or Cono
Italiano (Delaware).
|
(4)
|
Mr.
Leung was granted stock options to purchase 70,000 shares. The Company
valued these options using the Black-Scholes option -pricing valuation
model. The model uses market sourced inputs such as interest rates, stock
prices, and option volatilities, the selection of which requires Company
management’s judgment, and which may impact the value of the options. The
assumptions used in the Black-Scholes valuation model were: a risk-free
interest rate of 4.6% and 4.7%; the current stock price at date of
issuance of $0.03 and $2.00 per share; the exercise price of the options
of $0.05 and $2.00 per share; the term of 5 years; volatility of 157% and
160%. The stock options granted to Mr. Leung have vested as follows:
60,000 were granted on October 5, 2006 and vested immediately, 5,000
were granted on November 6, 2006, and vested on that date, and 5,000 were
granted on November 6, 2006 and vested on November 6,
2007.
|
(5)
|
Mr.
Clarke was appointed as the Company’s President and CEO on September 12,
2008; he resigned from these positions on June 4, 2009.
|
(6)
|
Mr.
St-Pierre served as the Chief Financial Officer of the Company from
January 9, 2007 until June 22,
2009.
|
None of
the officers earned any bonus, restricted stock awards, LTIP Payouts or any
other annual or long term compensation other than the stock awards paid to each
of Mr. Brown, Mr. Masselli and Mr. Savage by Cono Italiano
(Delaware).
31
Outstanding
Equity Awards at Fiscal Year-End (1)
As of
the end of our most recent fiscal year, December 31, 2009, Mitchell Brown, our
Chief Executive Officer and Director, Joseph Masselli, our President, Chief
Operating Officer and Director, Alex J. Kaminski, our Chief Financial Officer,
Treasurer and Director and Steve Savage, our Secretary and Director have not
been issued any options in the Company.
The
following table provides the information regarding outstanding options owned by
the named executive officers and directors as of December 31, 2009. We
have never granted any stock appreciation rights. The shares set forth
below reflect our August 10, 2009 one for sixty stock split.
Name
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
Option Exercise
Price
|
Option Expiration
Date
|
||||||
James
Pak Chiu Leung, Former CEO, Former President and Former Director
(1)
|
84
|
0
|
120.00
|
November
6, 2012
|
||||||
84
|
0
|
120.00
|
November
6, 2011
|
|||||||
Claude
Pellerin, Former Secretary and Former Director (2)
|
84
|
0
|
120.00
|
November
6, 2012
|
||||||
84
|
0
|
120.00
|
November
6, 2011
|
(1)
Mr. Leung served as the Chief Executive Officer, President and Director of the
Company from June 5, 2006 to September 9, 2008.
(2)
Mr. Pellerin resigned as the Company’s secretary on June 19,
2009.
Director
Compensation
The
persons who served as members of our board of directors, including executive
officers, did not receive any compensation for services as a director in either
the fiscal year ended December 31, 2009 or the fiscal year ended January 31,
2009.
The
Company has employment agreements with each of Mitchell Brown, Joseph Masselli,
Alex Kaminski and Steve Savage. These directors will not be separately
compensated for their service as directors, as they are also serving as officers
of the Company. The Company does not have an employment or other
compensation agreement with Scott Smith, who was compensated according to the
schedule above. Mr. Smith, who will be serving only as a director and not
as an officer will be paid a fee of $18,000 per annum, which will be deferred
for the first year of service to the Company.
Employment
Contracts
As of the
end of our prior fiscal year on January 31, 2009 the Company did not have any
employment contracts with any officer, director or other employees. On
December 30, 2009, the Company entered into employment agreements with each of
the officers serving the Company. The employment agreements contained the
following material provisions: (i) two-year terms with automatic renewal
provisions unless notice is given by either party 30 days prior to
renewal; (ii) commitment of a substantial portion of their professional
time to the Company, consisting of 75% of their time for Mitchell Brown and 60%
of their time for each of Joseph Masselli, Alex Kaminski and Steve Savage; and
(iii) and additional customary employment agreement terms and conditions.
The officers have agreed that they will not receive any compensation for their
services to the Company prior to January 1, 2012. The compensation of the
officers has been set as follows:
Officer
|
Annual
Salary
|
|||
Mitchell
Brown, Chief Executive Officer
|
$
|
125,000
|
||
Joseph
Masselli, President and Chief Operating Officer
|
$
|
75,000
|
||
Alex
Kaminski, Chief Financial Officer and Treasurer
|
$
|
50,000
|
||
Steve
Savage, Secretary
|
$
|
50,000
|
32
It has
been agreed by the Company, Mr. Scott Smith (a director of the Company) and Mr.
Alex Kaminski (the Chief Financial Officer and Treasurer of the Company) that
pursuant to separate stock option agreements, Mr. Smith will be granted options
to purchase 2,000,000 shares of the Company’s common stock at $.01 per share and
Mr. Kaminski will be granted options to purchase 1,500,000 shares of the
Company’s common stock at $.01 per share. These options will vest in one
year and will expire in three years.
Equity
Incentive Plan
On
October 5, 2006, the Company’s Board of Directors adopted the Company’s 2006
Equity Incentive Plan, which authorizes the Company to issue options for the
purchase of up to 2,000,000 shares of the Company’s common stock, pursuant to
the terms and conditions set forth therein. The Equity Incentive Plan authorizes
the issuance of incentive stock options (ISO) and non-qualified stock options
(NQOs) to our employees, directors or consultants.
During
the year ended November 30, 2006, the Company issued 517,500 stock options to
officers and directors of the Company with an average exercise price of $0.30
per share. Of the stock options issued, 450,000 were vested on October 5, 2006,
33,750 were vested on November 1, 2006 and the balance vested on November 1,
2007. Following the resignation of one of our directors in January 2007,
70,000 such options were cancelled. During the month of August, 2007, the
Company issued 50,000 stock options to officers and directors of the Company
with an average exercise price of $2.86 per share. Of the stock options issued,
50,000 vested on August 1, 2007. No options were exercised during the
years ended January 31, 2009 or December 31, 2009. As of January 31, 2009
we had three directors and officers eligible to receive options under the Equity
Incentive Plan. Options to buy 277,500 shares of common stock (equal
to 4,625 shares of common stock after the 1 for 60 stock split) were
outstanding under the Equity Incentive Plan and 1,722,500 shares remained
available for grants under this plan. As of December 31, 2009, we had five
officers and directors eligible to receive options under the Equity Incentive
Plan. Options to buy 336 shares of common stock were outstanding under
the Equity Incentive Plan and 1,999,664 options remained eligible for
grant.
2006
Equity Plan Administration
The
compensation committee is empowered to select those eligible persons to whom
options shall be granted under the 2006 Equity Incentive Plan; to determine the
time or times at which each option shall be granted, whether options will be
ISOs or NQOs and the number of shares to be subject to each option; and to fix
the time and manner in which each option may be exercised, including the
exercise price and option period, and other terms and conditions of options, all
subject to the terms and conditions of the 2006 Equity Incentive Plan. The
compensation committee has sole discretion to interpret and administer the Plan,
and its decisions regarding the Plan are final.
2006 Equity Plan Option
Pricing
Each
grant shall specify an option price per share, which shall be equal to or
greater than the fair market value per share on the grant date; provided that in
the case of any incentive stock option granted to a person who on any given date
owns, either directly or indirectly (taking into account the attribution rules
contained in Section 424(d) of the Code), stock possessing more than 10 percent
of the total combined voting power of all classes of stock of the Company or any
subsidiary, the option price shall not be less than 110% of the fair market
value of a share on the date of grant.
2006
Equity Plan Amendment and Termination
The Plan
may be amended from time to time by the Board, but no such amendment shall
increase any of the limitations concerning the shares or options available under
the Plan, other than to reflect an adjustment made in accordance with Section 14
of the Plan (i.e. dilution, enlargement of the rights of participants in the
Plan), change the class of persons eligible to receive grants of awards or the
types of awards available under the Plan and increase the benefits to
participants under the Plan, in any such case without the further approval of
the stockholders of the Company. The Board will also condition any
amendment on the approval of the stockholders of the Company if such approval is
necessary with respect to the applicable listing or other requirements of a
national securities exchange or other applicable laws, policies or regulations,
and the Board may condition any amendment on the approval of the stockholders of
the Company if such approval is deemed advisable to comply with such
requirements.
The Plan
shall terminate on the tenth anniversary of the date upon which it is approved
by the stockholders of the Company, and no award shall be granted after that
date.
The
Company expects to adopt a new equity plan during the foreseeable future which
will be similar to the 2006 Plan.
33
Indemnification
Agreements
Through
its Indemnification Agreements, the Company agrees to indemnify directors and
officers, to the extend provided for in the Agreement, and to hold them harmless
from and against, any losses or expenses at any time incurred by or assessed
against them arising out of or in connection with their work as a director,
advisory director, Board Committee member, officer, employee or agent of the
Company or of an affiliate, whether the basis of such proceeding is alleged
action in an official capacity or in any other capacity while serving as an
officer or director of the Company or of an Affiliate, to the fullest extent
permitted by law in as in effect or as such laws may from time to time hereafter
be amended to increase the scope of such permitted indemnification.
Whistleblower
Procedures Policy
In
accordance with the requirements of Section 301 of the Sarbanes-Oxley Act of
2002, the Board of Directors the Company has adopted this Whistleblower
Procedures Policy, stating that all employees of the Company and its
subsidiaries are strongly encouraged to report any evidence of financial
irregularities which they may become aware of, including those with respect to
internal controls, accounting or auditing matters. Under this
Whistleblower Procedures Policy, the management of the Company shall promptly
and periodically communicate to all employees with access to accounting, payroll
and financial information the means by which they may report any such
irregularities. In the event an employee is uncomfortable for any reason
reporting irregularities to his or her supervisor or other management of the
Company, employees may report directly to any member of the Board of Directors
of the Company. The identity of any employee reporting under these
procedures will be maintained as confidential at the request of the employee, or
may be made on an anonymous basis. Notice must be provided to all of the
Company’s employees with access to accounting, payroll and financial information
in respect of these procedures.
Changes
in Control
As of the
date of filing of this Report, the Company is unaware of any arrangement which
may result in a change in control.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth, as of the close of business on April 29, 2010, the
total number of shares owned beneficially by the Company’s directors, officers
and key employees, and any person (including any group) who is known to the
Company to be the beneficial owner of more than five percent of any class of the
Company's voting securities. Except as otherwise indicated below, each
person named has sole voting and investment power with respect to the shares
indicated. The percentage of ownership set forth below reflects each holder's
ownership interest in the 81,880,988 shares of the Company's common
stock outstanding as of April 29, 2010. The number of shares set
forth below reflect both our August 10, 2009 one for sixty stock split, and our
share exchange which was entered into as of November 12, 2009.
Amount and Nature
of
Beneficial
Ownership
Name and Address of Beneficial Owner
|
Shares
|
Options/
Warrants (1)
|
Total (1)
|
Percentage of
Shares
Outstanding (1)
|
||||||||||||
Five
Percent Stockholders
|
||||||||||||||||
Lara
Mac Inc.(2)
|
6,000,000
|
0
|
6,000,000
|
7.3
|
%
|
|||||||||||
Joseph
H. Masselli
|
15,000,000
|
0
|
15,000,000
|
18.3
|
%
|
|||||||||||
Executive
Officers and Directors
|
||||||||||||||||
Mitchell
Brown, Chief Executive Officer and Director (2)
|
36,000,000
|
0
|
36,000,000
|
44
|
%
|
|||||||||||
Joseph
Masselli, President, Chief Operating Officer and
Director
|
15,000,000
|
0
|
15,000,000
|
18.3
|
%
|
|||||||||||
Alex
J. Kaminski, Chief Financial Officer, Treasurer and
Director
|
0
|
0
|
0
|
0
|
%
|
|||||||||||
Steve
Savage, Secretary and Director
|
750,000
|
0
|
750,000
|
.9
|
%
|
|||||||||||
Scott
Smith, Director
|
0
|
0
|
0
|
0
|
%
|
|||||||||||
All
officers and directors as group (5 persons)
|
51,750,000
|
0
|
51,750,000
|
63.2
|
%
|
* Less
than 1%.
