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EX-32.1 - CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 18 U.S.C. SECTION 1350 - Mister Goody, Inc.msgo_ex32z1.htm
EX-31.2 - CERTIFICATION - Mister Goody, Inc.msgo_ex31z2.htm


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 10-Q


(Mark One)

þ

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

For the quarterly period ended: September 30, 2013

Or

¨

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

Commission File Number: 000-54517

 

Mister Goody, Inc.

(Exact name of registrant as specified in its charter)

 

Florida

27-5414480

(State or other jurisdiction of incorporation
or organization)

(I.R.S. Employer Identification No.)

 

 

14762 Wildflower Lane
Delray Beach, Florida


33446

(Address of principal executive offices)

(Zip Code)

 

 

561-396-0554

(Registrant’s telephone number, including area code)

 

(Former name, former address and former fiscal year, if changed since last report)

 

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

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Date 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 þ No ¨

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

Large accelerated filer

¨

Accelerated filer

¨

Non-accelerated filer

¨

Smaller reporting company

þ

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes ¨ No þ

Indicate the number of shares outstanding of each of the issuers classes of common stock, as of the latest practicable date: 61,773,334 shares of common stock as of November 18, 2013.

 

 





Mister Goody, Inc.

Table of Contents


 

Page

 

 

PART I – FINANCIAL INFORMATION

 

Item 1. Condensed Financial Statements:

1

Condensed Balance Sheets (unaudited)

1

Condensed Statements of Operations (unaudited)

2

Condensed Statements of Cash Flows (unaudited)

3

Notes to Condensed Financial Statements (unaudited)

4

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

11

Item 3. Quantitative and Qualitative Disclosure About Market Risk

17

Item 4. Controls and Procedures

17

PART II – OTHER INFORMATION

18

Item 1. Legal Proceedings.

18

Item 1A. Risk Factors.

18

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

18

Item 3. Defaults Upon Senior Securities

18

Item 4. Mine Safety Disclosures

18

Item 5. Other Information.

18

Item 6. Exhibits

19

SIGNATURES

20





ii



PART I – FINANCIAL INFORMATION

MISTER GOODY, INC.

BALANCE SHEETS

 

 

September 30,

 

 

March 31,

 

 

 

2013

 

 

2013

 

 

 

(Unaudited)

 

 

 

 

Assets

  

                         

  

  

                         

  

 

 

 

 

 

 

 

Cash

 

$

118,187

 

 

$

 

Total current assets

 

 

118,187

 

 

 

 

 

 

 

 

 

 

 

 

 

Equity Investment

 

 

124,890

 

 

 

65,863

 

Total assets

 

$

243,077

 

 

$

65,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

29,999

 

 

$

40,914

 

Notes Payable– net of unamortized discount of $207,152 and $0

 

 

42,859

 

 

 

 

Notes payable - related party

 

 

 

 

 

40,400

 

Total current liabilities

 

 

72,858

 

 

 

81,314

 

 

 

 

 

 

 

 

 

 

Stockholders' equity (deficit):

 

 

 

 

 

 

 

 

Preferred stock, $0.001 par value, 5,000,000 shares authorized, 0 shares issued and outstanding

 

 

 

 

 

 

Common stock, $0.001 par value, 200,000,000 shares authorized, 61,733,334 and 60,323,332 shares issued and outstanding as of September 30, 2013 and March 31, 2013, respectively

 

 

61,772

 

 

 

60,323

 

Paid-in capital

 

 

918,337

 

 

 

416,415

 

Accumulated deficit

 

 

(809,890

)

 

 

(492,189

)

Total stockholders' equity (deficit)

 

 

170,219

 

 

 

(15,451

)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity (deficit)

 

$

243,077

 

 

$

65,863

 



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





1



MISTER GOODY, INC.

STATEMENTS OF OPERATIONS
(UNAUDITED)

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

September 30,

 

 

September 30,

 

 

 

2013

 

 

2012

 

 

2013

 

 

2012

 

 

  

                         

  

  

                         

  

  

                         

  

  

                         

  

NET REVENUES

 

$

 

 

$

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OPERATING EXPENSES:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

170,488

 

 

 

20,796

 

 

 

259,270

 

 

 

89,433

 

Management services

 

 

 

 

 

397

 

 

 

 

 

 

15,397

 

Total operating expenses

 

 

170,488

 

 

 

21,193

 

 

 

259,270

 

 

 

104,830

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations

 

 

(170,488

)

 

 

(21,193

)

 

 

(259,270

)

 

 

(104,830

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER INCOME (EXPENSE)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense

 

 

(26,429

)

 

 

 

 

 

(52,858

)

 

 

 

Equity in income/(loss) from unconsolidated affiliate

 

 

181

 

 

 

(4,402

)

 

 

(5,573

)

 

 

(4,402

)

Total other expense

 

 

(26,248

)

 

 

(4,402

)

 

 

(58,431

)

 

 

(4,402

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

LOSS BEFORE INCOME TAX PROVISION

 

 

(196,736

)

 

 

(25,595

)

 

 

(317,701

)

 

 

(109,232

)

Income tax provision

 

 

 

 

 

 

 

 

 

 

 

 

NET LOSS

 

$

(196,736

)

 

$

(25,595

)

 

$

(317,701

)

 

$

(109,232

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share, basic and diluted

 

$

(0.00

)

 

$

(0.00

)

 

$

(0.01

)

 

$

(0.00

)

Weighted-average common shares outstanding, basic and diluted

 

 

60,928,949

 

 

 

59,740,000

 

 

 

60,760,600

 

 

 

59,742,732

 



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





2




 MISTER GOODY, INC.

