10-12G/A 1 g5890.txt AMENDMENT NO. 2 TO FORM 10 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington D.C. 20549 --------------------- FORM 10 Amendment No. 2 --------------------- GENERAL FORM FOR REGISTRATION OF SECURITIES Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934 SPICY GOURMET MANUFACTURING, INC. (Exact name of registrant as specified in its charter) Delaware 45-2282672 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 7910 Ivanhoe Ave. #414 La Jolla, California 92037 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: (858) 459-1133 Registrant's facsimile number, including area code: (858) 459-1103 Securities to be registered pursuant to Section 12(b) of the Act: None Securities to be registered pursuant to Section 12(g) of the Act: Common Stock - $0.0001 Par Value Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company. Large accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] ITEM 1. DESCRIPTION OF BUSINESS BACKGROUND OF THE ISSUER AND ITS PREDECESSOR Spicy Gourmet Manufacturing, Inc. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on December 30, 2010 as part of the implementation of the Chapter 11 plan of reorganization of Spicy Gourmet Organics, Inc. ("SGO"), a California corporation. SGO was incorporated in the State of California in 2006 and was formed to import specialty, organic spices from South Asia and sell them in the United States. SGO was under capitalized and sales of its spice products were slow to develop, possibly due to the current recession. As a result SGO lacked sufficient cash flow to meet its current obligations and on October 1, 2010 SGO filed a voluntary petition for bankruptcy under Chapter 11 in the U.S. Bankruptcy Court for the Central District of California. SGO's plan of reorganization was confirmed by the Court on November 19, 2010. The plan of reorganization provided for the acquisition by SGO of a new, unrelated, retail business and the spin off of all of the various elements of SGO's spice business (importing, manufacturing, retail sales and wholesale sales) to four different entities. The plan of reorganization called for the spin off of SGO's manufacturing business to this Issuer, the incorporation of this Issuer, and the distribution of shares in this Issuer to the bankruptcy creditors. The plan required the Issuer to issue 1,180,000 shares of its common stock and distribute these to SGO's general unsecured creditors, to its administrative creditors, and to its shareholder. The shares were distributed pursuant to section 1145 of the U.S. Bankruptcy Code. As stated in the Plan of Reorganization ordered by the Court, these shares were issued "to enhance the distribution to creditors," i.e. to enhance their opportunity to recover the losses they sustained in the SGO bankruptcy. To this end, SGO, by and through its President, agreed "to use its best efforts to have the shares... publicly traded on the Over-The-Counter market in order to provide an opportunity for liquidity to the creditors" (from the Court approved "Disclosure Statement" describing the Plan of Reorganization). The present filing is a result of this commitment. DESCRIPTION OF CURRENT BUSINESS Prior to the bankruptcy of SGO, the issuer's predecessor designed a hand held spice mill and arranged for the manufacture of 1,000 of these mills at a factory in China. The factory in China is not owned by the Issuer, nor is the Issuer under any obligation to it. The mills were manufactured by the factory in China and delivered to SGO on a simple contract basis. The Company hopes to capitalize on this experience and manufacture and sell spice mills to other retailers of spices and or spice related products. Depending upon the financial requirements of any orders the Company may develop, the Company's three directors may finance the order with interest free loans from their own funds to the Company, or they may seek financing via advance payments from a buyer, loans from the factory in China, or loans from another source such as a commercial lender. As of the date hereof, we have not entered into any sales agreement nor have we identified a potential buyer for our spice mills other than the successor to SGO. The SGO successor is headed by one of our directors, Dinesh Perera, and it has indicated a willingness to purchase mills from us when needed, however its current inventory is such that it does not expect to order additional mills for at least six months. It is anticipated that we will incur only nominal expenses in the implementation of the business plan described herein until such time as we have an order for the manufacture of spice mills. Because we have limited capital with which to pay these anticipated expenses, our three directors, Mr. Balaban, Mr. Masters and Mr. Perera, will pay these charges with their personal funds, as interest free loans to the Company or as capital contributions. 2 It is our present intent to continue to comply with all of the reporting requirements under the 1934 Act. Our three directors, Ali Balaban, Daniel Masters and Dinesh Perera, have orally agreed to provide the necessary funds, without interest, for the Company to comply with the 1934 Act reporting requirements, provided that they are officers and directors of the Company when the obligation is incurred. These officers have not, as of the date hereof, set a maximum dollar amount that they are willing to provide to the Company. ITEM 1A. RISK FACTORS Our business is subject to numerous risk factors, including the following: 1. We have no operating history and no revenues or earnings from operations. We have no assets other than a small amount of cash. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until we obtain an order for the manufacture and delivery of our spice mills. This may result in us incurring a net operating loss that will increase continuously, at least until we negotiate a sale of our products. There is no assurance that we can find a buyer or our products or, if we do, that the sales price will be such that we can operate profitably. 