The
mailing address for each of the officers and directors is Cono Italiano, Inc.,
10 Main Street, Keyport, NJ 07735.
(1)
Includes options and warrants exercisable as of the date hereof or within
60 days hereafter. The Company is unaware of any pledges of any shares, options
or warrants by any of the individuals or entities listed above. The
Company intends to make option grants to certain officers and directors within
the foreseeable future, however, no options or agreements pertaining to options
have been granted or entered into by the Company or such officers and directors
as of the date hereof.
34
(2)
Our Chief Executive Officer Mr. Mitchell Brown has sole voting power and sole
power of disposition over all 6,000,000 shares of Company common owned by Lara
Mac Inc. (in addition to 30,000,000 shares owned by Mr. Brown directly), and as
such all such shares are therefore deemed to be beneficially owned by Mr.
Brown.
Potential
Changes in Control
To the
knowledge of management, there are no present arrangements or pledges of
securities of the Company which may result in a change in control of the
Company.
Changes
in Control
On June
4, 2009, an Affiliate Stock Purchase Agreement (the “Stock Purchase Agreement”)
was entered into by and between Gallant Energy International Inc. (“Gallant”),
the owner of 5,000,000 shares of the Company’s common stock and Lara Mac Inc.
(“Lara Mac”), an entity controlled by Mitchell Brown (who is now the Chief
Executive Officer of the Company and a member of the Company’s Board of
Directors). Pursuant to the Stock Purchase Agreement, Gallant sold all of
its 5,000,000 shares of the Company’s common stock to Lara Mac.
The
Gallant transaction with Lara Mac resulted in a change in control of the largest
voting block of the Company effective as of June 4, 2009. The compensation
which Gallant received from Lara Mac consisted of Lara Mac’s agreement to assure
the payment of certain obligations of the Company in the amount of $162,139
which shall be paid by the Company in due course. The Company is not a
party to the Stock Purchase Agreement. The address of Lara Mac is 10 Main
Street, Keyport, NJ 07735.
In
addition, on June 22, 2009, the Company and Lara Mac entered into a Management
Services Agreement. In exchange for the provision of services as set forth
therein, Lara Mac received 9,553,377 shares of the Company’s common stock. On
November 6, 2009, as additional inducement to the shareholders of Cono Italiano
(Delaware) to enter into the Share Exchange Agreements, Lara Mac Inc. agreed to
the termination of the Management Services Agreement with Cono Italian (Nevada)
and cancellation of all Cono Italian (Nevada) shares previously issued to Lara
Mac under the Management Services Agreement (242,557 shares of the Company’s
common stock as adjusted for the one-for-sixty reverse stock
split).
After
giving effect to the Share Exchange, Mitchell Brown, both as an individual
and through his control of Lara Mac, controls 36,000,000 shares of the Company’s
common stock. These shares constitute 44% of the Company’s 81,880,988
issued and outstanding shares.
Adverse
Interests
The
Company is not aware of any material proceeding to which any director, officer,
or affiliate of the Company, or any owner of record or beneficially of more than
five percent of any class of the Company’s voting securities, or security holder
is a party adverse to the Company or has a material interest adverse to the
Company.
35
TRANSACTIONS
WITH RELATED PERSONS, PROMOTERS AND CERTAIN CONTROL PERSONS
Lara
Mac Inc. Management Services Agreement
On June
22, 2009, Lara Mac Inc., an entity controlled by Mitchell Brown, our Chief
Executive Officer and a member of our Board of Directors, entered into a
Management Services Agreement with the Company (the “Management Services
Agreement”). Pursuant to the Management Services Agreement, Lara
Mac would render to the Company consulting and other advisory services in
relation to developing strategic plans for inception of operations, corporate
management, the operations of the Company, strategic planning, domestic and
international marketing and sales, financial advice, including, without
limitation, advisory and consulting services in relation to the selection and
retention of candidates for senior management of the Company and its
subsidiaries, prospective strategic alliance partners, preparing acquisition
growth plans, identifying prospective merger and acquisition candidates,
developing value propositions for the Company and acquisition candidates,
analyzing financial implications of potential transactions, advising on
negotiations regarding terms and conditions of transactions, outlining and
managing due diligence issues and due diligence processes, introductions to
prospective customers, selection of investment bankers or other financial
advisors or consultants, and advice with respect to the capital structure of the
Company, equity participation plans, employee benefit plans and other incentive
arrangements for certain key executives of the Company (collectively, the
“Services”). In exchange for the Services, Lara Mac shall receive
9,553,377 shares of the Company’s common stock (the “Fee”). The value of
the restricted shares of common stock constituting the Fee is deemed to be
$0.044 per share, which is equivalent to fifty percent of the average closing
trading price of the Company’s common stock during the ninety day period of
February 27, 2009, through May 27, 2009. Such time period is deemed to
constitute an objective public capital market valuation of the Company’s stock
price, having an aggregate value of $410,666 (the “Issue Value”). The
parties to the Management Services Agreement also agreed that Lara Mac may
render other services beyond the scope of activities which the parties
contemplate as part of the Services, as to which Lara Mac shall be entitled to
separate compensation that shall be negotiated in good faith by the parties on a
case-by-case basis. In the event that the Company is not generating
organic revenues (excluding interest and investment income) as of the first
anniversary of the date of the Management Services Agreement, then all of the
Shares constituting the Fee shall be subject to repurchase in the entirety by
the Company at a repurchase price equal to the Issue Value. On November 6, 2009,
as additional inducement to the shareholders of Cono Italiano (Delaware) to
enter into the Share Exchange Agreements, Lara Mac Inc. agreed to the
termination of the Management Services Agreement with Cono Italian (Nevada) and
cancellation of all Cono Italian (Nevada) shares previously issued to Lara Mac
under the Management Services Agreement (242,557 shares of the Company’s common
stock as adjusted for the one-for-sixty reverse stock split).
There
have been no transactions, since the beginning of the Company’s last fiscal
year, and there are no currently proposed transactions, in which the Company was
or is to be a participant and the amount involved exceeds the lesser of $120,000
or one percent of the average of the Company’s total assets at fiscal year-end
for the last three completed fiscal years, and in which any related person had
or will have a direct or indirect material interest, except as set forth
above.
Mr. Scott
Smith, who is the only current member of the Board of Directors who is
independent under the standards for independence contained in the Nasdaq
Marketplaces Rules, Rule 5605(a)(2), has independently reviewed and assessed the
fairness of the Management Services Agreement. Mr. Smith has determined
that the terms and conditions of the Management Services Agreement are fair and
reasonable to the Company and its shareholders and he has recommended that the
Management Services Agreement be adopted and approved by the entire Board of
Directors. Mr. Mitchell Brown, having an economic interest in the
Management Services Agreement through his beneficial ownership of Lara Mac,
recused himself from all deliberations and voting in regard to the Management
Services Agreement.
Edesia
Emprise, LLC
In July
of 2008, the Company’s Chief Executive Officer, Mitchell Brown and Ramona
Fantini of Pino Gelato formed a manufacturing entity, Edesia Emprise, LLC, to
produce and manufacturer the "Cones" used in the Company’s products at a
location in Indianapolis Indiana. Mitchell Brown transferred his ownership
interests in Edesia Emprise, LLC to his father, Gene Brown, later that
month.
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master Manufacturing
Agreement, Edesia Emprise, LLC will produce the Company’s Pizza Cono
product. Cono Italiano (Delaware) has agreed to pay Edesia Emprise, LLC
the costs of production plus fifteen percent (15%). This Master
Manufacturing Agreement has a five (5) year term and will automatically renew
unless cancelled by one of the parties pursuant to its terms. This Master
Manufacturing Agreement is exclusive within the United States. Under the
Master Manufacturing Agreement, Edesia Emprise, LLC may engage qualified
subcontractors throughout its territory for purposes of performing its
obligations to the Company. On December 8, 2009, the Company was advised
that Edesia Emprise had entered into its first subcontract agreement with
Sunrise Baking Acquisition Company, based in Brooklyn, New York.
On
November 12, 2009, the Company’s Board of Directors ratified the Master
Manufacturing Agreement entered into by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC. The Board has determined that the terms and
conditions of this agreement are fair and reasonable to the Company and its
shareholders. Mr. Mitchell Brown, whose father owns Edesia Emprise, LLC,
recused himself from all deliberations and voting in regard to this
agreement.
36
DIRECTOR
INDEPENDENCE
Mr. Scott
Smith is the only current member of the Board who may be deemed to be
independent. The Company has adopted the standards for independence
contained in the Nasdaq Marketplaces Rules, Rule 5605(a)(2).
LEGAL
MATTERS
The
validity of the shares of common stock offered hereby will be passed upon for us
by Michael J. Morrison Esq., special Nevada counsel to the Company. Mr.
Morrison’s mailing address is 1495 Ridgeview Drive, Suite 220 Reno, Nevada
89509.
The
Company’s general securities counsel is Wuersch & Gering LLP. The mailing
address for Wuersch & Gering LLP is 100 Wall Street, 21st Floor,
New York, NY 10005.
EXPERTS
Our
financial statements as of December 31, 2008 and December 31, 2009, have been
included herein in reliance upon the report of EFP Rotenberg, LLP, Certified
Public Accountants, independent registered public accounting firm, appearing
elsewhere herein, and upon authority of said firm as experts in accounting and
auditing.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION
FOR
SECURITIES ACT LIABILITIES
We have a
provision in our bylaws providing for indemnification of our officers and
directors.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers or persons controlling us pursuant to the
foregoing provisions, or otherwise, we have been advised that in the opinion of
the Commission, such indemnification is against public policy as expressed in
the Securities Act and is, therefore, unenforceable.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We have
filed with the Commission a registration statement on this Form S-1 under the
Securities Act, with respect to the common stock offered by this prospectus.
This prospectus, filed as part of the registration statement, does not contain
all of the information set forth in the registration statement and its exhibits
and schedules. For further information regarding us and the shares offered
hereby, please refer to the registration statement. You may inspect a copy of
the registration statement without charge at the Commission's principal offices,
and you may obtain copies of all or any part of the registration statement from
such office upon payment of the fees prescribed by the Commission.
In
addition to this registration statement, we are also required to file periodic
reports and other information with the Securities and Exchange Commission,
including quarterly reports and annual reports which include our audited
financial statements. You may read and copy any reports, statements or
other information we file at the Commission’s public reference facility
maintained by the Commission at 100 F Street, N.E., Washington, D.C. 20549, on
official business days during the hours of 10:00am to 3:00pm. You can request
copies of these documents, upon payment of a duplicating fee, by writing to the
Commission. Please call the Commission at 1-800-SEC-0330 for further information
on the operation of the public reference room. Our SEC filings are also
available to the public through the Commission Internet site at http\\www.sec.gov .
These filings may be inspected and copied (at prescribed rates) at the
Commission's Public Reference Room at 100 F Street, N.E., Washington, D.C.
20549.
You may
also request a copy of our filings at no cost, by writing of telephoning us
at:
Cono
Italiano, Inc.
10
Main Street
Keyport,
NJ 07735
Telephone:
877-330-2666
Attn:
Mitchell Brown
Chief
Executive Officer
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS JANEX INTERNATIONAL, INC.)
(A
DELAWARE CORPORATION)
Long
Branch, New Jersey
FINANCIAL
REPORTS
|
AT
|
DECEMBER
31, 2009
|
TABLE
OF CONTENTS
|
|
Report
of Independent Registered Public Accounting Firm
|
F-2
|
Consolidated
Balance Sheets at December 31, 2009 and 2008
|
F-3
|
Consolidated
Statements of Changes in Stockholders’ Deficit for the Years Ended
December 31, 2009 and 2008
|
F-4
|
Consolidated
Statements of Operations for the Years Ended December 31, 2009 and
2008
|
F-5
|
Consolidated
Statements of Cash Flows for the Years Ended December 31, 2009 and
2008
|
F-6
|
Notes
to Consolidated Financial Statements
|
F-7
- F-18
|
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors and
Stockholders
of Cono Italiano, Inc.
10
Main Street
Keyport,
New Jersey 07735
We
have audited the accompanying consolidated balance sheets of Cono Italiano, Inc.
as of December 31, 2009 and 2008, and the related consolidated statements of
operations, changes in stockholders' deficit, and cash flows for each of the
years in the two-year period ended December 31, 2009. Cono Italiano, Inc.’s
management is responsible for these financial statements. Our responsibility is
to express an opinion on these financial statements based on our
audits.
