AS
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 7, 2015
REGISTRATION
STATEMENT NO. 333-203340
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
S-1
(Amendment
No. 1)
REGISTRATION
STATEMENT
UNDER
THE
SECURITIES ACT OF 1933
BARFRESH
FOOD GROUP, INC.
(Name
of small business issuer in its charter)
Delaware |
|
2038 |
|
27-1994406 |
(State
or jurisdiction of |
|
(Primary
Standard Industrial |
|
(I.R.S.
Employer |
incorporation
or organization) |
|
Classification
Code Number) |
|
Identification
No.) |
8530 Wilshire Blvd.,
Suite 450
Beverly Hills, California
90211
Telephone: (310) 598-7113
(Address
and telephone number of principal executive offices and principal place of business)
Copies
to:
Mark
Y. Abdou
Ruba
Qashu
Libertas
Law Group, Inc.
225
Santa Monica Boulevard, 11th Floor
Santa
Monica, CA 90401
Telephone:
(310) 359-8742
Facsimile:
(310) 356-1922
Approximate
date of proposed sale to the public:
From
time to time after the effective date hereof.
If
any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under
the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check
the following box. [X]
If
this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the
following box and list the Securities Act registration statement number of the earlier effective registration statement for the
same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
this form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list
the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ]
If
delivery of the prospectus is expected to be made pursuant to Rule 434 under the Securities Act, check the following box. [ ]
Indicate
by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller
reporting company” in Rule 12b-2 of the Exchange Act.
Large
Accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller
reporting company [X]
The
Registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until
the Registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become
effective in accordance with Section 8(a) of the Securities Act of 1933 or until the Registration Statement shall become effective
on such date as the Commission, acting pursuant to said Section 8(a), may determine.
CALCULATION
OF REGISTRATION FEE
Title of each class of securities
to be registered | |
Amount to be
registered (1) | | |
Proposed maximum
offering price per
share | | |
Proposed maximum
aggregate offering
Price | | |
Amount of
registration
fee (4) | |
Common stock, par value $0.000001 per share | |
| 10,300,000 | | |
$ | 0.52 | (2) | |
$ | 5,356,000 | | |
| | |
Common stock, par
value $0.000001 per share, issuable upon exercise of Series N Warrants and other Warrants
| |
| 1,093,333 | | |
$ | 0.52 | (3) | |
$ | 568,533 | | |
| | |
Common stock, par value $0.000001 per share, issuable upon exercise of
Series G Warrants | |
| 5,387,000 | | |
$ | 0.6 | (3) | |
$ | 3,232,200 | | |
| | |
Total | |
| 16,780,333 | | |
| | | |
$ | 9,156,733 | | |
$ | 1,064.61 | |
(1)
Pursuant to Rule 416 under the Securities Act of 1933, as amended (“Securities Act”), the shares of common stock being
registered hereunder include such indeterminate number of shares of common stock as may be issuable with respect to the shares
of common stock being registered hereunder as a result of stock splits, stock dividends or similar transactions.
(2)
Estimated solely for the purpose of calculating the registration fee under Rule 457(c) under the Securities Act.
(3)
Estimated solely for the purpose of calculating the registration fee under Rule 457(g) under the Securities Act.
(4)
Previously paid.
SUBJECT
TO COMPLETION, DATED MAY 7, 2015
PROSPECTUS
16,780,333
Shares of Common Stock
This
prospectus relates to 16,780,333 shares of our common stock, par value $0.000001 per share, of which 6,430,333 are issuable upon
exercise of certain warrants, that may be sold from time to time by the selling shareholders listed under the caption “Selling
Shareholders”. All of the shares, when sold, will be sold by these selling shareholders. The selling shareholders may sell
these shares from time to time in the open market at prevailing prices or in individually negotiated transactions through agents
designated from time to time or through underwriters or dealers. We will not control or determine the price at which the selling
shareholders decide to sell their shares. See “Plan of Distribution”. The selling shareholders may be deemed underwriters
of the shares of common stock that they are offering. We will pay the expenses of registering these shares.
