Attached files

file filename
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R32.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R17.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R26.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R6.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R37.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R12.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R10.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R21.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R16.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R2.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R15.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R1.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R5.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R28.htm
EX-32.2 - CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 18 U.S.C. SECTION 1350 - Mister Goody, Inc.msgo_ex32z2.htm
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
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R20.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R38.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R27.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R34.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R14.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R13.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R19.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R23.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R11.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R4.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R18.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R3.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R7.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R24.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R36.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R22.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R35.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R8.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R31.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R30.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R29.htm
EXCEL - IDEA: XBRL DOCUMENT - Mister Goody, Inc.Financial_Report.xls
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R9.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R25.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R33.htm
XML - IDEA: XBRL DOCUMENT - Mister Goody, Inc.R39.htm
EX-31.1 - CERTIFICATION - Mister Goody, Inc.msgo_ex31z1.htm


 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


Form 10-K


þ

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


For the fiscal year ended March 31, 2014


OR


o

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 0-54517


MISTER GOODY, INC.

(Exact name of registrant as specified in its charter)


Florida

 

27-5414480

(State or other jurisdiction of

 

(I.R.S. employer

incorporation or organization)

 

identification number)

 

 

 

14762 Wildflower Lane
Delray Beach, Florida

 

33446

(Address of principal executive offices)

 

(Zip Code)


561-396-0554

(Registrant’s telephone number)


Securities registered pursuant to Section 12(b) of the Act:

None


Securities registered pursuant to Section 12(g) of the Act:


Common Stock, Par Value $0.001

(Title of class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes o  No þ


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No þ


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 o





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


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of Registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment of this Form 10-K. þ


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 Act). Yes o  No  þ


The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant was $146,467 as of June 30, 2014 (7,323,334 shares at $0.02 per share).


As of July 15, 2014, there were 60,823,334 outstanding shares of the registrant’s common stock, $.001 par value.

 

 







TABLE OF CONTENTS


 

 

 

 

Page

 

 

PART I

 

 

                       

  

 

  

                       

Item 1.

 

Business

 

1

Item 1A.

 

Risk Factors

 

6

Item 1B.

 

Unresolved Staff Comments

 

15

Item 2.

 

Properties

 

15

Item 3.

 

Legal Proceedings

 

15

Item 4.

 

Mine Safety Disclosures

 

15

 

 

 

 

 

 

 

PART II

 

 

 

 

 

 

 

Item 5.

 

Market for Registrant’s Common Equity, Related Stockholder Matters, and Issuer Purchases of Equity Securities

 

16

Item 6.

 

Selected Financial Data

 

18

Item 7.

 

Management’s Discussion and Analysis of Financial Condition and Results of Operations

 

19

Item 7A.

 

Quantitative and Qualitative Disclosures About Market Risk

 

21

Item 8.

 

Financial Statements and Supplementary Data

 

21

Item 9.

 

Changes in and Disagreements With Accountants on Accounting and Financial Disclosure

 

21

Item 9A.

 

Controls and Procedures

 

21

Item 9B.

 

Other Information

 

22

 

 

 

 

 

 

 

PART III

 

 

 

 

 

 

 

Item 10.

 

Directors, Executive Officers and Corporate Governance

 

23

Item 11.

 

Executive Compensation

 

24

Item 12.

 

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

 

25

Item 13.

 

Certain Relationships and Related Transactions, and Director Independence

 

26

Item 14.

 

Principal Accounting Fees and Services

 

27

 

 

 

 

 

 

 

PART IV

 

 

 

 

 

 

 

Item 15.

 

Exhibits, Financial Statement Schedules

 

28

Signatures

 

 

 

29









PART I


SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS


This report on Form 10-K contains forward-looking statements. 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. 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.


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.


ITEM 1.

BUSINESS


Business Summary


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.


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




1



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 2013 and as a result, we received no management consulting fee revenue from Naked Edge during our fiscal year ended March 31, 2014. 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 which have a suggested retail price of $1.29 per unit. 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 entered into an agreement with Natural Food Works, LLC, a Colorado limited liability company, to produce and package products for Naked Edge. Natural Food Works, LLC began manufacturing for Naked Edge in February 2014 and will be paid all direct and indirect costs incurred plus a margin, as compensation for its services.. Mister Goody assists Naked Edge by providing consulting on equipment financing, timing of expansion and other matters.


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 March 31, 2014, Veggie Go’s could be purchased at hundreds of  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.




2



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.




3



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.


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 March 31, 2014, Mister Goody had two consultants and Naked Edge had two employees. The Mister Goody Chief Executive Officer and Vice President of Business Development works 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 contractors 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.



4




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, 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 we entered into a consulting agreement with First Market, LLC (“First Market”), pursuant to which First Market is paid $10,000 per month plus 1,000,000 shares of common stock for management consulting, business advisory, strategic planning and public relations services. This agreement was subsequently terminated and 750,000 shares of common previously issued to them were returned for consideration of $18,000 with no further obligations. In addition to the termination of the agreement, accrued consulting fees of $30,000 was reversed and adjusted in general and administrative expenses.


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 at any time with a 30 day notice in writing.




5



ITEM 1A.

RISK FACTORS


Risks Related To Our Business


Our independent auditors have expressed substantial doubt about our ability to remain as a going concern which may negatively impact our ability to obtain additional funding or funding on terms attractive to us.


Our independent auditors state in their audit report that since we have incurred substantial losses, had negative cash flow from operations, and are dependent on our ability to raise capital from stockholders or other sources to sustain operations, there is a substantial doubt that we will be able to continue as a going concern. The going concern opinion may negatively impact our ability to obtain additional funding or funding on terms attractive to us. If we are unable to continue as a going concern, you will lose your entire investment.


We do not have sufficient capital to repay $250,000 in debt which may become due on April 3, 2015, which may affect our ability to survive.


We do not have sufficient capital to repay $250,000 in debt which may become due on April 3, 2015. The only cash currently available to us is the cash in our bank account. We have no lines of credit or other sources of capital. The availability of additional funding is subject to credit, economic, market and legal constraints. No guarantees that any additional financing can be obtained are possible. Even if financing is available, it may not be available on terms we find favorable. 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.


We have a limited operating history for assessing our ability to conduct successful business activities.


We are a recently formed entity with limited operating history. There can be no assurance that we will be able to successfully implement our business plan to successfully assist Naked Edge or that we will ever generate positive cash flow from our efforts.


At this early stage of our operation, we face certain risks and uncertainties frequently encountered by companies at the early stage of their business development. Potential investors should be aware of the difficulties normally encountered by new companies and the high rate of failure of such enterprises. The likelihood of success must be considered in light of the problems, expenses, difficulties, complications and delays encountered in connection with the operations we plan to undertake. We cannot be sure that we will be successful in addressing these risks and uncertainties and our failure to do so could have a material adverse effect on our financial condition and your investment.


Our future success is dependent on many factors including our ability to increase awareness of the Veggie Go’s brand name, meet customer standards, attain customer loyalty, attract product distributors, attract retailers, respond effectively to competitive pressures and attract qualified personnel. None of these factors can be demonstrated by our historic performance and there is no assurance we will be able to accomplish them.


Our limited operating history makes any prediction of our future results of operations difficult or impossible. Since there can be no assurance of future successful performance of our business, or the Naked Edge business, you are accepting a high probability of losing your entire investment.


Our business plan and future success is entirely dependent upon the success of Naked Edge since we have no other consulting clients.


Mister Goody provides management consulting services to Naked Edge, which is its sole client, which means that our business plan and future success is entirely dependent upon the success of Naked Edge. Pursuant to a written agreement, in exchange for our consulting services, Naked Edge pays our Company a fee of 5% of its net-income during any calendar year that Naked Edge generates net-income of at least $300,000. In the event that Naked Edge does not meet this threshold during any calendar year, we will receive no management fees from Naked Edge, and hence, no revenue. 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.



6




We have never generated a profit and if we are unable to generate consistent profits, we will not have the ability to sustain our business.


Since inception to March 31, 2014, we have incurred a net loss of $850,948. We are expecting losses over the next 12 months because we do not have any significant revenues to offset the expenses associated with the development and implementation of our business plan. We cannot guarantee we will ever be successful in generating significant revenues in the future or that any revenues we are able to generate would be sufficient to pay for our expenses. If we are not able to generate sufficient revenues to achieve profitable operations, you will lose your entire investment.


We incur significant costs complying with our obligations as a reporting issuer which will make it more difficult to generate a profit and will reduce the cash available to implement our business plan.