We
conducted our audits in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. The company is not required to
have, nor were we engaged to perform, an audit of its internal control over
financial reporting. Our audit included consideration of internal control over
financial reporting as a basis for designing audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an
opinion on the effectiveness of the company’s internal control over financial
reporting. Accordingly, we express no such opinion. An audit also includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements, assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our
opinion, the consolidated financial statements referred to above present fairly,
in all material respects, the financial position of Cono Italiano, Inc. as of
December 31, 2009 and 2008, and the results of its operations and its cash flows
for each of the years in the two-year period ended December 31, 2009 in
conformity with accounting principles generally accepted in the United States of
America.
The
accompanying consolidated financial statements have been prepared assuming that
the Company will continue as a going concern. As discussed in Note H to the
consolidated financial statements, the Company's significant operating losses
raise substantial doubt about its ability to continue as a going concern. The
consolidated financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/
EFP Rotenberg, LLP
EFP
Rotenberg, LLP
Rochester,
New York
April
15, 2010
F-2
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED BALANCE SHEETS
December 31,
|
2009
|
2008
|
||||||
ASSETS
|
||||||||
Cash
and Cash Equivalents
|
$ | 10,658 | $ | 724 | ||||
Due
from Related Party
|
133,938 | 55,500 | ||||||
Prepaid
Expenses
|
20,048 | 4,615 | ||||||
Total
Current Assets
|
164,644 | 60,839 | ||||||
Property
and Equipment - Net of Accumulated Depreciation
|
20,393 | 36,156 | ||||||
Other
Assets
|
||||||||
Licensing
Rights - Net of Accumulated Amortization
|
137,004 | 143,502 | ||||||
Total
Assets
|
$ | 322,041 | $ | 240,497 | ||||
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
||||||||
Liabilities
|
||||||||
Accounts
Payable
|
$ | 199,427 | $ | — | ||||
Accrued
Expenses
|
39,400 | — | ||||||
Accrued
Legal Expense
|
63,360 | — | ||||||
Accrued
Interest
|
36,182 | 17,885 | ||||||
Deferred
Revenue
|
10,109 | 4,750 | ||||||
Notes
Payable
|
231,987 | 200,000 | ||||||
Due
to Officer
|
624,366 | 568,828 | ||||||
Total
Current Liabilities
|
1,204,831 | 791,463 | ||||||
Other
Liabilities
|
||||||||
Deferred
Revenue
|
75,816 | 40,375 | ||||||
Total
Liabilities
|
1,280,647 | 831,838 | ||||||
Stockholders'
Deficit
|
||||||||
Common
Stock - $.001 Par; 100,000,000 Shares Authorized,
|
||||||||
79,880,988
and 53,250,000 Shares Issued and Outstanding
|
79,881 | 53,250 | ||||||
Additional
Paid-In-Capital
|
378,923 | 335,494 | ||||||
Deficit
|
(1,417,410 | ) | (980,085 | ) | ||||
Total
Stockholders' Deficit
|
(958,606 | ) | (591,341 | ) | ||||
Total
Liabilities and Stockholders' Deficit
|
$ | 322,041 | $ | 240,497 |
The
accompanying notes are an integral part of these financial
statements.
F-3
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED
STATEMENTS OF CHANGES IN STOCKHOLDERS ’ DEFICIT
FOR THE YEARS ENDED DECEMBER 31, 2009 AND 2008
Common
Stock
|
Additional
|
Treasury
|
Total
|
|||||||||||||||||||||
$ .001 Par
|
Paid-In
|
Stock
|
Stockholders'
|
|||||||||||||||||||||
Shares
|
Amount
|
Capital
|
Deficit
|
at Cost
|
Deficit
|
|||||||||||||||||||
Balance
- January 1, 2008 (1)
|
6,000,000
|
$
|
6,000
|
$
|
159,000
|
$
|
(50,290
|
)
|
$
|
—
|
$
|
114,710
|
||||||||||||
Additional
Paid-In-Capital - Deemed Distribution
|
—
|
—
|
(312,000
|
)
|
—
|
—
|
(312,000
|
)
|
||||||||||||||||
Common
Stock Issued to Prior Owners
|
3,000,000
|
3,000
|
54,000
|
—
|
—
|
57,000
|
||||||||||||||||||
Common
Stock Issued in Exchange for Services
|
44,250,000
|
44,250
|
434,494
|
—
|
—
|
478,744
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
(929,795
|
)
|
—
|
(929,795
|
)
|
||||||||||||||||
Balance
- December 31, 2008
|
53,250,000
|
53,250
|
335,494
|
(980,085
|
)
|
—
|
(591,341
|
)
|
||||||||||||||||
Common
Stock Issued in Exchange for Services
|
7,616,428
|
7,616
|
178,777
|
—
|
—
|
186,393
|
||||||||||||||||||
Common
Stock Issued for Cash
|
262,000
|
262
|
64,608
|
—
|
—
|
64,870
|
||||||||||||||||||
Common
Stock Issued for Related Party Expense
|
500,000
|
500
|
69,500
|
—
|
—
|
70,000
|
||||||||||||||||||
Acquisition
of Shell (1)
|
242,560
|
243
|
(272,946
|
)
|
—
|
—
|
(272,703
|
)
|
||||||||||||||||
Common
Stock Issued to Relieve Accounts Payable
|
10,000
|
10
|
3,490
|
—
|
—
|
3,500
|
||||||||||||||||||
Common
Stock Issued for Note Payable Conversion
|
18,000,000
|
18,000
|
—
|
—
|
—
|
18,000
|
||||||||||||||||||
Net
Loss
|
—
|
—
|
—
|
(437,325
|
)
|
—
|
(437,325
|
)
|
||||||||||||||||
79,880,988
|
$
|
79,881
|
$
|
378,923
|
$
|
(1,417,410
|
)
|
$
|
—
|
$
|
(958,606
|
)
|
(1)
|
The
stockholders equity of Cono Italiano, Inc. has been recapitalized to give
effect to the shares received by the existing shareholders of Cono
Italiano, Inc. form the share exchange agreement with Tiger Renewable
Energy Inc.
|
The
accompanying notes are an integral part of these financial
statements.
F-4
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended December 31,
|
2009
|
2008
|
||||||
Sales
|
$
|
12,600
|
$
|
11,285
|
||||
Cost
of Sales
|
3,455
|
5,668
|
||||||
Gross
Profit
|
9,145
|
5,617
|
||||||
Expenses
|
||||||||
Selling
and Direct
|
48,735
|
121,631
|
||||||
Compensation
Expense
|
140,005
|
280,000
|
||||||
General
and Administrative
|
240,634
|
521,863
|
||||||
Interest
Expense
|
20,296
|
11,918
|
||||||
Gain
on Sale of Assets
|
(3,200
|
)
|
—
|
|||||
Total
Expenses
|
446,470
|
935,412
|
||||||
Net
Loss
|
$
|
(437,325
|
)
|
$
|
(929,795
|
)
|
||
Loss
per Share - Basic and Diluted
|
$
|
(0.01
|
)
|
$
|
(0.02
|
)
|
||
Weighted
Average Common Shares Outstanding
|
55,716,122
|
40,687,123
|
The
accompanying notes are an integral part of these financial
statements.
F-5
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
CONSOLIDATED STATEMENTS OF CASH FLOWS
For
the Years Ended December 31,
|
2009
|
2008
|
||||||
Cash
Flows from Operating Activities
|
||||||||
Net
Loss
|
$ | (437,325 | ) | $ | (929,795 | ) | ||
Adjustments
to Reconcile Net Loss to
|
||||||||
Net Cash Flows from Operating Activities:
|
||||||||
Amortization
|
6,498 | 6,498 | ||||||
Depreciation
|
14,587 | 13,980 | ||||||
Common
Stock Issued in Exchange for Services
|
170,960 | 478,744 | ||||||
Expense
to Prior Owners
|
— | 257,000 | ||||||
Gain
on Sale of Assets
|
(3,200 | ) | — | |||||
Changes
in Assets and Liabilities:
|
||||||||
Prepaid
Expenses
|
— | (4,615 | ) | |||||
Accounts
Payable
|
(22,703 | ) | — | |||||
Accrued
Expenses
|
39,400 | — | ||||||
Accrued
Legal Expense
|
63,360 | — | ||||||
Accrued
Interest
|
20,296 | 11,918 | ||||||
Deferred
Revenue
|
40,800 | 45,125 | ||||||
Net
Cash Flows from Operating Activities
|
(107,327 | ) | (121,145 | ) | ||||
Net
Cash Flows from Investing Activities
|
||||||||
Proceeds
from Sale of Asset
|
5,000 | — | ||||||
Acquisition
of Cash in Reorganization
|
916 | — | ||||||
Purchase
of Property and Equipment
|
(625 | ) | (15,374 | ) | ||||
Net
Cash Flows from Investing Activities
|
5,291 | (15,374 | ) | |||||
Cash
Flows from Financing Activities
|
||||||||
Cash
Proceeds from Sale of Stock
|
64,870 | — | ||||||
Cash
Advance to Related Party
|
(8,438 | ) | (55,500 | ) | ||||
Due
to Officer
|
55,538 | 92,226 | ||||||
Net
Cash Flows from Financing Activities
|
111,970 | 36,726 | ||||||
Net
Change in Cash and Cash Equivalents
|
9,934 | (99,793 | ) | |||||
Cash
and Cash Equivalents - Beginning of Year
|
724 | 100,517 | ||||||
Cash
and Cash Equivalents - End of Year
|
$ | 10,658 | $ | 724 | ||||
Supplemental
Non-Cash Investing and Financing Activities:
|
||||||||
Acquisition
of Accounts Payable in Reorganization
|
$ | 210,132 | $ | — | ||||
Acquisition
of Notes Payable in Reorganization
|
$ | 47,988 | $ | — | ||||
Deemed
Distribution
|
$ | — | $ | 312,000 | ||||
Common
Stock Issued for Prepaid Expenses
|
$ | 15,433 | $ | — | ||||
Common
Stock Issued to Relieve Accounts Payable
|
$ | 3,500 | $ | — | ||||
Common
Stock Issued for Note Payable Conversion
|
$ | 18,000 | $ | — | ||||
Common
Stock Issued for Related Party Payable
|
$ | 70,000 | $ | — | ||||
Cash
Paid During the Year for:
|
||||||||
Interest
|
$ | — | $ | — | ||||
Income
Taxes
|
$ | — | $ | — |
The
accompanying notes are an integral part of these financial
statements.
F-6
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note
A -
|
The
Company
|
Merger
and Recapitalization
The
Company was incorporated in the State of Nevada on September 9, 2004, as Arch
Management Services Inc. A change of control of the Company occurred on
June 5, 2006 and the Company changed its name form “Arch Management Services
Inc.” to “Tiger Ethanol International Inc.” on November 24, 2006. On
February 11, 2008 the Company changed its name to “Tiger Renewable Energy
Ltd.” Another change of control of the Company occurred on June 4,
2009. On August 10, 2009 the Company changed its name to “Cono Italiano,
Inc.” (Cono Italiano, Inc. (Nevada)). On November 12, 2009 Cono Italiano, Inc.
entered into a share exchange agreement with Cono Italiano, Inc. a Delaware
Corporation (Cono Italiano, Inc. (Delaware)).
The
Company was previously party to a joint venture named Xinjiang Yajia Distillate
Company Limited (the “Venture”) to produce ethanol in the People’s Republic of
China. The Company’s board of directors determined that it was in the
Company’s best interest to initiate a withdrawal from the ethanol business as of
January 31, 2009 and assess alternative businesses.
On
June 4, 2009 an Affiliate Stock Purchase Agreement (the “Stock Purchase
Agreement”) was entered into by and between Gallant Energy International Inc.
(“Gallant”), the owner of 5,000,000 shares of the Company’s common stock (prior
to the Company’s one for sixty reverse stock split) and Lara Mac Inc. (“Lara
Mac”), an entitiy controlled by Mitchell Brown (now the Chief Executive Officer
of the Company and a member of the Company’s Board of Directors). Pursuant
to the Stock Purchase Agreement, Gallant sold all of its 5,000,000 shares of the
Company’s common stock to Lara Mac. The Gallant transaction with Lara Mac
resulted in a change in control of the largest voting block of the Company
effective as of June 4, 2009.
Reorganization
with Cono Italiano, Inc. (Delaware)
Janex
International Inc. was formed on July 6, 2007, in the State of
Delaware. On January 8, 2008 Janex International Inc., changed its
name to Cono Italiano, Inc (Delaware).