2. We may not be able to continue to operate as a going concern. Our auditor has expressed the opinion that we may not be able to continue as a going concern. His opinion letter and the notation in the financial statements indicate that we do not have revenues, significant cash reserves, or other material assets and that we are relying on advances from stockholders, officers and directors to meet our limited operating expenses. We may become insolvent if we are unable to pay our debts in the ordinary course of business as they become due. 3. Our proposed plan of operation is speculative. The success of our proposed plan of operation is speculative. Although we have arranged for the manufacture of products in the past, these products were sold to a related entity, our former parent. There can be no assurance that we will be successful in locating other buyers for our products, or that, if we do find buyers, that we will be able to sell products at a price and in sufficient quantity to earn a profit or to continue in operation. 4. We face intense competition from other sellers. We are and will continue to be an insignificant participant in the business of supplying small hand operated appliances such as spice mills. A large number of established and well-financed entities are engaged in such sales. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we have. Many of them have their own factories and so are able to control their costs when we cannot. There can be no assurance that we will be able to successfully compete with these large businesses. 5. We face intense competition from others seeking to have products manufactured for them in China. We are and will continue to be an insignificant participant in the business of arranging the overseas manufacture, especially the Chinese manufacture, of our products. Because of our small size and probably infrequent orders we will not be in a position to negotiate especially low prices with a manufacturer. This inability to insure that we obtain low prices could result in the prices we charge customers being non-competitive, and this could lead to an inability to sell our products. 6. Our success is dependent on our officers and directors who have other full time employment, have limited experience, and will only devote limited time (part time) to working for the Company, all of which makes our future even more uncertain. 3 Ali Balaban is the President and a director of the Issuer, Daniel Masters is the Secretary and Treasurer and a director of the Issuer, and Dinesh Perera is a director of the Issuer. These are the only offices and directors of the Company. All three will serve without pay while maintaining other employment. As of the date hereof, each is devoting no more than two hours per week to the affairs of the Company, however, each expects to increase that time commitment from time to time as other obligations permit. Notwithstanding the limited availability of our directors, loss of the services of any director could adversely affect development of our business and its likelihood of continuing in operation. 7. Our officers and directors have limited experience in arranging for the manufacture of products such as spice mills, making our ability to compete successfully more uncertain. Although Dinesh Perera, one of our directors, is currently engaged in the retail sale of spices and spice mills, our other directors have no similar experience. Mr. Perera is currently president of Santa Barbara Organic Spice Company, a company engaged in internet based retail sales of spices and spice mills. Our President, Ali Balaban, has no direct experience with the spice business although he has experience in management of consumer product sales businesses, including business which sell primarily via television infomercials. Our Secretary/Treasurer, Daniel Masters, is an attorney. This lack of extensive experience makes our ability to compete more uncertain. 8. Our dependence upon foreign manufacture of our products may subject us to currency risks. Because we intend to have our products manufactured in China but sell them here we are subject to certain risks based on the change in value of currencies relative to each other. If, for example, the Chinese RMB were to rise in value relative to the dollar it would increase the price of Chinese products, possibly making our spice mills too costly to sell. If this were to happen after we had entered a contract to sell products at a certain dollar price, and another contract to purchase products at a certain RMB price, we could lose money on the transaction. This could jeopardize our ability to continue in business. 9. One of our officers is also our principal shareholder and he will be able to approve all corporate actions without shareholder consent and will control our Company. Our principal shareholder, Ali Balaban, currently owns approximately 53.7% of our Common Stock. Because of this, he will have the controlling vote in all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders. In addition, he is now the Company's President and one of its three directors. Because he is the majority shareholder, he will be able to elect all of the members of our board of directors, allowing him to exercise significant control of our affairs and management. In addition, he may transact corporate business requiring shareholder approval by written consent, without soliciting the votes of other shareholders. 10. Our Common Stock may never be publicly traded and holders may have no ability to sell their shares. There is no established public trading market for our shares of Common Stock, and there is no assurance that our Common Stock will be accepted for quotation on the OTC Bulletin Board or in any other trading system in the future. There can be no assurance that a market for our Common Stock will be established or that, if established, a market will be sustained. Therefore, if you purchase our Common Stock you may be unable to sell the shares. Accordingly, you should be able to bear the financial risk of losing your entire investment. 4 Only market makers can apply to quote securities. A market maker who desires to initiate quotations in the OTC Bulletin Board system must complete an application (Form 211) (unless an exemption is applicable) and by doing so, will have to represent that it has satisfied all applicable requirements of the Securities and Exchange Commission Rule 15c2-11 and the filing and information requirements promulgated under the Financial Industry Regulatory Authority ("Finra") Bylaws. The OTC Bulletin Board will not charge us a fee for being quoted on the service. Finra rules prohibit market makers from accepting any remuneration in return for quoting issuers' securities on the OTC Bulletin Board or any similar medium. Finra will review the market maker's application (unless an exemption is applicable). If cleared, it cannot be assumed by any investor that any federal, state or self-regulatory requirements other than certain Finra rules and Rule 15c2-11 have been considered by Finra. Furthermore, the clearance should not be construed by any investor as indicating that Finra, the Securities and Exchange Commission, or any state securities commission has passed upon the accuracy or adequacy of the documents contained in the submission. The OTC Bulletin Board is a market maker or dealer-driven system offering quotation and trading reporting capabilities - a regulated quotation service - that displays real-time quotes, last-sale prices, and volume information in OTC equity securities. The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting market makers or dealers in stocks. 