STATEMENTS OF CASH FLOWS
(UNAUDITED)

 

 

Six Months Ended

September 30,

 

 

 

2013

 

 

2012

 

Cash flows from operating activities:

  

                         

  

  

                         

  

Net loss

 

$

(317,701

)

 

$

(109,232

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

 

 

Non-cash stock compensation expense

 

 

153,371

 

 

 

48,524

 

Amortization of debt discount

 

 

42,859

 

 

 

 

Equity in losses of unconsolidated affiliate

 

 

5,573

 

 

 

4,402

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Other current assets

 

 

 

 

 

20

 

Accounts payable and accrued liabilities

 

 

(10,915

)

 

 

(2,500

Net cash used in operating activities

 

 

(126,813

)

 

 

(58,786

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

100,000

 

 

 

 

Payments on  notes payable - related party

 

 

(40,400

)

 

 

 

Proceeds from notes payable

 

 

250,000

 

 

 

 

Net cash provided by financing activities

 

 

309,600

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Equity Investment in Naked Edge

 

 

(64,600

)

 

 

(65,000

)

Net cash used in investing activities

 

 

(64,600

)

 

 

(65,000

)

 

 

 

 

 

 

 

 

 

Change in cash

 

 

118,187

 

 

 

(123,786

)

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

 

 

 

133,804

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$

118,187

 

 

$

10,018

 

 

 

 

 

 

 

 

 

 

Interest paid in cash

 

$

5,000

 

 

$

 


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





3





MISTER GOODY, INC.

NOTES TO CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)

Note 1: Organization and Basis of Presentation

Mister Goody, Inc. (the “Company”) is a Florida corporation that was incorporated on March 1, 2011 to develop an online marketplace and cause-marketing services designed to help businesses increase their brand awareness and sales. Due to a lack of sufficient revenue that resulted from this business plan, on August 24, 2012, the Company’s Board of Directors determined that it was in the Company’s stockholders’ best interest to refocus the business activities in a manner which could more fully enhance stockholder value. The Company decided to no longer pursue their online marketplace and cause-marketing services and it ceased all of its operations with respect thereto. On August 24, 2012, the Company acquired 50% of the common units of The Naked Edge, LLC (“Naked Edge”), a Colorado Limited Liability Company along with the option to acquire 33.33% of Naked Edge preferred units for $85,000 on or before August 24, 2013 (“Option”). The common units provided the Company with 50% of the voting rights and 20% of the economic rights of Naked Edge. On April 9, 2013, the Company exercised its Option and acquired 33.33% of the preferred units. As a result of this acquisition, the Company now owns 50% of the Common Ownership Interests and 33.33% of the Preferred Ownership Interests of The Naked Edge, which equates to 50% of the voting rights and 40% of the economic rights of Naked Edge. The Company’s primary business plan is to provide management consulting services to Naked Edge, which is the Company’s sole client. The Company has accounted for this investment under the equity method of accounting.

Unless the context otherwise requires, all references to “our company,” “we,” “our” or “us” and other similar terms means Mister Goody, Inc.

Basis of presentation

The accompanying unaudited condensed financial statements have been prepared by management in accordance with accounting principles generally accepted in the United States of America ("GAAP") for interim financial information. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments, consisting only of normal and recurring adjustments considered necessary for a fair statement, have been included. The reported results of operations are not necessarily indicative of the results that may be expected for the full year. These condensed financial statements should be read in conjunction with the audited financial statements and accompanying notes for year ended March 31, 2013.

Note 2: Going Concern

The accompanying condensed financial statements have been prepared assuming the Company will continue as a going concern. The Company has incurred losses and has had negative operating cash flows since inception. The future of the Company is dependent upon future profitable operations and the development of the business plan. The Company expects to raise additional funds via equity offerings; however, no assurances can be given that the Company will obtain access to capital markets in the future or that adequate financing to satisfy the cash requirements of implementing the Company’s business strategies will be available on acceptable terms.  

These conditions raise substantial doubt about the Company's ability to continue as a going concern. These condensed financial statements do not include any adjustments that might arise from this uncertainty.

Note 3: Summary of Significant Accounting Policies

Use of Estimates

The preparation of condensed 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 reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.







4





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities from date of purchase of three months or less to be cash equivalents. Cash consists of deposit with domestic banks which are insured by the Federal Deposit Insurance Corporation (FDIC).

Partially Owned Equity Affiliates

Partially owned equity affiliates are accounted for under the equity method of accounting. Equity method investments are recorded at cost and are adjusted periodically to recognize the Company's proportionate share of the affiliate's income or loss, additional contributions made and dividends and capital distributions received. In the event any of the partially owned equity affiliates were to incur a loss and the Company's cumulative proportionate share of the loss exceeded the carrying amount of the equity method investment, application of the equity method would be suspended and the Company's proportionate share of further losses would not be recognized until the Company committed to provide further financial support to the affiliate. The Company would resume application of the equity method once the affiliate becomes profitable and the Company's proportionate share of the affiliate's earnings equals the Company's cumulative proportionate share of losses that were not recognized during the period the application of the equity method was suspended.

The amount of the difference between the Company’s investment costs and the underlying equity in net assets is treated as goodwill, which is evaluated for impairment on a regular basis.

Revenue Recognition

The Company recognizes revenue from its services when it is probable that the economic benefits associated with the transactions will flow to the Company and the amount of revenue can be measured reliably. This is normally demonstrated when: (i) persuasive evidence of an arrangement exists; (ii) the fee is fixed or determinable; (iii) performance of service has been delivered; and (iv) collection is reasonably assured.

Net Loss per Share

Basic net loss per share is computed using the weighted average number of common shares outstanding during the period. As the Company is in a net loss position, there are no outstanding potentially dilutive securities that would cause diluted earnings per share to differ from basic earnings per share.

Income Taxes

The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed financial statements or tax returns. Under this method, deferred tax liabilities and assets are determined based on the difference between the financial statement and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company has established a valuation allowance for all deferred tax assets (consisting of net operating loss carry-forwards and stock compensation) as of September 30, 2013 as it has not determined that such assets are likely to be realized.

Management has conducted an evaluation of the Company's tax positions taken on returns that remain subject to examination and has concluded that there are no uncertain tax positions, as defined in ASC 740, that require recognition or disclosure in the financial statements.










5





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Fair Value of Financial Instruments

Under the FASB’s authoritative guidance on fair value measurements, fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The fair value hierarchy ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: Valuations for assets and liabilities traded in active exchange markets. Valuations are obtained from readily available pricing sources for market transactions involving identical assets or liabilities.

Level 2: Valuations for assets and liabilities traded in less active dealer or broker markets. Valuations are obtained from third party pricing services for identical or similar assets or liabilities.