We
are not selling any shares of common stock in this offering and therefore will not receive any proceeds from the sale of common
stock hereunder. We will receive proceeds from any exercise of outstanding warrants by the selling shareholders if and when those
warrants are exercised for cash. Series N Warrants may be exercised by the payment of the exercise price of $0.45 per share for
a term of five years, in cash or via cashless exercise, subject to the registration rights agreement governing those rights. Series
G Warrants may be exercised by the payment of the exercise price of $0.60 per share for a term of five years, in cash, subject
to the registration rights agreement governing those rights. Certain other Warrants being registered may be exercised by
the payment of the exercise price of $0.50 per share for a term of three years, in cash or via cashless exercise.
Our
common stock is traded on the OTCQB under the symbol BRFH. On May 4, 2015, the last reported sale price of our common stock was
$0.81 per share.
INVESTING
IN OUR COMMON STOCK INVOLVES SUBSTANTIAL RISK. IN REVIEWING THIS PROSPECTUS, YOU SHOULD CAREFULLY CONSIDER THE MATTERS DESCRIBED
UNDER THE HEADING “RISK FACTORS” BEGINNING ON PAGE 3.
NEITHER
THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES, OR
DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The
date of this prospectus is May 7, 2015
TABLE
OF CONTENTS
PROSPECTUS
SUMMARY
This
summary highlights selected information contained elsewhere in this prospectus. To understand this offering fully, you should
read the entire prospectus carefully, including the “Risk Factors” section, the financial statements and the notes
to the financial statements. Unless the context otherwise requires, references contained in this prospectus to the “Company”,
“Barfresh”, “we”, “us” or “our” shall mean Barfresh Food Group Inc., a
Delaware corporation.
BARFRESH
FOOD GROUP INC.
Our
Company
Barfresh
is a leader in the creation of, manufacturing and distributing ready to blend beverages. The current portfolio of products is
made up of smoothies, shakes and frappes. All of the products are portion controlled and ready to blend beverage ingredient packs
or “beverage packs”. The beverage packs contain all of the ingredients necessary to make the beverage, including the
base (either sorbet, frozen yogurt or ice cream), fruit pieces, juices and ice.
Domestic
and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the products. In
November 2011, the Company acquired the patent rights in the United States and Canada. The Canadian patent has been granted and
the United States patent is “patent pending”. On October 15, 2013, the Company acquired all of the related international
patent rights, which were filed pursuant to the Patent Cooperation Treaty and have been granted in 13 jurisdictions. The patents
are pending in the remainder of the jurisdictions that have signed the treaty. In addition, on October 15, 2013, the Company purchased
all of the trademarks related to the patented products.
Product
development and new flavor creation is a critical element of the business. The leadership team has been developing flavor profiles
for each beverage category that will appeal to tastes in the United States. The Company has been in discussions with a number
of companies including both large and small quick service restaurant (“QSR”) chains and full service restaurant chains
(“FSR”). Additionally, there are also discussions with national food service companies that serve alternative venues
such as stadiums, arenas and universities with national footprints in the United States. Preliminary agreements with three potential
customers have been reached and testing in these venues will begin in the near future. There are also other ongoing negotiations
taking place with several of national foodservice companies.
In
addition to the large fast food, fast casual and full service restaurant chains, the Company will sell to food distributors that
supply products to the food services market place. Effective July 2, 2014, the Company entered into an agreement with Sysco Merchandising
and Supply Chain Services, Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s
ready-to-blend smoothies, shakes and frappes. All Barfresh products will be included in Sysco’s national core selection
of beverage items, making Barfresh its exclusive single-serve, pre-portioned beverage provider. The agreement is mutually exclusive;
provided however, the products are supplied to other foodservice distributors, but only to the extent required for such foodservice
distributors to service multi-unit chain operators with at least 20 units and where Sysco is not such multi-unit chain operators
nominated distributor for our products. The Company has started shipping to Sysco under this agreement and anticipates a national
rollout to approximately 74 distribution centers over the next 18 months.
Finally,
the Company intends to monetize the international patents outside of the current area of operations, North America, by expanding
contract manufacturing to other countries and selling either through selling agents or internal sales personnel. The Company will
also consider entering into some form of license or royalty agreements with third parties.
