-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A0ER8hIWPsaJ/+Un2tjbdtMtOb1c/IifhJbppShawBRF2GvqBnFEq6JH3+4hgt4w AhrBEuk+OnI+UagmWGFWuQ== 0001019687-07-004496.txt : 20071231 0001019687-07-004496.hdr.sgml : 20071231 20071231082304 ACCESSION NUMBER: 0001019687-07-004496 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20070710 ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20071231 DATE AS OF CHANGE: 20071231 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Nascent Wine Company, Inc. CENTRAL INDEX KEY: 0001310213 STANDARD INDUSTRIAL CLASSIFICATION: WHOLESALE-BEER, WINE & DISTILLED ALCOHOLIC BEVERAGES [5180] IRS NUMBER: 820576512 FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: 1934 Act SEC FILE NUMBER: 333-120949 FILM NUMBER: 071333225 BUSINESS ADDRESS: STREET 1: 2355-A PASEO DE LAS AMERICAS CITY: SAN DIEGO STATE: CA ZIP: 92154 BUSINESS PHONE: (619) 661-0458 MAIL ADDRESS: STREET 1: 2355-A PASEO DE LAS AMERICAS CITY: SAN DIEGO STATE: CA ZIP: 92154 8-K/A 1 nascent_8ka1-122807.txt AMENDMENT NO. 1 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 8-KA CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of earliest event reported: JULY 10, 2007 NASCENT WINE COMPANY, INC. (Exact name of Registrant as specified in charter) NEVADA 333-120949 82-0576512 (State of Other Jurisdiction (Commission (IRS Employer of Incorporation) File Number) Identification No.) 2355-A PASEO DE LAS AMERICAS SAN DIEGO, CALIFORNIA 92154 (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: (619) 661-0458 (Former Name or Former Address, if Changed Since Last Report) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: |_| Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |_| Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |_| Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |_| Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ================================================================================ ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS This Current Report on Form 8-KA amends the Current Report on Form 8-K filed by Nascent Wine Company, Inc. (the "Company") with the Securities and exchange commission dated July 10, 2007 (as the "Original 8-K") in connection with the entering into and closing of the Asset Purchase Agreement with Grupo Sur Promociones de Mexico, S.A. de C.V. (the "Company"), Francesca Wright de Cowal ("Wright de Cowal") and Gregory Cowal Robbins ("Robbins") on July 10, 2007 to purchase all of the issued and outstanding capital stock of the Company (except one share retained by Wright de Cowal) (the "Acquisition"). This Current Report of form 8-K did not include the financial statements and pro forma financial information of the business acquired. The Current Report on Form 8-KA is filed to provide he financial statements the business acquired required by Item 9.01 (a) and pro forma financial information required by Item 9.01 (b) of Form 8-K. . ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS. (a) Financial statements of business acquired. The following financial statements of Grupo Sur Promociones de Mexico, S.A. de C.V and notes thereto, in Spanish and pesos are included as Exhibit 99.1 to this Form 8-K/A and are incorporated by reference to this Form 8-K/A: i) Report of C. P. Vladimir Robles Garcia , an independent public Mexican accountant, and Audited Balance Sheet, Statements of Operations, Statements of Stockholders' Equity, Statements of Cash Flows and Notes to the Financial Statements for the years ended December 31, 2006 and 2005; in Spanish and pesos and ii) Translation of report, Balance Sheets, Statement of Operations, Statements of Stockholders' equity, Statement of Cash ( Flows, and Notes to the Financial Statements for the years ended. December 31, 2006 ad 2005 into English and converted to U. S. dollars (iii) Unaudited financial statements for the six months ended June 30, 2007 (b) Pro forma financial information. The following pro forma financial information of Nascent Wine Company, Inc. and Subsidiaries/ Grupo Sur Promociones de Mexico, S.A. de C.V., and notes thereto, are included as Exhibit 99.2 to this Form 8-K/A and are incorporated by reference to this Form 8-K/A: (i) Unaudited Pro Forma Balance Sheet as of June 30, 2007, Unaudited Statement of Operations for the six months ended June 30, 2007 and Unaudited Notes to Pro Forma Financial Statements for the six months ended June 30, 2007; and (ii) Unaudited Pro Forma Balance Sheet as of December 31, 2006, Unaudited Statements of Operations for the year ended December 31, 2006 and Unaudited Notes to Pro Forma Financial Statements for the year ended December 31, 2006. 2 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Nascent Wine Company, Inc. -------------------------------- (Registrant) Date: December 31, 2007 By: /s/ Sandro Piancone -------------------------------- Name: Sandro Piancone Its: Chief Executive Officer 3 EX-99.1 2 nascent_8ka1-ex9901.txt EXHIBIT 99.1 (i) AL CONSEJO DE ADMINISTRACION Y A LOS ACCIONISTAS DE GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. HE EXAMINADO EL ESTADO DE POSICION FINANCIERA DE GRUPO SUR PROMOCIONES DE MEXICO, S. A. DE C.V. AL 31 DE DICIEMBRE DEL 2006 Y DE 2005 Y LOS ESTADOS DE RESULTADOS DE VIARIACIONES EN EL CAPITAL CONTABLE Y DE CAMBIOS EN LA SITUACION FINANCIERA EN BASE A EFECTIVO QUE LE SON RELATIVOS POR EL ANO TERMINADO EN ESA FECHA. MI EXAMEN SE EFECTUO DE ACUERDO CON LAS NORMAS DE AUDITORIA GENERALMENTE ACEPTADAS Y EN CONSECUENCIA INCLUYO PRUEBAS DE LOS LIBROS Y DOCUMENTOS DE CONTABILIDAD Y OTROS PROCEDIMIENTOS DE AUDITORIA QUE CONSIDERE NECESARIOS EN LAS CIRCUNSTANCIAS. LA COMPANIA OMITIO REVELAR LOS EFECTOS DE LA INFLACION Y LOS ESTADOS FINANCIEROS POR EL EJERCICIO TERMINADO EL 31 DE DICIEMBRE DEL 2006 Y DE 2005 EN CONSECUENCIA NO INCLUYEN COMO LO REQUIEREN LOS PRINCIPIOS DE CONTABILIDAD GENERALMENTE ACEPTADOS EL RECONOCIMIENTO DE LOS EFECTOS DE LA INFLACION EN INVENTARIOS, COSTO DE VENTAS, PROPIEDADES Y EQUIPO, DEPRECIACION ACUMULADA Y DEL EJERCICIO, CAPITAL CONTABLE Y POSICION MONETARIA, NI LA DETERMINACION DEL RESULTADO POR TENENCIA DE ACTIVOS NO MONETARIOS. EN MI OPINION EXCEPTO POR LA FALTA DE RECONOCIMIENTO DE LOS EFECTOS DE LA INFLACION EN LA INFORMACION FINANCIERA SEGUN SE EXPLICA EN EL PARRAFO ANTERIOR, LOS ESTADOS FINANCIEROS ADJUNTOS PRESENTAN RAZONABLEMENTE LA SITUACION FINANCIERA DE GRUPO SUR PROMOCIONES DE MEXICO, S. A. DE C. V., AL 31 DE