11. If our Common Stock does not meet blue sky resale requirements, certain shareholders may be unable to resell our Common Stock. The resale of Common Stock must meet the blue sky resale requirements in the states in which the proposed purchasers reside. If we are unable to qualify the Common Stock and there is no exemption from qualification in certain states, the holders of the Common Stock or the purchasers of the Common Stock may be unable to sell them. 12. Our shareholders may face significant restrictions on the resale of our Common Stock due to state "blue sky" laws. There are state regulations that may adversely affect the transferability of our Common Stock. We have not registered our Common Stock for resale under the securities or "blue sky" laws of any state. We may seek qualification or advise our shareholders of the availability of an exemption. We are under no obligation to register or qualify our Common Stock in any state or to advise the shareholders of any exemptions. Current shareholders, and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that there might be significant state restrictions upon the ability of new investors to purchase the Common Stock. Blue sky laws, regulations, orders, or interpretations place limitations on offerings or sales of securities by where such securities represent "cheap stock" previously issued to promoters or others. Our officers received stock at a price of $.0005 for each share, and may be deemed to hold "cheap stock." These limitations typically provide, in the form of one or more of the following limitations, that such securities are: (a) Not eligible for sale under exemption provisions permitting sales without registration to accredited investors or qualified purchasers; (b) Not eligible for the transaction exemption from registration for non-issuer transactions by a registered broker-dealer; (c) Not eligible for registration under the simplified small corporate offering registration (SCOR) form available in many states; (d) Not eligible for the "solicitations of interest" exception to securities registration requirements available in many states; (e) Not permitted to be registered or exempted from registration, and thus not permitted to be sold in the state under any circumstances. 5 Virtually all 50 states have adopted one or more of these limitations, or other limitations or restrictions affecting the sale or resale of "cheap stock" issued to promoters or others. Specific limitations on such offerings have been adopted in: Alaska Arkansas California Delaware Florida Georgia Idaho Indiana Nebraska Nevada New Mexico Ohio Oklahoma Oregon Pennsylvania Rhode Island South Carolina South Dakota Tennessee Texas Utah Vermont Washington Any secondary trading market which may develop, may only be conducted in those jurisdictions where an applicable exemption is available or where the shares have been registered. 13. Our Common Stock will be subject to significant restriction on resale due to federal penny stock restrictions. The Securities and Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. 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, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or 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 penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements will have the effect of reducing the level of trading activity in any secondary market for our stock, and accordingly, shareholders of our Common Stock will find it difficult to sell their securities, if at all. ITEM 2. FINANCIAL INFORMATION SELECTED FINANCIAL DATA The Company was organized on December 30, 2010 and therefore no significant historical financial information exists. The Company's statement of operations for the period from December 30, 2010 (inception) through December 31, 2011 reflects the following: Revenues $ 0 Expenses 118 ----- Profit (Loss) $(118) ===== MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS 1) Liquidity: The Company had $5,000 in cash and no other liquid assets at December 31, 2011. It is anticipated that we will incur nominal expenses in the implementation of the business plan described herein. Because we have limited cash with which to pay these anticipated expenses, the directors of the Company have agreed to pay these charges with their personal funds, as interest free loans to the Company or as capital contributions. However, this is a voluntary agreement; our three directors are not contractually obligated to pay these expenses. No loans have been made as of the date hereof. 6 2) Capital Resources: As noted above, the Company has limited capital resources but will rely upon interest free loans or capital contributions from our three directors to meet its needs. 3) Results of Operations: As noted above, the Company was recently organized and has conducted no operations other than organizational efforts and the preparation of this Form 10 and the audit of its financial statements. 4) Off-Balance Sheet Arrangements: The Company has no off balance sheet arrangements. INFORMATION ABOUT MARKET RISK The Company is not currently subject to fluctuations in interest rates, currency exchange rates, or other financial market risks, however, as noted in Risk Factor 8 above, we may become subject to fluctuations in currency exchange rates if we contract for manufacture or delivery of products in another currency and carry this as a payable or receivable rather than paying or accepting payment at the time the contract is entered. Our three directors have agreed to extend loans to the Company as needed to meet obligations, however these will be interest free. As of the date of this filing, the Company has not made any sales, purchases, or commitments with foreign entities which would expose it to currency risks. ITEM 3. DESCRIPTION OF PROPERTY We presently utilize minimal space at 7910 Ivanhoe Avenue, No. 414, La Jolla, California. This space is provided to the Company by our Secretary on a rent free basis, and it is anticipated that this arrangement will remain until such time as the Company requires dedicated office space. Management believes that this arrangement will meet the Company's needs for the foreseeable future. ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT (A) SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS The following table sets forth the security and beneficial ownership for each class of our equity securities for any person who is known to be the beneficial owner of more than five (5%) percent of the Company. Amount and Nature of Title Name and Address of Beneficial Percent of Class Beneficial Owner Owner of Class -------- ---------------- ----- -------- Common Ali Balaban 6,000,000 53.7% Ayazaga Maslak Yolu No: 5/A Kat: 3 Maslak, Sisli 34396 Istanbul-TURKEY Common Daniel Masters 4,000,000 35.8% 7910 Ivanhoe Ave., #414 La Jolla, CA 92037 The remaining 1,180,000 shares of the Company's outstanding common stock are held by 48 persons, no one of which is known to be the beneficial owner of five percent (5%) or more of the Company's common shares. There are, as of the date hereof, a total of 11,180,000 common shares issued and outstanding and no preferred shares issued or outstanding. 7 (B) SECURITY OWNERSHIP OF MANAGEMENT The following table sets forth the ownership for each class of equity securities of the Company owned beneficially and of record by all of our directors and officers. Amount and Nature of Title Name and Address of Beneficial Percent of Class Beneficial Owner Owner of Class -------- ---------------- ----- -------- Common Ali Balaban 6,000,000 53.7% President & Director Ayazaga Maslak Yolu No: 5/A Kat: 3 Maslak, Sisli 34396 Istanbul-TURKEY Common Daniel Masters 4,000,000 35.8% Secretary, Treasurer & Director 7910 Ivanhoe Ave., #414 La Jolla, CA 92037 Common Dinesh Perera 100,000 0.9% Director 67 Alameda Padre Serra Santa Barbara, CA 93103 Common All Officers and 10,100,000 90.34% Directors as a Group (three [3] individuals) ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS Our directors and officers (and promoters, affiliates and control persons) are as follows: Name Age Position ---- --- -------- Ali Balaban 43 President/Director Daniel Masters 66 Secretary/Treasurer/Director Dinesh Perera 52 Director The above listed officers and directors will serve until the next annual meeting of the shareholders or until their death, resignation, retirement, removal, or disqualification, or until their successors have been duly elected and qualified. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. Officers of the Company serve at the will of the Board of Directors. There are no agreements or understandings for any officer or director to resign at the request of another person and no officer or director is acting on behalf of or will act at the direction of any other person. RESUMES Ali Balaban, age 43, is President and a Director of the Company. Since 2010 he has been a Director of Yonja Group A.S., the acquirer of Spicy Gourmet Organics, Inc. (SGO) under SGO's bankruptcy plan of reorganization. Yonja sells European and U.S. food supplements and beauty products in Turkey. Mr. Balaban oversees project development at Yonja. Since 2000 he has also been the Chief Financial Officer of Homedrom Direct Response TV International, a retailer of consumer products through direct response television advertising in several European and Asian countries including Germany, Turkey, Ukraine, Kazakhstan, Georgia, Azerbaijan, and Cyprus. Since 2009 he has also been the Managing Director of Unite Technologies, a Ukraine based business which provides IT management services to major GSM (cell phone) network operators and call centers 8 in Easter European countries. Mr. Balaban currently serves as a consultant on European Union policies and programs for IT, especially the E-Content and Sixth Framework Programs which offer grants and funds for European IT companies. Prior to 2000 Mr. Balaban was an executive at a leading software outsourcing company and at an apparel manufacturer. He earned his BA in Business Administration and his MA in Strategy from Universite Paul Valery in Montpellier, France and an MBA in International Business from UCLA. Daniel Masters, age 66, is Secretary, Treasurer, and a Director of the Company. He is also an attorney practicing business law with an emphasis on corporate reorganizations. Before establishing his current law practice in 2002, Mr. Masters served as an independent investment banker and corporate finance consultant from 1990 to 2002. Between 1978 and 1989 he worked as an investment banker with L.F. Thompson & Co. and at Capital Technology Group; as Vice President for Finance with the Trilon Group, a private holding company with over a billion dollars in assets; and as President of Golden Gate Capital, a venture capital group. Prior to 1978 Mr. Masters held positions as a legislative aid on the staff of the U.S. Congress and as executive assistant to the President of the University of California. Mr. Masters received his Bachelor of Arts Degree (A.B.) from Harvard University and a Juris Doctorate (J.D.) from Thomas Jefferson School of Law where he served on the Editorial Board of the Law Review. Dinesh Perera, age 52, was the President of Spicy Gourmet Organics Inc. (SGO) from 2006 until 2010. SGO filed a petition for bankruptcy under Chapter 11 in 2010 and the confirmed plan of reorganization provided for the incorporation of this Issuer. He has been a Director of the Issuer since it was established on December 30, 2010. He is also the President of Santa Barbara Organic Spice Company, Inc., a retailer of organic spices, which he formed in December, 2010. From 2000 to 2005 he was the manager of the Arati Store in New York, a retailer of health foods, herbal supplements, books, and related products. From 1996 to 2000 he owned and managed a business which sold sunglasses wholesale to stores in California, Hawaii, and Texas. From 1986 to 1996 he was an independent auto insurance agent in California, and from 1978 to 1986 he worked as an engineer with British Aerospace Corp. in London. Mr. Perera attended an aerospace trade school in Britain and Santa Monica College in California. OTHER OFFERINGS Daniel Masters is currently President and a Director of MedBook World, Inc. and of Three Shades For Everybody, Inc. MedBook World is currently a shell company, and Three Shades For Everybody was formerly a shell company but is currently in the business of selling art and