We are required to file periodic reports with the Securities & Exchange Commission, including financial statements and disclosure regarding changes in our operations. In order to comply with these requirements, our independent registered public accounting firm will have to review our financial statements on a quarterly basis and audit our financial statements on an annual basis. Moreover, our legal counsel will have to review and assist in the preparation of such reports. The costs charged by these professionals for such services cannot be accurately predicted at this time because factors such as the number and type of transactions that we engage in and the complexity of our reports cannot be determined at this time and will have a major effect on the amount of time to be spent by our auditors and attorneys. However, we estimate that these costs could exceed $30,000 per year for the next few years. Those fees will be higher if our business volume and activity increases. Those obligations will reduce and possibly eliminate our ability and resources to fund our operations and may prevent us from meeting our normal business obligations. These compliance costs will be charged to operations and will negatively impact our ability to attain profitable operations.


However, for as long as we remain an "emerging growth company" as defined in the Jumpstart Our Business Startups Act of 2012, we intend to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not "emerging growth companies" including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We intend to take advantage of these reporting exemptions until we are no longer an "emerging growth company."


We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the first sale of our common stock pursuant to an effective registration statement, (b) in which we have total annual gross revenue of at least $1.0 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.


Our failure to secure additional financing when needed may affect our ability to survive.


We may be required to spend substantial amounts of working capital to implement our business plan. The only cash currently available to us is the cash in our bank account. We have no lines of credit or other sources of capital. The availability of additional funding is subject to credit, economic, market and legal constraints. No guarantees that any additional financing can be obtained are possible. Even if financing is available, it may not be available on terms we find favorable. 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.




7



If Naked Edge fails to develop the Veggie Go’s brand cost-effectively, our business may be adversely affected.


We believe that developing and maintaining the Veggie Go’s brand is critical to our success. The importance of the Veggie Go’s brand recognition may become greater as competitors offer more products similar to ours. Our brand-building activities involve increasing awareness of the Veggie Go’s brand, creating and maintaining brand loyalty and increasing the availability of Naked Edge’s products. If our brand-building activities are unsuccessful, we may never recover the expenses incurred in connection with these efforts, and we may be unable to implement our business strategy and increase our future sales.


Naked Edge could be subject to significant liability if the consumption of any of its products causes illness or physical harm, which would adversely affect our revenue.


The sale of food products for human consumption involves the risk of injury or illness to consumers. Such injuries or illness may result from inadvertent mislabeling, tampering or product contamination or spoilage. Under certain circumstances, Naked Edge may be required to recall or withdraw products, which may have a material adverse effect on our business. Even if a situation does not necessitate a recall or market withdrawal, product liability claims may be asserted against Naked Edge. If the consumption of any of our products causes, or is alleged to have caused, a health-related illness, we may become subject to claims or lawsuits relating to such matters. Even if a product liability claim is unsuccessful, the negative publicity surrounding any assertion that Naked Edge products caused illness or physical harm could adversely affect its reputation with existing and potential distributors, retailers and consumers and its corporate image and brand equity. Moreover, claims or liabilities of this sort might not be covered by insurance or by any rights of indemnity or contribution that Naked Edge may have against others. A product liability judgment against Naked Edge or a product recall or market withdrawal could have a material adverse effect on our business, and operating results.


Disruptions in the worldwide economy may adversely affect our business, results of operations and financial condition.


Adverse and uncertain economic conditions may impact distributor, retailer and consumer demand for Naked Edge products. In addition, our ability to manage normal commercial relationships with suppliers, contract manufacturers, distributors, retailers, consumers and creditors may suffer. Consumers may shift purchases to lower-priced or other perceived value offerings during economic downturns. In particular, consumers may reduce the amount of natural and organic products that they purchase where there are conventional offerings, which generally have lower retail prices. In addition, consumers may choose to purchase private label products rather than branded products because they are generally less expensive. Distributors and retailers may become more conservative in response to these conditions and seek to reduce their inventories. For example, during the economic downturn from 2007 through 2009, distributors and retailers significantly reduced their inventories, and inventory levels have not returned to, and are not expected to return to, pre-downturn levels. Our results of operations depend upon, among other things, our ability to maintain and increase Naked Edge’s sales volume with its distributors and retailers, to attract new consumers and to provide products that appeal to consumers at prices they are willing and able to pay. Prolonged unfavorable economic conditions may have an adverse effect on Naked Edge’s sales and profitability, and hence our revenue and profitability.


Consumer preferences for our products are difficult to predict and may change, and, if we are unable to respond quickly to new trends, Naked Edge’s business may be adversely affected.


Our business is dependent on the successful development, manufacture, marketing and distribution of Naked Edge’s branded natural and organic food products. If consumer demand for these products decreased, our business would suffer. In addition, sales of natural and organic products are subject to evolving consumer preferences. Consumer trends that we believe favor sales of Naked Edge’s products could change based on a number of possible factors, including a shift in preference from organic to non-organic and from natural to non-natural products, a loss of confidence by consumers in what constitutes “organic,” economic factors and social trends. A significant shift in consumer demand away from Naked Edge’s products could reduce its sales or the prestige of its brand, which would effectively harm our business.




8



Failure to introduce new products or improve existing products successfully would adversely affect our ability to continue to grow our revenues.


A key element of Naked Edge’s revenue growth strategy depends on its ability to develop and market new products and improvements to Naked Edge’s existing products that appeal to consumer preferences. The success of innovation and product development efforts is affected by the ability to anticipate changes in consumer preferences, the technical capability of product development staff in developing and testing product prototypes, including complying with governmental regulations, and the success of management in introducing and marketing new products. Failure to develop and market new products that appeal to consumers may lead to a decrease in Naked Edge’s growth, sales and profitability, and hence, a decrease in our profitability.


Additionally, the development and introduction of new products requires substantial research, development and marketing expenditures, which Naked Edge may be unable to recoup if the new products do not gain widespread market acceptance. If Naked Edge is unsuccessful in meeting objectives with respect to new or improved products, Naked Edge’s and our business could be harmed.


Naked Edge participates in a highly competitive industry which may prevent us from generating a profit.


The natural and organic food industry is highly competitive and barriers to entry are low. Privately-backed and public companies could choose to enter our space and compete directly with us, 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 our ability to increase sales and generate a profit. Many companies and individuals are engaged in the same or similar businesses.


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. We also compete against other fruit based snack brands owned by: Betty Crocker, Kellogg’s, Annie’s, Welch’s, Motts, Sunkist and many others.


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 our business. Some of Naked Edge’s competitors have significant advantages over us, 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 our ability to generate sales and profit. We may never achieve a profit from our business plan.


We may not be able to successfully implement Naked Edge’s growth strategy on a timely basis or at all.


Our future success depends, in large part, on our ability to implement our growth strategy of expanding production, increasing distribution, improving placement of Naked Edge’s products, attracting new consumers to its brand and introducing new product lines and product extensions. Our ability to implement this growth strategy depends, among other things, on our ability to:


·

enter Naked Edge distribution and other strategic arrangements with third-party retailers and other potential distributors of Naked Edge products;

·

continue to compete in conventional grocery and mass merchandiser retail channels in addition to the natural and organic channel;

·

secure shelf space in mainstream aisles;

·

increase Naked Edges brand recognition;

·

expand and maintain brand loyalty; and

·

develop new product lines and extensions.




9



We may not be able to successfully implement our growth strategy. Naked Edge’s sales and operating results will be adversely affected if we fail to implement our growth strategy or if we invest resources in a growth strategy that ultimately proves unsuccessful.


We may expand through acquisitions of, or investments in, other companies or through business relationships, all of which may divert our management’s attention, resulting in additional dilution to our stockholders and consumption of resources that are necessary to sustain Naked Edge’s business.


We may pursue acquisition opportunities in the future. Any future acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the acquired businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us and we may have difficulty retaining the customers of any acquired business due to changes in management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of Naked Edge’s business. In connection with one or more of those transactions, we may issue additional equity securities that would dilute our stockholders or incur debt on terms unfavorable to us or that we are unable to repay.


Moreover, we cannot assure you that the anticipated benefits of any acquisition, investment or business relationship would be realized or that we would not be exposed to unknown liabilities, nor can we assure you that we will be able to complete any acquisitions on favorable terms or at all.


RISKS RELATED TO OUR MANAGEMENT


Our officers have other business interests and plan to devote only 20 hours of their time per week to the development of our business plan, which may result in periodic interruptions, delays and even business failure.


Our officers, Joel Arberman and Brendan Vogel have other business interests, which may create conflicts of interests that could materially harm us. Each officer has indicated they plan to devote approximately 20 hours per week to the development of our business plan. We are entirely dependent upon the efforts of our officers. If any of our officers are unable to devote sufficient time to our development, it would have a significant impact on our business and may result in our business plan to fail.


We may have to cease our operations if we lose any of our key officers.


We are heavily dependent on the management experience of Joel Arberman. If something were to happen to him, it would greatly delay our daily operations until further industry contacts could be established. If we lose his their services and cannot find a suitable replacement, we may have to cease operations. We do not have insurance covering his life. The success of our company is largely dependent on his efforts.


Naked Edge may have to cease our operations if we lose any of our significant employees.


