UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended: March 31, 2012

 

OR

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the Transition Period from ___________ to____________

 

Commission File Number: 000-51388

 

CONO ITALIANO, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		84-1665042
(State or other jurisdiction of		(IRS Employer I.D. No.)
incorporation)

 

10 Main Street

Keyport, NJ 07735

(Address of principal executive offices and Zip Code)

 

(877) 330-2666

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes x No ¨

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files. Yes x No ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

 

Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	¨		Smaller reporting company	x

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes¨ No x

 

As of May 21, 2012, there were 102,833,087 shares outstanding of the registrant’s common stock.

 

 

TABLE OF CONTENTS

 

PART I – FINANCIAL INFORMATION
Item 1.	Financial Statements.	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	17
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	20
Item 4.	Controls and Procedures.	20
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	21
Item 1A.	Risk Factors.	21
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds.	21
Item 3	Defaults Upon Senior Securities.	21
Item 4.	Mine Safety Disclosure.	21
Item 5.	Other Information.	21
Item 6.	Exhibits.	22
Signatures		23

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Financial Statements.

  

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

FINANCIAL REPORTS

AT

March 31, 2012

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY INC.)

(A DEVELOMENT STAGE COMPANY)

(A NEVADA Corporation)

Keyport, New Jersey

 

TABLE OF CONTENTS
Consolidated Balance Sheets at March 31, 2012 (Unaudited) and December 31, 2011	3
Consolidated Statements of Changes in Stockholders’ Deficit for the Period from Date of Inception (March 2, 2006) Through March 31, 2012 (Unaudited)	4
Consolidated Statements of Operations for the Three Months Ended March 31, 2012 and 2011 and the Period from Inception (March 2, 2006) Through March 31, 2012 (Unaudited)	5
Consolidated Statements of Cash Flows for the Three Months Ended March 31, 2012 and 2011 and the Period from Inception (March 2, 2006) Through March 31, 2012 (Unaudited)	6
Notes to Consolidated Financial Statements	7-16

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY LTD.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

CONSOLIDATED BALANCE SHEETS

 

		(Unaudited)
		March 31,				December 31,
		2012				2011
ASSETS
Cash and Cash Equivalents		$	157,459			$	—
Due from Related Party			36,937				11,937
Prepaid Expenses			57,000				21,000
Deferred Equity Financing Costs			87,500				—
Total Current Assets			338,896				32,937
Property and Equipment - Net of Accumulated Depreciation			144,362				148,087
Deferred Note Payable Issuance Costs - Net of Accumulated Amortization			35,865				—
Total Assets		$	519,123			$	181,024
LIABILITIES AND STOCKHOLDERS' DEFICIT
Liabilities
Bank Overdraft		$	—			$	3,348
Accounts Payable			135,508				135,508
Accrued Expenses			63,057				54,713
Accrued Legal Expense			198,024				187,525
Accrued Interest - Officer			54,764				52,746
Accrued Compensation - Officers			56,250				—
Note Payable			62,428				60,905
Convertible Note Payable, Net			237,939				—
Due to Officer			770,317				724,975
Total Liabilities			1,578,287				1,219,720
Stockholders' Deficit
Common Stock - $.001 Par; 150,000,000 Shares Authorized, 100,833,087 and 99,234,988 Shares Issued and Outstanding			100,833				99,235
Common Stock Subscribed			526				526
Additional Paid-In-Capital			1,231,999				1,131,939
Deficit Accumulated During Development Stage			(2,392,522	)			(2,270,396	)
Total Stockholders' Deficit			(1,059,164	)			(1,038,696	)
Total Liabilities and Stockholders' Deficit		$	519,123			$	181,024

 

 The accompanying notes are an integral part of these financial statements.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY LTD.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

CONSOLIDATED STATEMENTS OF CHANGES IN DEFICIT FOR THE PERIOD FROM DATE OF INCEPTION (MARCH 2, 2006) THROUGH MARCH 31, 2012 (UNAUDITED)

 