Level 3: Valuations for assets and liabilities that are derived from other valuation methodologies, including option pricing models, discounted cash flow models and similar techniques, and not based on market exchange, dealer or broker traded transactions. Level 3 valuations incorporate certain unobservable assumptions and projections in determining the fair value assigned to such assets.

The Company’s financial instruments consist of cash, accounts payable and notes payable The carrying amount of each of these instruments approximates fair value because of the short-term nature of the item.

Note 4: Equity Investment

On August 24, 2012, the Company entered into an agreement with Naked Edge whereby the Company completed the purchase of 50% of Naked Edge Common Units for $65,000. At that time, the Company also received an option to acquire 33.33% of Naked Edge Preferred Units for $85,000 on or before August 24, 2013 (“Option”). The Company exercised the Option for a total of $85,000 during March and April 2013. The Common Units provide the Company with 50% of the voting rights and 20% of the economic rights of Naked Edge and the Preferred Units provide us with an additional 20% of the economic rights of Naked Edge for a total of 40%. The Company has accounted for this investment under the equity method of accounting.

Naked Edge is a Colorado Limited Liability Company organized on January 7, 2011. Naked Edge manufactures and distributes Veggie Go’s, an organic fruit and vegetable snack. The product is made with natural ingredients and no preservatives. Naked Edge produces four blends of Veggie Go’s and they are dairy free, soy free, gluten free and vegan. Naked Edge produces four blends of Veggie Go’s.

Summarized balance sheet information of Naked Edge as of September 30, 2013 is as follows:

Assets

     

 

 

 

 

 

September 30, 2013

 

Cash

 

$

14,843

 

Accounts receivable

 

 

52,828

 

Other current assets

 

 

4,666

 

Fixed assets

 

 

118,365

 

  Total assets

 

$

190,702

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

Current liabilities

 

$

52,614

 

Long term portion of capital leases

 

 

49,588

 

Long term portion of notes payable

 

 

17,172

 

Stockholders' equity

 

 

71,328

 

  Total liabilities and stockholders' equity

 

$

190,702

 


 




6





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

Summarized results of operations for the three and six months ended September 30, 2013 of Naked Edge are as follows:


 

 

Three months

ended

September 30,

2013

 

 

Six months

ended

September 30,

2013

 

Net Revenues

 

$

127,163

 

 

$

204,815

 

Cost of Goods Sold

 

 

(66,072

)

 

 

(106,236

)

Gross Profit

 

 

61,091

 

 

 

98,578

 

Operating Expenses:

 

 

 

 

 

 

 

 

General and Administrative

 

 

(60,638

)

 

 

(112,511

)

Total Operating Expenses

 

 

(60,638

)

 

 

(112,511

)

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

453

 

 

$

(13,933

)


Under the equity method of accounting, we record our proportional share of the losses of Naked Edge in which we have invested, up to the amount of our investment. The Company’s investment and equity in losses of Naked Edge is as follows:


Investment balance as of March 31, 2013

 

$

65,863

 

Equity loss

 

 

(5,573

)

Investment contribution

 

 

64,600

 

Investment balance as of September 30, 2013

 

$

124,890

 


Naked Edge rents its facilities and the future minimum payments by fiscal year are as follows:

By fiscal year

 

 

 

 

 

 

 

2014

$

11,597

 

2015

 

23,383

 

2016

 

11,786

 

2017

 

 

Thereafter

 

 

Total

$

46,766

 


In March 2012, Naked Edge entered into a promissory note in the amount of $10,500. The note has a 5 year term and an annual interest rate of 5% on the unpaid balance. The monthly payments are $198.15 including interest.


In November 2012, Naked Edge entered into a promissory note in the amount of $20,000. The note has a 5 year term and an annual interest rate of 5% on the unpaid balance. The monthly payments are $377.42 including interest.


In September 2013, Naked Edge entered into a promissory note in the amount of $15,000. The note is due March 15, 2014 and an annual interest rate of 5% on the unpaid balance. The monthly payments are $2,562, including interest.


In November 2012, Naked Edge entered into two financing agreements for the purchase of equipment. The cost basis for the two pieces of equipment totals $52,192. The term of both financing agreements range is 48 months and interest rates range from 32% to 41%. The agreements are secured by the respective underlying equipment and are guaranteed by either Naked Edge’s CEO or Naked Edge’s CEO and President. Monthly payments range from $893 to $1,200 and there is no prepayment penalties associated with these agreements. Useful life of equipment is 48 months


In November 2012, Naked Edge entered into a capital lease for equipment. The cost basis of the equipment is $9,099. The lease term is 44 months and the imputed interest rate is 37%. The lease is secured by the underlying equipment and is guaranteed by Naked Edge’s CEO and President. The monthly lease payment is $378 and there is no prepayment penalty associated with the agreement. Useful life of the leased equipment for depreciation purposes is 44 months.




7





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

In April 2013, Naked Edge entered into a capital lease for equipment. The cost basis of the equipment is $10,800. The lease term is 48 months and the imputed interest rate is 17%. The lease is secured by the underlying equipment and is guaranteed by Naked Edge’s CEO and President. The monthly lease payment is $313 and there is no prepayment penalty associated with the agreement. Useful life of the leased equipment for depreciation purposes is 48 months.

Future minimum lease payments due under the capital lease agreements are as follows for the fiscal years ending as of September 30, 2013:

2014

     

$

16,709

 

2015

 

 

33,417

 

2016

 

 

33,417

 

2017

 

 

19,548

 

2018

 

 

186

 

Total minimum lease payments

 

 

103,277

 

Less imputed interest

 

 

(39,742

)

Present value of minimum lease payments

 

 

63,535

 

Less: current maturities of capital lease obligations

 

 

(13,947

)

Noncurrent maturities of capital lease obligations

 

$

49,588

 


As of September 30, 2013, there were no related party transactions.

Naked Edge receives consulting services for matters relating to product development, packaging, sales, marketing, distribution, and business management in exchange for 5% of Naked Edge’s net income once Naked Edge generates a net income of $300,000 in any calendar year.