We are heavily dependent on the experience of John McHugh and Lisa Goode McHugh. If something were to happen to either of them, it would greatly delay Naked Edge’s daily operations until further industry contacts could be established. If we lose either of their services and cannot find a suitable replacement, Naked Edge may have to cease operations. We do not have insurance covering their life. The success of Naked Edge is largely dependent on their efforts.




10



Our officers and directors own a controlling interest in our voting stock and investors will not have any voice in our management, which could result in decisions adverse to our general stockholders.


Our officers and directors, in the aggregate, will beneficially own approximately or have the right to vote approximately 88.32% of our outstanding common shares. As a result, these stockholders, acting together, will have the ability to control substantially all matters submitted to our stockholders for approval including:


·

election of our board of directors;

·

removal of any of our directors;

·

amendment of our Articles of Incorporation or By-laws; and

·

adoption of measures that could delay or prevent a change in control or impede a merger, takeover or other business combination involving us.


The interests of our officers may differ from the interests of the other stockholders, and they may influence decisions with which the other stockholders may not agree. Such decisions may be detrimental to our business plan and/or operations and they may cause the business to fail in which case you may lose your entire investment.


Our officers and directors have no meaningful accounting or financial reporting education or experience, which increases the risk of accounting errors and makes an investment in our company more speculative.


Our ability to meet Exchange Act reporting requirements on a timely basis will be dependent to a significant degree on advisors and consultants. Our officers and directors have no meaningful accounting or financial reporting education or experience. As such, there is risk about our ability to comply with all financial reporting requirements accurately and on a timely basis.


We do not have a compensation committee or an audit committee, so shareholders will have to rely on the outside directors to perform these functions.


We do not have an audit or compensation committee comprised of independent directors. These functions are performed by the independent member of our board of directors. Until we have an audit committee, there may less oversight of management decisions and activities and little ability for minority shareholders to challenge or reverse those activities and decisions, even if they are not in the best interests of minority shareholders.


Our officers and directors have no experience in establishing and maintaining disclosure controls and procedures and internal control over financial reporting.


We have never operated as a public company. Our officers and directors have no experience establishing and maintaining disclosure controls and procedures and internal control over financial reporting. As a result, we may not be able to operate successfully as a public company, even if our operations are successful.


Any failure to develop or maintain effective controls, or any difficulties encountered in their implementation or improvement, could harm our operating results or cause us to fail to meet our reporting obligations and may result in a restatement of our prior period financial statements. Any failure to implement and maintain effective internal controls also could adversely affect the results of periodic management evaluations and annual auditor attestation reports regarding the effectiveness of our internal control over financial reporting that we may be required to include in our periodic reports filed with the SEC, under Section 404 of the Sarbanes-Oxley Act. As long as we remain a smaller reporting company, we will not be required to obtain an auditor’s attestation concerning management’s report on internal control over financial reporting.


Ineffective disclosure controls and procedures and internal control over financial reporting could also cause investors to lose confidence in our reported financial and other information, which would likely have a negative effect on the trading price of our common stock.




11



In order to develop and subsequently maintain effective disclosure controls and procedures and internal control over financial reporting, we will need to expend significant resources and provide significant management oversight. We have a substantial effort ahead of us to implement appropriate processes, document our system of internal control over relevant processes, assess their design, remediate any deficiencies identified and test their operation. As a result, management’s attention may be diverted from other business concerns, which could harm our business, operating results and financial condition. These efforts will also involve substantial accounting-related costs.


We plan to comply with all of the various rules and regulations, which are required for a public company. However, if we cannot operate successfully as a public company, your investment may be materially adversely affected. Our inability to operate as a public company could be the basis of your losing your entire investment in us.


RISKS RELATED TO OUR SECURITIES


We may need additional capital in the future, which may not be available to us on favorable terms, or at all, and may dilute your ownership of our common stock.


We have historically relied on outside financing to fund our operations, capital expenditures and expansion. We may require additional capital from equity or debt financing in the future to:


·

Fund our operations;

·

Respond to competitive pressures;

·

Take advantage of strategic opportunities, including more rapid expansion of our business or the acquisition of complementary products, technologies or businesses; and

·

Develop new products or enhancements to existing products.


We may not be able to secure timely additional financing on favorable terms, or at all. The terms of any additional financing may place limits on our financial and operating flexibility. If we raise additional funds through issuances of equity, convertible debt securities or other securities convertible into equity, our existing stockholders could suffer significant dilution in their percentage ownership of our company, and any new securities we issue could have rights, preferences and privileges senior to those of our common stock. If we are unable to obtain adequate financing or financing on terms satisfactory to us, if and when we require it, our ability to grow or support our business and to respond to business challenges could be significantly limited.


Our quarterly results may fluctuate and if we fail to meet the expectations of analysts or investors, our stock price could decline substantially.


Our quarterly operating results may fluctuate, and if we fail to meet or exceed the expectations of securities analysts or investors, the trading price of our common stock could decline. Some of the important factors that could cause our revenue and operating results to fluctuate from quarter to quarter include:


·

our ability to retain existing customers, attract new customers and satisfy our customers requirements;

·

general economic conditions;

·

changes in our pricing policies;

·

our ability to expand our business;

·

the effectiveness of our personnel;

·

new product and service introductions;

·

technical difficulties or interruptions in our services;

·

the timing of additional investments in our hardware and software systems;

·

regulatory compliance costs;

·

costs associated with future acquisitions of technologies and businesses; and

·

extraordinary expenses such as litigation or other dispute-related settlement payments.




12



Some of these factors are not within our control, and the occurrence of one or more of them may cause our operating results to vary widely. As such, we believe that quarter-to-quarter comparisons of our revenue and operating results may not be meaningful and should not be relied upon as an indication of future performance.


Our board of directors has the authority, without stockholder approval, to issue preferred stock with terms that may not be beneficial to existing common stockholders and with the ability to affect adversely stockholder voting power and perpetuate their control over us.


Our articles of incorporation allow us to issue shares of preferred stock without any vote or further action by our common or preferred stockholders. Our board of directors has the authority to fix and determine the relative rights and preferences of preferred stock. Our board of directors also has the authority to issue preferred stock without further stockholder approval, including large blocks of preferred stock. As a result, our board of directors could authorize the issuance of a series of preferred stock that would grant to holders the preferred right to our assets upon liquidation, the right to receive dividend payments before dividends are distributed to the holders of common stock or other preferred stockholders and the right to the redemption of the shares, together with a premium, prior to the redemption of our common stock or existing preferred shares.


Preferred stock could be used to dilute a potential hostile acquirer. Accordingly, any future issuance of preferred stock or any rights to purchase preferred shares may have the effect of making it more difficult for a third party to acquire control of us. This may delay, defer or prevent a change of control or an unsolicited acquisition proposal. The issuance of preferred stock also could decrease the amount of earnings attributable to, and assets available for distribution to, the holders of our common stock and could adversely affect the rights and powers, including voting rights, of the holders of our common stock and preferred stock.


Our common stock is considered a penny stock, which would be subject to restrictions on marketability. These rules may affect your ability to resell your shares.


We are subject to the penny stock rules adopted by the Securities and Exchange Commission that require brokers to provide extensive disclosure to their customers prior to executing trades in penny stocks. These disclosure requirements may cause a reduction in the trading activity of our common stock, which in all likelihood would make it difficult for our shareholders to sell their securities.


Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the NASDAQ system). Penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document that provides information about penny stocks and the risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer’s account. The broker-dealer must also make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser’s written agreement to the transaction. These requirements may have the effect of reducing the level of trading activity, if any, in the secondary market for a security that becomes subject to the penny stock rules. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit the market price and liquidity of our securities. These requirements may restrict the ability of broker-dealers to sell our common stock and may affect your ability to resell our common stock.


The market price of our shares would decline if our restricted shareholders sell a large number of shares.


A substantial number of our shares of common stock are restricted securities under Rule 144 of the Securities Act of 1933. In general, persons holding restricted securities, including affiliates, must hold their shares for a period of at least six months, may not sell more than one percent of the total issued and outstanding shares in any 90-day period, and must resell the shares in an unsolicited brokerage transaction at the market price. These restrictions do not apply to resales under Rule 144(b)(1)(i). The availability for sale of substantial amounts of common stock under Rule 144 could reduce prevailing market prices for our securities.




13



We have no plans to pay dividends on our common shares, leaving our investors with no income for the foreseeable future.


Holders of shares of our common stock are entitled to receive such dividends as may be declared by our board of directors. To date, we have paid no cash dividends on our shares of common stock and we do not expect to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, to provide funds for operations of our business. Therefore, any return investors in our common stock may have will be in the form of appreciation, if any, in the market value of their shares of common stock. You should not buy our stock if you anticipate any income from dividends.


We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors.


We are an "emerging growth company," as defined in the Jumpstart our Business Startups Act of 2012, and we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.


Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to opt out of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.