Most
recently, as part of the Company’s expansion due to the acquisition of the international patents, a leading regional Australian
food ingredient supply and product developer has been engaged as the wholesaler and distributor for Barfresh. The first order
to Australia shipped in January 2014.
Our
corporate and sales office is located at 8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211. Our telephone number is (310)
598-7113 and our websites are www.barfresh.com/us and www.smoothieinc.com.
SUMMARY
OF THE OFFERING
The
Offering |
|
Up
to 16,780,333 shares of our common stock, par value $0.000001 per share, of which 958,333 are issuable upon exercise of Series
N Warrants, 5,387,000 are issuable upon exercise of Series G Warrants and 135,000 are issuable upon exercise of certain other
Warrants.
Series
N Warrants may be exercised by the payment of the exercise price of $0.45 per share for a term of five years, in cash
or via cashless exercise, subject to the registration rights agreement governing those rights.
Series
G Warrants may be exercised by the payment of the exercise price of $0.60 per share for a term of five years, in cash,
subject to the registration rights agreement governing those rights. |
|
|
|
|
|
The
other Warrants may be exercised by the payment of the exercise price of $0.50 per share
for a term of three years, in cash or via cashless exercise.
|
|
|
|
Trading
Market |
|
OTCQB
under the symbol “BRFH” |
|
|
|
Offering
Period |
|
We
are registering the selling shareholders’ shares to allow the selling shareholders the opportunity to sell their shares
pursuant to a registration rights agreement between the Company and these shareholders. The shares of common stock being registered
include such indeterminate number of shares of common stock as may be issuable with respect to the shares of common stock
being registered hereunder as a result of stock splits, stock dividends or similar transactions. The shares of common stock
being registered do not include additional shares of common stock issuable as a result of changes in market price of the common
stock, issuance by us of shares of equity securities below a certain price or other anti-dilutive adjustments or variables
not covered by Rule 416 (“Rule 416”) under the Securities Act of 1933, as amended (“Securities Act”). |
|
|
|
Risk
Factors |
|
The
shares being offered are speculative and involve very high risks, including those listed in “Risk Factors”. |
|
|
|
Net
Proceeds |
|
We
will not receive any proceeds from the sale of any shares by selling shareholders. However, we may receive up to an aggregate
of $3,730,950 from the exercise by selling shareholders of warrants to purchase the common stock we are registering under
this registration statement. |
|
|
|
Use
of Proceeds |
|
We
expect to use any cash proceeds we receive from the exercise of warrants by selling shareholders for general working capital
purposes. |
RISK
FACTORS
An
investment in the Company’s securities involves significant risks, including the risks described below. You should carefully
consider the risks described below before purchasing the shares. The risks highlighted here are not the only ones that the Company
faces. For example, additional risks presently unknown to us or that we currently consider immaterial or unlikely to occur could
also impair our operations. If any of the risks or uncertainties described below or any such additional risks and uncertainties
actually occur, our business, prospects, financial condition or results of operations could be negatively affected, and you might
lose all or part of your investment.
Risks
Related to Our Business
We
have a history of operating losses and there can be no assurance that we can achieve or maintain profitability.
We
have a history of operating losses and may not achieve or sustain profitability. These operating losses have been generated while
we market to potential customers. We cannot guarantee that we will become profitable. Even if we achieve profitability, given
the competitive and evolving nature of the industry in which we operate, we may be unable to sustain or increase profitability
and our failure to do so would adversely affect the Company’s business, including our ability to raise additional funds.
A
worsening of economic conditions or a decrease in consumer spending may adversely impact our ability to implement our business
strategy.
Our
success depends to a significant extent on discretionary consumer spending, which is influenced by general economic conditions
and the availability of discretionary income. While there are signs that conditions may be improving, there is no certainty that
this trend will continue or that credit and financial markets and confidence in economic conditions will not deteriorate again.
Accordingly, we may experience continuing declines in revenue during economic turmoil or during periods of uncertainty. Any material
decline in the amount of discretionary spending, leading cost-conscious consumers to be more selective in restaurants visited,
could have a material adverse effect on our revenue, results of operations, business and financial condition.
The
challenges of competing with the many food services businesses may result in reductions in our revenue and operating margins.