Note 5: Notes Payable

On April 3, 2013 the Company entered into a convertible loan agreement with Snack Um, LLC whereby it borrowed $250,000. Under terms of the loan, the Company is obligated to pay interest (8% per annum) on a quarterly basis with a term of three years.  At the sole option of Snack Um LLC, all or part of the unpaid principal then outstanding may be converted into shares of common stock of Mister Goody, at any time starting from the day after payment. Snack Um LLC may convert the principal balance outstanding into 2,500,000 shares of common stock at a price of $0.10 per share of Mister Goody. Snack Um LLC may convert the entire principal outstanding at any time and may convert part of the principal outstanding in increments of $50,000 or more at any time. Should Snack Um LLC elect to not convert the principal into common shares of Mister Goody, Mister Goody will repay the principal amount outstanding and any outstanding interest on the 3rd year anniversary of receiving the loan, Mister Goody shall not be obligated to repay any part of the principal amount outstanding before the 2nd year anniversary of receiving the loan, with four months of written notice

The conversion price of the note was below market at the date of issue which created a beneficial conversion feature which was accounted for as debt discount. The discount of $250,000 will be accreted into interest expense over the life of the note.  For the six months ended September 30, 2013, the Company recorded $42,859 of interest expense related to the amortization of debt discount.

Note 6: Shareholders’ Equity

On September 6, 2013, the Company issued 833,334 shares of common stock for $100,000.  

On September 12, 2013, the Company entered into a one-year agreement with a non-employee for consulting services to be performed.  The agreement called for the issuance of 200,000 shares immediately and $7,500 per month for the first three month period; $50,000 (measured on December 12, 2013) of common stock and $7,500 per month for the second three month period; $50,000 of common stock (measured on March 12, 2014) and $7,500 per month for the third three month period and $50,000 of common stock (measured on June 12, 2014) and $7,500 for the fourth three month period.  The Company issued 200,000 shares of common stock and estimated the fair market value on issuance date at $0.25 per share and recorded $50,000 in stock based compensation.




8





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

On November 29, 2012, the Company executed an agreement with a non-employee for consulting services to be performed. The agreement calls for a signing bonus of $100,000 payable through the issuance of a total of 1,000,000 shares issuable under the following time lines – (1) 250,000 immediately upon signing of the agreement and (2) 750,000 shares payable through monthly issuances of   83,333 shares of restricted stock through August 2013, so long as the related agreement has not been terminated by either party. Pursuant to the executed agreement the Company issued 83,333 shares of restricted common stock monthly through August 31, 2013.   For the six months ended September 30, 2013 the Company issued 416,668 shares of its common stock and recorded an expense of $83,334 based on a fair value of the Company’s stock ranging from $0.15 - $0.25 per share.  

Note 7: Related Party Transactions

The Company’s shareholders paid $2,175 and $6,377 for Company-related expenses during the six months ended September 30, 2013 and 2012, respectively. Such amounts were repaid to the shareholders as of September 30, 2013 and 2012.

On November 26, 2012 the Company entered into a promissory note whereby it borrowed $10,000 from a member of the Company’s board of directors. Under the terms of the unsecured promissory note, the Company is obligated to pay one lump sum of principal and no interest on March 31, 2013.

On November 26, 2012 the Company entered into a promissory note whereby by it borrowed $10,000 from the president of the Company. Under the terms of the unsecured promissory note, the Company is obligated to pay one lump sum of principal and no interest on March 31, 2013.

On March 22, 2013, the Company entered into unsecured promissory notes with each of Joel Arberman and Brendan Vogel, who are officers of the Company. Mr. Arberman loaned the Company $10,400 and Mr. Vogel loaned the Company $10,000. The promissory notes bear no interest or prepayment penalty and are due on May 31, 2013.

On April 9, 2013, the registrant repaid the $10,400 Arberman Promissory Note dated March 22, 2013, the $10,000 Vogel Promissory Note dated March 22, 2013, the $10,000 Sager Promissory Note dated November 26, 2012 and the $10,000 Arberman Promissory Note dated November 26, 2012, since the terms of the notes allowed for it to be paid within fifteen days of the due date no default interest is charged on the March 31, 2013 notes.

Management services

During the six months ended September 30, 2013 and 2012, the Company paid $0 and $15,397, respectively, to individuals for management services rendered to the Company. Some of these individuals were also shareholders of the Company.

Note 8: Commitments and Contingencies

Litigation

The Company may from time to time be involved in legal proceedings arising from the normal course of business. There are no pending or threatened legal proceedings as of September 30, 2013.

Note 9: Stock-Based Compensation

On August 26, 2013 and September 11, 2013, the Company executed separate agreements with two non-employees for consulting services to be performed.  Each of the agreements call for 315,000 non-statutory stock options to be issued with an exercise price of $0.15 per share.  Under each agreement, 15,000 shares vest immediately, and 5,000 shares shall vest each of the first 60 months starting October 1, 2013.  No additional shares will vest after the continuous employment with the Company as a consultant is terminated for any reason.  During the period ended September 30, 2013, the Company recorded $7.440 as stock based compensation related to the fair market value of options vested immediately.

On June 7, 2013, the Company executed separate agreements with three non-employees for consulting services to be performed. Each of the three agreements call for 315,000 non-statutory stock options to be issued with an exercise price $0.15 per share. 15,000 shares shall invest immediately and 5,000 shares shall vest each of the first 60 months starting July 1, 2013. No additional shares will vest after the continuous employment with the Company as a consultant is terminated for any reason.




9





MISTER GOODY, INC.