collectibles. It's primary asset is a collection of signed, numbered, lithographs by actor Red Skelton valued at $9,885. Neither Mr. Balaban nor Mr. Perera are currently directors or officers of any other publicly traded companies or SEC registrants. CONFLICTS OF INTEREST As noted above, Mr. Perera is in the business of selling organic spices and related products including spice mills to the public via the internet. Because the Company expects to manufacture spice mills for sale on a wholesale basis the Company believes that no conflict of interest exists. Mr. Balaban also works with companies which sell products to the public on a retail basis and the Company believes that no conflict of interest exists. Mr. Masters is an officer and director of two other companies and represents other businesses as an attorney however these companies are in unrelated businesses and Mr. Masters believes that there is no conflict of interest. The officers and directors are, so long as they are officers or directors of the Company, subject to the restriction that all opportunities contemplated by the Company's plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to the Company. A breach of this requirement will be a breach of the fiduciary duties of the officer or director. 9 However, all directors may still individually take advantage of opportunities if the Company should decline to do so. Also as noted above, all three of the Company's directors have other employment and, therefore, there is a potential conflict of interest in the time which the officers and directors devote to this Company and to their other employment. We do not currently have an agreement as to the amount of time that will be devoted to the Company's affairs, however our three directors have stated that they will devote such time as they believe necessary to seeking out potential buyers of the Company's products and arranging for their manufacture and importation. ITEM 6. EXECUTIVE COMPENSATION None of our three directors has received any compensation for services rendered to the Company since its inception, nor are there any agreements in place or contemplated to provide compensation to any officer or director. We have no retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our officers and directors, and we have no employees. ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS There have been no related party transactions, or any other transactions or relationships required to be disclosed. There are no promoters except to the extent the three Directors of the Company may be considered to be promoters because of their involvement with the bankruptcy plan of reorganization calling for the creation of this Issuer and because of their ownership of shares in the Issuer. The two officers of the Company have agreed to provide the necessary funds, without interest, for the Company to comply with the 1934 Act provided that the lender is an officer of the Company when the obligation is incurred. All advances are interest-free and there is no contractual obligation requiring the two officers to provide these funds. ITEM 8. LEGAL PROCEEDINGS There is no litigation pending or threatened by or against the Company. ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS (A) MARKET PRICE There is no trading market for our Common Stock at present and there has been no trading market to date. We do not have a trading symbol. There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue. The Company intends to request a broker-dealer to make application to Finra to have the Company's securities traded on the OTC Bulletin Board System or published, in print and electronic media, or either, in the Pink Sheets, LLC ("Pink Sheets"), however there is no assurance that a broker-dealer will agree to make such application or, if one does, that Finra will provide us with a symbol. The Securities and Exchange Commission adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; 10 and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stocks. It is likely that our stock, if it trades at all, will be considered a penny stock, and the rules noted above will apply. As a result, a shareholder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, the Company's securities. (B) HOLDERS There are fifty (50) shareholders of record of the Company's Common Stock. Forty-eight (48) of these shareholders received their shares as a result of the bankruptcy of Spicy Gourmet Organics, Inc. (SGO). In that case the Bankruptcy Court for the Central District of California ordered certain shares of the Company's stock to be distributed to the creditors of SGO. The shares were distributed under an exemption from registration provided by Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code). (C) DIVIDENDS The Company has not paid any cash dividends to date, and has no plans to do so in the immediate future. (D) SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS The Company has not authorized the issuance of any securities under any compensation plan. ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES (A) SECURITIES ISSUED IN BANKRUPTCY 1,180,000 shares of our common stock were distributed to 48 shareholders by order of the U.S. Bankruptcy Court for the Central District of California as part of the confirmed Plan of Reorganization of Spicy Gourmet Organics, Inc. (the "Debtor"). The Debtor was engaged in various phases of the spice business including the import of spices from South Asia into the U.S. The Court ordered the incorporation of the Issuer, the assignment to it of the spice import aspect of the Debtor's business, and ordered the Issuer's securities to be distributed to creditors of the Debtor in partial satisfaction of their claims against the Debtor and in order to enhance the creditors' opportunity for recovery. 5,000,000 warrants to purchase shares of our common stock were also distributed to creditors of the Debtor as part of the confirmed Plan of Reorganization. The warrants consist of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00. All warrants are currently exercisable and may be exercised at any time prior to November 19, 2015. 