We
compete with many well-established companies, food service and otherwise, on the basis of taste, quality and price of product
offered, customer service, atmosphere, location and overall guest experience. Our success depends, in part, upon the popularity
of our products and our ability to develop new menu items that appeal to consumers across all four day parts. Shifts in consumer
preferences away from our products, our inability to develop new menu items that appeal to consumers across all day parts, or
changes in our menu that eliminate items popular with some consumers could harm our business. We compete with other smoothie and
juice bar retailers, specialty coffee retailers, yogurt and ice cream shops, bagel shops, fast-food restaurants, delicatessens,
cafés, take-out food service companies, supermarkets and convenience stores. Our competitors change with each of the four
day parts, ranging from coffee bars and bakery cafés to casual dining chains. Many of our competitors or potential competitors
have substantially greater financial and other resources than we do, which may allow them to react to changes in the market quicker
than we can. In addition, aggressive pricing by our competitors or the entrance of new competitors into our markets, as evidenced
by McDonald’s Corporation’s inclusion of fruit smoothies on their menu, could reduce our revenue and operating margins.
We also compete with other employers in our markets for hourly workers and may become subject to higher labor costs as a result
of such competition.
Fluctuations
in various food and supply costs, particularly fruit and dairy, could adversely affect our operating results.
Supplies
and prices of the various ingredients that we are going to use to can be affected by a variety of factors, such as weather, seasonal
fluctuations, demand, politics and economics in the producing countries.
These
factors subject us to shortages or interruptions in product supplies, which could adversely affect our revenue and profits. In
addition, the prices of fruit and dairy, which are the main ingredients in our products, can be highly volatile. The fruit of
the quality we seek tends to trade on a negotiated basis, depending on supply and demand at the time of the purchase. An increase
in pricing of any fruit that we are going to use in our products could have a significant adverse effect on our profitability.
We cannot assure you that we will be able to secure our fruit supply.
Our
business depends substantially on the continuing efforts of our senior management and other key personnel, and our business may
be severely disrupted if we lose their services.
Our
future success heavily depends on the continued service of our senior management and other key employees. If one or more of our
senior executives is unable or unwilling to continue to work for us in his present position, we may have to spend a considerable
amount of time and resources searching, recruiting, and integrating a replacement into our operations, which would substantially
divert management’s attention from our business and severely disrupt our business. This may also adversely affect our ability
to execute our business strategy. In addition, of any of our senior executives joins a competitor or forms a competing company,
we may lose customers, suppliers, know-how and key employees.
Our
senior management’s limited experience managing a publicly traded company may divert management’s attention from operations
and harm our business.
With
the exception of our Chief Financial Officer, our senior management team has relatively limited experience managing a publicly
traded company and complying with federal securities laws, including compliance with recently adopted disclosure requirements
on a timely basis. Our management will be required to design and implement appropriate programs and policies in responding to
increased legal, regulatory compliance and reporting requirements, and any failure to do so could lead to the imposition of fines
and penalties and harm our business.
We
may be unable to attract and retain qualified, experienced, highly skilled personnel, which could adversely affect the implementation
of our business plan.
Our
success depends to a significant degree upon our ability to attract, retain and motivate skilled and qualified personnel. As we
become a more mature company in the future, we may find recruiting and retention efforts more challenging. If we do not succeed
in attracting, hiring and integrating excellent personnel, or retaining and motivating existing personnel, we may be unable to
grow effectively. The loss of any key employee, including members of our senior management team, and our inability to attract
highly skilled personnel with sufficient experience in our industries could harm our business.
Product
liability exposure may expose us to significant liability.
We
may face an inherent business risk of exposure to product liability and other claims and lawsuits in the event that the
development or use of our technology or prospective products is alleged to have resulted in adverse effects. We
may not be able to avoid significant liability exposure. Although we believe our insurance coverage to be adequate, we may not
have sufficient insurance coverage, and we may not be able to obtain sufficient coverage at a reasonable cost. An
inability to obtain product liability insurance at acceptable cost or to otherwise protect against potential product
liability claims could prevent or inhibit the commercialization of our products. A product liability claim could hurt
our financial performance. Even if we avoid liability exposure, significant costs could be incurred that could hurt our
financial performance and condition.