Notwithstanding the above, we are also currently a “smaller reporting company”, meaning that we are not an investment company, an asset-backed issuer, or a majority-owned subsidiary of a parent company that is not a smaller reporting company and have a public float of less than $75 million and annual revenues of less than $50 million during the most recently completed fiscal year. In the event that we are still considered a “smaller reporting company”, at such time are we cease being an “emerging growth company”, the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company”. Specifically, similar to “emerging growth companies”, “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; are not required to conduct say-on-pay and frequency votes until annual meetings occurring on or after January 21, 2013; and have certain other decreased disclosure obligations in their SEC filings, including, among other things, only being required to provide two years of audited financial statements in annual reports. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze the Company’s results of operations and financial prospects.


For all of the foregoing reasons and others set forth herein, an investment in our securities involves a high degree of risk.




14



ITEM 1B.

UNRESOLVED STAFF COMMENTS


None


ITEM 2.

PROPERTIES


Properties


Our principal executive office is located in Delray Beach, Florida. Office space is provided at no cost to us. We believe that additional space may be required as our business expands and believe that we can obtain suitable space as needed.


The Naked Edge subsidiary is located in Suite 900 at the Valmont Tech Center, 2825 Wilderness Place in Boulder, Colorado. Naked Edge occupies approximately 1,511 square feet which costs approximately $1,901 per month. The lease expires on September 30, 2015. We believe that additional space may be required as our business expands and believe that we can obtain suitable space as needed.


ITEM 3.

LEGAL PROCEEDINGS


We are not aware of any litigation or threatened litigation of a material nature.


ITEM 4.

MINE SAFETY DISCLOSURES


Not Applicable





15



PART II


ITEM 5.

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES


Market Information


Our common stock is traded on the Over-the-Counter Bulletin Board (“the OTC-BB” or “BB”) under the symbol “MSGO.” Prior to April 5, 2012, our common shares were not quoted or traded on any electronic or other trading system and there was no public market for our common shares. The market for our common shares is limited and can be volatile.


The following table set forth below lists the range of high and low bids for our common stock for each fiscal quarter since April 5, 2012, which is the date that we commenced trading. The prices in the table reflect inter-dealer prices, without retail markup, markdown or commission and may not represent actual transactions.


 

 

 

High

 

 

Low

 

 

 

 

Bid

 

 

Ask

 

 

Bid

 

 

Ask

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2012

1st Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

2nd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

3rd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

4th Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2013

1st Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

2nd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

3rd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

4th Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2014

1st Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

2nd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

3rd Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

4th Quarter

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

 

$

(1)

 

———————

(1)

Reflects that no priced bids or asks were calculated because there was not a minimum of 2 two-sided quotes for our common stock.


Holders


As of July 15, 2014, we have a total of 60,823,334 shares of common stock outstanding, held of record by approximately 48 shareholders. We do not have any shares of preferred stock outstanding.


Dividends


No cash dividends have been declared or paid on our common stock to date. No restrictions limit our ability to pay dividends on our common stock. The payment of cash dividends in the future, if any, will be contingent upon our company's revenues and earnings, if any, capital requirements and general financial condition. The payment of any dividends is within the discretion of our board of directors.




16



Securities Authorized for Issuance under Equity Compensation Plans


Equity Compensation Plan Information


Plan category

 

Number of

securities to be

issued upon

exercise of

outstanding

options, warrants

and rights

 

 

Weighted-average

exercise price

of outstanding

options, warrants

and rights

 

 

Number of

securities remaining

available for

future issuance

under equity

compensation plans

(excluding securities

reflected in

column (a))

 

 

 

(a)

 

 

(b)

 

 

(c)

 

Equity compensation plans approved by security holders

    

  

2,075,000

  

  

$

0.10

  

  

  

9,500,000

  

Equity compensation plans not approved by security holders

 

 

0

 

 

 

0

 

 

 

0

 

Total

 

 

2,075,000

 

 

$

0.10

 

 

 

9,500,000

 


We have reserved 10,000,000 shares of common stock pursuant to our 2011 Stock Incentive Plan enacted for the benefit of our directors, officers, employees and consultants. As of March 31, 2014, 2,075,000 stock options were outstanding pursuant to that plan.


Penny Stock Regulations and Restrictions on Marketability


The Securities Exchange Commission has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a price of less than $5.00, other than securities registered on certain national securities exchanges or quoted on the NASDAQ system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or quotation system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the Commission, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation to such duties or other requirements of Securities' laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type, size and format, as the Commission shall require by rule or regulation.


The broker-dealer also must provide, prior to effecting any transaction in a penny stock, the customer with: (a) bid and offer quotations for the penny stock; (b) the compensation of the broker-dealer and its salesperson in the transaction; (c) the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock; and (d) a monthly account statements showing the market value of each penny stock held in the customer's account.


In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from those rules; the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written acknowledgment of the receipt of a risk disclosure statement, a written agreement to transactions involving penny stocks, and a signed and dated copy of a written suitability statement.


The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in our securities, which could severely limit their market price and liquidity of our securities.




17



Recent Sales of Unregistered Securities


During the period covered by this report, our Company has sold the following securities without registering the securities under the Securities Act:


Securities issued for consideration


Date

 

Security

 

 

 

September 2013

 

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




Securities issued for services


Date

 

Security

 

 

 

Various dates during 2013

 

Common stock – 616,668 shares of common stock for $139,272 of services.


Securities issued pursuant to our Employee Stock Plan


Date

 

Security

 

 

 

June through September 2013

 

Stock options - 1,575,000 shares of common stock at $0.15 per share.


No underwriters were utilized and no commissions or fees were paid with respect to any of the above transactions. These persons were the only offerees in connection with these transactions. We relied on Section 4(2) and Rule 506 of Regulation D of the Securities Act since the transaction does not involve any public offering.


Stock Transfer Agent


We have retained Interwest Transfer Company, Inc. to serve as our stock transfer agent. Interwest Transfer Company, Inc. is located at 1981 Murray Holladay Road, Suite 100, Salt Lake City, UT 84117. Mailing address: P.O. Box 17136, Salt Lake City, UT 84117. Phone: (801) 272-9294. Fax: (801) 277-3147.


ITEM 6.

SELECTED FINANCIAL DATA


Not Applicable.




18



ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS


Except for the historical information contained in this report on Form 10-K, the matters discussed herein are forward-looking statements. Words such as “anticipates,” “believes,” “expects,” “future,” and “intends,” and similar expressions are used to identify forward-looking statements. These and other statements regarding matters that are not historical are forward-looking statements. These matters involve risks and uncertainties that could cause actual results to differ materially from those in the forward-looking statements. Factors that could cause or contribute to such differences in results and outcomes include without limitation those discussed below as well as those discussed elsewhere in this report. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.


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 an 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.


We may pursue additional acquisition opportunities in the future. We have made only one material acquisition to date and, therefore, our ability as an organization to make and integrate significant acquisitions remains unproven. Any future acquisition, investment or business relationship may result in unforeseen operating difficulties and expenditures. In particular, we may encounter difficulties assimilating or integrating the acquired businesses, technologies, products, personnel or operations of the acquired companies, particularly if the key personnel of the acquired company choose not to work for us and we may have difficulty retaining the customers of any acquired business due to changes in management and ownership. Acquisitions may also disrupt our ongoing business, divert our resources and require significant management attention that would otherwise be available for ongoing development of our business. In connection with one or more of those transactions, we may issue additional equity securities that would dilute our stockholders or incur debt on terms unfavorable to us or that we are unable to repay.


Results of Operations


For the year ended March 31, 2014 as compared to the year ended March 31, 2013:


Revenues. We generated $0 in revenues.


Operating Expenses. For the years ended March 31, 2014 and 2013, our operating expenses were $224,614 and $267,429, respectively and consisted of general and administrative expenses of $224,614 and $252,032 and $0 and $15,397 of management services expenses, respectively. For the years ended March 31, 2014 and 2013, $131,569 and $140,191 of our expenses was non-cash stock-based compensation, respectively.

 

Equity in Losses of Unconsolidated Affiliate: We incurred losses on our equity investment in Naked Edge of $28,609 and $19,537 for the respective years ended March 31, 2014 and 2013.




19



Net Loss. We had a net loss of $358,759 and $286,966 for the years ended March 31, 2014 and 2013, respectively.  The increase of $71,793 is primarily due to the interest expense of $85,536 during the year ended March 31, 2014, associated with the amortization of the discount associated the Beneficial Conversion Feature contained in the $250,000 Notes Payable to Snack Um.  


We expect to considerably increase our operating expenses in the future.


Liquidity and Capital Resources


Our balance sheet as of March 31, 2014 and 2013 reflects cash assets of $75,042 and $0, respectively.  At March 31, 2014 and 2013 there were $101,853 and $65,863 in the equity investment of Naked Edge and $87,536 and $81,314 in liabilities, respectively.   