Cono
Italiano, LLC (Cono, LLC) was formed on June 27, 2007 as a limited liability
company in the State of New Jersey. Cono, LLC had no operations and its
primary assets were the license rights to manufacture, market, and distribute
“pizza cono”, a unique pizza style food product.
- continued -
F-7
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note
A -
|
The
Company - continued
|
Merger
and Recapitalization
In
March 2007, the license rights held by the individual founders of Cono, LLC were
sold to The Total Luxury Group (TLG), an unrelated entity. Subsequently,
on January 8, 2008 the license rights were transferred to Mitchell Brown for the
total consideration of $312,000. The transfer of Cono, LLC (which includes
the license rights) was effected in settlement of an obligation due to Mitchell
Brown by TLG.
On
January 14, 2008, Cono, LLC was sold to Cono Italiano, Inc. (Delaware) for
the total consideration of $426,000. In exchange for the 100% interest in
Cono, LLC, the sole member of the LLC received 6,000,000 shares of Cono
Italiano, Inc. (Delaware) valued at $114,000 and was issued a promissory note
for $312,000. Mitchell Brown is also a principal stockholder in Cono
Italiano, Inc. (Delaware).
The
transaction was accounted for as a recapitalization of Cono Italiano, Inc.
(Delaware) and Cono, LLC; as both companies were under common control. As
such, the assets and liabilities of Cono, LLC were carried over to Cono
Italiano, Inc. (Delaware) at the historical carrying values.
At the
time of the sale of Cono, LLC to Cono Italiano, Inc. (Delaware), Cono LLC had a
tangible net book value of $114,700. Since the assets and liabilities of Cono,
LLC were recorded at their historical carrying amounts after the merger and
recapitalization, the excess of the consideration paid of $426,000 over the
carrying value of $114,700 had been recorded as a distribution to the
stockholder.
On
November 12, 2009 Cono Italiano, Inc. (Delaware) entered into a share exchange
agreement whereby Cono Italiano, Inc. (Delaware) would exchange all of its
common stock for the stock of Cono Italiano, Inc. (Nevada) on a share for share
basis. Prior to entering into the share exchange agreement, the principal
stockholder of Cono Italiano, Inc. (Delaware) became a stockholder of TRE,
either through direct ownership or through an entity in which he controlled,
effectively gaining control of Cono Italiano, Inc. (Nevada) , and on August 10,
2009, Cono Italiano, Inc. (Nevada) changed its name to Cono Italiano,
Inc., a Nevada corporation. As an inducement for Cono Italiano,
Inc. (Delaware) to enter the share exchange agreement, Cono Italiano, Inc.
(Nevada)’s largest shareholder has agreed to the cancellation of 242,557 shares
of Cono Italiano, Inc. (Nevada) stock.
The
exchange of shares between Cono Italiano, Inc., (Delaware) and Cono Italiano,
Inc., (Nevada) will be accounted for as a recapitalization of the Companies, as
the majority stockholder of Cono Italiano, Inc. will be the majority stockholder
of the surviving company. Pursuant to the accounting for a
recapitalization, the historical carrying value of the assets and liabilities of
Cono Italiano, Inc. (Nevada) will carry over to the surviving
company.
Effective
at the closing of the share exchange transactions, November 12, 2009, Cono
(Delaware) became a wholly owned subsidiary of Cono (Nevada).
- continued -
F-8
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note A
-
|
The Company -
continued
|
Scope
of Business
The
Company is licensed to distribute an innovative food product - a cone-shaped
pizza called "Pizza Cono." The product will be distributed into fast
food market establishments which include typical fast food chains, supermarkets,
convenience stores, entertainment facilities, and sports arenas. The
Company’s focus will be the sale and management of licensing and distribution
agreements with customers.
Note B -
|
Summary of Significant Accounting
Policies
|
Principles
of Consolidation
The
consolidated financial statements include the accounts of Cono Italiano, Inc.
(Nevada) and its wholly owned subsidiary, Cono Italiano, Inc. (Delaware) (the
“Company”). All significant intercompany balances have been
eliminated in consolidation.
Method
of Accounting
The
Company maintains its books and prepares its financial statements on the accrual
basis of accounting.
Cash
and Cash Equivalents
Cash and
cash equivalents include time deposits, certificates of deposit, and all highly
liquid debt instruments with original maturities of three months or
less. The Company maintains cash and cash equivalents at financial
institutions, which periodically may exceed federally insured
amounts.
Property,
Equipment and Depreciation
Property
and equipment are reflected at cost of acquisition and are depreciated on
various methods utilizing the following estimated lives:
Machinery
and Equipment
|
5 -
7 Years
|
Office
Equipment
|
3 -
7 Years
|
Maintenance
and repairs are expensed as incurred. The cost of property and
equipment retired or otherwise disposed of and the related accumulated
depreciation are removed from the accounts and reflected as other income or
expense.
Long-lived
Assets
The
Company accounts for impaired long-lived assets in accordance with FASB ASC
360-10-15-3, "Impairment or Disposal of Long-Lived Assets”. This
standard prescribes the method for asset impairment evaluation for long-lived
assets and certain identifiable intangibles that are either held and used or are
to be disposed of. The Company evaluates the ability to recover
long-lived assets whenever events or circumstances indicate that the carrying
value of the asset may not be recoverable. In the event assets are
impaired, losses are recognized to the extent the carrying value exceeds the
fair value. In addition, the Company reports assets to be disposed of
at the lower of the carrying amount or the fair market value less selling
costs.
-
continued -
F-9
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note B
-
|
Summary of Significant
Accounting Policies –
continued
|
Intangible
Assets
Intangible
assets consist of licensing rights. The Company applies an impairment
evaluation whenever events or changes in business circumstances indicate that
the carrying value of the intangible assets may not be
recoverable. Other intangible assets are amortized on a straight-line
basis over their estimated economic lives. The Company believes that
the straight-line method of amortization reflects an appropriate allocation of
the cost of the intangible assets to earnings in proportion to the amount of
economic benefits obtained annually by the Company.
Income
Taxes
The
Company accounts for income taxes in accordance with FASB ASC 740, “Income
Taxes” using the asset and liability approach, which requires recognition of
deferred tax liabilities and assets for the expected future tax consequences of
temporary differences between the carrying amounts and the tax basis of such
assets and liabilities. This method utilizes enacted statutory tax
rates in effect for the year in which the temporary differences are expected to
reverse and gives immediate effect to changes in income tax rates upon
enactment. Deferred tax assets are recognized, net of any valuation
allowance, for temporary differences and net operating loss and tax credit carry
forwards. Deferred income tax expense represents the change in net
deferred assets and liability balances.
Earnings
per Share
Earnings
per share of common stock are computed in accordance with FASB ASC 260,
“Earnings per Share”. Basic earnings per share are computed by
dividing income or loss available to common shareholders by the weighted-average
number of common shares outstanding for each period. Diluted earnings
per share are calculated by adjusting the weighted average number of shares
outstanding assuming conversion of all potentially dilutive stock options,
warrants and convertible securities, if dilutive. Common stock equivalents that
are anti-dilutive are excluded from both diluted weighted average number of
common shares outstanding and diluted earnings per share.
Use
of Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
Reclassifications
Certain
amounts in the prior year consolidated financial statements have been
reclassified to conform with current year presentation. The
reclassifications made to the prior year have no impact on the net income (loss)
or overall presentation of the consolidated financial
statements.
Fair
value of financial instruments
Prepaid
expenses, accrued expenses, notes payable, and amounts due to and from related
parties are carried in the financial statements at amounts which approximate
fair value.
-
continued -
F-10
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note B
-
|
Summary of Significant
Accounting Policies –
continued
|
Stock-Based
Compensation
Stock-based
compensation related to non-employees is recognized based on service provided in
the accompanying statements of operations and is based on the fair value of the
services received or the fair value of the equity instruments issued, whichever
is more readily determinable. The Company’s accounting policy for equity
instruments issued to consultants and vendors in exchange for goods and services
follows the provisions of FASB ASC 505, “Equity Based Payments to
Non-Employees”. The measurement date for the fair value of the equity
instruments issued is determined at the earlier of (i) the date at which a
commitment for performance by the consultant or vendor is reached or (ii) the
date at which the consultant or vendor’s performance is complete. In the case of
equity instruments issued to consultants, the fair value of the equity
instrument is recognized over the term of the consulting
agreement.
Note C -
|
Recently Issued Accounting
Standards
|
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB ASC
810-10-65 “Consolidations”. FASB ASC 810-10-65 establishes accounting
and reporting standards for the non-controlling interest in a subsidiary and for
the deconsolidation of a subsidiary. FASB ASC 810-10-65 is effective
for fiscal years, and interim periods within those fiscal years, beginning on or
after December 15, 2008. As such, the Company was required to adopt
these provisions at the beginning of the fiscal year ended December 31,
2009. The adoption of FASB ASC 810-10-65 on its consolidated
financial statements did not have a material effect.
In
December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB ASC
805 "Business Combinations”. FASB ASC 805 establishes principles and
requirements for recognition and measurement of identifiable assets and goodwill
acquired, liabilities assumed, and any noncontrolling interest in the acquiree
at fair value. The guidance also established disclosure requirements
to enable the evaluation of the nature and financial effects of a business
combination. FASB ASC 805 is effective for fiscal years, and interim
periods within those fiscal years, beginning on or after December 15,
2008. As such, the Company was required to adopt these provisions at
the beginning of the fiscal year ended December 31, 2009. The
adoption of FASB ASC 805 on its consolidated financial statements did not have a
material effect.
In
March 2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC
815-10 “Derivatives and Hedging”. FASB ASC 815-10 requires enhanced
disclosures about an entity’s derivative and hedging activities. FASB
ASC 815-10 is effective for financial statements issued for fiscal years and
interim periods beginning after November 15, 2008 with early application
encouraged. As such, the Company was required to adopt these
provisions at the beginning of the fiscal year ended December 31,
2009. The adoption of FASB ASC 815-10 on its consolidated financial
statements did not have a material effect.
-
continued -
F-11
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note C
-
|
Recently Issued Accounting
Standards – continued
|
In May
2008, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 944,
“Financial Services - Insurance”. FASB ASC 944 interprets Statement
60 and amends existing accounting pronouncements to clarify their application to
the financial guarantee insurance contracts included within the scope of that
Statement. FASB ASC 944 is effective for financial statements issued
for fiscal years beginning after December 15, 2008, and all interim periods
within those fiscal years. As such, the Company was required to adopt
these provisions at the beginning of the fiscal year ended December 31,
2009. The adoption of FASB ASC 944 on its financial statements did
not have a material effect.
In May
2009, the Financial Accounting Standards Board (“FASB”) issued FASB ASC 855,
“Subsequent Events”. FASB ASC 855 establishes general standards of
accounting for and disclosure of events that occur after the balance sheet date
but before the financial statements are issued. FASB ASC 855 was
effective for interim or annual financial periods ending after June 15,
2009. Adoption of FASB ASC 855 did not have a significant effect on
the Company’s consolidated financial statements.
In
June 2009, the FASB issued revised authoritative guidance related to variable
interest entities, which requires entities to perform a qualitative analysis to
determine whether a variable interest gives the entity a controlling financial
interest in a variable interest entity. The guidance also requires an
ongoing reassessment of variable interests and eliminates the quantitative
approach previously required for determining whether an entity is the primary
beneficiary. This guidance, which was reissued by the FASB in
December 2009 as ASU No. 2009-17, “Improvements to Financial
Reporting by Enterprises Involved with Variable Interest Entities,” amends ASC
Topic 810, “Consolidation”, and will be effective as of the beginning of an
entity’s first annual reporting period that begins after November 15, 2009
(January 1, 2010 for the Company). The Company does not expect that
the adoption of this guidance will have a significant impact on its consolidated
financial statements.
In
June 2009, the Financial Accounting Standards Board issued FASB ASC 105,
“Generally Accepted Accounting Principles”. FASB ASC 105 establishes the FASB Accounting Standards
Codification as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the
preparation of financial statements in conformity with GAAP. FASB ASC
105 is effective for financial statements issued for interim and annual periods
ending after September 15, 2009. The adoption changed certain
disclosure references to U.S. GAAP, but did not have any other impact on the
Company’s consolidated financial statements.