Our
inability to protect our intellectual property rights may force us to incur unanticipated costs.
Our
success will depend, in part, on our ability to obtain and maintain protection in the United States and internationally
for certain intellectual property incorporated into our products. Our intellectual properties may be challenged, narrowed,
invalidated or circumvented, which could limit our ability to prevent competitors from marketing similar solutions
that limit the effectiveness of our patent protection and force us to incur unanticipated costs. In addition, existing
laws of some countries in which we may provide services or solutions may offer only limited protection of our intellectual
property rights.
Our
products may infringe the intellectual property rights of third parties, and third parties may infringe our proprietary rights,
either of which may result in lawsuits, distraction of management and the impairment of our business.
As
the number of patents, copyrights, trademarks and other intellectual property rights in our industry increases, products
based on our technology may increasingly become the subject of infringement claims. Third parties could assert infringement
claims against us in the future. Infringement claims with or without merit could be time consuming, result in costly litigation,
cause product shipment delays or require us to enter into royalty or licensing agreements. Royalty or licensing
agreements, if required, might not be available on terms acceptable to us, or at all. We may initiate claims or litigation
against third parties for infringement of our proprietary rights or to establish the validity of our proprietary
rights. Litigation to determine the validity of any claims, whether or not the litigation is resolved in our favor, could
result in significant expense to us and divert the efforts of our technical and management personnel from productive
tasks. If there is an adverse ruling against us in any litigation, we may be required to pay substantial damages, discontinue
the use and sale of infringing products and expend significant resources to develop non-infringing technology or
obtain licenses to infringing technology. Our failure to develop or license a substitute technology could prevent us from
selling our products.
If
securities or industry analysts do not continue to publish research, or publish inaccurate or unfavorable research, about our
business, our share price and trading volume could decline.
The
trading market for our common stock may be impacted, in part, by the research and reports that securities or industry analysts
publish about our business or us. There can be no assurance that analysts will cover us, continue to cover us or provide favorable
coverage. If one or more analysts downgrade our stock or change their opinion of our stock, our share price may decline. In addition,
if one or more analysts cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in
the financial markets, which could cause our share price or trading volume to decline.
We
will continue to incur increased costs as a result of operating as a public company, and our management will be required to devote
substantial time to compliance initiatives and corporate governance practices.
As
a public company, we will continue to incur significant legal, accounting and other expenses. The Sarbanes-Oxley Act of 2002,
the Dodd-Frank Wall Street Reform and Consumer Protection Act and other applicable securities rules and regulations impose various
requirements on public companies, including establishment and maintenance of effective disclosure and financial controls and corporate
governance practices. Our management and other personnel will need to continue to devote a substantial amount of time to these
compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and make
some activities more time-consuming and costly.
We
cannot predict or estimate the amount of additional costs we may incur to continue to operate as a public company, nor can we
predict the timing of such costs. These rules and regulations are often subject to varying interpretations, in many cases due
to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided
by regulatory and governing bodies which could result in continuing uncertainty regarding compliance matters and higher costs
necessitated by ongoing revisions to disclosure and governance practices.
We
have identified material weaknesses in our internal control over financial reporting. If we fail to maintain an effective system
of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
Pursuant
to Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, we are required to furnish a report by our management on our
internal control over financial reporting. As such, our management has conducted this evaluation and, as of March 31, 2014, identified
the following material weaknesses in the Company’s internal control over financial reporting:
● |
We
do not have an audit committee: While we are not currently obligated to have an audit committee, including a member who is
an “audit committee financial expert,” as defined in Item 407 of Regulation S-K, under applicable regulations
or listing standards; however, it is management’s view that such a committee is an important internal control over financial
reporting, the lack of which may result in ineffective oversight in the establishment and monitoring of internal controls
and procedures. |
|
|
● |
We
do not have a majority of independent directors on our board of directors, which may result in ineffective oversight in the
establishment and monitoring of required internal controls and procedures. |
|
|
● |
Inadequate
Segregation of Duties: We have an inadequate number of personnel to properly implement control procedures. |
Management
believes that these material weaknesses have not had an effect our financial results and has concluded that disclosure controls
and procedures remain effective. Nonetheless, effective internal control over financial reporting is necessary to provide reliable
financial reports and effectively prevent fraud. If we cannot provide reliable financial reports or prevent fraud, our operating
results could be harmed. We will need to continue to dedicate internal resources, potentially engage outside consultants and adopt
a detailed work plan to modify and document the adequacy of internal control over financial reporting, continue steps to improve
control processes as appropriate, validate through testing that controls are functioning as documented and implement a continuous
reporting and improvement process for internal control over financial reporting. Continued identification of one or more material
weaknesses in our internal control over financial reporting could result in an adverse reaction in the financial markets due to
a loss of confidence in the reliability of our financial statements.