Cash used in operating activities during the years ended March 31, 2014 and 2013 were primarily related to the net losses of $358,759 and $286,966, respectively, offset by non-cash compensation expense of $131,569 and $140,191; amortization of debt discount of $85,536 and $0, respectively.  During the year ended March 31, 2014, net cash provided by financing activities consisted primarily from the issuance of 833,334 shares in September 2013 for $100,000; proceeds from the Convertible notes payable of $250,000 offset by payments made to various related parties for a notes payable of $40,400 and payments made to a shareholder for $18,000 in order to retire the common stock.  


Over the next 12 months, we anticipate needing approximately $65,000 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 $7,500 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 would be obligated to pay a substantial amount of interest which would reduce our cash available for working capital. In addition, holders of preferred stock would 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.




20



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.


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.


New Accounting Pronouncements


We do not expect the adoption of recently issued accounting pronouncements to have a significant impact on our results of operations, financial position or cash flow.


ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK


Not Applicable.


ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


The financial statements included in this annual report under this item are set forth beginning on Page F-1 of this Annual Report, immediately following the signature page.


ITEM 9.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE


Not Applicable.


ITEM 9A.

CONTROLS AND PROCEDURES


Evaluation of Disclosure Controls and Procedures


As of the end of the period covered by this report, our Company evaluated the effectiveness and design and operation of its disclosure controls and procedures. Our Company’s disclosure controls and procedures are the controls and other procedures that we designed to ensure that our Company records, processes, summarizes, and reports in a timely manner the information that it must disclose in reports that our Company files with or submits to the Securities and Exchange Commission. Our principal executive officer and principal financial officer reviewed and participated in this evaluation. Based on this evaluation, our Company made the determination that its disclosure controls and procedures were ineffective.


Management's Report on Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the participation of management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal controls over financial reporting based on the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO"). Based on this evaluation, management has concluded that our internal control over financial reporting was ineffective as of March 31, 2014.




21



The Company's internal control over financial reporting includes policies and procedures that (1) pertain to maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company's assets that could have a material effect on the financial statements.


Our management, including our principal executive officer and principal financial officer, does not expect that our disclosure controls or our internal control over financial reporting will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system's objectives will be met. Internal control over financial reporting is a process that involves human diligence and compliance and is subject to lapses in judgment and breakdowns resulting from human failures. In addition, the design of any system of controls is based in part on certain assumptions about the likelihood of future events, and controls may become inadequate if conditions change. There can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.


This annual report does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to rules of the Securities and Exchange Commission that permit the Company to provide only management’s attestation in this annual report.


Changes in Company Internal Controls


No change in our Company’s internal control over financial reporting occurred during our fourth fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.


ITEM 9B.

OTHER INFORMATION


Not Applicable.






22



PART III


ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE


Identity of directors, executive officers and significant employees


Name

 

Age

 

Title

 

Held Position Since

 

 

 

 

 

 

 

Joel Arberman

 

41

 

Chairman of the Board, Chief Executive Officer, Principal Accounting Officer, Secretary

 

March, 2011

Brendan Vogel

 

44

 

Vice President of Business Development

 

March, 2011

Fred Sager

 

61

 

Director

 

March, 2011


Business experience of directors, executive officers, and significant employees


Joel Arberman has been Chairman of the board of directors and Chief Executive Officer since March 2011.


Since March 2010, Mr. Arberman has been the managing member of Advertising Expert, LLC, an Internet marketing company, which assists clients in advertising, marketing, lead generation and search engine optimization. He is responsible for all aspects of the business. Since March 2010, Mr. Arberman has also been a managing member of Public Financial Services, LLC, a financial consulting company which assists clients in becoming a reporting issuer and publicly traded. He is responsible for all aspects of the business.


From October 2008 until April 2010, Mr. Arberman was Executive Vice President of Business Development and Marketing of Ekstein Development, LLC, a real estate investment firm with diverse business interests, where he was responsible for business development, and marketing, lead generation and search engine optimization. From April 2008 until October 2008, Mr. Arberman was Senior Vice President of Remediation Capital Funding, LLC, a commercial mortgage lender specializing in environmentally contaminated real estate, where he was responsible for business development, loan analysis and structuring.


Prior to April 2008, Mr. Arberman was principally an independent corporate finance, business development consultant and entrepreneur. Prior to 1998, he was a partner and Internet analyst at Yorkton Securities, Inc., an investment banking firm, equity analyst at SunAmerica Asset Management, an asset management company and junior analyst at First Investors Management Corporation, an asset management company.


Mr. Arberman holds a B.S. degree in Business Administration with a concentration in finance and marketing and a minor in economics from the State University of New York, at Albany.


Mr. Arbermans’ qualifications to serve on our board of directors include his knowledge of our company and his years of experience in management, sales, marketing, business development and finance.


Brendan Vogel has been Vice President of Business Development since June 2012. He was Vice President of Merchant Relations from March 2011 until June 2012. Since January 2006, Mr. Vogel has been Vice President of Business Development at Intellicomp, a distribution company, where he is responsible for product acquisition and vendor relations. At Intellicomp, Mr. Vogel co-founded Froobi.com, an online business focused on selling a wide range of discounted products, where he was responsible for product acquisition and vendor relations until the business was sold in late 2010. Mr. Vogel continues to represent Intellicomp by developing retail distribution for SeaSnax, a seaweed based snack food.


Mr. Vogel has a B.A. degree in American History from San Francisco State University.


Fred Sager has been a director since March 2011. Mr. Sager has been a Registered Investment Advisor for Northeast Securities, Inc., a NASD member brokerage firm, since 1997. From September 2007 to December 2008, Mr. Sager was the Managing Partner of The Amber Fund, a private investment fund. Mr. Sagers qualifications to serve on our board of directors include his knowledge of our company, business and finance.




23



Audit Committee


Our Company does not have a separately designated standing audit committee in place; our Company’s entire board of directors has served, and currently serves, in that capacity. This is due to the small number of executive officers involved with the Company and the fact that the Company operates with few employees. Our board of directors will continue to evaluate, from time to time, whether a separately designated standing audit committee should be put in place. We do not have an audit committee financial expert as that term is defined by the rules promulgated by the Securities and Exchange Commission. We currently have limited working capital and limited revenues. Management does not believe that it would be in our best interests at this time to retain independent directors to sit on an audit committee. If we are able to generate sufficient revenues in the future, then we will likely seek out and retain independent directors and form an audit, compensation committee and other applicable committees.


Code of Ethics


Our Company has a Code of Ethics that applies to all of the Company’s employees, including its executive officers and board of directors. A copy of our Code of Business Conduct and Ethics has been filed with the Securities and Exchange Commission as an exhibit to our Form S-1 filed on June 16, 2011. Any person desiring a copy of the Code of Business Conduct and Ethics, can obtain one by going to www.sec.gov and looking at the attachments to our form S-1. Additionally, our Code of Ethics is posted on our Company website located at http://www.MisterGoody.com. Our Company intends to disclose any changes in or waivers from its Code of Ethics by posting such information on its website.


Nominating Committee


Our Board of Directors does not have a nominating committee. This is due to our development stage and smaller sized Board of Directors. Instead of having such a committee, our entire Board of Directors historically has searched for and evaluated qualified individuals to become nominees for membership on our Board of Directors.


Section 16(a) Beneficial Ownership Reporting Compliance


To the best of our knowledge, no officer, director and/or beneficial owner of more than 10% of our Common Stock, failed to file reports as required by Section 16(a) of the Exchange Act during the period covered by this report.


ITEM 11.

EXECUTIVE COMPENSATION


The table below summarizes all compensation awarded to, earned by, or paid to our named executive officers for the fiscal year ended March 31, 2014and 2013.


Summary Compensation Table


Name and Principal Position

 

Year

 

Salary

($)

 

Bonus

($)

 

Stock Awards

($)

 

Option

Awards

($)

 

All Other

Compensation

($)

 

Total

($)

(a)

 

(b)

 

(c)

 

(d)

 

(e)

 

(f)

 

(i)

 

(j)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Joel Arberman (1) (2)

CEO, Director

 

2014

2013

 

15,000

15,000

 

0

0

 

0

0

 

0

0

 

0

0

 

15,000

15,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brendan Vogel (1) (2)

Vice President of Business Development

 

2014

2013

 

15,000

15,000

 

0

0

 

0

0

 

0

0

 

0

0

 

15,000

15,000

———————

(1) Pursuant to a consulting agreement, Mr. Arberman receives a base salary of $2,500 per month.

(2) Pursuant to a consulting agreement, Mr. Vogel receives a base salary of $2,500 per month.




24



We grant stock awards and stock options to our executive officers based on their level of experience and contributions to our Company. The aggregate fair value of awards and options are computed in accordance with FASB ASC 718 and are reported in the Summary Compensation Table above in the columns (e) and (f).