DICIEMBRE DEL 2006 Y DE 2005, LOS RESULTADOS DE SUS OPERACIONES, LAS VARIACIONES EN SU CAPITAL CONTABLE Y LOS CAMBIOS EN LA SITUACION FINANCIERA EN BASE A EFECTIVO POR EL EJERCICIO TERMINADO EN ESA FECHA, DE CONFORMIDAD CON PRINCIPIOS DE CONTABILIDAD GENERALMENTE ACEPTADOS Y APLICADOS CONSISTENTEMENTE. C. P. VLADIMIR ROBLES GARCIA NO. DE REGISTRO DE LA DIRECCION GENERAL DE FISCALIZACION 11171 MEXICO, D. F. 9 DE JUNIO DEL 2006. -1- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. ESTADO DE POSICION FINANCIERA AL 31 DE DICIEMBRE DE 2006 Y DE 2005 (CIFRAS EN PESOS) 2006 2005 ----------- ----------- ACTIVO EFECTIVO EN CAJA Y BANCOS 218,816 235,456 VALORES DE IMMEDATA REALIZACION 9,217 509,207 ----------- ----------- TOTAL DE EFECTIVEO E INVERSIONES TEMPORALES 228,033 744,663 CUENTAS A COBRAR 12,256,685 7,666,733 PAGOS ANTICIPADOS 478,810 532,597 ----------- ----------- TOTAL DE ACTIVO CIRCULANTE 12,963,528 8,943,993 ACTIVO FIJO INMUEBLES, MAQUINARIA Y EQUIPO 3,990,437 3,674,265 DEPRECIACIONES 2,654,635 2,057,471 ----------- ----------- INMUEBLES, MAQUINARIA Y EQUIPO (NETO) 1,335,802 1,616,794 ----------- ----------- TOTAL DE ACTIVO 14,299,330 10,560,787 =========== =========== PASIVIO DOCUMENTOS POR PAGAR -- 17,973 ACREEDORES DIVERSOS 3,062,594 2,482,644 PROVEEDORES 4,004,786 40,306 IMPUESTOS POR PAGAR 1,545,644 1,031,007 ----------- ----------- TOTAL DEL PASIVO A CORTO PLAZO 8,613,024 3,571,930 CAPITAL CONTABLE CAPITAL SOCIAL PROVENIENTE DE APORTACIONES 100,000 100,000 UTILIDADES RETENIDAS DE EJERCICIOS ANTERIORES 6,617,008 8,106,674 RESULTADO EJERCICIO 2007 (1,030,702) (1,217,817) ----------- ----------- TOTAL DEL CAPITAL CONTABLE 5,686,306 6,988,857 ----------- ----------- TOTAL DEL PASIVO Y CAPITAL CONTABLE 14,299,330 10,560,787 =========== =========== LAS NOTAS ADJUNTAS SON PARTE INTEGRANTE DE ESTE ESTADO FINANCIERO -2- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. ESTADO DE RESULTADOS POR LOS EJERCICIOS COMPRENDIDOS DEL 1 DE ENERO AL 31 DE DICIEMBRE DE 2006 Y DE 2005 (CIFRAS EN PESOS) 2006 2005 ------------ ------------ INGRESOS POR SERVICIOS 211,239,437 146,982,025 GASTOS POR SERVICIOS 194,339,706 130,958,443 ------------ ------------ UTILIDAD DE OPERACION 16,899,731 16,023,582 GASTOS DE ADMINISTRACION 18,018,552 17,316,909 ------------ ------------ PERDIDAS ANTES DE OTROS INGRESOS Y GASTOS: (1,118,821) (1,293,327) OTROS INGRESOS Y (GASTOS): INGRESO INTEGRAL DE FINANCIAMIENTO 88,119 75,510 ------------ ------------ PERDIDAS ANTES DE IMPUESTOS (1,030,702) (1,217,817) PROVISIONES PARA IMPUESTOS -- -- ------------ ------------ PERDIDA NETA (1,030,702) (1,217,817) ============ ============ LAS NOTAS ADJUNTAS SON PARTE INTEGRANTE DE ESTE ESTADO FINANCIERO -3- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. ESTADO DE VARIACIONES EN EL CAPITAL CONTABLE POR LOS EJERCICIOS TERMINADOS AL 31 DE DICIEMBRE DE 2006 Y DE 2005 (CIFRAS EN PESOS) CAPITAL TOTAL DE SOCIAL UTILIDADES CAPITAL NOMINAL RETENIDOS CONTABLE ----------- ----------- ----------- SALDO AL 31 DE DICIEMBRE 2004 100,000 11,222,472 11,322,472 PERDIDA DE EJERCICIO 2005 -- (1,217,817) (1,217,817) APLICACION DE IMPUESTOS -- (3,115,798) (3,115,798) ----------- ----------- ----------- SALDO AL 31 DE DICIEMBRE 2005 100,000 6,888,857 6,988,857 PERDIDA DE EJERCICIO 2006 -- (1,030,702) (1,030,702) APLICACION DE IMPUESTOS -- (271,849) (271,849) ----------- ----------- ----------- SALDO AL 31 DE DICIEMBRE 2006 100,000 5,586,306 5,686,306 =========== =========== =========== LAS NOTAS ADJUNTAS SON PARTE INTEGRANTE DE ESTE ESTADO FINANCIERO -4- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. ESTADO DE CAMBIOS EN LA SITUACION FINANCIERA POR LOS EJERCICIOS TERMINADOS AL 31 DE DICIEMBRE DE 2006 Y DE 2005 (CIFRAS EN PESOS) 2006 2005 ---------- ---------- OPERACIONES PERDIDA DEL ANO (1,030,702) (1,217,817) DEPRECIACIONES 597,164 532,090 AUMENTO O DIDMINUCION EN CUENTAS A COBRAR (3,589,321 (1,040,842) PAGOS ANTICIPADOS (946,845) 2,695,950 IMPUESTOS A PAGAR (271,848) (3,115,798) PROVEEDORES Y OTROS PASIVOS 5,041,093 238,034 ---------- ---------- RECURSOS UTILIZADOS POR LA OPERACION (200,459) (1,767,883) RECURSOS UTILIZADO POR INVERSION ACTIVO FIJO (316,172) (397,777) DISMINUCION EN EFECTIVO E INVERSIONES TEMPORALES (516,631) (2,165,660) EFECTIVO Y INVERSIONES TEMPORALES AL PRINCIPIO DEL EJERCICIO 744,663 2,910,324 ---------- ---------- EFECTIVO Y INVERSIONES TEMPORALES AL FINAL DEL PERIODO 228,033 744,664 ========== ========== LAS NOTAS ADJUNTAS SON PARTE INTEGRANTE DE ESTE ESTADO FINANCIERO -5-
GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. NOTAS A LOS ESTADOS FINANCIEROS POR LOS EJERCICIOS TERMINADOS AL 31 DE DICIEMBRE DE 2006 Y DE 2005 (CIFRAS EN PESOS) NOTA NO. 1 OPERACIONES EL GIRO DE LA EMPRESA ES LA PRESTACION DE TODA CLASE DE SERVICIOS EN LOS RAMOS DE MERCADOTECNIA, LA PUBLICIDAD, LA PROMOCION DE VENTAS, ADMINISTRACION DE VENTAS Y RELACIONES INDUSTRIALES. NOTA NO. 2 RESUMEN DE LAS POLITICAS CONTABLES SIGNIFICATIVAS. A CONTINUACION SE PRESENTA UN RESUMEN DE LAS POLITICAS CONTABLES MAS SIGNIFICATIVAS UTILIZADAS EN LA PREPARACION DE LOS ESTADOS FINANCIEROS. A) PROPIEDADES Y EQUIPOS. LAS PROPIEDADES Y EQUIPOS SE REGISTRAN A SU COSTO DE ADQUISICION. LAS MODIFICACIONES Y MEJORAS DE IMPORTANCIA SON CAPITALIZADAS MIENTRAS QUE LOS REEPLAZOS, REPARACIONES Y MANTENIMIENTO QUE NO PROLONGAN LA VIDA UTIL DE LOS ACTIVOS SON CARGADOS A LOS GASTOS DE EJERCICIO EN QUE SE EFECTUAN. B) DEPRECIACION PARA EL CACULO DE LA DEPRECIACION SE SIGUE EL METODO DE LINEA RECTA TANTO PARA EFECTOS FINANCIEROS COMA PARE EFECOTS FISCALES DE ACUERDO A LAS SIGUIENTES TASAS ANUALES. MOBILIARIO Y EQUIPO 10% EQUIPO DE COMPUTO 30% EQUIPO DE TRANSPORTE 25% EL COSTO DE ADQUISICION, LA DEPRECIACION ACUMULADA Y EL VALOR EN LIBROS DE LAS PROPIEDADES Y EQUIPOS AL 31 DE DICIEMBRE DEL 2006 Y 2005 SE INTEGRAN COM SIGUE: PARA 31 DE DICIEMBRE DE 2006 -------------------------------------------------- CONCEPTO VALOR DE DEPRECIACION VALOR DE ADQUISICION ACUMULADA LIBROS ------------ ------------ ------------ MOBIARIO Y EQUIPO 1,045,502 526,361 519,141 EQUIPO DE COMPUTO 1,539,251 1,030,674 508,577 EQUIPO DE TRANSPORTE 1,405,684 1,097,600 308,084 ------------ ------------ ------------ TOTALES 3,990,437 2,654,635 1,335,802 ============ ============ ============ PARA 31 DE DICIEMBRE DE 2005 -------------------------------------------------- CONCEPTO VALOR DE DEPRECIACION VALOR DE ADQUISICION ACUMULADA LIBROS ------------ ------------ ------------ MOBIARIO Y EQUIPO 1,030,220 422,906 607,314 EQUIPO DE COMPUTO 1,238,361 819,441 418,920 EQUIPO DE TRANSPORTE 1,405,684 815,124 590,560 ------------ ------------ ------------ TOTALES 3,674,265 2,057,471 1,616,794 ============ ============ ============ C) INDEMNIZACIONES Y PAGOS DE PRIMAS DE ANIQUEDAD LAS COMPENSACIONES ACUMULADAS A FAVOR DE LOS TRABAJADORES DE ACUERDO CON SU ANTIGUEDAD ESTIPULADAS EN LA LEY FEDERAL DEL TRABAJO SE REGISTRAN CUANDO SUCEDEN LOS RETIROS O LAS RENUNCIAS DEL PERSONAL, COMO GASTOS DEL EJERCICIO EN QUE SE CUBREN INCLUYENDO LAS PRIMAS DE ANTIGUEDAD -6- NOTA NO. 3 CAPITAL SOCIAL EL CAPITAL SOCIAL ES DE CIEN MIL PESOS REPRESENTADO POR 100 ACCIONES NOMINATIVAS LIBERADAS CON UN VALOR NOMINAL DE UN MIL PESOS CADA UNA. NOTA NO. 4 RESTRICCIONES A LAS UTILIDADES ACUMULADAS A) RESPECTO A LAS UILIDADES ACUMULADAS NO SE EFECTUARA RRETENCION ALGUNA DE IMPUESTO SOBRE LA RENTA EN PAGO DE DIVIDENDOS, CUANDO LAS UTILIDADES QUE SE DISTRIBUYAN PROVENGAN DEL SALDO DE LA CUENTA DE "UTILIDAD FISCAL NETA" SENALADA EN EL ARTICULO 88 DE LA LEY DEL I.S.R. EN CASO DE QUE NO PROVENGAN DEL SALDO DE ESA CUENTA, EL IMPUSTO A RETENER SERA DEL 29% SOBRE LA BASE DE MULTIPLICAR EL IMPORTE DE LA DISTRIBUCION POR EL FACTOR DE 1.38989 DE ACUERDO CON LO ESTABLECIDO EN EL ART. 11 EL IMPORTE QUE SE DISTRIBUYA COMO DIVIDENDOS NO DEBE EXCEDER LAS UNILIDIDES CONTABLES REPARTIBLES. B) LA UTILIDAD NETA DEL ANO ESTA SUJETA A LA DISPOSICION LEGAL QUE REQUIERA QUE EL 5% DE LAS UTILIDADES DE CADA ANO SEA TRASPASADA A LA RESERVA LEGAL HASTA QUE ESTA SEA IGUAL AL 20% DEL CAPITAL SOCIAL, ESTA RESERVA NO ESTA SUJETA A DISTRIBUCION A LOS ACCIONISTAS DURANTE LA EXISTENCIA DE LA COMPANIA EXCEPTO SI ES RREPARTIDA COMO DIVIDENDOS EN ACCIONES. NOTA NO. 5 PASIVO CONTIGENTE DE CONFORMIDAD CON LA LEY FEDERAL DEL TRABAJO, LA COMPANIA TIENE UN PASIVO CONTINGENTE POR EL PAGO DE RETIROS, INDEMINZACIONES A EMPLEADOS Y TRAJADORES QUE SEAN DESPEDIDOS BAJO CIERTAS CIRCUNSTANCIAS COMO SE SENALA EN LA NOTA NO. 2 ANTERIOR. NO ES POLITICA DE LA COMPANIA REGISTRAR PASIVO ALGUNO POR ESTA CONTINGENCIA. ESTAS NOTAS SON PARTE INTERGRANTE DE LOS ESTADOS FINANCIEROS. -7- (ii) TRANSLATION OF (i) INTO ENGLISH AND UNITED STATES DOLLARS To the Board of Directors and Stockholders Grupo Sur Promociones de Mexico S.A. de C.V. I have audited the accompanying Balance Sheets of Grupo Sur Promociones de Mexico S.A. de C.V. as of December 31, 2006 and 2005, and the related Statements of Operations, Stockholders Equity , and Cash Flows for the periods then ended. I conducted my audits in accordance with generally accepted auditing standards that include tests of the accounting records and other auditing procedures that I considered necessary under the circumstances. The Company has omitted recording the effects of inflation at December 31, 2006 and 2005. Therefore, they have not complied with the generally accounting principle to record inflation effecting inventory, cost of sales, property and equipment , accumulated depreciation and cash flow. In my opinion, except for non recogonition of inflation as explained in the above paragraph, the financial statements referred to above present fairly, in all material respects, the financial position of Grupo Sur Promociones de Mexico S.A. de C.V. as of December 31, 2006 and 2005, and the results of its operations, stockholder's equity and its cash in conformity with generally accepted accounting principles. -8- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. BALANCE SHEETS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) December 31, DECEMBER 31, 2006 2005 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 20,968 $ 69,524 Accounts receivable 1,127,000 715,788 Prepaid and deposits 44,026 49,724 ----------- ----------- TOTAL CURRENT ASSETS 1,191,994 835,036 Property and equipment 366,920 343,040 Depreciation (244,093) (192,091) ----------- ----------- Property and equipment (net) 122,827 150,949 ----------- ----------- TOTAL ASSETS $ 1,314,821 $ 985,985 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Note payable $ -- $ 1,678 Accounts payable 368,239 3,763 Accrued expenses 281,605 231,787 Accrued taxes 142,122 96,258 ----------- ----------- TOTAL CURRENT LIABILITIES 791,966 333,486 Stockholders' equity: Paid-in capital 9,336 9,336 Accumulated other comprehensive loss (36,612) (1,735) Retained earnings 644,899 756,862 Current year deficit (94,768) (111,964) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 522,855 652,499 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 1,314,821 $ 985,985 =========== =========== The accompanying notes are an integral part of these financial statements. -9- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. STATEMENTS OF OPERATIONS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) FOR THE YEAR ENDED FOR THE YEAR ENDED DECEMBER 31, 2006 DECEMBER 31, 2005 ----------------- ----------------- REVENUES FROM SERVICES $ 19,422,351 $ 13,513,227 COST OF SERVICES 17,868,510 12,040,052 ------------ ------------ GROSS PROFIT 1,553,841 1,473,175 OPERATING EXPENSES General and administrative expenses 1,656,711 1,592,081 ------------ ------------ TOTAL OPERATING EXPENSES 1,656,711 1,592,081 LOSS FROM OPERATIONS (102,870) (118,906) OTHER INCOME AND (EXPENSE) Interest income 8,102 6,942 Provision for income taxes -- -- ------------ ------------ NET LOSS $ (94,768) $ (111,964) ============ ============ The accompanying notes are an integral part of these financial statements. -10- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. STATEMENTS OF STOCKHOLDERS' EQUITY (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) TOTAL PAID IN RETAINED COMPREHENSIVE STOCKHOLDERS' CAPITAL EARNINGS INCOME EQUITY ----------- ----------- ----------- ----------- BALANCE DECEMBER 31, 2004 $ 9,336 $ 1,047,763 $ -- $ 1,057,098 NET LOSS FOR THE YEAR -- (111,964) -- (111,964) LOSS ON TRANSLATION -- -- (1,735) (1,735) ----------- COMPREHENSIVE LOSS -- -- -- (113,699 PRIOR YEAR ADJUSTMENT FOR TAXES -- (290,900) -- (290,900) ----------- ----------- ----------- ----------- BALANCE DECEMBER 31, 2005 9,336 644,899 (1,735) 652,500 NET LOSS FOR THE YEAR -- (94,768) -- (94,768) LOSS ON TRANSLATION -- -- (34,877) (34,877) ----------- COMPREHENSIVE LOSS -- -- -- (129,645) ----------- ----------- ----------- ----------- BALANCE DECEMBER 31, 2006 $ 9,336 $ 550,131 $ (36,612) $ 522,855 =========== =========== =========== =========== The accompanying notes are an integral part of these financial statements. -11-
GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. STATEMENTS OF CASH FLOWS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) FOR THE YEAR FOR THE YEAR ENDED ENDED DECEMBER 31, DECEMBER 31, 2006 2005 --------- --------- CASH FLOWS FROM OPERATING ACTIVITIES Net loss $ (94,768) $(111,758) Adjustment to reconcile net loss to net cash used for operating activities: Depreciation 54,906 48,829 Changes in operating assets and liabilities: Increase in accounts receivable (330,019) (95,517) Increase (decrease) in deposits (87,057) 247,405 Decrease in taxes (24,995) (285,933) Increase in accounts payable and other liabilities 463,502 21,844 --------- --------- NET CASH USED FOR OPERATING ACTIVITIES (18,431) (175,131) CASH FLOWS FROM INVESTING ACTIVITIES Purchase of fixed assets (29,070) (36,504) --------- --------- NET CASH USED FOR INVESTING ACTIVITIES (29,070) (36,504) EFFECT OF EXCHANGE RATE CHANGES ON CASH (1,055) 14,080 --------- --------- NET DECREASE IN CASH (48,556) (197,554) Cash - Beginning 69,524 267,078 --------- --------- CASH - Ending $ 20,968 $ 69,524 ========= ========= The accompanying notes are an integral part of these financial statements. -12- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. NOTES TO FINANCIAL STATEMENTS FOR THE YEARS ENDED DECEMBER 31, 2006 AND 2005 (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) NOTE NO. 1 OPERATIONS THE COMPANY'S BUSINESS IS THE OFFERING OF ALL TYPES OF SERVICES IN THE BRANCHES OF MARKETING, PUBLICITY, PROMOTION OF SALES, ADMINISTRATION OF SALES AND INDUSTRIAL RELATIONS. NOTE NO. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE CONTINUATION IS A SUMMARY OF SIGNIFICANT ACCOUNTING UTILIZED IN THE PREPARATION OF THE FINANCIAL STATEMENTS. A) PROPERTY AND EQUIPMENT. THE PROPERTY AND EQUIPMENT ARE RECORDED AT COST. THE MODIFICATIONS AND IMPROVEMENTS OF IMPORTANCE ARE CAPITALIZED WHILE THE REPLACEMENTS, REPAIRS AND MAINTENANCE THAT DO NOT PROLONG THE LIFE OF THE ASSETS ARE EXPENSED. B) DEPRECIATION DEPRECIATION IS CALCULATED USING THE STRAIGHT LINE METHOD USING THEE FOLLOWING ANNUAL RATES. FURNITURE AND FIXTURES 10% COMPUTERS 30% TRUCKS AND AUTOS 25% THE COST OF ADQUISITION, THE DEPRECIATION ACCUMULATED AND THE BOOK VALUE OF THE PROPERTY AND EQUIPMENT TO DECEMBER 31, 2006 AND 2005 ARE AS FOLLOWS: December 31, 2006 -------------------------------------------- Accumulated Cost Depreciation Net ---------- ------------ ---------- Furniture and fixtures 96,134 48,399 47,735 Computers 141,534 94,770 46,764 Trucks and autos 129,252 100,924 28,328 ---------- ---------- ---------- TOTAL 366,920 244,093 122,827 ========== ========== ========== December 31, 2005 -------------------------------------------- Accumulated Cost Depreciation Net ---------- ------------ ---------- Furniture and fixtures 96,184 39,484 56,701 Computers 115,617 76,505 39,112 Trucks and autos 131,239 76,102 55,136 ---------- ---------- ---------- TOTAL 343,040 192,091 150,949 ========== ========== ========== B) COMPENSATIONS AND PAYMENTS TO RETIREES WORKERS ARE ENTITLED BY LAW TO COMPENSATION WHEN THEY LEAVE THE COMPANY IN ACCORDANCE WITH HOW LONG THEY HAVE BEEN WITH THE COMPANY. THE COMPANY RECORDS THE EXPENSE IN THE PERIOD IN WHICH THEY PAY THE WORKERS. -13- NOTE NO. 3 CAPITAL STOCK THE CAPITAL STOCK IS A HUNDRED THOUSAND PESOS REPRESENTED BY 100 NOMINATIVE SHARES WITH A FACE VALUE OF A THOUSAND PESOS PER SHARE. NOTES NO. 4 RESTRICTIONS ON RETAINED EARNINGS A) THERE IS NO TAX ON DIVIDENDS PAID OUT OF "FISCAL EARNINGS NET" IF IN COMPLIANCE WITH ARTICLE 88 OF THE TAX LAW.. IN THE EVENT THAT PAYMENT DOES NOT COME FROM THE BALANCE OF THAT ACCOUNT, THE RETAINED TAX OF 29% WILL BE WITHHELD. DIVIDENDS CANNOT EXCEED THE RETAINED EARNINGS. B) 5% OF NET INCOME EACH YEAR SHOULD BE PUT INTO A LEGAL RESERVE UNTIL THE LEGAL RESERVE EQUALS 20% OF CAPITAL. THIS RESERVE CANNOT BE PAID OUT EXCEPT AS STOCK DIVIDEND. NOTE NO. 5 CONTINGENT LIABILITIES ACCORDING TO THE FEDERAL LABOR LAW , THE COMPANY HAS A CONTINGENT LIABILITY FOR PAYMENTS OF EATS, INDEMINFICATIONS TO EMPLOYEES AND WORKERS WHO LEAVE UNDER CERTAIN CIRCUMSTANCES AS NOTED IN THE NOTE NO. 2 ABOVE. THE COMPANY DOES NOT RECORD ANY LIABILITY FOR SUCH PAYMENT TO BE MADE. -14- (iii) GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. BALANCE SHEETS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) June 30, December 31, 2007 2006 ----------- ----------- ASSETS Current assets: Cash and cash equivalents $ 14,613 $ 20,968 Accounts receivable 2,026,500 1,127,000 Prepaid and deposits 17,219 44,026 Investments 298,390 -- ----------- ----------- TOTAL CURRENT ASSETS 2,356,722 1,191,994 Property and equipment 404,374 366,920 Depreciation (246,025) (244,093) ----------- ----------- Property and equipment (net) 158,349 122,827 ----------- ----------- TOTAL ASSETS $ 2,515,071 $ 1,314,821 =========== =========== LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 251,361 $ 368,239 Accrued expenses 258,186 281,605 Accrued taxes 996,284 142,122 ----------- ----------- TOTAL CURRENT LIABILITIES 1,505,831 791,966 Stockholders' equity: Paid-in capital 9,336 9,336 Accumulated other comprehensive loss (55,453) (36,612) Retained earnings 550,131 644,899 Current year income (loss) 505,226 (94,768) ----------- ----------- TOTAL STOCKHOLDERS' EQUITY 1,009,240 522,855 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 2,515,071 $ 1,314,821 =========== =========== The accompanying notes are an integral part of these financial statements. -15- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. STATEMENTS OF OPERATIONS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) FOR THE SIX MONTHS ENDED JUNE 30, 2007 ------------- REVENUES FROM SERVICES $12,636,039 COST OF SERVICES 11,035,034 ----------- GROSS PROFIT 1,601,005 OPERATING EXPENSES General and administrative expenses 1,099,650 ----------- TOTAL OPERATING EXPENSES 1,099,650 NET PROFIT FROM OPERATIONS 501,355 OTHER INCOME AND (EXPENSE) Interest income 3,871 Provision for income taxes -- ----------- NET PROFIT $ 505,226 =========== The accompanying notes are an integral part of these financial statements. -16- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. STATEMENTS OF CASH FLOWS (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) FOR THE SIX MONTHS ENDED JUNE 30, 2007 ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 505,226 