																						Deficit
		Common Stock								Common				Stock				Additional				Accumulated				Total
		$ .001 Par								Stock				Subscriptions				Paid-In				During				Stockholders'
		Shares				Amount				Subscribed				Receivable				Capital				Development Stage				Deficit
Balance - March 2, 2006			—			$	—			$	—			$	—			$	—			$	—			$	—
Common Stock Issued for Contribution of License Rights and Equipment			6,000,000				6,000				—				—				159,000				—				165,000
Net Loss			—				—				—				—				—				—				—
Balance - December 31, 2006			6,000,000				6,000				—				—				159,000				—				165,000
Net Loss			—				—				—				—				—				(50,290	)			(50,290	)
Balance - December 31, 2007			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	)
Balance - December 31, 2009			79,880,988				79,881				—				—				378,923				(1,417,410	)			(958,606	)
Common Stock Issued for Note Payable Conversion			2,000,000				2,000				—				—				182,547				—				184,547
Common Stock Issued in Exchange for Services			10,000,000				10,000				—				—				83,880				—				93,880
Common Stock Issued - Licensing Agreement			125,000				125				—				—				75,691				—				75,816
Net Loss			—				—				—				—				—				(348,521	)			(348,521	)
Balance - December 31, 2010			92,005,988				92,006				—				—				721,041				(1,765,931	)			(952,884	)
Common Stock Issued to Prior Owners			3,184,000				3,184				—				—				90,336				—				93,520
Common Stock Issued in Exchange for Services			3,325,000				3,325				—				—				152,924				—				156,249
Common Stock Cancelled			(3,280,000	)			(3,280	)			—				—				(27,836	)			—				(31,116	)
Stock subscription, net of cash proceeds received			4,000,000				4,000				526				—				195,474				—				200,000
Net Loss			—				—				—				—				—				(504,465	)			(504,465	)
Balance - December 31, 2011			99,234,988				99,235				526				—				1,131,939				(2,270,396	)			(1,038,696	)
Common Stock Issued in Exchange for Services			600,000				600				—				—				35,400				—				36,000
Common Stock Issued in Exchange for Equity Financing			998,099				998				—				—				51,502				—				52,500
Discount on Convertible Note Payable			—				—				—				—				13,158				—				13,158
Net Loss for the Period			—				—				—				—				—				(122,126	)			(122,126	)
Balance - March 31, 2012			100,833,087			$	100,833			$	526			$	—			$	1,231,999			$	(2,392,522	)		$	(1,059,164	)

 

 The accompanying notes are an integral part of these financial statements.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY LTD.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

 

										Period From
										Date of Inception
										(March 2, 2006)
										Through
For the Three Months Ended March 31,		2012				2011				March 31, 2012
Sales		$	—			$	—			$	33,994
Cost of Sales			—				—				9,123
Gross Profit			—				—				24,871
Expenses
Selling and Direct			1,760				—				353,240
Compensation Expense			56,250				—				476,255
General and Administrative			56,978				125,256				1,385,246
Interest Expense			7,138				5,631				75,347
Loss on Impairment of License Right			—				—				130,505
Gain on Sale of Assets			—				—				(3,200	)
Total Expenses			122,126				130,887				2,417,393
Net Loss for the Period		$	(122,126	)		$	(130,887	)		$	(2,392,522	)
Loss per Share - Basic and Diluted		$	(0.00	)		$	(0.00	)		$	(0.05	)
Weighted Average Common Shares Outstanding			100,071,849				94,644,370				51,178,810

 

 The accompanying notes are an integral part of these financial statements.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY LTD.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

 