At no time during the last fiscal year was any outstanding option otherwise modified or re-priced, and there was no tandem feature, reload feature, or tax-reimbursement feature associated with any of the stock options we granted to our executive officers or otherwise.


As of March 31, 2014, we have granted 2,075,000 stock options to several sales consultants under our 2011 Employee Stock Plan.


Compensation of Directors


No person received any compensation for their service as a director of our Company during our last completed fiscal year. No arrangements are presently in place regarding compensation to directors for their services as directors.


Compensation Committee


Our Board of Directors currently has no standing compensation committee or committee performing similar functions. This is due to the small number of executive officers involved with the Company, and the fact that the Company operates with few employees. The Company’s entire board of directors currently participates in the consideration of executive officer and director compensation. Our board of directors will continue to evaluate, from time to time, whether it should appoint a standing compensation committee.


Compensation Policies and Practices As They Relate To Our Risk Management


No risks arise from our Company’s compensation policies and practices for our employees that are reasonably likely to have a material adverse effect on our Company.


ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS


The following table sets forth, as of July 15, 2014, the names, addresses, amount and nature of beneficial ownership and percent of such ownership of our common stock of each of our officers and directors, our officers and directors as a group, and each person or group known to our Company to be the beneficial owner of more than five percent (5%) of our common stock:


Security Ownership of Management


Name and Address (1)

 

Amount and

Nature of Beneficial

Ownership (2)

 

% Owned

(3) (4)

 

 

 

 

 

Joel Arberman

CEO and Chairman of the Board

 

30,000,000

 

49.32%

Brendan Vogel

Vice President of Business Development

 

  5,500,000

 

  9.04%

Fred Sager

Director

 

18,000,000

 

29.59%

 

 

 

 

 

Officers and Directors as a group (4 persons)

 

53,500,000

 

87.95%

———————

(1)

In care of our Company at 14762 Wildflower Lane, Delray Beach, Florida 33446.

(2)

To our best knowledge, as of the date hereof, such holders had the sole voting and investment power with respect to the voting securities beneficially owned by them, unless otherwise indicated herein. Includes the person's right to obtain additional shares of common stock within 60 days from July 15, 2014.



25



(3)

Based on 60,823,334 shares of common stock outstanding on July 15, 2014. Does not include shares underlying: (i) options to purchase shares of our common stock and (ii) outstanding warrants to purchase shares of our common stock (iii) and 2,500,000 shares which could be issued pursuant to the possible conversion of a convertible note.

(4)

If a person listed on this table has the right to obtain additional shares of common stock within 60 days from July 15, 2014 the additional shares are deemed to be outstanding for the purpose of computing the percentage of class owned by such person, but are not deemed to be outstanding for the purpose of computing the percentage of any other person.


Change in Control Arrangements


We are not aware of any arrangements that could result in a change of control.


Securities Authorized for Issuance under Equity Compensation Plans


Information regarding our compensation plans under which our equity securities are authorized for issuance can be found in Part II –Item 5 of this report.


ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE


The Company’s shareholders paid $7,203 and $9,285 for Company-related expenses during the years ended March 31, 2014 and 2013, respectively. Such amounts were repaid to the shareholders as of March 31, 2014 and 2013.

On November 26, 2012 the Company entered into a promissory note whereby by it borrowed $10,000 from a member of the Company’s board of directors, Fred Sager. 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, Joel Arberman. 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 note.

Management services

During the year ended March 31, 2014 and 2013, 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.


We do not have a formal written policy for review and approval of “related-person transactions”. Our outside board members are responsible for review, approval and ratification of “related-person transactions” between us and any related person.


All future transactions between us and our officers, directors or 5% shareholders, and their respective affiliates, will be on terms no less favorable than could be obtained from unaffiliated third parties and will be approved by a majority of any independent, disinterested directors.




26



Director Independence


Our board of directors currently consists of 2 directors. Our board of directors has undertaken a review of the independence of our directors and considered whether any director has a material relationship with us that could compromise his ability to exercise independent judgment in carrying out his responsibilities. We believe that none of our board members are independent directors, as defined by Section 803(a)(2) of the NYSE listing standards.


ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES


The aggregate fees billed for professional services by McConnell & Jones, LLP for the year ended March 31, 2014 and March 31, 2013 were as follows:


 

 

2014

 

 

2013

 

Audit

 

$

16,000

 

 

$

11,500

 

Audit-Related

 

 

7,000

 

 

 

7,500

 

Tax

 

 

0

 

 

 

0

 

All Other

 

 

0

 

 

 

0

 


Audit Fees are the fees billed for professional services rendered by McConnell & Jones, LLP for the audit of our annual financial statements


Audit-Related Fees are the aggregate fees billed in the last fiscal year for assurance and related services by McConnell & Jones, LLP that are reasonably related to the performance of the audit or review of our financial statements. The services comprising the fees disclosed under this category are in connection with the Company’s filing of their S-1 Registration Statement and audit of prior years’ private company financial statements included in such Registration Statement.


Tax Fees. We paid no tax fees to McConnell & Jones, LLP and they rendered no tax services.


All Other Fees are the aggregate fees billed for services provided by McConnell & Jones, LLP, other than the services reported in the above categories. There were none.


Audit Committee Pre-Approval Policies.


The Company does not have an audit committee comprised of independent directors. These functions are performed by the member of our board of directors.  The Company’s board of directors currently does not have any pre-approval policies or procedures concerning services performed by McConnell & Jones, LLP. All the services performed by McConnell & Jones, LLP that are described above were pre-approved by the Company’s board of directors.


None of the hours expended on McConnell & Jones, LLP‘s engagement to audit the Company’s financial statements for the years ended March 31, 2014 and March 31, 2013 were attributed to work performed by persons other than McConnell & Jones, LLP’s full-time, permanent employees.







27



PART IV


ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES


(a) Documents filed as part of this report:


1. Financial Statements and Reports


The financial statements included in Part II, Item 8 of this Annual Report on Form 10-K are filed as part of this Report.


2. Financial Statements Schedule


Other financial statement schedules have been omitted because either the required information (i) is not present, (ii) is not present in amounts sufficient to require submission of the schedule or (iii) is included in the Financial Statements and Notes thereto under Part II, Item 8 of this Annual Report on Form 10-K.


3. Exhibits


The exhibit list in the Index to Exhibits is incorporated herein by reference as the list of exhibits required as part of this Report.






28



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 July 15, 2014.


Mister Goody, Inc.

 

 

By:

/s/ Joel Arberman

 

Joel Arberman

 

Principal Executive Officer

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated:


Signature

 

Capacity

 

Date

 

 

 

 

 

/s/ Joel Arberman

 

Principal Executive Officer,

 

July 15, 2014

Joel Arberman

 

Principal Financial Officer, Director

 

 

 

 

 

 

 

/s/ Fred Sager

 

Director

 

July 15, 2014

Fred Sager

 

 

 

 








29



INDEX TO FINANCIAL STATEMENTS


 

Page

Report of Independent Registered Public Accounting Firm

F-2

Balance Sheets

F-3

Statements of Operations

F-4

Statements of Shareholder’s Equity (Deficit)

F-5

Statements of Cash Flows

F-6

Notes to Financial Statements

F-7








F-1




[msgo_10k002.gif]


Report of Independent Registered Public Accounting Firm


To the Board of Directors

Mister Goody, Inc.

Delray Beach, Florida


We have audited the accompanying balance sheets of Mister Goody, Inc. (the “Company”) as of March 31, 2014 and 2013, and the related statements of operations, shareholders' equity (deficit), and cash flows for the years ended March 31, 2014 and March 31, 2013. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal controls over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's internal controls over financial reporting. Accordingly, we express no such opinion. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Mister Goody, Inc. as of March 31, 2014 and 2013 and the results of its operations and their cash flows for the years ended March 31, 2014 and March 31, 2013, in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred losses, has had negative operating cash flows since inception. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ McConnell & Jones, LLP


Houston, Texas

July 15, 2014






F-2



Mister Goody, Inc.

Balance Sheets


 

 

March 31,

 

 

March 31,

 

 

 

2014

 

 

2013

 

Assets

 

                      

  

  

                      

  

Cash

 

$

75,042

 

 

$

-

 

Other current assets

 

 

-

 

 

 

-

 

Total current assets

 

 

75,042

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Equity Investment

 

 

101,853

 

 

 

65,863

 

Total assets

 

$

176,895

 

 

$

65,863

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity (Deficit)

 

 

 

 

 

 

 

 

Liabilities:

 

 

 

 

 

 

 

 

Accounts payable

 

$

2,000

 

 

$

40,914

 

Notes payable – net of unamortized discount of $164,464 and $0

 

 

85,536

 

 

 

-

 

Notes payable – related party

 

 

-

 

 

 

40,400

 

Total current liabilities

 

 

87,536

 

 

 

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, 60,823,334 and 60,323,332 shares issued and outstanding as of March 31, 2014 and March 31, 2013, respectively

 

 

60,823

 

 

 

60,323

 

Paid-in capital

 

 

879,484

 

 

 

416,415

 

Accumulated deficit

 

 

(850,948

)

 

 

(492,189

)

Total stockholders' equity(deficit)

 

 

89,359

 

 

 

(15,451

)

 

 

 

 

 

 

 

 

 

Total liabilities and stockholders' equity

 

$

176,895

 

 

$

65,863

 



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







F-3



Mister Goody, Inc.