In
January 2010, the FASB issued Accounting Standards Updated (ASU) No. 2010-06,
“Improving Disclosures about Fair Value Measurements,” which amends ASC 820,
“Fair Value Measures and Disclosures.” ASU No. 2010-06 amends the ASC
to require disclosure of transfers into and out of Level 1 and Level 2 fair
value measurements, and also require more detailed disclosure about the activity
within Level 3 fair value measurements. The changes to the ASC as a
result of this update are effective for annual and interim reporting periods
beginning after December 15, 2009 (January 1, 2010 for the Company), except for
the requirements related to Level 3 disclosures, which are effective for annual
and interim reporting periods beginning after December 15, 2010 (January 1, 2011
for the Company). This guidance requires new disclosures only, and
will have no impact on the Company’s consolidated financial
statements.
F-12
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note D -
|
Property and
Equipment
|
Property
and equipment consisted of the following:
December 31,
|
2009
|
2008
|
||||||
Machinery
and Equipment
|
$
|
45,652
|
$
|
49,402
|
||||
Office
Equipment
|
2,398
|
1,774
|
||||||
$
|
48,050
|
$
|
51,176
|
|||||
Less: Accumulated
Depreciation
|
27,657
|
15,020
|
||||||
Net Property and
Equipment
|
$
|
20,393
|
$
|
36,156
|
Depreciation
expense for the years ended December 31, 2009 and 2008 was $14,587 and $13,980,
respectively.
Note E -
|
Licensing
Rights
|
Licensing
Rights were bought in February 2006 and have a life of 25 years. However, since
the Company was in the development stage in 2007 and 2006 the rights are being
amortized over 23 years and consist of the following:
December 31,
|
2009
|
2008
|
||||||
Licensing
Rights
|
$
|
150,000
|
$
|
150,000
|
||||
Less: Accumulated
Depreciation
|
12,996
|
6,498
|
||||||
Net Licensing Rights
|
$
|
137,004
|
$
|
143,502
|
Amortization
expense for each of the years ended December 31, 2009 and 2008 was
$6,498. Amortization for the next five (5) years is expected to be
$6,498 annually.
Note F
-
|
Related Party
Transactions
|
Due
from Related Party
On July
14, 2008, (the date of Edesia’s inception), the Company entered into an
operating agreement with Edesia Emprise, LLC to manufacture product for the
Company. The CEO of the Company owned 50% of Edesia until July 21, 2008 when he
transferred his interest to a relative. At the date of the transfer, Edesia had
no assets or business operations.
Due
from Related Party consists of monies advanced on behalf of Edesia Emprise,
LLC.
-
continued -
F-13
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note F
-
|
Related Party Transactions –
continued
|
Due
from Related Party
The
Company purchased manufacturing equipment on behalf of Edesia to be used by an
unrelated entity for the production of the pizza cones products. The
manufactured pizza cone products will be resold by Cono and its licensees.
Production of the pizza cones under the agreement began in
March 2009.
The
advances are non-interest bearing and is due upon demand. Due from
related party consists of the following:
December 31,
|
2009
|
2008
|
||||||
Edesia Emprise, LLC
|
$
|
133,937
|
$
|
55,500
|
On
November 11, 2009, Cono Italiano (Delaware) and Edesia Emprise, LLC entered into
a Master Manufacturing Agreement. Pursuant to this Master
Manufacturing Agreement, Edesia Emprise, LLC will produce the Company’s Pizza
Cono product. Cono Italiano (Delaware) has agreed to pay Edesia
Emprise, LLC the costs of production plus fifteen percent (15%). This
Master Manufacturing Agreement has a five (5) year term and will automatically
renew unless cancelled by one of the parties pursuant to its
terms. This Master Manufacturing Agreement is exclusive within the
United States. Edesia Emprise, LLC may either produce this product
directly or through a subcontractor.
Edesia
Emprise, LLC has advised Cono Italiano (Delaware) that it has entered into its
first subcontract agreement. Sunrise Bakery, located in Brooklyn, New
York, will produce the cones for the Pizza Cono product on behalf of Edesia
Emprise, LLC
Due
to Officer
Certain
disbursements of the Company have been paid by an officer of the
Company. The balance at December 31, 2009 and 2008 was $624,366 and
$568,828, respectively. There are no established repayment
terms. For the years ended December 31, 2009 and 2008, the Company
has imputed interest at the applicable federal rate of 2.64% and 3.25%,
respectively. Accrued interest was $33,939 and $17,885, at December 31, 2009 and
2008, respectively.
Note G
-
|
Notes
Payable
|
In
January, 2008, Cono Inc. (Delaware) issued 3,000,000 shares of common stock to
the former owners of the license rights of the Pizza Cono
Products. The shares were issued by agreement between Cono, Inc.
(Delaware) and the former owners in satisfaction of any future claims whether
known or unknown with regards to the license rights. In addition to
the shares issued, the Company also issued a note payable to the MEGK Group LLC
(the former owners) in the amount of $200,000 on December 28, 2007. Interest
accrued at 8% per annum, and the note was due in full on December 28,
2008. This note was also convertible automatically upon the sale of
all or substantially all of the assets of the Company or the merger,
consolidation or liquidation of the Company where the Company would not remain
in control of the new company. The note could also be converted at
option of the holder. Common stock issued upon conversion would be
calculated by dividing the principal amount of the note to be converted divided
by $.001. On November 1, 2009, MEGK assigned its rights to this note
payable to Azure Seas Ltd.
-
continued -
F-14
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note G
-
|
Notes Payable -
continued
|
On
December 16, 2009, Azure renegotiated the original convertible promissory note,
waived all past due interest on the note through November 1, 2009, and assigned
$18,000 of the note to various holders. Prior to December 31, 2009,
those holders converted their notes payable of $18,000 to 18,000,000 shares
common stock. At December 31, 2009 and 2008, note payable to Azure
was $182,000 and $200,000 to MEGK, respectively. For the years ended
December 31, 2009 and 2008 interest expense was $2,547 and $-0-,
respectively.
The
Company also has a note payable to DT Crystal Limited accruing interest at 10%
annual which is due upon demand. The note is convertible at the
option of the holder into restricted stock of Cono (Nevada). At
December 31, 2009 and 2008 note payable to DT Crystal was $49,987 and $-0-,
respectively. Interest expense for the years ended December 31, 2009
and 2008 was $1,999 and $-0-, respectively.
Note H
-
|
Going
Concern
|
The
Company’s financial statements have been presented on the basis that it is a
going concern, which contemplates the realization of assets and the satisfaction
of liabilities in the normal course of business. The Company has reported
recurring losses from operations. As a result, there is an
accumulated deficit of $1,417,410 at December 31, 2009.
The
Company’s continued existence is dependent upon its ability to raise
capital. The financial statements do not include any adjustments that
might be necessary should the Company be unable to continue as a going
concern
Note I
-
|
Employment
Contracts
|
On
December 30, 2009 the Company entered into employment agreements with each of
the officers serving the Company. The employment agreements contained
the following provisions: (i) two-year terms with automatic renewal provisions
unless notice is given by either party 30 days prior to renewal; (ii) commitment
of a substantial portion of their professional time to the Company, consisting
of 75% of their time for Mitchell Brown and 60% of their time for each of Joseph
Masselli, Alex Kaminski and Steve Savage; and (iii) and additional customary
employment agreement terms and conditions. The officers have agreed
that they will not receive any compensation for their services to the Company
prior to January 1, 2012. The compensation of the officers has been
set as follows:
Annual
|
||||
Officer
|
Salary
|
|||
Mitchell
Brown, Chief Executive Officer
|
$
|
125,000
|
||
Joseph
Masselli, President and Chief Operating Officer
|
$
|
75.000
|
||
Alex
Kaminski, Chief Financial Officer and Treasurer
|
$
|
50.000
|
||
Steve
Savage, Secretary
|
$
|
50.000
|
-
continued -
F-15
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note I
-
|
Employment Contracts –
continued
|
It has
been agreed by the Company, Mr. Scott Smith (a director of the Company) and Mr.
Alex Kaminski that pursuant to separate stock option agreements, Mr. Smith will
be granted options to purchase 2,000,000 shares of the Company’s common stock at
$.01 per share and Mr. Kaminski will be granted options to purchase 1,500,000
shares of the Company’s common stock at $.01 per share. These options
will vest in one year and will expire in three years. At December 31, 2009 no
options have been issued under these agreements.
Note J
-
|
Stock Based Compensation
Expense
|
In the
reorganization between Cono Italiano, Inc. (Delaware) and Cono Italiano,
Inc. (Nevada) an existing Equity Incentive Plan was
continued. The 2006 Equity Incentive Plan authorizes the Company to
issue options for the purchase of up to 2,000,000 shares of the Company’s common
stock, pursuant to the terms and conditions set forth therein. The
Equity Incentive Plan authorizes the issuance of incentive stock options (ISQ)
and non-qualified stock options (NQOs) to the Company’s employees, directors or
consultants.
Options
outstanding at the date of reorganization were 336. All outstanding options were
fully vested and expensed prior to the acquisition.
Year Ended
|
||||||||
December 31,
2009
|
||||||||
Number of
|
Weighted -
Average
|
|||||||
Options
|
Options
|
Exercise Price
|
||||||
Balance
at date of reorganization
|
336
|
$
|
120
|
|||||
Granted
|
––
|
––
|
||||||
Exercised
|
––
|
––
|
||||||
Cancelled
|
––
|
––
|
||||||
Balance at December 31,
2009
|
336
|
$
|
120
|
|||||
Options Exercisable at December 31,
2009
|
336
|
$
|
120
|
The aggregate intrinsic value of the
options outstanding and the options exercisable on December 31, 2009 is
$0.
The following table summarizes
information about options outstanding and exercisable at December 31,
2009:
Weighted
|
||||||
Options
|
Average
|
Options
|
||||
Outstanding
|
Contractual Life
|
Exercisable
|
||||
Exercise Price
|
Number
|
(In Years)
|
Number
|
|||
$120
|
336
|
1.85
|
336
|
As of
December 31, 2009, there was no unrecognized compensation cost related to
non-vested stock options.
F-16
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note K
-
|
Income Tax
Compliance
|
The
Company is not in compliance with filing its required income tax
returns. Since the Company has had continuous losses and has
available net operating losses, the Company believes that any tax liability
would not be material. Deferred taxes are provided for the temporary differences
between the financial reporting basis and the tax reporting basis of the
Company’s assets and liabilities. The temporary differences between
financial reporting and income tax purposes are primarily net operating loss
carry forwards for income tax purposes. A valuation allowance is recorded for
deferred tax assets when management determines it is more likely than not, that
such assets, will not be realized.
A full
valuation allowance has been established against the deferred tax assets for the
years ended December 31, 2009 and 2008 as utilization of the loss carry forwards
and realization of other deferred tax assets cannot be reasonably
assured.
Note L
-
|
Licensing
Revenue
|
On
July 9, 2008, (subsequently amended in October, 2009) the Company entered into a
Supplier/Distribution agreement with Pino Gelato, Inc., an unrelated
entity. The agreement grants the exclusive manufacture and
distribution rights to Pino Gelato, Inc. for the production of pizza cono food
products for certain specified geographical territories. The term of
the agreement is for ten (10) years with an automatic renewal for another ten
(10) years. In addition, Pino Gelato, Inc. has the exclusive rights
to enter into franchise agreements with third parties to market and sell the
pizza cono food products.
In
exchange for the rights granted to Pino Gelato under the agreement, the Company
received total cash consideration of $100,000.
As an
inducement for Pino Gelato, Inc to buy the distribution and franchise rights,
the Company agreed to issue 375,000 shares of common stock to Pino upon receipt
of the first and final installment of the agreement. Common stock
amounting to 250,000 shares were issued prior to the execution of the amendment
in October, 2009 with the remaining 125,000 shares to be issued upon receipt of
the final $25,000 cash payment from Pino. As of December 31, 2009, the final
payment has been received from Pino. The related 125,000 shares remain unissued
and will be issued upon request. The fair market value of the common stock
issued in connection with the installment payments made has been recorded as an
offset to the payments received under the agreement. The payments
received have been recorded as deferred licensing revenue in the accompanying
consolidated financial statements. The licensing revenue is being
amortized to revenue over the initial license term of ten (10)
years.
In
addition to the $100,000 cash consideration, the Company is entitled to
royalties on the sale of all Pino Gelato’s pizza cono food products in the
amount of $9,500, which had been received as of the year ended December 31,
2009. Furthermore, the Company is entitled to ten (10) percent of all
franchise revenue generated by Pino Gelato.