										Period From
										Date of Inception
										(March 2, 2006)
										Through
For the Three Months Ended March 31,		2012				2011				March 31, 2012
Cash Flows from Operating Activities
Net Loss for the Period		$	(122,126	)		$	(130,887	)		$	(2,392,522	)
Adjustments to Reconcile Net Loss for the Period to Net Cash Flows from Operating Activities:
Amortization of Deferred Note Payable Issuance Costs			3,260				—				22,754
Amortization of Debt Discount			1,096				—				1,096
Depreciation			12,067				1,294				58,496
Common Stock Issued in Exchange for Services			—				91,120				800,823
Expense to Prior Owners			—				—				350,520
Gain on Sale of Assets			—				—				(3,200	)
Loss on Impairment of License Right			—				—				130,505
Common Stock Issued in Lieu of Rent Expense			—				9,000				36,000
Changes in Assets and Liabilities:
Prepaid Expenses			—				—				26,328
Accounts Payable			—				—				(24,458	)
Accrued Expenses			5,844				14,969				60,557
Accrued Compensation - Officers			56,250				—				56,250
Accrued Legal Expense			10,499				(9,882	)			135,860
Accrued Interest			6,042				5,631				74,252
Deferred Revenues			—				—				75,818
Net Cash Flows from Operating Activities			(27,068	)			(18,755	)			(590,921	)
Cash Flows from Investing Activities
Proceeds from Sale of Asset			—				—				5,000
Acquisition of Cash in Reorganization			—				—				916
Purchase of Property and Equipment			(8,342	)			—				(189,661	)
Net Cash Flows from Investing Activities			(8,342	)			—				(183,745	)
Cash Flows from Financing Activities
Bank Overdraft			(3,348	)			—				—
Cash Proceeds from Convertible Note Payable			250,000				—				250,000
Cash Paid for Deferred Equity Financing Costs			(30,000	)			—				(30,000	)
Cash Paid for Issuance of Deferred Note Payable			(39,125	)			—				(39,125	)
Cash Proceeds from Sale of Stock			—				—				264,870
Cash Received (Paid to) from Related Party - Net			(30,000	)			15,000				28,063
Due to Officer - Net			45,342				3,850				458,317
Net Cash Flows from Financing Activities			192,869				18,850				932,125
Net Change in Cash and Cash Equivalents			157,459				95				157,459
Cash and Cash Equivalents - Beginning of Period			—				665				—
Cash and Cash Equivalents - End of Period		$	157,459			$	760			$	157,459
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
Expenses Paid by Related Party		$	5,000			$	—			$	5,000
Common Stock Issued (Retired) for Prepaid Expenses		$	—			$	(216	)		$	105,828
Common Stock Issued to Relieve Accounts Payable		$	—			$	—			$	3,500
Common Stock Issued for Note Payable Conversion		$	—			$	—			$	202,547
Common Stock Issued for Related Party Payable		$	—			$	—			$	70,000
Cash Paid During the Period for:
Interest		$	—			$	—			$	—
Income Taxes		$	—			$	—			$	—

 

 The accompanying notes are an integral part of these financial statements.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY INC.)

(A DEVELOPMENT STAGE COMPANY)

(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 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.

 

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 entity 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.

 

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 August 10, 2009, the Company conducted a one for sixty reverse stock split. As of that date, all of the existing outstanding common stock of the Company have been consolidated such that existing stockholders will hold one share of post-split common stock for every sixty shares owned prior to the reverse split. All fractional shares resulting from the reverse stock split have been rounded up to the next whole share.

 

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 -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY INC.)

(A DEVELOPMENT STAGE COMPANY)

(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. 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, 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, Inc. (Delaware) valued at $114,000 and was issued a promissory note for $312,000. Mitchell Brown is also a principal stockholder in Cono, Inc. (Delaware).

 

The transaction was accounted for as a recapitalization of Cono, Inc. and Cono, LLC; as both companies were under common control. As such, the assets and liabilities of Cono, LLC were carried over to Cono, Inc. (Delaware) at the historical carrying values.

 

At the time of the sale of Cono, LLC to Cono, 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 Inc. (Delaware) entered into a share exchange agreement whereby Cono Inc. (Delaware) would exchange all of its common stock for the stock of Tiger Renewable Energy, Inc. (TRE) (a shell company) on a share for share basis. Prior to entering into the share exchange agreement, the principal stockholder of Cono Inc. (Delaware) became a stockholder of TRE, either through direct ownership or through an entity in which he controlled, effectively gaining control of TRE, and on August 10, 2009, TRE changed its name to Cono Italiano, Inc., a Nevada corporation. As an inducement for Cono (Delaware) to enter the share exchange agreement, TRE’s largest shareholder has agreed to the cancellation of 242,557 shares of Cono (Nevada) stock.

 

The exchange of shares between Cono Italiano, Inc., (Delaware) and Cono Italiano, Inc., (Nevada) was 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, 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).

 

On December 13, 2011 the Board of Directors approved increasing the authorized shares of common stock from 100,000,000 to 150,000,000.