Statements of Operations


 

 

Year Ended March 31,

 

 

 

2014

 

 

2013

 

 

  

                      

  

  

                      

  

Net revenues

 

$

-

 

 

$

-

 

Cost of Goods Sold

 

 

-

 

 

 

-

 

Gross Profit

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and Administrative

 

 

(224,614

)

 

 

(252,032

)

Management Services

 

 

-

 

 

 

(15,397

)

Total operating expenses

 

 

(224,614

)

 

 

(267,429

)

 

 

 

 

 

 

 

 

 

Operating loss

 

 

(224,614

)

 

 

(267,429

)

 

 

 

 

 

 

 

 

 

Other expense:

 

 

 

 

 

 

 

 

Interest expense

 

 

(105,536

)

 

 

-

 

Equity in loss of unconsolidated affiliate

 

 

(28,609

)

 

 

(19,537

)

Total other expense

 

 

(134,145

)

 

 

(19,537

)

 

 

 

 

 

 

 

 

 

Loss before income tax provision

 

 

(358,759

)

 

 

(286,966

)

Income tax provision

 

 

-

 

 

 

-

 

Net loss

 

$

(358,759

)

 

$

(286,966

)

 

 

 

 

 

 

 

 

 

Net loss per share:

 

 

 

 

 

 

 

 

Basic and diluted

 

$

(0.01

)

 

$

(0.00

)

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding:

 

 

 

 

 

 

 

 

Basic and diluted

 

 

60,926,895

 

 

 

59,846,393

 


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





F-4



Mister Goody, Inc.

Statements of Stockholders' Equity (Deficit)


 

 

Common Stock

 

 

Preferred Stock

 

 

Paid in

 

 

Accumulated

 

 

 

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Capital

 

 

Deficit

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

 

 

Balance at March 31, 2012

 

 

60,240,000

 

 

 

60,240

 

 

 

-

 

 

 

-

 

 

 

276,307

 

 

 

(205,223

)

 

 

131,324

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for service

 

 

583,332

 

 

 

583

 

 

 

-

 

 

 

-

 

 

 

91,084

 

 

 

-

 

 

 

91,667

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares cancelled

 

 

(500,000

)

 

 

(500

)

 

 

-

 

 

 

-

 

 

 

500

 

 

 

-

 

 

 

-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

48,524

 

 

 

-

 

 

 

48,524

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(286,966

)

 

 

(286,966

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at March 31, 2013

 

 

60,323,332

 

 

 

60,323

 

 

 

-

 

 

 

-

 

 

 

416,415

 

 

 

(492,189

)

 

 

(15,451

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for cash

 

 

833,334

 

 

 

834

 

 

 

-

 

 

 

-

 

 

 

99,166

 

 

 

-

 

 

 

100,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares issued for service

 

 

416,668

 

 

 

416

 

 

 

-

 

 

 

-

 

 

 

88,856

 

 

 

-

 

 

 

89,272

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Shares cancelled

 

 

(750,000

)

 

 

(750

)

 

 

 

 

 

 

 

 

 

 

(17,250

)

 

 

 

 

 

 

(18,000

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock Option compensation

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

42.297

 

 

 

-

 

 

 

42,297

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Discount on Notes Payable

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

250,000

 

 

 

-

 

 

 

250,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

(358,759

)

 

 

(358,759

)

Balance at March 31, 2014

 

 

60,823,334

 

 

$

 60,823

 

 

 

-

 

 

$

 -

 

 

$

 879,484

 

 

$

 (850,948

)

 

$

 89,359

 



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






F-5



Mister Goody, Inc.

Statements of Cash Flows


 

 

Year Ended March 31,

 

 

 

2014

 

 

2013

 

Cash flows from operating activities:

  

                      

  

  

                      

  

Net loss

 

$

(358,759

)

 

$

(286,966

)

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

 

 

 

 

 

 

 

 

Non-cash stock compensation expense

 

 

131,569

 

 

 

140,191

 

Amortization of debt discount

 

 

85,536

 

 

 

 

 

Equity in losses of unconsolidated affiliate

 

 

28,609

 

 

 

 19,537

 

Change in operating assets and liabilities:

 

 

 

 

 

 

 

 

Accounts receivable

 

 

-

 

 

 

20

 

Accounts payable and accrued liabilities

 

 

(38,913

)

 

 

38,414

 

Net cash used in operating activities

 

 

(151,958

)

 

 

(88,804

)

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

Proceeds from issuance of common stock

 

 

100,000

 

 

 

-

 

Proceeds from notes payable - related party

 

 

-

 

 

 

40,400

 

Proceeds from notes payable

 

 

250,000

 

 

 

-

 

Payments on notes payable – related party

 

 

(40,400

)

 

 

-

 

Payments to retire common stock

 

 

(18,000

)

 

 

-

 

Net cash provided by financing activities

 

 

291,600

 

 

 

40,400

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

Equity Investment in Naked Edge

 

 

(64,600

)

 

 

(85,400

)

Net cash used in investing activities

 

 

(64,600

)

 

 

(85,400

)

 

 

 

 

 

 

 

 

 

Change in cash

 

 

75,042

 

 

 

(133,804

)

 

 

 

 

 

 

 

 

 

Cash, beginning of period

 

 

-

 

 

 

133,804

 

 

 

 

 

 

 

 

 

 

Cash, end of period

 

$

75,042

 

 

$

-

 

 

 

 

 

 

 

 

 

 

Supplementary Information:

 

 

 

 

 

 

 

 

Interest Paid

 

$

20,000

 

 

$

-

 

Supplementary Information of Non-Cash Transactions:

 

 

 

 

 

 

 

 

Creation of debt discount  on Note payable

 

$

250,000

 

 

$

-

 

 

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






F-6



Mister Goody, Inc.

Notes to Financial Statements


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 financial statements and accompanying notes are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”). The financial statements include the accounts of the Company. Certain amounts in prior periods have been reclassified to conform to the current period.


Note 2: Going Concern


The accompanying 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. Management expects to need to raise additional funds via equity offerings; however, no assurances 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.


These conditions raise substantial doubt about the Company's ability to continue as a going concern. These 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 financial statements in conformity with GAAP 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.




F-7



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). Under such special coverage, balances maintained in non-interest bearing transaction accounts are insured in full by the 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 asset is treated as goodwill, which is evaluated for impairment on a regular basis.


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 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) as of March 31, 2014 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.


Fair Value of Financial Instruments


U.S. GAAP establishes a fair value hierarchy which has three levels based on the reliability of the inputs to determine the fair value. These levels include: Level 1, defined as inputs such as unadjusted quoted prices in active markets for identical assets or liabilities; Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, defined as unobservable inputs for use when little or no market data exists, therefore requiring an entity to develop its own assumptions.


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




F-8



New Accounting Standards


There are no Accounting Standards Updates that have been issued but not yet adopted as of March 31, 2014, that are expected to significantly impact the presentation or results of operations, cash flows or financial position or disclosures of Mister Goody.


Note 4: Equity Investment


Background


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 March 31, 2014 and 2013 is as follows:


 

 

March 31,

 

 

 

2014

 

 

2013

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

14,325

 

 

$

1,484

 

Accounts receivable

 

 

31,775

 

 

 

21,366

 

Other current assets

 

 

4,666

 

 

 

6,234

 

Fixed assets

 

 

137,268

 

 

 

100,935

 

  Total assets

 

$

188,034

 

 

$

130,019

 

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders' Equity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

$

71,966

 

 

$

39,468

 

Long term portion of capital leases

 

 

41,336

 

 

 

47,835

 

Long term portion of notes payable

 

 

61,085

 

 

 

21,756

 

Stockholders' equity

 

 

13,647

 

 

 

20,960

 

  Total liabilities and stockholders' equity

 

$

188,034

 

 

$

130,019

 


Summarized results of operations for the years ended March 31, 2014 and March 31, 2013 of Naked Edge are as follows:


 

 

Year Ended March 31,

 

 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

Net revenues

 

$

424,572

 

 

$

94,102

 

Cost of Goods Sold

 

 

(253,362

)

 

 

(77,177

)

Gross Profit

 

 

171,210

 

 

 

16,925

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

General and Administrative

 

 

(242,763

)

 

 

(102,466

)

Total operating expenses

 

 

(242,763

)

 

 

(102,466

)

 

 

 

 

 

 

 

 

 

Net loss

 

$

(71,553

)

 

$

(85,541

)



F-9



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, 2012

 

$

-

 

Investment contribution

 

 

85,400

 

Equity loss

 

 

(19,538

)

Investment balance as of March 31, 2013

 

$

65,862

 

Investment contribution

 

 

64,600

 

Equity loss

 

 

(28,609)

 

Investment balance as of March 31, 2014

 

$

101,853

 


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


2015

 

 

23,383

 

2016

 

 

11,786

 

2017

 

 

-

 

Thereafter

 

 

-

 

Total

 

$

35,169

 


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, 2013and 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.