NOTES TO FINANCIAL STATEMENTS
(UNAUDITED)

From time to time, the Company grants stock option awards to officers and employees. Such awards are valued based on the grant date fair value of the instruments, net of estimated forfeitures, using a Black-Scholes option pricing model with the following assumptions:


Volatility

 

148-193.8%

Risk-free interest rate

 

1.03-2.31%

Expected term

 

5-7.5 years

Forfeiture rate

 

0-10%

Dividend yield rate

 

0%


The volatility used was based on historical volatility of similar sized companies due to lack of historical data of the Company’s stock price. The risk free interest rate was determined based on treasury securities with maturities equal to the expected term of the underlying award. The expected term was determined based on the simplified method outlined in Staff Accounting Bulletin No. 110. Stock option awards are expensed on a straight-line basis over the requisite service period. During the six months ended September 30, 2013 and 2012 the Company recognized $20,036 and $48,524 respectively, of compensation expense. Unamortized compensation expense related to the 1,575,000 options outstanding at September 30, 2013 is $274,540

The following summarizes stock option activity for the three months ended September 30, 2013:

 

 

Number of

Shares

 

Weighted

Average

Exercise

Price

 

Weighted

Average

Remaining

Contractual Life

 

Aggregate

Intrinsic

Value

 

Outstanding at March 31, 2013

 

 

500,000

 

$

0.04

 

 

8.51

 

$

50,000

 

Granted

 

 

1,575,000

 

 

0.11

 

 

9.79

 

 

157,500

 

Exercised

 

 

 

 

 

 

 

 

 

Forfeited

 

 

 

 

 

 

 

 

 

Outstanding at September 30, 2013

 

 

2,075,000

 

$

0.15

 

 

9.48

 

 $

207,500

 

Exercisable

 

 

620,000

 

$

0.15

 

 

8.75

 

$

62,000

 


Note 10: Discontinued Operations


Due to a lack of sufficient revenue that resulted from this business plan, on August 24, 2012, the Company’s Board of Directors determined that it was in the Company’s stockholders best interest to refocus the business activities in a manner which could more fully enhance stockholder value. The Company decided to no longer pursue their online marketplace and cause-marketing services and it ceased all of its operations with respect thereto. Therefore, the revenue in the amount of $0 and $3,109 for the six months ended September 30, 2013 and 2012, respectively was reclassed to general and administrative expenses. Discontinued operation disclosure was considered however due to the immaterial nature of the balance, it was reclassed to expenses.


Note 11: Subsequent Events

Management has evaluated all events occurring through the date of issuance, and no events are disclosed.  






10





ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

Forward-Looking Information

This quarterly report on Form 10-Q contains 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”). Forward-looking statements involve risks and uncertainties, such as statements about our plans, objectives, expectations, assumptions or future events. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “estimate,” “plan,” “project,” “continuing,” “ongoing,” “expect,” “we believe,” “we intend,” “may,” “should,” “will,” “could” and similar expressions denoting uncertainty or an action that may, will or is expected to occur in the future. These statements involve estimates, assumptions, known and unknown risks, uncertainties and other factors that could cause actual results to differ materially from any future results, performances or achievements expressed or implied by the forward-looking statements.

Examples of forward-looking statements include:

·

the timing of the development of future products;

·

projections of costs, revenue, earnings, capital structure and other financial items;

·

statements of our plans and objectives;

·

statements regarding the capabilities of our business operations;

·

statements of expected future economic performance;

·

statements regarding competition in our market; and

·

assumptions underlying statements regarding us or our business.

The ultimate correctness of these forward-looking statements depends upon a number of known and unknown risks and events. We discuss our known material risks under Item 1.A “Risk Factors” in our most recent Annual Report on Form 10-K filed with the Securities and Exchange Commission on July 15, 2013. Many factors could cause our actual results to differ materially from the forward-looking statements. In addition, we cannot assess the impact of each factor on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements.

We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast b We caution you that actual outcomes and results may differ materially from what is expressed, implied, or forecast by our forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which the statement is made or to reflect the occurrence of unanticipated events. This information should also be read in conjunction with our audited historical financial statements which are included in our Annual Report on Form 10-K for the fiscal year ended March, 31, 2013, filed with the Securities and Exchange Commission on July 15, 2013.

 

Background Overview

Mister Goody, Inc. (the “Company”) is a Florida corporation that was incorporated on March 1, 2011 to develop an online marketplace and cause-marketing services designed to help businesses increase their brand awareness and sales. Due to a lack of sufficient revenue that resulted from this business plan, on August 24, 2012, the Company’s Board of Directors determined that it was in the Company’s stockholders best interest to refocus the business activities in a manner which could more fully enhance stockholder value. The Company decided to no longer pursue their online marketplace and cause-marketing services and it ceased all of its operations with respect thereto. On August 24, 2012, the Company acquired 50% of the common units of The Naked Edge, LLC (“Naked Edge”), a Colorado Limited Liability Company along with the option to acquire 33.33% of Naked Edge preferred units for $85,000 on or before August 24, 2013 (“Option”). The common units provided the Company with 50% of the voting rights and 20% of the economic rights of Naked Edge. On April 9, 2013, the Company exercised its Option and acquired 33.33% of the preferred units. As a result of this acquisition, the Company now owns 50% of the Common Ownership Interests and 33.33% of the Preferred Ownership Interests of The Naked Edge, which equates to 50% of the voting rights and 40% of the economic rights of Naked Edge. The Company’s primary business plan is to provide management consulting services to Naked Edge, which is the Company’s sole client.




11





Unless the context otherwise requires, all references to “our company,” “we,” “our” or “us” and other similar terms means Mister Goody, Inc.

Principal Services

Mister Goody provides management consulting services to Naked Edge, which is its sole client. Mister Goody’s services include consulting on matters relating to Naked Edge’s product development, packaging, sales, marketing, distribution and business management. Pursuant to a written agreement, in exchange for our consulting services, Naked Edge pays the Company a fee of 5% of its net-income during any calendar year that Naked Edge generates net-income of at least $300,000. Naked Edge did not meet this threshold during calendar year 2012 and as a result, we received no management consulting fee revenue from Naked Edge during our fiscal year ended March 31, 2013. We presently have no other sources of income, and do not contemplate obtaining income from any other sources in the near future other than Naked Edge, if and when it meets the $300,000 net income threshold. Our future success is entirely dependent on the future success of Naked Edge.

Principal Products

Mister Goody does not sell any products. Naked Edge manufactures and distributes Veggie Go’s, an organic fruit and vegetable snack. The product is made with natural ingredients and no preservatives. They are dairy free, soy free, gluten free, vegan, non-GMO certified and kosher certified. Naked Edge produces four blends of Veggie Go’s. Mister Goody assists Naked Edge by providing consulting on pricing, packaging, promotions, sales, marketing, distribution, business development and other matters.