F-17
CONO
ITALIANO, INC.
(FORMERLY
KNOWN AS TIGER RENEWABLE ENERGY INC.)
(A
NEVADA CORPORATION)
Keyport,
New Jersey
NOTES
TO CONSOLIDATED FINANCIAL
STATEMENTS
|
Note M
-
|
Other
Matters
|
In
October, 2009, the Company through its related party entity, Edesia Emprise,
LLC, terminated an agreement (which began in March, 2009) with an unrelated
party for the manufacture of pizza cone products. The termination was reached in
mutual agreement with the counter party and mutual releases were granted in
connection wit the termination.
On
November 6, 2009, Cono Italiano (Delaware) entered into a Commitment Letter,
pursuant to which, one of the Company’s shareholders, Lara Mac has agreed to
provide financing to Cono Italiano, Inc., with such funds as the Company’s Board
of Directors shall deem to be sufficient to maintain the Company’s ordinary
course of business operations (the “Commitment Amount”). We may draw
on the Commitment Amount in monthly tranches in accordance with our operating
requirements as set forth in our business plan. The available Commitment
Amount will be reduced by the aggregate cash proceeds received by the Company
which are derived from the issuance of any equity securities and Company gross
revenues. Draws on the Commitment Amount will be made on terms of unsecured
notes, with interest set on each note as of the date of the draw at prime rate
plus two percent per annum. The notes will mature and become repayable thirty
calendar days after demand at any time following the earlier of (a) December 31,
2010 or (b) the date upon which we are in receipt of revenues or proceeds from
the sales of equity securities. We will give Lara Mac customary representations
and warranties regarding the good standing of our Company and status of progress
in respect of our Company business plan prior to each draw on the Commitment
Amount, and we will provide certifications and covenants regarding use of
proceeds of each draw, which will be in customary forms reasonably requested by
Lara Mac as determined by reference to similar lenders making similar loans to
similar companies. Lara Mac will not be required to make any loans under the
Commitment Amount to us if we are unable to make the representations,
warranties, certifications or covenants, or if we are in breach of any
previously given representations, warranties, certifications or covenants. If we
breach any of the notes, the default rate will be 15% per annum and Lara Mac may
seek recourse against our company for repayment of all of the notes. As of
December 31, 2009, no funds have been borrowed.
F-18
[OUTSIDE
BACK COVER OF PROSPECTUS]
DEALER
PROSPECTUS DELIVERY OBLIGATION
Until
ninety days after the effective date of this prospectus, 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
dealers’ obligation to deliver a prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
38
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
13. Other Expenses of Issuance and
Distribution
The
following table sets forth the estimated costs and expenses to be incurred in
connection with the issuance and distribution of the securities registered under
this registration statement. All amounts are estimates except the Commission
registration fee. The following estimated expenses will be borne solely by
us.
Commission
registration fee
|
$
|
1,749.08
|
||
Legal
fees and expenses
|
$
|
5,000.00
|
||
Accounting
fees and expenses
|
$
|
2,500.00
|
||
Miscellaneous
expenses
|
$
|
2,500.00
|
||
Total
|
$
|
11,749.08
|
We have
agreed to bear expenses related to the registration of the shares of common
stock covered by this registration statement.
Item
14. Indemnification of Directors and
Officers
Our
bylaws provide that we shall indemnify any and all of our present or former
directors and officers for expenses incurred in connection with the defense of
any action relating to their services. Costs, charges and expenses (including
attorneys' fees) incurred by such person in defending a civil or criminal
proceeding shall be paid by the Company in advance upon receipt of an
undertaking to repay all amounts advanced if it is ultimately determined that
the person is not entitled to be indemnified by the Company as authorized by the
bylaws, and upon satisfaction of other conditions required by current or future
legislation. To the extent that a director has been successful in
defense of any proceeding, the Nevada Revised Statutes provide that he shall be
indemnified against reasonable expenses incurred in connection therewith. These
provisions may limit the ability of our stockholders to recover damages against
our directors through legal proceeding or otherwise.
Insofar
as indemnification for liabilities arising under the Securities Act may be
permitted to directors, officers and controlling persons of the Company pursuant
to the foregoing provisions, or otherwise, the Company has been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy and is, therefore, unenforceable.
Item
15. Recent Sales of Unregistered
Securities
Sales
by the Company
On
September 1, 2006, the Company and Gallant Energy International Inc. (“Gallant”)
entered into a Purchase Agreement pursuant to which Gallant sold the Company its
interest in a joint venture it formed with certain Chinese entities to develop
facilities for the production of ethanol fuel in the People’s Republic of China,
in exchange for the issuance of 5,000,000 shares of the Company’s common stock
for a value of $143,000.
On
November 1, 2006, VP Bank (Schweiz) AG paid five hundred and fifty thousand
dollars ($550,000) to purchase from the Company (i) 275,000 shares of the
Company's common stock; and (ii) Series A Warrants to purchase up to an
additional 137,500 shares of the Company's common stock at an exercise price
initially set at $2.50 per share. The relative fair value of the common stock
was $436,000 and the relative fair value of the warrants was
$114,000.
On
November 1, 2006, Sal. Oppenheim Jr. & Cie (Schweiz) AG paid four hundred
and fifty thousand dollars ($450,000) to purchase from the Company (i) 225,000
shares of the Company's common stock; and (ii) Series A Warrants to purchase up
to an additional 112,500 shares of the Company's common stock at an exercise
price initially set at $2.50 per share. The relative fair value of the common
stock was $356,000 and the relative fair value of the warrants was
$94,000.
On
November 1, 2006, Portu Finance paid five hundred thousand dollars ($500,000) to
purchase from the Company (i) 250,000 shares of the Company's common stock; and
(ii) Series A Warrants to purchase up to an additional 125,000 shares of the
Company's common stock at an exercise price initially set at $2.50 per share.
The relative fair value of the common stock was $396,000 and the relative fair
value of the warrants was $104,000.
39
On March
8, 2007, Emper Overseas S.A paid five hundred thousand dollars ($500,000) to
purchase from the Company (i) 250,000 shares of the Company's common stock; and
(ii) Series A Warrants to purchase up to an additional 125,000 shares of the
Company's common stock at an exercise price initially set at $2.50 per share.
The relative fair value of the common stock was $360,000 and the relative fair
value of the warrants was $140,000.
On March
8, 2007, Aton Select Fund Limited paid five hundred thousand dollars ($500,000)
to purchase from the Company (i) 250,000 shares of the Company's common stock;
and (ii) Series A Warrants to purchase up to an additional 125,000 shares of the
Company's common stock at an exercise price initially set at $2.50 per share.
The relative fair value of the common stock was $360,000 and the relative fair
value of the warrants was $140,000.
On March
10, 2007, Simeon Securities S.A. paid five hundred thousand dollars ($500,000)
to purchase from the Company (i) 250,000 shares of the Company's common stock;
and (ii) Series A Warrants to purchase up to an additional 125,000 shares of the
Company's common stock at an exercise price initially set at $2.50 per share.
The relative fair value of the common stock was $359,000 and the relative fair
value of the warrants was $141,000.
On March
16, 2007, Capinvest LLC paid one million and five thousand dollars ($1,500,000)
to purchase from the Company (i) 750,000 shares of the Company's common stock;
and (ii) Series A Warrants to purchase up to an additional 375,000 shares of the
Company's common stock at an exercise price initially set at $2.50 per share.
The relative fair value of the common stock was $1,079,000 and the relative fair
value of the warrants was $421,000.
On March
30, 2007, the Company (i) issued 1,250,000 shares of the Company’s common stock;
and (ii) issued Series A Warrants to purchase up to an additional 625,000 shares
of the Company’s common stock. The total purchase price paid for the common
stock and Series A Warrants pursuant to the Common Stock Purchase Agreements was
$2,500,000.
On July
27, 2007, Adagio Marine Ltd paid one million and five thousand dollars
($1,500,000) to purchase from the Company (i) 750,000 shares of the Company's
common stock; and (ii) Series A Warrants to purchase up to an additional 375,000
shares of the Company's common stock at an exercise price initially set at $2.50
per share. The relative fair value of the common stock was $1,082,000 and the
relative fair value of the warrants wais $418,000.
On
June 25, 2008, the Company issued seven hundred seventy one thousand and seventy
(771,070) shares of common stock to DT Crystal Holdings Limited. These shares
were issued pursuant to an Exchange Agreement entered into between the Company
and DT Crystal Holdings Limited as of June 19, 2008. The Company owed $462,642
to DT Crystal Holdings Limited as of June 19, 2008, consisting of loans in the
amount $450,000, plus accrued interest totaling $12,642. The Company and DT
Crystal Holdings Limited elected to convert this debt into 771,070 shares of the
Company’s common stock. The conversion price of these shares of the Company’s
common stock, $.60 per share, was equal to the average of the selling price of
the Company’s common stock traded during the Fifteen (15) business days prior to
the closing date of this transaction, minus an adjustment of
7.5%
On August
12, 2008, Pellerin lawyers exchanged $38,905 of accounts payables for 155,621
shares of the Company’s common stock. The conversion price of these
shares of the Company’s common stock was $.25 per share, which resulted in a
cost of $17,118 for the Company.
All of
the aforementioned stock issuance transactions were made with non-U.S. persons
and were undertaken by the Company in reliance upon the exemption from
securities registration of Regulation S of the U.S. Securities Act of 1933, as
amended, (the “Securities Act”) and the rules and regulations promulgated
thereunder.
On
June 22, 2009, Lara Mac entered into a Management Services Agreement with the
Company (the “Management Services Agreement”). Pursuant to the Management
Services Agreement, Lara Mac would render management consulting and other
advisory services to the Company (collectively, the “Services”). In
exchange for the Services, Lara Mac received 9,553,377 shares of the Company’s
restricted common stock (these 9,553,377 shares were issued prior to the
Company’s August 10, 2009 one-for-sixty reverse stock split, and accordingly,
Lara Mac’s ownership of 14,553,377 shares was reduced to 242,557 shares pursuant
to the reverse stock split). The shares were issued under exemption
from registration in reliance on Section 4(2) of the Securities
Act. As an inducement to the shareholders of Cono Italiano (Delaware)
to enter into the Share Exchange Agreements described below, Lara Mac agreed to
the cancellation of these 242,557 shares of the Company’s common stock and
termination of the Management Services Agreement.
On
November 12, 2009, the Company entered into share exchange agreements (the
“Share Exchange Agreements”) with the shareholders of Cono Italiano
(Delaware). Pursuant to the terms of the agreements, the form of
which are identical, each of the Cono Italiano (Delaware) shareholders have
exchanged their respective shares of Cono Italiano (Delaware) for shares of
Company restricted common stock (such proposed exchange, the “Exchange
Offer”). The ratio of the exchange was one share of Company common
stock issued for each one share of Cono Italiano (Delaware) stock
tendered. The Company agreed to issue 61,286,428 shares of
the Company’s common stock to 40 shareholders of Cono Italiano (Delaware).
Effective at the closing of the share exchange transactions, Cono Italiano
(Delaware) became a wholly owned subsidiary of the Company. No cash
compensation was paid or received for the shares which were
exchanged. The consideration received in respect of such issuances by
the Company consisted solely of shares of common stock of Cono Italiano
(Delaware). The Exchange Offer was made to the shareholders of the
common stock of Cono Italiano pursuant to the exemption from registration
provided by Section 4(2) of the Securities Act.
40
In
December of 2009, the Company entered into Share Purchase Agreements with seven
individuals, pursuant to which 202,000 shares of the Company’s common stock were
issued in exchange for $43,000. These 202,000 shares were issued
under exemption from registration in reliance on Section 4(2) of the Securities
Act.
In
December of 2009, the Company entered into a Share Purchase Agreement with
Claude Pellerin, pursuant to which 10,000 shares of the Company’s common stock
were issued to Hovington Pellerin, in exchange for the release of debt equal to
the outstanding accounts payable. These shares were issued under
exemption from registration in reliance on Section 4(2) of the Securities
Act.
In
December of 2009, the Company entered into a Share Purchase Agreement with
Temmco Inc., pursuant to which 40,000 shares of the Company’s common stock were
issued to Temmco Inc. in exchange for website design and marketing services to
be performed by Temmco Inc. These shares were issued under exemption
from registration in reliance on Section 4(2) of the Securities
Act.