 

- continued -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY INC.)

(A DEVELOPMENT STAGE COMPANY)

(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

Basis of Presentation

The condensed consolidated financial statements of Cono Italiano, Inc. (the “Company”) included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”). Certain information and footnote disclosures normally included in financial statements prepared in conjunction with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations, although the Company believes that the disclosures are adequate to make the information presented not misleading. These condensed consolidated financial statements should be read in conjunction with the annual audited financial statements and the notes thereto included in the Company’s registration statement on Form 10-K, and other reports filed with the SEC.

 

The accompanying unaudited interim financial statements reflect all adjustments of a normal and recurring nature which are, in the opinion of management, necessary to present fairly the financial position, results of operations and cash flows of the Company for the interim periods presented. The results of operations for these periods are not necessarily comparable to, or indicative of, results of any other interim period or for the fiscal year taken as a whole. Certain information that is not required for interim financial reporting purposes has been omitted.

 

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.

 

Development Stage

The Company has operated as a development stage enterprise since its inception by devoting substantially all of its efforts to financial planning, raising capital, research and development, and developing markets for its services. The Company prepares its financial statements in accordance with the requirements of FASB ASC 915, ““Development Stage Entities.”

 

- continued -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note B -

Summary of Significant Accounting Policies – continued

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.

 

In a loss year, the calculation for basic and diluted earnings per share is considered to be the same, as the impact of potential common shares is anti-dilutive. At March 31, 2012, there were 4,651,395 shares that could dilute future earnings.

 

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.

 

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.

 

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.

- continued -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note B -

Summary of Significant Accounting Policies – continued

Stock-Based Compensation

We follow the provisions of FASB ASC 718. FASB ASC 718 requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). FASB ASC 718 also requires measurement of the cost of employee services received in exchange for an equity award based upon the grant-date fair value of the award.

 

Note C -

Recently Issued Accounting Standards

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

Note D -

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.

 

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:

 

		March 31,				December 31,
		2012				2011
Edesia Emprise, LLC		$	36,937			$	11,937

 

- continued -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note D -

Related Party Transactions - continued

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.

 

In November 2009, Edesia Emprise, LLC has entered into a subcontract agreement with Sunrise Bakery, located in Brooklyn, New York, to produce the cones for the Pizza Cono product on behalf of Edesia Emprise, LLC.

 

For the three months ended March 2012, Edesia Emprise was reimbursed expenses paid on behalf of the Company in the amount of $25,000.

 

Due to Officer

Certain disbursements of the Company have been paid by an officer of the Company. The balance at March 31, 2012 and 2011 was $770,317 and $724,975, respectively. There are no established repayment terms. For the periods ended March 31, 2012 and December 31, 2011, the Company has imputed interest at the applicable federal rate of 1.08% and 1.27%, respectively. Accrued interest was $54,764 and $52,746, at March 31, 2012 and December 31, 2011, respectively.

 

Note E -

Accrued Legal Expense

Accrued legal expense consists of legal services rendered to the Company in the ordinary course of business including SEC filings and the reverse merger. Accrued legal expense at March 31, 2012 and December 31, 2011 was $198,024 and $187,524, respectively.

 

Note F -

Notes Payable

The Company has a note payable to DT Crystal Limited accruing interest at 10% annually which is due upon demand. The note is convertible at option of the holder into restricted stock of Cono (Nevada). At March 31, 2012 and December 31, 2011 note payable to DT Crystal was $62,428 and $60,905, respectively. Interest expense for the three months ended March 31, 2012 and 2011 was $1,523 and $1,379, respectively.

 

Note G -

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 $2,392,522 at March 31, 2012.

 

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

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note H –

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 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. At March 31, 2012 accrued compensation was $56,250. The compensation of the officers has been set as follows:

 

		Annual
Officer		Salary
Mitchell Brown, Chief Executive Officer		$	125,000
Alex Kaminski, Chief Financial Officer and Treasurer		$	50,000
Steve Savage, Secretary		$	50,000

 

It has been agreed by the Company, Mr. Smith, a director and Mr. 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. As of March 31, 2012, the stock agreements have not been executed, therefore the options have not been granted.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note I -

Security Agreement

On February 27, 2012, the Company entered into a security agreement with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership related to a $250,000 convertible promissory note issued by the Company in favor of TCA. The Security Agreement grants to TCA a continuing, first priority security interest in all of the Company’s assets, wheresoever located and whether now existing or hereafter arising or acquired.