Manufacturing

Mister Goody does not manufacture any products. Naked Edge produces Veggie Go’s at its leased facility in Boulder, Colorado. The manufacturing process requires special equipment and trained personnel. As of September 30, 2013, Naked Edge’s production capacity is approximately 80,000 units per month. Mister Goody assists Naked Edge by providing consulting on equipment financing, timing of expansion and other matters.

Naked Edge entered into an agreement with Natural Food Works, LLC, a Colorado limited liability company, to produce and package products for Naked Edge starting in November 2013 and will be paid all direct and indirect costs incurred plus a margin, as compensation for its services.

Distribution

Mister Goody does not distribute any products. Naked Edge’s products are generally sold to distributors who generally sell to natural and organic food retailers, some of which are well-known national chains, as well as smaller regional specialty stores. As of September 30, 2013, Veggie Go’s could be purchased at approximately six  hundred retail locations, one farmer’s market and several websites. Mister Goody assists Naked Edge by making introductions to food distributors, food brokers and food retailers.

Sales and Marketing

Mister Goody does not actively market its consulting services. Naked Edge must establish and strengthen the brand awareness of Veggie Go’s. Naked Edge believes enhancing and maintaining its brand recognition among retailers and consumers is an important aspect of its efforts to increase revenue and generate a profit for both Naked Edge and our Company. Naked Edge promotes consumer awareness of its products through in-store product demonstrations, social media outreach, community involvement, Internet marketing, public relations and developing partnerships. Mister Goody assists Naked Edge by providing consulting on sales, marketing and related matters.

Supplies and Suppliers

Mister Goody does not contract with any suppliers for any supplies. While Naked Edge products are unique within the marketplace, the underlying ingredients are readily available and generally not subject to shortages or significant market fluctuations. Naked Edge’s product and geographic expansion plans may require additional supplier relationships.




12





Organic Food Industry – Naked Edge

According to a recent publication, the U.S. is the world’s largest organic food market, with sales of natural and organic foods exceeding $40 billion in 2010. From 2000 to 2010, the U.S. natural and organic food market grew at a compound annual growth rate of approximately 12% and is projected by the same industry source to grow at a compound annual growth rate of approximately 8% from 2010 to 2013. We believe growth rates for the U.S. natural and organic food market have been, and will continue to be, higher than those for the overall U.S. food market.

We believe growth in the natural and organic food market is driven by various factors, including heightened awareness of the role that food and nutrition play in long-term health and wellness. Many consumers prefer natural and organic products due to increasing concerns over the purity and safety of food. The development and implementation of U.S. Department of Agriculture, or USDA, standards for organic certification has increased consumer awareness of, and confidence in, products labeled as organic. According to published information, 75% of adults in the U.S. purchased natural or organic foods in 2010, with 33% of consumers using organic products at least once a month as compared to 22% ten years before.

Historically, natural and organic foods were primarily available at independent organic retailers or natural and organic retail chains. Mainstream grocery stores and mass merchandisers have expanded their natural and organic product offerings because of increasing consumer demand for natural and organic products, which command a higher margin for the retailer. The percentage of natural and organic food sales has been rising, and, according to an industry source, in 2010, 73% of consumers purchased organic products at grocery stores as compared to 25% at natural food stores. We believe the emergence of strong natural and organic brands, driven by a loyal and growing consumer base, will act as an additional catalyst for higher penetration in the mainstream grocery and mass merchandiser channels.

Competition – Naked Edge

Naked Edge’s principal competitors include organic fruit leather snack brands owned by Whole Foods (365 Organic brand), Stretch Island Fruit Co., Sun-Rype Products Ltd., Kaia Foods, Clif Bar & Company, Trader Joe’s (Fiberful Bars brand), Wacky Apple and Chef Roberts, LLC. Naked Edge also competes against other fruit based snack brands owned by: Betty Crocker, Kellogg’s, Annie’s, Welch’s, Motts, Sunkist and many others.

The snack food industry is highly competitive and barriers to entry are low. Privately-backed and public companies could choose to enter Naked Edge’s space and compete directly with Naked Edge, or indirectly by offering substitute offerings. With the influx of new entrants to the market, we expect competition to persist and intensify in the future, which could harm Naked Edge’s ability to increase sales and generate a profit. Many companies and individuals are engaged in the same or similar businesses.

Competition could result in reduced sales, reduced margins or the failure of Veggie Go’s to achieve or maintain more widespread market acceptance, any of which could harm Naked Edge’s business. Some competitors have significant advantages over Naked Edge, including greater name recognition, longer operating histories, lower operating costs, pre-existing relationships with current or potential retailers and customers, greater financial, marketing and other resources. These advantages could allow Naked Edge’s competitors to respond more quickly to opportunities or changes in its markets. These competitive disadvantages could adversely affect Naked Edge’s ability to generate sales and profit. Naked Edge may never achieve a profit which means our Company may never achieve a profit.

Intellectual Property

Mister Goody owns no intellectual property. Naked Edge owns all associated copyrights, domain names, trademarks and service marks, but it does not own any patents, franchises or concessions, and has no present intention to obtain such in the near future. While Naked Edge’s products are not patented, it believes its recipes and formulations are protected trade secrets.

Naked Edge considers the process of developing food products from concept, including formulas, recipes, flavor profiles and the batching process is not easily attained and therefore is proprietary information which gives it a competitive advantage. This proprietary information is critical to Naked Edge’s success. Naked Edge considers this an intellectual asset of its business. Naked Edge’s management prohibits contract manufacturers and agents from disclosing or using its confidential or proprietary information outside the company, before, during and after involvement with Naked Edge.




13





All resources that have access to Naked Edge’s proprietary information are required to execute a non-disclosure agreement. Both Mister Goody and Naked Edge consider everything Naked Edge does in terms of marketing, promotions and product as a trade secret, and information we wish to keep confidential. Naked Edge’s proprietary information includes recipes, formulas, processes, and methods used in production. It includes business and marketing plans, customer lists, and contracts and reasonable measures have been taken to keep this information protected, as it is not readily ascertainable by the public.

Naked Edge’s brand and image will be protected to the extent the law provides through trademark notifications. Naked Edge has not registered trademarks or otherwise protected the propriety of its currently available products through registration with governmental authorities or licenses with private parties. As its market share and product availability increases, significant future expenditures may be required to protect its brand and proprietary product recipes.