On
December 16, 2009, nine (9) individuals and entities were issued a total of
18,000,000 restricted shares of the Company’s common stock upon the conversion
of a convertible promissory note issued by Cono Italiano (Delaware) on December
28, 2007 in the principal amount of $200,000, plus interest accrued, as
subsequently re-issued on January 31, 2008, and as amended effective as of
September 1, 2009 (collectively, the “Promissory Note”). These
18,000,000 shares were issued under exemption from registration in reliance on
Section 4(2) of the Securities Act.
On
January 13, 2010, an additional entity was issued 2,000,000 restricted shares of
the Company’s common stock to complete the conversion of the Promissory
Note. These 2,000,000 shares were issued under exemption from
registration as a private sale under the Securities Act.
41
Item
16. Exhibits and Financial Statement
Schedules.
EXHIBITS
The
following exhibits are included as part of this registration
statement.
Exhibit No.
|
Description of Exhibits
|
|
Exhibit
3.1
|
Articles
of Incorporation, incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form SB-2, filed with the Securities
and Exchange Commission on December 17, 2004.
|
|
Exhibit
3.2
|
Bylaws,
incorporated by reference to Exhibit 3.2 to the Company’s Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission
on December 17, 2004.
|
|
Exhibit
3.3
|
Certificate
of Amendment to the Articles of Incorporation, dated as of November 11,
2006, incorporated by reference to Exhibit 3.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
30, 2006.
|
|
Exhibit
3.4
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.4 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on July 17, 2007.
|
|
Exhibit
3.5
|
Certificate
of Amendment to the Articles of Incorporation, dated as of February 11,
2008, incorporated by reference to Exhibit 3.5 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
3.6
|
Certificate
of Amendment to the Articles of Incorporation, dated as of July 31, 2009,
incorporated by reference to Exhibit 3.6 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.7
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.7 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.8
|
Certificate
of Incorporation of Cono Italiano (Delaware) (formerly known as Janex
International, Inc.), incorporated by reference to Exhibit 3.8 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.9
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.9 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.10
|
Certificate
of Merger of Foreign Corporation into a Domestic Corporation (Cono
Italiano (Delaware)), incorporated by reference to Exhibit 3.10 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.11
|
Certificate
of Merger of Domestic Corporation and Foreign Limited Liability Company
(Cono Italiano (Delaware)), incorporated by reference to Exhibit 3.11 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.12
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.12 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.13
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.13 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
42
Exhibit
3.14
|
Certificate
of Correction (Cono Italiano (Delaware)), incorporated by reference to
Exhibit 3.14 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.15
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.15 to the Company’s
Registration Statement on Form S-1, filed with the Securities and Exchange
Commission on January 14, 2010.
|
|
Exhibit
5.1
|
Opinion
of Michael Morrison, Nevada counsel to the Company. Opinion based upon
Nevada state law.
|
|
Exhibit
10.16
|
Stock
Purchase Agreement by and between the Company and Adagio Marine Ltd, dated
July 27, 2007, incorporated by reference to Exhibit 10.16 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on September 20, 2007.
|
|
Exhibit
10.17
|
Series
A Warrant issued to Adagio Marine Ltd, dated July 27, 2007, incorporated
by reference to Exhibit 10.17 to the Company’s Report on Form 10-QSB,
filed with the Securities and Exchange Commission on September 20,
2007.
|
|
Exhibit
10.26
|
Memorandum
by and between the Company, Xinjiang Wangye Brewing Co. Ltd. and Guangdong
Kecheng Trading Co., dated as of June 6, 2007, incorporated by reference
to Exhibit 10.26 to the Company’s Amended Registration Statement Form
SB-2/A, filed with the Securities and Exchange Commission on January 29,
2008.
|
|
Exhibit
10.27
|
Exchange
Agreement by and between the Company and DT Crystal Holdings Limited,
dated as of June 19, 2008, incorporated by reference to Exhibit 10.27 to
the Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 18, 2008.
|
|
Exhibit
10.28
|
Exchange
Agreement by and between the Company and Buck Master Overseas, dated as
of August 12, 2008, incorporated by reference to Exhibit 10.28 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on December 15, 2008.
|
|
Exhibit
10.29
|
Working
Interest Purchase and Sale Agreement, by and between the Company and
Wellington Capital Management Inc., dated as of January 29, 2009,
incorporated by reference to Exhibit 10.29 to the Company’s Report on Form
10-K, filed with the Securities and Exchange Commission on May 18,
2009.
|
|
Exhibit
10.30
|
Assignment
and Assumption Agreement, by and between the Company and DT Crystal
Holdings Limited, dated as of January 31, 2009, incorporated by reference
to Exhibit 10.30 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.31
|
Convertible
Note Agreement, by and between the Company and Wellington Capital
Management Inc., dated as of February 2, 2009, incorporated by reference
to Exhibit 10.31 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.32
|
Termination
of Working Interest Purchase and Sale Agreement, by and between the
Company and Wellington Capital Management Inc., dated as of April 28,
2009, incorporated by reference to Exhibit 10.1 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.33
|
Termination
and Discharge of Convertible Note Agreement, by and between the Company
and Wellington Capital Management Inc., dated as of April 28, 2009,
incorporated by reference to Exhibit 10.2 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.34
|
Mutual
Release, by and between the Company and Wellington Capital Management
Inc., incorporated by reference to Exhibit 10.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.35
|
Letter
of Intent, by and between the Company and Financial Media Net, Inc., dated
as of March 25, 2009, incorporated by reference to Exhibit 99.1 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on March 26,
2009.
|
43
Exhibit
10.36
|
Affiliate
Stock Purchase Agreement, dated June 4, 2009, between Gallant Energy
International Inc. and Lara Mac Inc., incorporated by reference to Exhibit
99.1 to Lara Mac Inc.’s Schedule 13D, filed with the Securities and
Exchange Commission on June 15, 2009.
|
|
Exhibit
10.37
|
Management
Services Agreement, by and between the Company and Lara Mac Inc., dated as
of June 22, 2009, incorporated by reference to Exhibit 10.37 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 14, 2009.
|
|
Exhibit
10.38
|
Agreement,
by and between Kono Italia S.r.l & Spuntibreak S.r.l. DBA Pizza Hands
and Cono Italiano LLC, dated as of March 2, 2006, incorporated by
reference to Exhibit 10.38 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.39
|
Distribution
Agreement, by and between Cono Italiano, Inc. and Pino Gelato, Inc., dated
as of July 9, 2008, incorporated by reference to Exhibit 10.39 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.40
|
Amendment
to Distribution Agreement, by and between Cono Italiano, Inc. and Pino
Gelato, Inc., dated as of July 9, 2008, incorporated by reference to
Exhibit 10.40 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.41
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.41 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.42
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 1, 2008, incorporated by reference to Exhibit 10.42 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.43
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.43 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.44
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.45
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 11, 2009, incorporated by reference to Exhibit 10.43 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.46
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.47
|
Settlement
Agreement and Mutual Release, by and between Dough Bros., Inc., John
Allen, Drew Allen, Matt Allen, Edesia Emprise, LLC, Cono Italiano, Inc.,
Mitchell Brown, John Jacobs and Ramona Fantini, dated as of October 22,
2009, incorporated by reference to Exhibit 10.47 to the Company’s Report
on Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
10.48
|
Commitment
Agreement, by and between Cono Italiano (Delaware) and Lara Mac Inc.,
dated as of November 9, 2009, incorporated by reference to Exhibit 10.48
to the Company’s Report on Form 8-K, filed with the Securities and
Exchange Commission on November 13, 2009.
|
|
Exhibit
10.49
|
Master
Manufacturing Agreement, by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC, dated as of November 11, 2009, incorporated by
reference to Exhibit 10.49 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
44
Exhibit
10.50
|
Form
of Share Exchange Agreement, by and between the Company and the
shareholders of Cono Italiano (Delaware), incorporated by reference to
Exhibit 10.50 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.51
|
Amendment
to the Management Services Agreement, by and between Lara Mac Inc., Cono
Italiano, Inc. (a Nevada corporation) and Cono Italiano, Inc. (a Delaware
corporation), dated as of November 6, 2009, incorporated by reference to
Exhibit 10.51 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.52
|
Employment
Agreement, by and between the Company and Mitchell Brown, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.52 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.53
|
Employment
Agreement, by and between the Company and Joseph Masselli, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.53 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.54
|
Employment
Agreement, by and between the Company and Alex Kaminski, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.54 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.55
|
Employment
Agreement, by and between the Company and Steve Savage, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.55 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.56
|
Convertible
Promissory Note issued by Cono Italiano (Delaware) on December 28, 2007,
incorporated by reference to Exhibit 10.56 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.57
|
Convertible
Promissory Note re-issued by Cono Italiano (Delaware) on January 31, 2008,
incorporated by reference to Exhibit 10.57 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.58
|
Amendment
to Convertible Promissory Note, dated as of October 22, 2009, incorporated
by reference to Exhibit 10.58 to the Company’s Registration Statement on
Form S-1, filed with the Securities and Exchange Commission on January 14,
2010.
|
|
Exhibit
14.1
|
Code
of Conduct, incorporated by reference to Exhibit 14.1 to the Company’s
Report on Form 8-K, filed with the Securities and Exchange Commission on
August 31, 2006.
|
|
Exhibit
14.2
|
Equity
Incentive Plan, incorporated by reference to Exhibit 14.2 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on October 23, 2006.
|
|
Exhibit
14.3
|
Audit
Committee Charter, incorporated by reference to Exhibit 14.3 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.4
|
Whistleblower
Procedures Policy, incorporated by reference to Exhibit 14.4 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.5
|
Governance
Charter, incorporated by reference to Exhibit 14.5 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
14.6
|
Compensation
Charter, incorporated by reference to Exhibit 14.6 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
21
|
|
List
of Subsidiaries.
|
Exhibit
23.1
|
Consent
of EFP Rotenberg, LLP with respect to inclusion of audit report in
Registration Statement on Form S-1.
|
|
Exhibit
23.2
|
Consent
of Michael Morrison, Nevada counsel to the Company (included in Exhibit
5.1).
|
|
Exhibit
24
|
Power
of Attorney (included on Signature
Page).
|
45
Item
17. Undertakings
The
undersigned Company hereby undertakes to:
(1) To
file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To
include any prospectus required by Section 10(a)(3) of the Securities Act of
1933;
(ii) To
reflect in the prospectus any facts or events arising after the effective date
of the registration statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent a fundamental change
in the information set forth 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
Securities and Exchange 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,
and
(iii) To
include any material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change to
such information in the registration statement.
(2) That,
for the purpose of determining any liability under the Securities Act of 1933,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To
remove from registration by means of a post-effective amendment any of the
securities being registered which remain unsold at the termination of the
offering.
Insofar
as indemnification for liabilities arising under the Securities Act of 1933 may
be permitted to directors, officers and controlling persons of the registrant
pursuant to the foregoing provisions, or otherwise, the registrant has 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 the registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The
undersigned registrant hereby undertakes:
That, for
the purpose of determining liability under the Securities Act of 1933 to any
purchaser, 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.
46
SIGNATURES
Pursuant
to 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, thereunto duly authorized, in the City of Keyport, New Jersey, on
the 3rd day of
May, 2010.
CONO
ITALIANO, INC.
|
||
By:
|
/s/ Mitchell Brown
|
|
Mitchell
Brown
|
||
Chief
Executive Officer
|
DIRECTOR
AND OFFICER SIGNATURES AND POWERS OF ATTORNEY
KNOW ALL
PERSONS BY THESE PRESENTS, that each person whose signature appears below
constitutes and appoints Mitchell Brown as his true and lawful attorney-in-fact
and agent, for him and in his name, place and stead, in any and all capacities,
to sign any and all amendments (including post-effective amendments) to this
registration statement, and to file such amendments, together with exhibits and
other documents in connection therewith, with the Securities and Exchange
Commission, granting unto said attorney-in-fact and agent, full power and
authority to do and perform each and every act and thing requisite or necessary
to be done in about the premises, as fully to all intents and purposes as he
might or could do in person, hereby ratifying the confirming all that said
attorney-in-fact and agent, or any substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Pursuant
to the requirements of the Securities Act of 1933, this Registration Statement
has been signed by the following persons in the capacities and on the dates
indicated:
Signature
|
Title
|
Date
|
||
/s/ Mitchell Brown
|
Chief
Executive Officer and Director
|
January
13, 2010
|
||
Mitchell
Brown
|
||||
/s/ Joseph Masselli
|
President,
Chief Operating Officer and
|
January
13, 2010
|
||
Joseph
Masselli
|
Director
|
|||
/s/ Alex J. Kaminski
|
Chief
Financial Officer, Treasurer and
|
January
13, 2010
|
||
Alex
J. Kaminski
|
Director
|
|||
/s/ Steve Savage
|
Secretary
and Director
|
January
13, 2010
|
||
Steve
Savage
|
||||
/s/ Scott Smith
|
Director
|
January
13, 2010
|
||
Scott
Smith
|
47
EXHIBIT
INDEX
The
following exhibits are included as part of this registration
statement.