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.


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.




F-10



Future minimum lease payments due under the capital lease agreements are as follows for the fiscal years ending March 31:


2015

 

 

34,358

 

2016

 

 

33,417

 

2017

 

 

19,548

 

2018

 

 

314

 

Total minimum lease payments

 

$

87,637

 

Less imputed interest

 

 

(29,833

)

Present value of minimum lease payments

 

 

57,804

 

Less: current maturities of capital lease obligations

 

 

16,468

 

Noncurrent maturities of capital lease obligations

 

$

41,336

 


As of March 31, 2014 and 2013, there were no related party transactions.


On January 22, 2014, Naked Edge entered into a loan agreement with Whole Foods Market Services, Inc. whereby it borrowed $56,065 for the sole purpose of purchasing equipment and materials. Under the terms of the loan, Naked Edge is obligated to pay an interest rate of 4.7% per annum, to accrue daily interest, with a term of five years and expiring in February 1, 2019.  First monthly principal and interest as defined in the loan agreement are payable on March 1, 2014.


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, then Mister Goody will repay the principal amount outstanding and any outstanding interest on the 3rd year anniversary of receiving the loan. Snack Um LLC may elect to demand repayment with four months of written notice. Notwithstanding the foregoing, Mister Goody shall not be obligated to repay any part of the principal amount outstanding before the 2nd year anniversary of receiving the loan.


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 year ended March 31, 2014, the Company recorded $85,714 of interest expense related to the amortization of debt discount. At March 31, 2014, unamortized discount of $164,284 remains as Notes Payable.


Note 6: Notes Payable – Related Party


On November 26, 2012 the Company entered into a promissory note whereby by it borrowed $10,000 from a member of the Company’s board of directors, Fred Sager. Under the terms of the unsecured promissory note, the Company was 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, Joel Arberman. 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.




F-11



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 note.


All related party notes were paid within the fiscal year March 31, 2014 and the balance was zero.


Note 7: Income Taxes


Income taxes are summarized as follows for the year ended March 31, 2014 and 2013:


 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

Current expense (benefit)

 

$

(226,294

)

 

$

(149,049

)

Deferred expense

 

 

226,294

 

 

 

149,049

 

Net income tax (benefit) expense

 

 

-

 

 

 

-

 


The Company has experienced operating losses since inception. A full valuation allowance have been established for deferred tax assets based on a “more likely than not” threshold. The ability to realize deferred tax assets depends on our ability to generate sufficient taxable income within the carry forward periods provided in the tax law.


Note 8: 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. Services and obligations were cancelled including the 200,000 shares granted, upon notice to the company per agreement and the shares were returned in January 2014 for no further compensation.


On November 29, 2012, the Company executed an agreement with a non-employee for consulting services to be performed. The agreement calls for 83,333 shares of restricted stock to be issued monthly to the non-employee 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. During the fiscal year 2014, the Company issued 416,668 shares of its common stock and recorded an expense of $89,272, based on a fair value of the Company’s stock ranging from $0.15 - $0.25 per share. This agreement was terminated effective September 10, 2013 and 750,000 shares were returned for consideration of $18,000 with no further obligation. In addition to the termination of the agreement, accrued consulting fees of $30,000 were reversed and adjusted in general and administrative expenses.




F-12



Note 9: Related Party Transactions


The Company’s shareholders paid $7,203 and $9,285 for Company-related expenses during the years ended March 31, 2014 and 2013, respectively. Such amounts were repaid to the shareholders as of March 31, 2014 and 2013.


On November 26, 2012 the Company entered into a promissory note whereby by 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 note.


All related party notes were paid within the fiscal year March 31, 2014 and the balance was zero.


Management services


During the year ended March 31, 2014 and 2013, 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 10: Commitments and Contingencies


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 March 31, 2014.


The Company has no non-cancellable operating leases.


Note 11: Stock-Based Compensation


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 be vested after the continuous employment with the Company if a consultant is terminated for any reason.


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 be vested after the continuous employment with the Company if a consultant is terminated for any reason.


On April 2, 2012, Brendan Vogel, the owner of 6,000,000 shares of common stock of Mister Goody, Inc. (the “Registrant”), returned 500,000 common shares to the Registrant for cancellation in exchange for no consideration.




F-13



The stock options issued during fiscal year 2014 were 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:


 

 

2014

 

 

2013

 

 

 

 

 

 

 

 

Volatility

 

 

148-193.8%

 

 

 

148-193.8%

 

Risk-free interest rate

 

 

1.03-2.31%

 

 

 

1.03-2.31%

 

Expected term

 

 

5-7.5 years

 

 

 

5-6.3 years

 

Forfeiture rate

 

 

0-10%

 

 

 

0-10%

 

Dividend yield rate

 

 

0%

 

 

 

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 year ended March 31, 2014, and 2013 the Company recognized a total of $48,235 and $48,524 respectively, of compensation expense. Unamortized compensation expense related to the 2,075,000 options outstanding at March 31, 2014 is $247,844.

 

The following summarizes stock option activity for the year ended March 31, 2014 and 2013:


 

Number of

Shares

 

Weighted

Average

Exercise

Price

 

Weighted

Average

Remaining

Contractual

Life

 

Aggregate

Intrinsic

Value

Outstanding at March 31, 2012

 

240,000

 

$

0.02

 

 

9.06

 

$

19,784

Granted at market price

 

500,000

 

 

0.10

 

 

 

 

 

 

Exercised

 

-

 

 

 

 

 

 

 

 

 

Forfeited

 

(240,000

)

 

0.02

 

 

 

 

 

 

Outstanding at March 31, 2013

 

500,000

 

 

0.10

 

 

9.01

 

$

50,000

Granted

 

1,575,000

 

 

0.02

 

 

9.19

 

 

0

Exercised

 

-

 

 

-

 

 

-

 

 

-

Forfeited

 

-

 

 

-

 

 

-

 

 

-

Outstanding at March 31, 2014

 

2,075,000

 

$

0.15

 

 

8.98

 

 

0

Exercisable

 

770,000

 

$

0.09

 

 

8.45

 

$

-


Note 12: 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 year ending March 31, 2014 and 2013, 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 13: Subsequent Events


The Company evaluated events subsequent to March 31, 2014 up to filing date and determined there were no subsequent events requiring disclosure.






F-14



INDEX TO EXHIBITS


SEC Reference
Number

 

Title of Document

 

     

 

3.1

 

Articles of Incorporation (Incorporated by reference to Registration Statement on Form S-1 filed on June 16, 2011)

3.2

 

Bylaws (Incorporated by reference to Registration Statement on Form S-1 filed on June 16, 2011)

10.1

 

2011 Stock Incentive Plan (Incorporated by reference to Registration Statement on Form S-1 filed on June 16, 2011)

10.2

 

Consulting Agreement – Joel Arberman (Incorporated by reference to our Report on Form 10-K filed on July 13, 2012.)

10.3

 

Consulting Agreement – Brendan Vogel (Incorporated by reference to our Report on Form 10-K filed on July 13, 2012.)

14.1

 

Code of Ethics Code of Ethics (Incorporated by reference to Registration Statement on Form S-1 filed on June 16, 2011)

14.2

 

LLC Interest Purchase Agreement with Naked Edge (Incorporated by reference to our Report on Form 8-K filed on August, 27 2012.)

14.3

 

Consulting Agreement with Naked Edge (Incorporated by reference to our Report on Form 8-K filed on August, 27 2012.)

14.4

 

Consulting Agreement – First Market, LLC (Incorporated by reference to our Report on Form 8-K filed on December 3, 2012.)

14.5

 

Convertible Loan Agreement And Promissory Note - Snack Um, LLC (Incorporated by reference to our Report on Form 8-K filed on April 9, 2013)

14.6

 

Form of Related Party Promissory Note (Filed Herewith)

21.0

 

Subsidiaries (Incorporated by reference to Registration Statement on Form S-1 filed on June 16, 2011)

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 Co-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 INS

 

XBRL Instance Document

101 SCH

 

XBRL Taxonomy Extension Schema

101 CAL

 

XBRL Taxonomy Extension Calculation Linkbase

101 LAB

 

XBRL Taxonomy Extension Label Linkbase

101 PRE

 

XBRL Taxonomy Extension Presentation Linkbase

101 DEF

 

XBRL Taxonomy Extension Definition Linkbase


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.