11 The issuance of the 1,180,000 shares of common stock and the 5,000,000 warrants to purchase a total of 5,000,000 shares of common stock were issued in exchange for claims against the estate of the Debtor and were exempt from registration under the Securities Act of 1933, as amended, because they were issued under section 1145 of the Bankruptcy Code (Title 11 of the U.S. Code). In addition, we may have also relied upon section 3(a)(7) of the Securities Act of 1933 as a transaction ordered by a court as part of a bankruptcy reorganization. (B) SECURITIES ISSUED IN A PRIVATE PLACEMENT On June 30, 2011 the Company issued 10,000,000 restricted shares of its common stock to its two officers, 6,000,000 shares to its President, Ali Balaban, and 4,000,000 shares to its Secretary/Treasurer, Daniel Masters, all at $0.0005 per share, for total consideration of $5,000. We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuance. We believed that Section 4(2) was available because: - The issuance involved no underwriter, underwriting discounts or commissions; - We placed restrictive legends on all certificates issued; - No sales were made by general solicitation or advertising; - Sales were made only to accredited investors. In connection with the above transactions, we provided the following to the investor: - Access to all our books and records. - Access to all material contracts and documents relating to our operations. - The opportunity to obtain any additional information, to the extent we possessed such information, necessary to verify the accuracy of the information to which the investors were given access. ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED The Company's authorized capital stock consists of 100,000,000 Common Shares, par value $0.0001 per share, and 20,000,000 Preferred Shares, par value $0.0001 per share. We have no other class of equity securities authorized, and we have no debt securities presently authorized. We have 11,180,000 Common Shares issued and outstanding as of the date of this filing and no Preferred Shares issued and outstanding as of the date of this filing. We also have warrants outstanding which are convertible into an additional 5,000,000 Common Shares. The warrants are currently exercisable and may be exercised at any time prior to November 19, 2015. All shares of our Common Stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of Common Stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and non-assessable shares. Cumulative voting in the election of directors is not permitted, which means that the holders of a majority of the issued and outstanding shares of Common Stock represented at any meeting at which a quorum is present will be able to elect the entire Board of Directors if they so choose and, in such event, the holders of the remaining shares of Common Stock will not be able to elect any directors. In the event of liquidation of the Company, each shareholder is entitled to receive a proportionate share of the Company's assets available for distribution to shareholders after the payment of liabilities and after distribution in full of preferential amounts, if any. All shares of the Company's Common Stock issued and outstanding are fully-paid and non-assessable. Holders of the Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock, as may be declared by the Board of Directors out of funds legally available therefor. Our Board of Directors is authorized to issue our Preferred Stock in series and to fix the designation, powers, preferences, and rights of the shares of each such series and the qualifications, limitations, or restrictions thereof. 12 In addition to the 11,180,000 Common Shares which we currently have outstanding there are 5,000,000 warrants outstanding, each of which is convertible into one share of our Common Stock. These consist of 1,000,000 "A Warrants" each convertible in to one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible in to one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible in to one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible in to one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible in to one share of common stock at an exercise price of $7.00. All of the warrants are currently exercisable; they will expire if unexercised on November 19, 2015 unless extended by vote of the Board of Directors. All of these warrants were issued to creditors of Spicy Gourmet Organics, Inc. (SGO) by order of the Bankruptcy Court as part of the Chapter 11 Plan of Reorganization of SGO. The warrants were distributed under an exemption from registration provided by Section 1145 of Title 11 of the U.S. Code. ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS Except for acts or omissions which involve intentional misconduct, fraud or known violation of law, there shall be no personal liability of a director or officer to the Company, or to its stockholders for damages for breach of fiduciary duty as a director or officer. The Company may indemnify any person for expenses incurred, including attorneys fees, in connection with their good faith acts if they reasonably believe such acts are in and not opposed to the best interests of the Company and for acts for which the person had no reason to believe his or her conduct was unlawful. The Company may indemnify the officers and directors for expenses incurred in defending a civil or criminal action, suit or proceeding as they are incurred in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount of such expenses if it is ultimately determined by a court of competent jurisdiction in which the action or suit is brought that such person is not fairly and reasonably entitled to indemnification for such expenses. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to officers, directors or persons controlling the Company pursuant to the foregoing, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable. ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA The Company's audited financial statements are attached hereto. ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE There are no disagreements with the findings of our accountant. ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS The Company's audited financial statements as of December 31, 2011 and 2010 are filed herewith. Exhibit: 2.1 Plan of Reorganization Previously filed 3.1 Articles of Incorporation Previously filed 3.2 Bylaws Filed herewith 4.1 Form of "A" Warrant Agreement Previously filed 4.2 Form of "B" Warrant Agreement Previously filed 4.3 Form of "C" Warrant Agreement Previously filed 4.4 Form of "D" Warrant Agreement Previously filed 4.5 Form of "E" Warrant Agreement Previously filed 23.1 Consent of Stan J. H. Lee, CPA Previously filed 13 SIGNATURES Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized. Date: April 17, 2012 SPICY GOURMET MANUFACTURING, INC. By: /s/ Ali Balaban --------------------------------------- Ali Balaban President, CEO and Director By: /s/ Daniel Masters --------------------------------------- Daniel Masters CFO, Secretary, and Director 14 SPICY GOURMET MANUFACTURING, INC. (A DEVELOPMENT STAGE COMPANY) FINANCIAL STATEMENTS December 31, 2011 and 2010 CONTENTS Independent Auditors' Report F-2 Balance Sheet - Assets and Liabilities and Stockholders' Equity F-3 Statement of Operations F-4 Statement of Changes in Stockholders' Equity F-5 Statement of Cash Flows F-6 Notes to Financial Statements F-7 F-1 Stan J.H. Lee, CPA 2160 North Central Rd. Suite 203 * Fort Lee * NJ 07024 P.O. Box 436402 * San Diego * CA 92143-9402 619-623-7799 * Fax 619-564-3408 * E-mail) stan2u@gmail.com REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) We have audited the accompanying balance sheet of SPICY GOURMET MANUFACTURING INC. as of December 31, 2011 and 2010 and the related statements of operations, shareholders' deficit and cash flows for the period from December 30, 2010 (inception) to December 31, 2010 and calendar year ended December 31, 2011. 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 audit. We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purposes of expressing an opinion on the effectiveness of the Company's internal control 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 combined 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 Spicy Gourmet Manufacturing, Inc. as of December 31, 2011 and 2010, and the results of its operation and its cash flows for the aforementioned periods in conformity with U.S. generally accepted accounting principles. The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the note 3 to the financial statements, the Company has not established any source of revenue to cover its operating costs, and losses from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Stan J.H, Lee, CPA ---------------------------------- Stan J.H. Lee, CPA March 13, 2012 Fort Lee, NJ Registered with the Public Company Accounting Oversight Board Member of New Jersey Society of Certified Public Accountants Registered with Canadian Public Accountability Board F-2 SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) BALANCE SHEET
As of As of December 31, December 31, 2011 2010 -------- -------- ASSETS ASSETS Cash $ 5,000 $ -- -------- -------- TOTAL ASSETS $ 5,000 $ -- ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT) TOTAL LIABILITIES $ -- $ -- -------- -------- STOCKHOLDERS' EQUITY (DEFICIT) Preferred stock, $0.0001 par value: 20,000,000 shares authorized, no shares issued and outstanding as of December 31, 2011 and 2010 -- -- Common stock, $0.0001 par value: 100,000,000 shares authorized, 1,180,000 shares issued and outstanding as of December 31, 2010 118 11,180,000 shares issued and outstanding as of December 31, 2011 1,118 Additional paid in capital 4,000 -- Deficit accumulated during the development stage (118) (118) -------- -------- TOTAL SHAREHOLDERS' EQUITY (DEFICIT) 5,000 -- -------- -------- TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ 5,000 $ -- ======== ========
See Notes to Financial Statements F-3 SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) STATEMENT OF OPERATIONS
From Inception December 30, 2010 Period Ended Period Ended through December 31, December 31, December 31, 2011 2010 2011 ---------- ---------- ---------- REVENUE $ -- $ -- $ -- ---------- ---------- ---------- TOTAL REVENUE -- -- -- EXPENSES Organizational expenses -- 118 118 General & Admin expenses -- -- -- ---------- ---------- ---------- OPERATING EXPENSES -- 118 118 ---------- ---------- ---------- Other Income (Expense) -- -- -- ---------- ---------- ---------- NET INCOME (LOSS) $ -- $ (118) $ (118) ========== ========== ========== Basic and diluted earning (Loss) per Share $ (0.000) $ (0.000) ---------- ---------- Weighted average number of common shares outstanding - Basic and Diluted 6,200,163 590,000 ---------- ----------
See Notes to Financial Statements F-4 SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY From inception, December 30, 2010, to December 31, 2011
Accumulated Additional During the Total Common Stock Paid-in Development Stockholders Shares Amount Capital Stage Equity ------ ------ ------- ----- ------ Common Stock Issued Per Court Order December 30, 2010 1,180,000 $ 118 $ 0 $ 0 $ 118 Net loss for Period Ended December 31, 2010 -- -- -- (118) (118) ---------- ------- ------- ------- ------- Balance, December 31, 2010 1,180,000 118 0 (118) 0 Common Stock Issued to Officers June 30, 2011 at $0.0005 per share in cash 10,000,000 1,000 4,000 -- 5,000 Net loss for period Ended December 31, 2011 -- -- -- -- -- ---------- ------- ------- ------- ------- Balance, December 31, 2011 11,180,000 $ 1,118 $ 4,000 $ (118) $ 5,000 ========== ======= ======= ======= =======
See Notes to Financial Statements F-5 SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) STATEMENT OF CASH FLOWS
From Inception December 30, 2010 Period Ended Period Ended through December 31, December 31, December 31, 2011 2010 2011 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES Net Income (Loss) $ -- $ (118) $ (118) Adjustments to reconcile net income (loss) to net cash (used in) operations -- -- -- -------- -------- -------- NET CASH PROVIDED BY (USED IN) OPERATIONS -- (118) (118) -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES NET CASH PROVIDED BY INVESTING ACTIVITIES -- -- -- -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES Common Stock Issuance For Cash 5,000 -- 5,000 Common Stock Issuance For Expense -- 118 118 -------- -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES 5,000 118 5,118 -------- -------- -------- NET INCREASE (DECREASE) 5,000 -- -- -------- -------- -------- CASH BEGINNING OF PERIOD -- -- -- -------- -------- -------- CASH END OF PERIOD $ 5,000 $ -- $ -- ======== ======== ======== NON-CASH INVESTING AND FINANCING ACTIVITIES Common stock issued per Bankruptcy Court Order $ -- $ 118 $ 118 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION Interest paid $ -- $ -- $ -- -------- -------- -------- Income taxes paid $ -- $ -- $ -- -------- -------- --------