 

On February 27, 2012, the Company issued the Convertible Note in favor of TCA. The maturity date of the Convertible Note is February 27, 2013, and the Convertible Note bears interest at a rate of twelve percent (12%) per annum. Interest will accrue monthly but is due and payable upon maturity date of note. The Convertible Note is convertible into shares of the Company’s common stock at a price equal to ninety-five percent (95%) of the lowest daily volume weighted average price of the Company’s common stock during the five (5) trading days immediately prior to the date of conversion. The Convertible Note may be prepaid in whole or in part at the Company’s option without penalty.

 

The above Convertible Note contains a beneficial conversion feature recorded as a debt discount in the amount of $13,157 which will be expensed to interest expense over the term of the note. For the three months ended March 31, 2012, $1,096 was expensed to interest expense resulting in a remaining debt discount of $12,061 and note value, net of debt discount, of $237,939 at March 31, 2012. Accrued interest for the three months ended March 31, 2012 was $2,500.

 

On February 27, 2012, the Company entered into the Equity Agreement with TCA. Pursuant to the terms of the Equity Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of a Registration Statement, TCA shall commit to purchase up to $1,500,000 of the Company’s common stock, par value $0.001 per share. The purchase price of the Shares under the Equity Agreement is equal to ninety-five percent (95%) of the lowest daily volume weighted average price of the Company’s common stock during the five (5) consecutive trading days after the Company delivers to TCA an Advance notice in writing requiring TCA to advance funds to the Company, subject to the terms of the Equity Agreement.  At March 31, 2012, no shares had been purchased.

 

As further consideration for TCA entering into and structuring the Equity Facility, the Company paid to TCA a fee by issuing to TCA that number of shares of the Company’s common stock that equal a dollar amount of fifty-two thousand and five hundred dollars ($52,500) (the “Facility Fee Shares”). It is the intention of the Company and TCA that the value of the Facility Fee Shares shall equal $52,500. In the event the value of the Facility Fee Shares issued to TCA does not equal $52,500 after a nine month evaluation date, the Equity Agreement provides for an adjustment provision allowing for necessary action (either the issuance of additional shares to TCA or the return of shares previously issued to TCA to the Company’s treasury) to adjust the number of Facility Fee Shares issued. As of March 31, 2012, 998,099 shares of common stock have been issued as consideration for the Equity Facility fee and is included in Deferred Equity Financing Costs which will be netted against proceeds when shares are purchased pursuant to the Equity Agreement.

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note J -

Other Matters

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 March 31, 2012, the agreement was still in effect and no funds have been borrowed.

 

On August 1, 2010, Cono Italiano (Delaware) entered into a manufacturing agreement with Interstate Caterers for the purposes of manufacturing, producing and distributing “pizza cono”. The term of the agreement shall continue in force and effect unless terminated by either party. Cono will lease to Interstate equipment required for the manufacture of the product for $1 per year. All equipment will remain the property of Cono and upon termination of the agreement be returned to Cono by Interstate.

 

In addition to this agreement Cono issued 100,000 shares of common stock to the 2 sole stockholders of Interstate in exchange for the use of Interstate’s facility for 1 (one) year at an approximate value of $36,000 for the calendar year 2011, included in prepaid expenses. For the three months ended March 31, 2012 and 2011, $-0- and $9,000 has been expensed to rent, respectively. This agreement was superseded in September 2011 by another agreement with Interstate Caterers (See below).

- continued -

 

 

CONO ITALIANO, INC.

(FORMERLY KNOWN AS TIGER RENEWABLE ENERGY, INC.)

(A DEVELOPMENT STAGE COMPANY)

(A NEVADA CORPORATION)

Keyport, New Jersey

 

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

 

Note J -

Other Matters – continued

On July 11, 2011 the Company signed a subscription agreement with an individual to purchase 4,525,640 shares of the Company’s common stock in four (4) installments of $50,000 each, totaling $200,000. As of December 31, 2011 all of the four installments had been received totaling $200,000. The Company has issued 4,000,000 shares of the 4,525,640 that were to be issued. 525,640 shares of common stock are due to the individual for his investment, therefore, common stock subscribed is $526 at March 31, 2012 and December 31, 2011.