Research and Development – Naked Edge

Naked Edge products have, and are expected to be for the foreseeable future, developed by our management. We plan to develop new blends of Veggie Go’s to increase shelf space at existing retailers, attract food brokers, interest new retailers and provide consumers with a wider selection of blends to enjoy. We do not expect to incur significant expenses related to additional product development for at least the next twelve months. We are not reliant on heavy research and development.

Regulation – Naked Edge

United States food products are primarily regulated by the U.S. Food and Drug Administration (“FDA”). The FDA enacts and enforces regulations relating to the manufacturing, distribution and labeling of food products. The Food Safety Modernization Act, a 2011 law, provided additional food safety authority to the FDA. Naked Edge does not expect the cost of complying with FDA laws and regulations to be material since it intends to utilize a contract manufacturer to produce is products.

In addition, some states further regulate operations within the food distribution and sales industry by requiring additional licensing, enforcing federal and state standards for selected food products, grading food products, inspecting plants and warehouses, regulating trade practices related to the sale of certain food products and imposing their own labeling requirements on food products. We believe Naked Edge is compliant with all federal and state regulations.

We do not believe Naked Edge has any significant exposure to environmental protection laws and regulations.

Employees

As of September 30, 2013, Mister Goody had eight consultants and Naked Edge had two employees. The Mister Goody Chief Executive Officer and Vice President of Business Development work for Mister Goody under consulting agreements. The Naked Edge, LLC Chief Executive Officer and President work for Naked Edge under employment agreements.

Mister Goody and Naked Edge utilize independent contracts in an effort to build and operate its business cost-effectively. We believe the use of non-salaried personnel allows us to expend its capital resources as a variable cost as opposed to a fixed cost of operations. In other words, if we have insufficient revenues or cash available, we are in a better position to only utilize those services required to generate revenues as opposed to having salaried employees.

Material Agreements

Naked Edge

On August 24, 2012, as part of the LLC Interest Purchase Agreement we entered into with Naked Edge, we entered into a consulting agreement with Naked Edge to provide management consulting services to Naked Edge. Mister Goody’s services include consulting on matters relating to Naked Edge’s product development, packaging, sales, marketing, distribution and business management. Pursuant to that agreement, in exchange for our consulting services, Naked Edge pays the Company a fee of 5% of its net-income during any calendar year that Naked Edge generates net-income of at least $300,000. This agreement will remain in effect until cancelled by either party,




14





which cancellation may be effected at any time upon ten days written notice; provided, however, that Naked Edge may not terminate this agreement other than for cause, generally defined as our fraud or misconduct that materially and adversely affects the Company, negligence in the performance of our services, persistent failure to perform the services as contemplated by the agreement, conduct that discredits Naked Edge, or material breach of the terms of this agreement, provided in each case that we have been provided written notice of the facts and circumstances alleged to constitute the cause alleged and at least 10 days’ opportunity to cure it.

First Market, LLC

On November 29, 2012, the Company executed an agreement with a non-employee for consulting services to be performed. The agreement calls for a signing bonus of $100,000 payable through the issuance of a total of 1,000,000 shares issuable under the following time lines – (1) 250,000 immediately upon signing of the agreement and (2) 750,000 shares payable through monthly issuances of 83,333 shares of restricted stock through August 2013, so long as the related agreement has not been terminated by either party. The Company issued 83,333 shares of restricted common stock monthly through August 31, 2013.   For the six months ended September 30, 2013 the Company issued 416,668 shares of its common stock and recorded an expense of $83,334, based on a fair value of the Company’s stock ranging from $0.15 - $0.25 per share.  

Snack Um, LLC

On April 3, 2013 we entered into a convertible loan agreement and promissory note with Snack Um, LLC. The note is due on April 3, 2016, but it may be called by the holder upon four months written notice to the registrant at any time after April 3, 2015. We can repay the note at any time with no prepayment penalty upon 14 days written notice. The note provides Snack Um, LLC with 8% interest per annum and the ability to convert part or the entire note into shares of our common stock at a fixed price of $0.10 per share.

Results of Operations

From the three and six months ended September 30, 2013:

Revenues: We generated $0 in revenues.

Operating Expenses: Our operating expenses consisted of $170,488 and $259,270 respectively of general and administrative expenses and $0 of management services expenses. $105,767 and $153,371of our expenses was non-cash stock-based compensation.

Interest Expense: Our interest expenses consisted of $26,429 and $52,858, respectively.

Equity in Income of Unconsolidated Affiliate: We incurred a gain on our equity investment in Naked Edge of $181 and a loss of $5,573 for the three and six months ended September 30, 2013.

Net Loss: We had a net loss of $196,736 and $317,701 respectively, of which $105,767 and $153,371 respectively was non-cash stock-based compensation.

From the three and six months ended September 30, 2012:

Revenues: We generated $0 in revenues.

Operating Expenses: Our operating expenses consisted of $20,796 and 89,433 respectively of general and administrative expenses and $397 and $15,397, respectively, of management services expenses. $0 and $48,524 respectively of our expenses was non-cash stock-based compensation.

Equity in Losses of Unconsolidated Affiliate: We incurred losses on our equity investment in Naked Edge of $4,402 and $4,402 respectively.

Net Loss: We had a net loss of $25,595 and $109,232, respectively of which $0 and $48,524 respectively was non-cash stock-based compensation.

The results of operations for three months ended September 30, 2013 and 2012 are not indicative of the results for any future interim period. During this initial period, we were primarily focused on raising investment capital, recruiting and retaining management, business planning and initial software development.




15





We expect to considerably increase our operating expenses in the future, particularly expenses in accounting and legal fees.

Liquidity and Capital Resources

Our balance sheet as of September 30, 2013 reflects cash assets of $118,187, other assets of $124,890 and $72,858 in liabilities.

Our cash primarily came from the issuance of a convertible note in April 2013 in which we raised $250,000 and an equity private placement in September 2013 in which we raised $100,000.