See Notes to Financial Statements F-6 SPICY GOURMET MANUFACTURING, INC. (A Development Stage Company) Notes to Financial Statements December 31, 2011 and 2010 NOTE 1. NATURE AND BACKGROUND OF BUSINESS Spicy Gourmet Manufacturing, Inc. ("the Company" or "the Issuer") was organized under the laws of the State of Delaware on December 30, 2010. The Company was established as part of the Chapter 11 reorganization of Spicy Gourmet Organics, Inc. ("SGO"). Under SGO's Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the Central District of California, the Company was incorporated to: (1) receive and own any interest which SGO had in the manufacturing of spice mills and similar products; and (2) issue shares of its common stock to SGO's general unsecured creditors, to its administrative creditors, and to its shareholder. The Company has been in the development stage since its formation and has not yet realized any revenues from its planned operations. NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES a. BASIS OF ACCOUNTING The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a December 31 year-end. BASIS OF PRESENTATION - DEVELOPMENT STAGE COMPANY The Company is a development stage company as defined by ASC 915-10-05, "Development Stage Entity." The Company is still devoting substantially all of its efforts on establishing the business and its planned principal operations have not commenced. All losses accumulated since inception have been considered as part of the Company's development stage activities. b. BASIC EARNINGS PER SHARE The Company computes net income (loss) per share in accordance with the FASB Accounting Standards Codification ("ASC"). The ASC specifies the computation, presentation and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. Basic net earnings (loss) per share amounts are computed by dividing the net earnings (loss) by the weighted average number of common shares outstanding. Diluted earnings (loss) per share are the same as basic earnings (loss) per share due to the lack of dilutive items in the Company. c. ESTIMATES The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. d. CASH and CASH EQUIVALENT For the Balance Sheet and Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents. F-7 e. REVENUE RECOGNITION The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience. f. STOCK-BASED COMPENSATION The Company records stock-based compensation in accordance with the FASB Accounting Standards Classification using the fair value method. All transactions in which goods or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. Equity instruments issued to employees and the cost of the services received as consideration are measured and recognized based on the fair value of the equity instruments issued. g. INCOME TAXES Income taxes are provided in accordance with the FASB Accounting Standards Classification. A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting and net operating loss carry forwards. Deferred tax expense (benefit) results from the net change during the year of deferred tax assets and liabilities. 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. h. IMPACT OF NEW ACCOUNTING STANDARDS The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow. NOTE 3. GOING CONCERN The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the Company. NOTE 4. STOCKHOLDERS' EQUITY COMMON STOCK The authorized share capital of the Company consists of 100,000,000 shares of common stock with $0.0001 par value, and 20,000,000 shares of preferred stock also with $0.0001 par value. No other classes of stock are authorized. COMMON STOCK: As of December 31, 2011, there were a total of 11,180,000 common shares issued and outstanding and as of December 31, 2010 there were a total of 1,180,000 common shares issued and outstanding. The Company's first issuance of common stock, totaling 1,180,000 shares, took place on December 30, 2010 pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court in the matter of Spicy Gourmet Organics, Inc. ("SGO"). The Court ordered the distribution of shares in Organic Spice Imports, Inc. to all general unsecured creditors of SGO, with these creditors to F-8 receive their PRO RATA share (according to amount of debt held) of a pool of 80,000 shares in the Company. The Court also ordered the issuance of 100,000 shares in the Company to the sole shareholder of SGO. The Court also ordered the distribution of 1,000,000 shares in the Company to the administrative creditors of SGO; these creditors received one share of common stock in the Company for each $0.05 of SGO's administrative debt which they held. The Court also ordered the distribution of warrants in the Company to all administrative creditors of SGO, with these creditors to receive five warrants in the Company for each $0.05 of SGO's administrative debt which they held. These creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00. All warrants are exercisable at any time prior to November 19, 2015. This warrant distribution also took place on December 30, 2010. On June 30, 2011 the Company's two officers acquired a total of 10,000,000 common shares from the Issuer in a private placement. The shares were purchased at the price of $0.0005 per share for a total of $5,000. As a result of these issuances there were a total 11,180,000 common shares issued and outstanding, and a total of 5,000,000 warrants to acquire common shares issued and outstanding, at December 31, 2011. PREFERRED STOCK: The authorized share capital of the Company includes 20,000,000 shares of preferred stock with $0.0001 par value. As of December 31, 2011 no shares of preferred stock had been issued and no shares of preferred stock were outstanding. NOTE 5. INCOME TAXES The Company has had no business activity and made no U.S. federal income tax provision since its inception on December 30, 2010. NOTE 6. RELATED PARTY TRANSACTIONS The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts. NOTE 7. WARRANTS AND OPTIONS On December 30, 2010 (inception), the Company issued 5,000,000 warrants exercisable into 5,000,000 shares of the Company's common stock. These warrants were issued per order of the U.S. Bankruptcy Court in the matter of Spicy Gourmet Organics, Inc. ("SGO") to the administrative creditors of SGO. These creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $4.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $5.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $6.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $7.00. All warrants are exercisable at any time prior to F-9 November 19, 2015. As of the date of this report, no warrants have been exercised. NOTE 8. COMMITMENT AND CONTIGENTCY There is no commitment or contingency to disclose during the period ended December 31, 2011 and 2010. NOTE 9. SUBSEQUENT EVENTS The Company has performed an evaluation of subsequent events in accordance with ASC Topic 855 and the Company is not aware of any subsequent events which would require recognition or disclosure in the financial statements. F-10