 

On September 7, 2011 the Company entered into a manufacturing agreement with Interstate Caterers for the purposes of manufacturing, producing and distributing “pizza cono”. As consideration for Interstate entering into the agreement, the Company agreed to issue 3,500,000 shares of its restricted common stock upon the execution of the agreement. As of March 31, 2012 the stock had not been issued. As consideration for Interstate’s services under the agreement, Interstate will receive seventy percent (70%) of the difference between the sales price for the product less direct manufacturing costs for such product, regardless of whether the Company or Interstate initiated the sales of such product. In addition, the Company will lease to Interstate certain equipment to be used in the manufacture of the Cono products for $1.00 per year.

 

The term of the agreement is for a period of ten years commencing on September 7, 2011, the execution date of the agreement, and automatically renews for one additional ten-year period unless either the Company or Interstate provides the other notice of its intention to not renew at least thirty days prior to the end of the Initial Term.  The agreement may be earlier terminated at any time by the mutual consent of the Company and Interstate.  The Company may unilaterally terminate the agreement based on, among other things, Interstate’s non-performance in accordance with the Company’s specifications.  In addition, Interstate indemnifies the Company against third party claims based on alleged product defects.

 

 

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This quarterly report on Form 10-Q and other reports filed by Cono Italiano, Inc. (“we,” “us,” “our,” or the “Company”), from time to time with the U.S. Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

 

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments, and assumptions. We believe that the estimates, judgments, and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments, and assumptions are made. These estimates, judgments, and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates

 

Plan of Operation

 

On September 7, 2011, we entered into a strategic manufacturing agreement (the “Agreement”) with Interstate Caterers (“Interstate”) and continue moving forward with the production of our frozen foods and pizza cono. Additionally, we added empanadas to our product line which we believe will increase our market for sales. We plan to fund the manufacturing process of these products through the use of private funding investors and resources from Interstate Caterers.

 

In the first quarter of 2012, we added a fully automated filling machine to fill our pizza cono with various flavors. During the next 12 months the Company plans to begin the international distribution of its pizza cono and empanadas in Canada and the United States. We plan to distribute our products by using independent sales representatives and employees.  We anticipate developing our own proprietary microwave packaging and microwave sleeves for our products. Additionally, we plan to add a Flo Pack package machine to assist in our retail distribution and shipping in the second quarter of 2012.

 

 

Results of Operation

 

For the three months ended March 31, 2012 compared to the three months ended March 31, 2011

 

Revenues and Profit

 

In the three month period ended March 31, 2012, Cono Italiano (Delaware) had total revenue of $0, compared to total revenue of $0 for the same period in 2011.  We expect to generate revenue as we expand our business operations.

 

The Company had $0 in gross profits for the three month period ended March 31, 2012, compared to $0 for the same period in 2011.  We believe our business operations will be profitable once we begin to generate consistent revenue.  

 

General and Administrative Expenses

 

For the three month period ended March 31, 2012, the Company’s selling expenses have been $1,760, compensation expenses have been $56,250, general and administrative expenses have been $56,978, interest expenses were $7,138 and the loss on the impairment of a license right was $0. For the same period in 2011, selling expenses were $0, compensation expenses were $0, general and administrative expenses were $125,256, interest expenses were $5,631 and the loss on the impairment of a license right was $0. Our expenses have decreased due to our decrease in general administrative expenses. Our increase in selling expenses is attributable to expenses paid by the Company for traveling to meet prospective customers and clients. The increase in interest due is attributable to monies owed on a promissory note to DT Crystal Limited and a related party loan to Mitchell Brown, our Chief Executive Officer.

 

Net Loss

 

The net loss for the three month period ended March 31, 2012 was $(122,126), which was a decrease from $(130,887) for the same period in 2011. This decrease is attributable to the decrease in general and administrative expenses.