Exhibit No.
|
Description of Exhibits
|
|
Exhibit
3.1
|
Articles
of Incorporation, incorporated by reference to Exhibit 3.1 to the
Company’s Registration Statement on Form SB-2, filed with the Securities
and Exchange Commission on December 17, 2004.
|
|
Exhibit
3.2
|
Bylaws,
incorporated by reference to Exhibit 3.2 to the Company’s Registration
Statement on Form SB-2, filed with the Securities and Exchange Commission
on December 17, 2004.
|
|
Exhibit
3.3
|
Certificate
of Amendment to the Articles of Incorporation, dated as of November 11,
2006, incorporated by reference to Exhibit 3.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
30, 2006.
|
|
Exhibit
3.4
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.4 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on July 17, 2007.
|
|
Exhibit
3.5
|
Certificate
of Amendment to the Articles of Incorporation, dated as of February 11,
2008, incorporated by reference to Exhibit 3.5 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
3.6
|
Certificate
of Amendment to the Articles of Incorporation, dated as of July 31, 2009,
incorporated by reference to Exhibit 3.6 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.7
|
Amendment
to the Company’s Bylaws, incorporated by reference to Exhibit 3.7 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.8
|
Certificate
of Incorporation of Cono Italiano (Delaware) (formerly known as Janex
International, Inc.), incorporated by reference to Exhibit 3.8 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.9
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.9 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.10
|
Certificate
of Merger of Foreign Corporation into a Domestic Corporation (Cono
Italiano (Delaware)), incorporated by reference to Exhibit 3.10 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.11
|
Certificate
of Merger of Domestic Corporation and Foreign Limited Liability Company
(Cono Italiano (Delaware)), incorporated by reference to Exhibit 3.11 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
3.12
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.12 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.13
|
Certificate
of Amendment of Certificate of Incorporation (Cono Italiano (Delaware)),
incorporated by reference to Exhibit 3.13 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
3.14
|
Certificate
of Correction (Cono Italiano (Delaware)), incorporated by reference to
Exhibit 3.14 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
48
Exhibit
3.15
|
Bylaws,
as amended, incorporated by reference to Exhibit 3.15 to the Company’s
Registration Statement on Form S-1, filed with the Securities and Exchange
Commission on January 14, 2010.
|
|
Exhibit
5.1
|
Opinion
of Michael Morrison, Nevada counsel to the Company. Opinion based upon
Nevada state law.
|
|
Exhibit
10.16
|
Stock
Purchase Agreement by and between the Company and Adagio Marine Ltd, dated
July 27, 2007, incorporated by reference to Exhibit 10.16 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on September 20, 2007.
|
|
Exhibit
10.17
|
Series
A Warrant issued to Adagio Marine Ltd, dated July 27, 2007, incorporated
by reference to Exhibit 10.17 to the Company’s Report on Form 10-QSB,
filed with the Securities and Exchange Commission on September 20,
2007.
|
|
Exhibit
10.26
|
Memorandum
by and between the Company, Xinjiang Wangye Brewing Co. Ltd. and Guangdong
Kecheng Trading Co., dated as of June 6, 2007, incorporated by reference
to Exhibit 10.26 to the Company’s Amended Registration Statement Form
SB-2/A, filed with the Securities and Exchange Commission on January 29,
2008.
|
|
Exhibit
10.27
|
Exchange
Agreement by and between the Company and DT Crystal Holdings Limited,
dated as of June 19, 2008, incorporated by reference to Exhibit 10.27 to
the Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 18, 2008.
|
|
Exhibit
10.28
|
Exchange
Agreement by and between the Company and Buck Master Overseas, dated as
of August 12, 2008, incorporated by reference to Exhibit 10.28 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on December 15, 2008.
|
|
Exhibit
10.29
|
Working
Interest Purchase and Sale Agreement, by and between the Company and
Wellington Capital Management Inc., dated as of January 29, 2009,
incorporated by reference to Exhibit 10.29 to the Company’s Report on Form
10-K, filed with the Securities and Exchange Commission on May 18,
2009.
|
|
Exhibit
10.30
|
Assignment
and Assumption Agreement, by and between the Company and DT Crystal
Holdings Limited, dated as of January 31, 2009, incorporated by reference
to Exhibit 10.30 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.31
|
Convertible
Note Agreement, by and between the Company and Wellington Capital
Management Inc., dated as of February 2, 2009, incorporated by reference
to Exhibit 10.31 to the Company’s Report on Form 10-K, filed with the
Securities and Exchange Commission on May 18, 2009.
|
|
Exhibit
10.32
|
Termination
of Working Interest Purchase and Sale Agreement, by and between the
Company and Wellington Capital Management Inc., dated as of April 28,
2009, incorporated by reference to Exhibit 10.1 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.33
|
Termination
and Discharge of Convertible Note Agreement, by and between the Company
and Wellington Capital Management Inc., dated as of April 28, 2009,
incorporated by reference to Exhibit 10.2 to the Company’s Report on Form
8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.34
|
Mutual
Release, by and between the Company and Wellington Capital Management
Inc., incorporated by reference to Exhibit 10.3 to the Company’s Report on
Form 8-K, filed with the Securities and Exchange Commission on May 5,
2009.
|
|
Exhibit
10.35
|
Letter
of Intent, by and between the Company and Financial Media Net, Inc., dated
as of March 25, 2009, incorporated by reference to Exhibit 99.1 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on March 26, 2009.
|
|
Exhibit
10.36
|
Affiliate
Stock Purchase Agreement, dated June 4, 2009, between Gallant Energy
International Inc. and Lara Mac Inc., incorporated by reference to Exhibit
99.1 to Lara Mac Inc.’s Schedule 13D, filed with the Securities and
Exchange Commission on June 15,
2009.
|
49
Exhibit
10.37
|
Management
Services Agreement, by and between the Company and Lara Mac Inc., dated as
of June 22, 2009, incorporated by reference to Exhibit 10.37 to the
Company’s Report on Form 10-Q, filed with the Securities and Exchange
Commission on September 14, 2009.
|
|
Exhibit
10.38
|
Agreement,
by and between Kono Italia S.r.l & Spuntibreak S.r.l. DBA Pizza Hands
and Cono Italiano LLC, dated as of March 2, 2006, incorporated by
reference to Exhibit 10.38 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.39
|
Distribution
Agreement, by and between Cono Italiano, Inc. and Pino Gelato, Inc., dated
as of July 9, 2008, incorporated by reference to Exhibit 10.39 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.40
|
Amendment
to Distribution Agreement, by and between Cono Italiano, Inc. and Pino
Gelato, Inc., dated as of July 9, 2008, incorporated by reference to
Exhibit 10.40 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.41
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.41 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.42
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 1, 2008, incorporated by reference to Exhibit 10.42 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.43
|
Employment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 1, 2008, incorporated by reference to Exhibit 10.43 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.44
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Mitchell Brown,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.45
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Steve Savage, dated
as of August 11, 2009, incorporated by reference to Exhibit 10.43 to the
Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.46
|
Annulment
Agreement, by and between Cono Italiano (Delaware) and Joseph Masselli,
dated as of August 11, 2009, incorporated by reference to Exhibit 10.44 to
the Company’s Report on Form 8-K, filed with the Securities and Exchange
Commission on November 13, 2009.
|
|
Exhibit
10.47
|
Settlement
Agreement and Mutual Release, by and between Dough Bros., Inc., John
Allen, Drew Allen, Matt Allen, Edesia Emprise, LLC, Cono Italiano, Inc.,
Mitchell Brown, John Jacobs and Ramona Fantini, dated as of October 22,
2009, incorporated by reference to Exhibit 10.47 to the Company’s Report
on Form 8-K, filed with the Securities and Exchange Commission on November
13, 2009.
|
|
Exhibit
10.48
|
Commitment
Agreement, by and between Cono Italiano (Delaware) and Lara Mac Inc.,
dated as of November 9, 2009, incorporated by reference to Exhibit 10.48
to the Company’s Report on Form 8-K, filed with the Securities and
Exchange Commission on November 13, 2009.
|
|
Exhibit
10.49
|
Master
Manufacturing Agreement, by and between Cono Italiano (Delaware) and
Edesia Emprise, LLC, dated as of November 11, 2009, incorporated by
reference to Exhibit 10.49 to the Company’s Report on Form 8-K, filed with
the Securities and Exchange Commission on November 13,
2009.
|
50
Exhibit
10.50
|
Form
of Share Exchange Agreement, by and between the Company and the
shareholders of Cono Italiano (Delaware), incorporated by reference to
Exhibit 10.50 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.51
|
Amendment
to the Management Services Agreement, by and between Lara Mac Inc., Cono
Italiano, Inc. (a Nevada corporation) and Cono Italiano, Inc. (a Delaware
corporation), dated as of November 6, 2009, incorporated by reference to
Exhibit 10.51 to the Company’s Report on Form 8-K, filed with the
Securities and Exchange Commission on November 13,
2009.
|
|
Exhibit
10.52
|
Employment
Agreement, by and between the Company and Mitchell Brown, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.52 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.53
|
Employment
Agreement, by and between the Company and Joseph Masselli, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.53 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.54
|
Employment
Agreement, by and between the Company and Alex Kaminski, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.54 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.55
|
Employment
Agreement, by and between the Company and Steve Savage, dated as of
December 30, 2009, incorporated by reference to Exhibit 10.55 to the
Company’s Registration Statement on Form S-1, filed with the Securities
and Exchange Commission on January 14, 2010.
|
|
Exhibit
10.56
|
Convertible
Promissory Note issued by Cono Italiano (Delaware) on December 28, 2007,
incorporated by reference to Exhibit 10.56 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.57
|
Convertible
Promissory Note re-issued by Cono Italiano (Delaware) on January 31, 2008,
incorporated by reference to Exhibit 10.57 to the Company’s Registration
Statement on Form S-1, filed with the Securities and Exchange Commission
on January 14, 2010.
|
|
Exhibit
10.58
|
Amendment
to Convertible Promissory Note, dated as of October 22, 2009, incorporated
by reference to Exhibit 10.58 to the Company’s Registration Statement on
Form S-1, filed with the Securities and Exchange Commission on January 14,
2010.
|
|
Exhibit
14.1
|
Code
of Conduct, incorporated by reference to Exhibit 14.1 to the Company’s
Report on Form 8-K, filed with the Securities and Exchange Commission on
August 31, 2006.
|
|
Exhibit
14.2
|
Equity
Incentive Plan, incorporated by reference to Exhibit 14.2 to the Company’s
Report on Form 10-QSB, filed with the Securities and Exchange Commission
on October 23, 2006.
|
|
Exhibit
14.3
|
Audit
Committee Charter, incorporated by reference to Exhibit 14.3 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.4
|
Whistleblower
Procedures Policy, incorporated by reference to Exhibit 14.4 to the
Company’s Report on Form 10-QSB, filed with the Securities and Exchange
Commission on October 23, 2006.
|
|
Exhibit
14.5
|
Governance
Charter, incorporated by reference to Exhibit 14.5 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
14.6
|
Compensation
Charter, incorporated by reference to Exhibit 14.6 to the Company’s Report
on Form 10-QSB, filed with the Securities and Exchange Commission on
October 23, 2006.
|
|
Exhibit
21
|
|
List
of Subsidiaries.
|
Exhibit
23.1
|
Consent
of EFP Rotenberg, LLP with respect to inclusion of audit report in
Registration Statement on Form S-1.
|
|
Exhibit
23.2
|
Consent
of Michael Morrison, Nevada counsel to the Company (included in Exhibit
5.1).
|
|
Exhibit
24
|
Power
of Attorney (included on Signature
Page).
|
51