Adjustment to reconcile net loss to net cash used for operating activities: Depreciation 1,932 Changes in operating assets and liabilities: Increase in accounts receivable (899,500) Decrease in deposits 26,807 Increase in taxes 854,162 Decrease in accounts payable and other liabilities (140,297) --------- NET CASH USED FOR OPERATING ACTIVITIES 348,330 CASH FLOWS FROM INVESTING ACTIVITIES Investments (298,390) Purchase of fixed assets (37,454) --------- NET CASH USED FOR INVESTING ACTIVITIES (335,844) EFFECT OF EXCHANGE RATE CHANGES ON CASH (18,841) --------- NET DECREASE IN CASH (6,355) Cash - Beginning 20,968 --------- CASH - Ending $ 14,613 ========= The accompanying notes are an integral part of these financial statements. -17- GRUPO SUR PROMOCIONES DE MEXICO S.A. DE C.V. NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2007 (TRANSLATED FROM MEXICAN PESOS TO U.S. DOLLARS-UNAUDITED IN U.S. DOLLARS) NOTE NO. 1 OPERATIONS THE COMPANY'S BUSINESS IS THE OFFERING OF ALL TYPES OF SERVICES IN THE BRANCHES OF MARKETING, PUBLICITY, PROMOTION OF SALES, ADMINISTRATION OF SALES AND INDUSTRIAL RELATIONS. NOTE NO. 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES THE CONTINUACION IS A SUMMARY OF SIGNIFICANT ACCOUNTING UTILIZED IN THE PREPARATION OF THE FINANCIAL STATEMENTS. C) PROPERTY AND EQUIPMENT. THE PROPERTY AND EQUIPMENT ARE RECORDED AT COST. THE MODIFICATIONS AND IMPROVEMENTS OF IMPORTANCE ARE CAPITALIZED WHILE THE REPLACEMENTS, REPAIRS AND MAINTENANCE THAT DO NOT PROLONG THE LIFE OF THE ASSETS ARE EXPENSED. B) DEPRECIATION DEPRECIATION IS CALCULATED USING THE STRAIGHT LINE METHOD USING THEE FOLLOWING ANNUAL RATES. FURNITURE AND FIXTURES 10% COMPUTERS 30% TRUCKS AND AUTOS 25% C) COMPENSATIONS AND PAYMENTS TO RETIREES WORKERS ARE ENTITLED BY LAW TO COMPENSATION WHEN THEY LEAVE THE COMPANY IN ACCORDANCE WITH HOW LONG THEY HAVE BEEN WITH THE COMPANY. THE COMPANY RECORDS THE EXPENSE IN THE PERIOD IN WHICH THEY PAY THE WORKERS. NOTE NO. 3 CAPITAL STOCK THE CAPITAL STOCK IS A HUNDRED THOUSAND PESOS REPRESENTED BY 100 NOMINATIVE SHARES WITH A FACE VALUE OF A THOUSAND PESOS PER SHARE. NOTES NO. 4 RESTRICTIONS ON RETAINED EARNINGS A) THERE IS NO TAX ON DIVIDENDS PAID OUT OF "FISCAL EARNINGS NET" IF IN COMPLIANCE WITH ARTICLE 88 OF THE TAX LAW.. IN THE EVENT THAT PAYMENT DOES NOT COME FROM THE BALANCE OF THAT ACCOUNT, THE RETAINED TAX OF 29% WILL BE WITHHELD. DIVIDENDS CANNOT EXCEED THE RETAINED EARNINGS. B) 5% OF NET INCOME EACH YEAR SHOULD BE PUT INTO A LEGAL RESERVE UNTIL THE LEGAL RESERVE EQUALS 20% OF CAPITAL. THIS RESERVE CANNOT BE PAID OUT EXCEPT AS STOCK DIVIDEND. NOTE NO. 5 CONTINGENT LIABILITIES ACCORDING TO THE FEDERAL LABOR LAW , THE COMPANY HAS A CONTINGENT LIABILITY FOR PAYMENTS OF EATS, INDEMINFICATIONS TO EMPLOYEES AND WORKERS WHO LEAVE UNDER CERTAIN CIRCUMSTANCES AS NOTED IN THE NOTE NO. 2 ABOVE. THE COMPANY DOES NOT RECORD ANY LIABILITY FOR SUCH PAYMENT TO BE MADE. -18- EX-99.2 3 nascent_8ka1-ex9902.txt EXHIBIT 99.2 (i) NASCENT WINE COMPANY, INC. AND SUBSIDIARIES\GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. PRO FORMA BALANCE SHEET (UNAUDITED) JUNE 30, 2007 ------------ ASSETS Current assets: Cash $ 856,998 Accounts receivable 5,773,311 Inventory 4,219,473 Prepaid and deposits 847,920 Investments 298,390 ------------ TOTAL CURRENT ASSETS 11,996,092 Property and equipment, net 1,649,938 Other assets: Acquisition of distribution rights of Miller Beer (net) 7,183,541 Acquisition of trade marks 4,400,000 Goodwill 11,104,286 ------------ TOTAL ASSETS $ 36,333,857 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 4,369,625 Accrued expenses 750,114 Accrued interest 212,164 Accrued payroll taxes 996,284 Credit cards 114,469 Bank loans 610,078 Loans payable, less un-amortized debt interest 776,029 Capital lease deferred 824,567 Acquisition loans 4,412,500 Other loans payable 99,490 Shareholder loans 628,209 ------------ TOTAL CURRENT LIABILITIES 13,793,529 Long term debt -- ------------ TOTAL LIABILITIES 13,793,529 Stockholders' equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized no shares issued and outstanding -- Common stock, $0.001 par value, 195,000,000 shares authorized 82,715,7500 shares issued and outstanding as of June 30, 2007 82,716 Additional paid-in capital 27,093,837 Subscribed stock less cost to sell 222,340 Accumulated other comprehensive loss (24,313) Deficit accumulated (4,831,252) ------------ TOTAL STOCKHOLDERS' EQUITY 22,543,328 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 36,336,857 ============ The accompanying notes are an integral part of these financial statements. -1- NASCENT WINE COMPANY, INC. AND SUBSIDIARIES\ GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. PRO FORMA STATEMENT OF OPERATIONS (UNAUDITED) FOR THE SIX MONTHS ENDED JUNE 30, 2007 ------------- REVENUES $ 25,561,717 COST OF REVENUES 21,777,901 ------------ 3,783,816 GROSS PROFIT OPERATING EXPENSES General and administrative expenses 6,138,055 ------------ TOTAL OPERATING EXPENSES 6,138,055 LOSS FROM OPERATIONS (2,354,239) OTHER INCOME AND (EXPENSE) Interest income 9,923 Interest expense (980.163) Provision for income taxes -- ------------ NET LOSS $ (3,324,479) ============ The accompanying notes are an integral part of these financial statements. -2- NASCENT WINE COMPANY, INC. AND SUBSIDIARIES\ GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. NOTES TO PRO FORMA FINANCIAL STATEMENTS JUNE 30, 2007 (UNAUDITED) NOTE A - COMPANY OVERVIEW AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - ------------------------------------------------------------------------ COMPANY OVERVIEW - ---------------- The Company was incorporated under the laws of the State of Nevada, on December 31, 2002 (Date of inception). The Company had minimal operations until it acquired the rights to distribute Miller Beer in Baja California, Mexico from Piancone Group International, Inc. (PGII), issuing 17,500,000 shares of common stock at the par value $0.45 per share ($7,875,000) and paying off $800,000 debt of previous license holder. It started its distribution operations as of July 1, 2006. In accordance with Statement of Financial Standards (SFAS) #7, the Company was considered a development stage company until it started operations on July 1, 2006. The Company incorporated Best Beer S.A. de C. V. (Best Beer) in May 2006 in order to distribute in Baja California. The Company acquired the assets of Piancone Group