 

Liquidity and Capital Resources

 

As of March 31, 2012, the Company did not have and continues to not have sufficient cash on hand to pay present obligations as they become due. In addition, due to current economic conditions and the Company’s related risks and uncertainties, there is no assurance that we will be able to raise additional capital on acceptable terms, if at all, to meet our current obligation over the next 12 months. Because of the foregoing, the Company’s auditors have expressed substantial doubt about our ability to continue as a going concern.

 

Cost of sales for the three months ended March 31, 2012 and 2011, was $0 and $0, respectively. our cost of sales has not changed because we have not generated revenue in 2012 and 2011.

 

As of March 31, 2012, Cono Italiano (Delaware) had $157,459 in cash and cash equivalents, as compared to $760 in cash and cash equivalents as of December 31, 2011. The main source of the Company’s cash has been loans from our Chief Executive Officer, Mitchell Brown, who is owed $770,317 as of March 31, 2012, which total loan amount increased from $724,975 at December 31, 2011. Additionally, the Company issued a secured convertible promissory note in the principal amount of $250,000 as disclosed below.

 

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”). Lara Mac is wholly owned by Mitch Brown, our Chief Executive Officer. 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 March 31, 2012, there had been no borrowings under the Commitment Letter.

 

On February 27, 2012, the Company issued a secured convertible promissory note in the principal amount of $250,000 in favor of TCA (as defined herein) (the “Convertible Note”). The maturity date of the Convertible Note is February 27, 2013, and the Convertible Note bears interest at a rate of twelve percent (12%) per annum. The Convertible Note is convertible into shares of the Company’s common stock at a price equal to ninety-five percent (95%) of the lowest daily volume weighted average price of the Company’s common stock during the five (5) trading days immediately prior to the date of conversion. The Convertible Note may be prepaid in whole or in part at the Company’s option without penalty.

 

Further, on February 27, 2012, the Company entered into a committed equity facility (the “Equity Agreement”) with TCA Global Credit Master Fund, LP, a Cayman Islands limited partnership  (“TCA”). Pursuant to the terms of the Equity Agreement, for a period of twenty-four (24) months commencing on the date of effectiveness of the a registration statement, TCA has committed to purchase up to $1,500,000 of the Company’s common stock, par value $0.001 per share.

 

The Company expects the current resources from the Convertible Note, as well as the resources available from the Equity Agreement once the registration statement is declared effective, to be sufficient for a period of approximately 24 months, depending upon certain funding conditions contained therein, unless significant additional financing is received. Management has determined that general expenditures must be reduced and additional capital will be required in the form of equity or debt securities. In addition, if we cannot raise additional short term capital we will be forced to continue to further accrue liabilities due to our limited cash reserves. There are no assurances that management will be able to raise capital on terms acceptable to the Company. If we are unable to obtain sufficient amounts of additional capital, we may be required to reduce the scope of our planned development, which could harm our business, financial condition and operating results. If we obtain additional funds by selling any of our equity securities or by issuing common stock to pay current or future obligations, the percentage ownership of our stockholders will be reduced, stockholders may experience additional dilution, or the equity securities may have rights preferences or privileges senior to the common stock. If adequate funds are not available to us when needed on satisfactory terms, we may be required to cease operating or otherwise modify our business strategy.

 

 

The following table summarizes total current assets, liabilities and working capital at March 31, 2012, compared to December 31, 2011.

 

		March 31, 2012 (unaudited)				December 31, 2011				Increase/ (Decrease)
Current Assets		$	338,896			$	32,937			$	305,959
Current Liabilities		$	1,578,287			$	1,219,720			$	358,567
Working Capital		$	(1,239,391	)		$	(1,186,783	)		$	52,608

 

As of March 31, 2012, we had a working capital deficit of $1,239,391, as compared to a working capital deficit of $1,186,783 as of December 31, 2011, an increase of $52,608. Factors contributing to the increase in this deficit include increased expenses to service potential customers, trade shows, and equipment purchased to make sales presentations.

 

Current Liabilities consist of the following:

 

		March 31, 2012				December 31, 2011
Accounts Payable		$	135,508			$	135,508
Accrued Compensation, Officers			56,250				0
Bank overdraft			0				3,348
Accrued Expenses			63,057				54,713
Accrued Legal Expense			198,024				187,525
Accrued Interest, Officers			54,764				52,746
Due to Officer			770,317				724,975
Convertible Note Payable, Net			237,939				0
Note Payable			62,428				60,905
Total Current Liabilities		$	1,578,287			$	1,219,720

 

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.