On August 24, 2012, we completed the purchase of 50% of The Naked Edge, LLC (“Naked Edge”) Common Units for $65,000. At that time, we also received an option to acquire 33.33% of Naked Edge Preferred Units for $85,000 on or before August 24, 2013 (“Option”). We exercised the Option for a total of $85,000 during March and April 2013. The Common Units provide the Company with 50% of the voting rights and 20% of the economic rights of Naked Edge and the Preferred Units provide us with an additional 20% of the economic rights of Naked Edge. We recorded $5,573 of net equity in losses of our unconsolidated subsidiary Naked Edge during the six months ended September 30, 2013.

Over the next 12 months, we anticipate needing approximately $60,000 for accounting, legal, interest payments and working capital. We will utilize the cash currently held by the company to pay such expenses.

Since January 1, 2013, we have been spending approximately $5,000 per month to support our current level of operations. The expenses include costs of, legal, accounting and other expenses associated with the daily operations of our business.

In the future, we plan to try and raise additional capital through the issuance of additional shares of common stock or preferred stock. If we issue additional shares of common stock in the future, our then-existing shareholders may face substantial dilution. If we issue preferred stock, we may be obligated to pay a substantial amount of interest which would reduce our cash available for working capital. In addition, holders of preferred stock may be entitled to be paid out of any assets we have in the event of any liquidation, dissolution or winding up of the corporation, before the holders of common stock would be paid anything.

Currently, we do not have any arrangements for any financing, whether it be through the sale of common stock or preferred stock or any other method of financing, and we can provide no assurances to investors that we will be able to obtain any financing when required. The only cash currently available to us is the cash in our bank account. We have no other sources of capital.

No assurance can be given that we will obtain access to capital markets in the future or that adequate financing to satisfy the cash requirements of implementing our business strategies will be available on acceptable terms. Our inability to gain access to capital markets or obtain acceptable financing could have a material adverse effect upon the results of our operations and financial condition. Our failure to raise additional funds if needed in the future will adversely affect our business operations, which may require us to suspend our operations and lead you to lose your entire investment.

It is likely that our operating losses will increase in the future and it is very possible we will never achieve or sustain profitability. We may be unable to adjust spending in a timely manner to compensate for any unexpected revenue shortfall or other unanticipated changes in our industry. Any failure by us to accurately make predictions would have a material adverse effect on our business, results of operations and financial condition.

Critical Accounting Policies

Our critical accounting policies, including the assumptions and judgments underlying them, are disclosed in the Notes to the Financial Statements. We have consistently applied these policies in all material respects. We do not believe that our operations to date have involved uncertainty of accounting treatment, subjective judgment, or estimates, to any significant degree.




16





Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

Not applicable.

ITEM 4.

CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures.  The Company’s management, with the participation of the Company’s Principal Executive Officer and Principal Financial Officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of September 30, 2013.  Based on this evaluation, the Company’s Principal Executive Officer and Principal Financial Officer concluded that, as of September 30, 2013 the Company’s disclosure controls and procedures were ineffective, To mitigate the infectiveness, the Company engages a consultant to assist with the preparation of the financial statements in that they provide reasonable assurance that information required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and is accumulated and communicated to the Company’s management, including the Company’s Principal Executive Officer and Principal Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.





17





PART II – OTHER INFORMATION

ITEM 1.

LEGAL PROCEEDINGS.

Not Applicable.

ITEM 1A.

RISK FACTORS.

Not Applicable.

ITEM 2.

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

Date

 

Security/Value

 

 

 

April 30, 2013

 

Common stock – 83,333 shares of common stock for services. The common stock was valued at $16,667.

May 31, 2013

 

Common stock – 83,333 shares of common stock for services. The common stock was valued at $12,500.

June 7, 2013

 

Option - 945,000 shares of common stock at $0.15 per share. The option was valued at $139,839 using the Black-Scholes Option Pricing Formula

June 30, 2013

 

Common stock – 83,333 shares of common stock for services. The common stock was valued at $12,500.

September 6, 2013

 

Common stock – 833,334 shares of common stock for $100,000.


No underwriters were utilized and no commissions or fees were paid with respect to any of the above transactions.  We relied on Section 4(2) of the Securities Act of 1933, as amended, since the transactions did not involve any public offering.


ITEM 3.

DEFAULTS UPON SENIOR SECURITIES.

Not Applicable.

ITEM 4.

MINE SAFETY DISCLOSURES.

Not Applicable.

ITEM 5.

OTHER INFORMATION.

Not Applicable.




18





ITEM 6.

EXHIBITS.

SEC Reference

Number

 

Title of Document

 

Location

                          

     

 

     

                          

10.1

 

Arberman Amendment to Consulting Agreement dated August 2, 2012

 

*

10.2

 

Vogel Amendment to Consulting Agreement dated August 2, 2012

 

*

10.3

 

Naked Edge LLC Purchase Agreement dated August 24, 2012

 

**

10.4

 

First Market LLC Consulting Agreement dated November 29, 2012

 

***

10.5

 

Co-Pack Agreement

 

****

31.1

 

Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

31.2

 

Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

32.1

 

Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

32.2

 

Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

 

Filed herewith

101

 

The following financial information from Mister Goody, Inc.'s Quarterly Report on Form 10-Q for the quarter ended June 30, 2013, formatted in XBRL (eXtensible Business Reporting Language): (i) Condensed Balance Sheets; (ii) Condensed Statements of Operations; (iii) Condensed Statements of Cash Flows; and (iv) the Notes to Condensed Financial Statements.

 

Filed herewith

———————

*

Incorporated by reference to Form 8-K filed on August 3, 2012.

**

Incorporated by reference to Form 8-K filed on August 27, 2012

***

Incorporated by reference to Form 8-K filed on December 3, 2012

****

Incorporated by reference to Form 8-K filed on October 15, 2013

All other Exhibits called for by Rule 601 of Regulation S-K are not applicable to this filing. Information pertaining to our common stock is contained in our Certificate of Incorporation and By-Laws.




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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized on November 18, 2013.


Mister Goody, Inc.

Registrant

 

 

By:

/s/ Joel Arberman

 

Joel Arberman

 

Principal Executive Officer

 

 

 

 

 

 

By:

/s/ Joel Arberman

 

Joel Arberman

 

Principal Executive Officer, Principal Financial Officer

 




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