International, Inc., which was merged into Nascent, and Palermo Italian Foods, LLC in the fourth quarter of 2006. The Company acquired Pasani S.A. de C.V in May, 2007 The Pro Forma Balance sheet and Statement of operations include the activities of Group Sur Promociones de Mexicao, S.A de C.V. (Grupo Sur) that was acquired by the Company in July, 2007. PRINCIPLES OF CONSOLIDATION - --------------------------- The accompanying pro forma financial statements include the accounts of the Company and its wholly owned subsidiaries, Best Beer S.A. de C. V., International Foodservice Specialists, Inc., Palermo Italian Foods, LLC., Pasani and Grupo Sur acquired in July, 2007. The financial statements have been consolidated with the parent company and all inter-company transactions and balances have been eliminated in consolidation. FOREIGN CURRENCY TRANSLATION - ---------------------------- The Company translates the foreign currency financial statements of its foreign operations in accordance with Generally Accepted Accounting Principles by translating balance sheet accounts at the appropriate historical or current exchange rate on the balance sheet date and the income statement accounts using the prevailing exchange rates at the transaction date. Translation gains and losses are recorded in stockholders' equity and realized gains and losses are reflected in operations. BASIS OF PREPARATION OF FINANCIAL STATEMENTS - -------------------------------------------- The accompanying pro forma financial statements are prepared in accordance with U.S. generally accepted accounting standards (GAAP). The pro forma financial statements have been prepared assuming that the Company will continue as a going concern. -3- USE OF ESTIMATES - ---------------- The preparation of pro forma financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets, and liabilities on the date of the pro forma financial statements and the reported amounts of revenues. and expenses during the period. Actual results could differ from those estimates. INVENTORIES - ----------- Inventories are accounted for on the first-in, first-out basis. Any products reaching their expiration dates are written off. REVENUE RECOGNITION - ------------------- The Company reports revenue using the accrual method, in which revenues are recorded as services are rendered or as products are delivered and billings are generated. ALLOWANCE FOR DOUBTFUL ACCOUNTS - ------------------------------- The Company has not had sufficient experience with bad debts to establish a policy. However, the Company has reviewed all accounts and determined that an allowance for uncollectible accounts required at June 30, 2007 is $234,459. PROPERTY AND EQUIPMENT - ---------------------- Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the assets, which is three to ten years. IMPAIRMENT OF LONG-LIVED ASSETES - -------------------------------- The Company acquired long-lived assets during the last six month of the year ended December 31, 2006. The company will review the carrying values of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable and\or annually. No impairment losses were recorded in 2007. TAXES ON INCOME - --------------- The Company follows SFAS 109 "Accounting for Income Taxes" for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the differences between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expense or benefit is based on the change in the asset or liability each period. If available evidence suggests that is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax asset to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change. Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse. STOCK - BASED COMPENSATION - -------------------------- The Company accounts for stock-based compensation in accordance with SFAS No. 123r share based payment. The Company recognizes in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees and non employees. The Company did not grant any new employee options and no options were cancelled or exercised during the six months ended June 30, 2007. -4- EARNINGS PER SHARE - ------------------ Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding during the period. GOING CONCERN - ------------- The Company's financial statements are prepared using the generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. The Company commenced operations distributing Miller beer and other products in Baja California, Mexico starting July 1, 2006. NOTE B - NOTES PAYABLE - ---------------------- The Company has obtained Bridge loan financing. The balance at June 30, 2007 is $1,912,500 with interest payable at rate 8% annually. As additional consideration to obtain the loans due in one year, the Company issued warrants to the lenders to purchase 9,045,000 shares of common stock at a price per share of $0.25 to $0.84. The difference between the price to purchase shares and the closing price of the stock on the date of grant of the warrants $1,759,750 is being written off over the life of the loans (one year). The un-amortized interest, $743,971 has been deducted from total of the loans payable at June 30, 2007. Interest amortized during the period was $556,524. NOTE C - STOCKHOLDERS' EQUITY - ----------------------------- The Company is authorized to issue 195,000,000 shares of common stock at $.001 par value, and 5,000,000 shares of preferred stock at $.001 par value. On April 12, 2006, the Company did a 20 for 1 split. The balance of shares issued after the split was 86,568,800. On April 27, 2006, 69,068,800 shares were cancelled. On April 27, 2006, the Company issued 17,500,000 shares of common stock to acquire the distribution rights for Miller beer in Baja California, Mexico at a per share value of $0.45 per share ($7,875,000) and paid off the debt of the previous license holder to Miller Beer ($800,000). The total cost of the license was $8,675,000. The Company is amortizing the acquisition over 10 year and will evaluate the value of the intangible asset on an annual basis. During the six months ended June 30, 2007 the Company issued 75,000 shares of common stock for services rendered in the amount of $84,000 and 2,821,000 shares of common stock to redeem notes payable to shareholders in the amount of $1,130,000. The Company received subscriptions for an additional 21,304,000 shares of common stock in the amount of $8,522,000 less expenses of $1,235,000. At June 30, 2007 the Company had outstanding warrants to purchase 17,188,553 shares of common stock at a price of between $0.25 and $1.05 expiring in 2010. If all warrants were exercised the Company would receive $6,430,000. -5- NOTE D- SEGMENT INFORMATION-PRO FORMA - ------------------------------------- The Company has adopted FAS Statement No. 131, "Disclosures about Segments of a Business Enterprise and Related Information". UNITED STATES MEXICO ------------- ------------ Net gain (loss) for the six months ended June 30, 2007 $(13,333,846) $ 9,367 Long lived assets (net) at June 30, 2007 $ 976,533 $ 673,405