 

Recently Issued Accounting Standards

 

The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company’s results of operations, financial position or cash flow.

 

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. We follow the provisions of FASB ASC 718. FASB ASC 718 requires recognition in the financial statements of the cost of employee services received in exchange for an award of equity instruments over the period the employee is required to perform the services in exchange for the award (presumptively the vesting period). FASB ASC 718 also requires measurement of the cost of employee services received in exchange for an equity award based upon the grant-date fair value of the award.

 

 

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.

 

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

 

We do not hold any derivative instruments and do not engage in any hedging activities.

 

Item 4. Controls and Procedures.

 

As of the end of the period covered by this Report, an evaluation was carried out under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) and Rule 15d-15(e) promulgated under the Securities and Exchange Act of 1934 (the “Exchange Act”). Based on their evaluation of our disclosure controls and procedures as of March 31, 2012, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that the Company’s disclosure controls and procedures were not effective to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms and this information is accumulated and communicated to management, including the Company’s Chief Executive Officer and Chief Financial Officer to allow timely decisions regarding required disclosures.

 

Management identified a material weakness (as defined in Public Company Accounting Oversight Board Standard No. 2) in our internal control over financial reporting regarding a lack of adequate segregation of duties and concluded that such controls were not effective as of March 31, 2012.

 

Changes in Internal Control Over Financial Reporting

 

The Company is in the process of improving its internal control over financial reporting in an effort to remediate this material weakness by improving period-end closing procedures and requiring all period-end recurring and non-recurring adjustments be reviewed by the Chief Financial Officer.

 

As of March 31, 2012, there has been no change in the Company’s internal control over financial reporting that has materially affected or is reasonably likely to materially affect the Company’s internal control over financial reporting.

 

 

PART II: OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

We are currently not involved in any litigation that we believe could have a material adverse effect on our financial condition or results of operations. There is no action, suit, proceeding, inquiry or investigation before or by any court, public board, government agency, self-regulatory organization or body pending or, to the knowledge of the executive officers of our company or any of our subsidiaries, threatened against or affecting our company, our common stock, any of our subsidiaries or of our companies or our subsidiaries’ officers or directors in their capacities as such, in which an adverse decision could have a material adverse effect.

 

Item 1A. Risk Factors.

 

We believe there are no changes that constitute material changes from the risk factors previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2011, filed with the SEC on April 16, 2012.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

There were no unregistered sales of the Company’s equity securities during the quarter ended March 31, 2012, other than those previously reported in a Current Report on Form 8-K.

 

Item 3. Defaults Upon Senior Securities.

 

There were no defaults upon senior securities during the quarter ended March 31, 2012.

 

Item 4. Mine Safety Disclosure.

 

Not applicable.

 

Item 5. Other Information.

 

There is no other information required to be disclosed under this item which was not previously disclosed.

 

 

Item 6. Exhibits.

 

Exhibit No.		Description
3.1		Amendment to the Articles of Incorporation, dated February 17, 2012, incorporated herein by reference to the Current Report on Form 8-K filed on February 28, 2012
4.1		Form of Convertible Promissory Note issued by Cono Italiano, Inc. in favor of TCA Global Credit Master Fund, LP dated February 27, 2012
10.1		Form of Convertible Promissory Note issued by Cono Italiano, Inc. in favor of TCA Global Credit Master Fund, LP dated February 27, 2012
31.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*
31.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 302 of 2002*
32.1		Certification of Principal Executive Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*
32.2		Certification of Principal Financial Officer, pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002*

 

*filed herewith

 

 

SIGNATURES

 

 Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

	CONO ITALIANO, INC.
	(Registrant)
Dated: May 21, 2012
	By:	/s/ Mitchell Brown
		Name:	Mitchell Brown
		Title:	Principal Executive Officer
Dated: May 21, 2012
	By:	/s/ Alex J. Kaminski
		Name:	Alex J. Kaminski
		Title:	Principal Financial Officer and Chief Accounting Officer