NOTE E - RELATED PARTY TRANSACTIONS - ----------------------------------- The Company has unsecured loans form stockholders totaling $628,209 at June 30, 2007 due in one year. The loans have various due dates and contain interest rates ranging from 0% to 18%. On May 3, 2006, we acquired the exclusive rights from Piancone Group International, Inc. to market Miller Beer in Baja California, Mexico, in exchange for 17,500,000 shares of our common stock. At that time, neither Sandro Piancone nor Piancone Group was an affiliate. Concurrent with the acquisition of these rights, Sandro Piancone became our Chief Executive Officer and a director. In June 2006, we acquired substantially all of the assets of Piancone Group in exchange for the issuance of 15,000,000 shares of our common stock. Sandro Piancone, our Chief Executive Officer and a director, was the Chief Executive Officer, a director and the controlling stockholder of Piancone Group International, Inc. at the time its assets were acquired by us. We believe our purchase of Piancone Group's assets was fair and reasonable. -6- (ii) NASCENT WINE COMPANY, INC. AND SUBSIDIARIES\ GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. PRO FORMA BALANCE SHEET (UNAUDITED) DECMBER 31, 2006 ------------ ASSETS Current assets: Cash $ 497,344 Accounts receivable 2,454,153 Inventory 1,137,459 Prepaid and deposits 222,002 ------------ TOTAL CURRENT ASSETS 4,310,958 Property and equipment, net 716,518 Other assets: Acquisition of distribution rights of Miller Beer (net) 8,110,000 Goodwill 11,936,217 ------------ TOTAL ASSETS $ 25,073,693 ============ LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities: Accounts payable $ 2,547,581 Accrued expenses 826,039 Accrued interest 276,991 Credit cards 62,784 Bank loans 324,849 Loans payable, less un-amortized debt interest 932,005 Other loans payable 309,434 Shareholder loans 2,440,148 ------------ TOTAL CURRENT LIABILITIES 7,719,831 Long term debt 186,672 ------------ TOTAL LIABILITIES 7,906,503 Stockholders' equity: Preferred stock, $0.001 par value, 5,000,000 shares authorized no shares issued and outstanding -- Common stock, $0.001 par value, 195,000,000 shares authorized 52,050,000 and 4,328,400 shares issued and outstanding as of December 31, 2006 and December 31, 2005, respectively 61,386 Additional paid-in capital 16,314,478 Subscribed stock less cost to sell 2,334,727 Accumulated other comprehensive loss (36,613) Deficit accumulated (1,506,788) ------------ TOTAL STOCKHOLDERS' EQUITY 17,167,190 TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 25,073,693 ============ The accompanying notes are an integral part of these financial statements. -7- NASCENT WINE COMPANY, INC. AND SUBSIDIARIES\ GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. PRO FORMA STATEMENTS OF OPERATIONS (UNAUDITED) FOR THE YEAR ENDED DECEMBER 31, 2006 ------------ REVENUES $ 24,102,218 COST OF REVENUES 21,847,106 ------------ GROSS PROFIT 2,255,112 OPERATING EXPENSES General and administrative expenses 3,847,012 ------------ TOTAL OPERATING EXPENSES 3,847,012 LOSS FROM OPERATIONS (1,591,900) OTHER INCOME AND (EXPENSE) Interest income 15,105 Interest expense (289,580) Provision for income taxes -- ------------ NET LOSS $ (1,866,375) ============ The accompanying notes are an integral part of these financial statements. -8- NASCENT WINE COMPANY/ GRUPO SUR PROMOCIONES DE MEXICO, S.A. DE C.V. PRO-FORMA NOTES TO FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED JUNE 30, 2007 (UNAUDITED) 1. BASIS OF PRESENTATION --------------------- The accompanying pro-forma financial statements have been prepared assuming the transaction between Nascent Wine Company, Inc. and Group Sur Promociones de Mexicao, S.A de C.V. (Grupo Sur) completed their transaction as of the most recent year end which would have been December 31, 2006. All inter-company transactions have been eliminated in consolidation. These financial statements are filed with the appropriate 8-K filing describing the transaction. Readers of this financial statement should review it in conjunction with the various unaudited 10-QSB filings as well as the appropriate 10-KSB audited financial statements of Nascent Wine Company. Separate financial statements on Grupo Sur are also available on separate 8-K filings. Notes to the financial statements which would substantially duplicate the disclosure contained in the audited financial statements for 2006 have been omitted. Nascent Wine Company (the Parent) is a publicly traded OTC.BB company specializing in importing and distribution of food and beverage products in Mexico and the United States. It trades under the symbol NCTW. Grupo Sur is incorporated in Mexico and offers all types of services in the branches of marketing, publicity, promotion of sales, administration of sales and industrial relations. In July of 2007 Grupo Sur was acquired by Nascent. 2. DESCRIPTION OF BUSINESS ----------------------- Grupo Sur has been in the Mexican market for 30 years and is one of the leading field marketing and below the line market organization in Mexico with 4,500 contract employees receiving 240,000 retail accounts including supermarkets and convenient stores. Nascent operates a food wholesaling business in Mexico through with warehouses in the Cancun, Culiacan, Ciudad Juarez, Guadalajara, Mexico City, Tijuana, Mexicali, Ensenada, Cabo San Lucas and Monterrey. The distribution centers offer super markets, restaurants, hotels, bakeries resorts, pizza shops, schools and other food service establishments the largest variety of products locally available. A customized order/shopping list for recurring customers makes it easier for orders to be taken by the experienced sales representatives. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ------------------------------------------ PRINCIPLES OF CONSOLIDATION - --------------------------- The accompanying consolidated pro forma financial statements include the accounts of the parent and its wholly owned subsidiaries. The financial statements have been consolidated with the parent company and all inter-company transactions and balances have been eliminated in consolidation. REVENUE RECOGNITION - ------------------- The Parent recognized revenue when the earnings process is complete. This generally occurs when the products are shipped to the customer in accordance with terms of the agreement, title and risk of loss have been transferred, collection is reasonable assured, and pricing is fixed or determinable. ALLOWANCE FOR DOUBTFUL ACCOUNTS - ------------------------------- The Parent has not had sufficient experience with bad debts to establish a policy. However, the Company considers certain accounts to be in doubt and has provided an allowance of $50,000 at December 31, 2006 -9- INVENTORY - --------- Substantially all inventories consist of food products and related supply items for distribution to food service trade. Inventories are valued at cost, as determined by the first-in, first-out method; in the aggregate, such valuations are not in excess of market. PROPERTY AND EQUIPMENT - ---------------------- Property and equipment is stated at cost and depreciated using the straight-line method over the estimated useful life of the assets, which is three to seven years. IMPAIRMENT OF LONG-LIVED ASSETS - ------------------------------- The Parent reviews the carrying value of its long-lived assets for possible impairment whenever events or changes in circumstances indicate that the carrying amount of the assets may not be recoverable. USE OF ESTIMATES - ---------------- The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. INCOME TAXES - ------------ Deferred income taxes are reported using the liability method. Deferred tax assets are recognized for deductible temporary differences and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment. NET LOSS PER SHARE - ------------------ In February 1997, the Financial Accounting Standards Board (FASB) issued SFAS No. 128 "Earnings Per Share" which requires the Company to present basic and diluted earnings per share, for all periods presented. The computation of loss per common share (basic and diluted) is based on the weighted average number of shares actually outstanding during the period. The Company has no common stock equivalents, which would dilute earnings per share. FAIR VALUE OF FINANCIAL INSTRUMENTS - ----------------------------------- Financial instruments consist principally of cash and payables. The estimated fair value of these instruments approximate their carrying value. FOREIGN CURRENCY TRANSLATION - ---------------------------- The Company translates the foreign currency financial statements of its foreign operations by translating balance sheet accounts at the appropriate historical or current exchange rate on the balance sheet date and the income statement accounts using the prevailing exchange rates at the transaction date. Translation gains and losses are recorded in stockholders' equity and realized gains and losses are reflected in operations. RECENT ACCOUNTING PRONOUNCEMENTS - -------------------------------- The Company has reviewed recent accounting pronouncements that have been adopted and have concluded that they will not have any material impact on its financial statements. -10- 4. INVESTMENT ---------- The Parent has recognized an investment on the purchase of its distribution rights for Miller Brewing Products in B.C. Mexico. The investment has been recorded at the market price of the stock or .45 cents per share of 17,500,000 shares. 5. GOING CONCERN ------------- The accompanying consolidated pro forma financial statements, which have been prepared in conformity with accounting principles generally accepted in the United States of America, contemplates the continuation of the parent as a going concern. However, the Parent and Subsidiaries have not attained profitability and their continuance is dependent on equity and debt contributions. No adjustments have been made to these financial statements to reflect the outcome of the above uncertainty. 6. CAPITAL STOCK ------------- COMMON STOCK - ------------ The Parent has adopted SFAS No. 123, Accounting For Stock-Based Compensation, accounting using the fair value method. 7. INCOME TAXES ------------ The provision for income taxes on Pasani have been made to these pro forma financials. Deferred tax assets have not been accounted for as the parent can not at this time expect that benefit to be realized. 8. OPERATING LEASES ---------------- OPERATING LEASES - ---------------- The Company leases all of its facilities in Mexico, San Diego, California and Miami, Florida. 9. RELATED PARTY TRANSACTIONS -------------------------- The Company has unsecured loans form stockholders totaling $2,581,648 at December 31, 2006. The loans have various due dates and contain interest rates ranging from 0% to 18%. The maturities of notes payable at December 31, 2006 are as follows: FOR THE YEAR ENDED DECEMBER 31, -------------------------- 2007 $ 2,440,148 2008 $ 141,500 On May 3, 2006, we acquired the exclusive rights from Piancone Group International, Inc. to market Miller Beer in Baja California, Mexico, in exchange for 17,500,000 shares of our common stock. At that time, neither Sandro Piancone nor Piancone Group was an affiliate. Concurrent with the acquisition of these rights, Sandro Piancone became our Chief Executive Officer and a director. In June 2006, we acquired substantially all of the assets of Piancone Group in exchange for the issuance of 15,000,000 shares of our common stock. Sandro Piancone, our Chief Executive Officer and a director, was the Chief Executive Officer, a director and the controlling stockholder of Piancone Group International, Inc. at the time its assets were acquired by us. We believe our purchase of Piancone Group's assets was fair and reasonable. -11- 11. SEGMENT INFORMATION ------------------- The Company has adopted FAS Statement No. 131, "Disclosures about Segments of a Business Enterprise and Related Information". UNITED STATES MEXICO ------------- ------------- Net loss for the year ended December 31, 2006 $ 1,753,930 $ (112,445) Long lived assets (net) at December 31, 2006 $ 261,283 $ 455,235 -12- -----END PRIVACY-ENHANCED MESSAGE-----