We
are operating with less than a majority of independent directors.
We
do not have a majority of independent directors. Riccardo Delle Coste, Steven Lang and Arnold Tinter beneficially own approximately
51% of the Company’s common stock, are members of the board of directors and Messrs. Delle Coste and Tinter both serve as
officers of the Company. The Company is operated without the oversight of a majority of independent directors and material agreements
and transactions, including those with related parties, are not approved with the oversight of a majority of independent directors.
Failure
to comply with the United States Foreign Corrupt Practices Act could subject us to penalties and other adverse consequences.
As
a Delaware corporation, we are subject to the United States Foreign Corrupt Practices Act, which generally prohibits United States
companies from engaging in bribery or other prohibited payments to foreign officials for the purpose of obtaining or retaining
business. Some foreign companies, including some that may compete with our Company, may not be subject to these prohibitions.
Corruption, extortion, bribery, pay-offs, theft and other fraudulent practices may occur from time-to-time in countries in which
we conduct our business. However, our employees or other agents may engage in conduct for which we might be held responsible.
If our employees or other agents are found to have engaged in such practices, we could suffer severe penalties and other consequences
that may have a material adverse effect on our business, financial condition and results of operations.
Risks
Related to Ownership of Our Common Stock
The
shares registered hereunder represent 47.4% of our public float. If all or a substantial portion of these shares are issued and
subsequently resold in the public market it could create a greater supply for our shares than demand and therefore have a negative
impact on our stock price.
The
16,780,333 shares registered hereunder, if issued, would represent 21.3% of our shares outstanding and 47.4% of our public float
as of April 29, 2015, including the 6,480,333 shares issuable upon conversion of outstanding warrants. If all or a substantial
portion of these shares are issued and subsequently resold in the public market it could create a greater supply for our shares
than demand and therefore have a negative impact on our stock price.
Riccardo
Delle Coste, Steven Lang and Arnold Tinter have voting control over matters submitted to a vote of the shareholders, and they
may take actions that conflict with the interests of our other shareholders and holders of our debt securities.
Riccardo
Delle Coste, Steven Lang and Arnold Tinter, together, control more than 50% of the votes eligible to be cast by shareholders in
the election of directors and generally. As a result, Messrs. Delle, Lang and Tinter have the power to control all matters requiring
the approval of our shareholders, including the election of directors and the approval of mergers and other significant corporate
transactions.
Our
common stock is quoted on the OTCQB, which may have an unfavorable impact on our stock price and liquidity.
Our
common stock is quoted on the OTCQB, which is a significantly more limited trading market than the New York Stock Exchange, NYSE
MKT or the NASDAQ Stock Market. The quotation of the Company’s shares on the OTCQB may result in a less liquid market available
for existing and potential shareholders to trade shares of our common stock, could depress the trading price of our common stock
and could have a long-term adverse impact on our ability to raise capital in the future.
There
is limited liquidity on the OTCQB, which may result in stock price volatility and inaccurate quote information.
When
fewer shares of a security are being traded on the OTCQB, volatility of prices may increase and price movement may outpace the
ability to deliver accurate quote information. Due to lower trading volumes in shares of our common stock, there may be a lower
likelihood of one’s orders for shares of our common stock being executed, and current prices may differ significantly from
the price one was quoted at the time of one’s order entry.
If
we are unable to adequately fund our operations, we may be forced to voluntarily file for deregistration of our common stock with
the SEC.
Compliance
with the periodic reporting requirements required by the SEC consumes a considerable amount of both internal, as well external,
resources and represents a significant cost for us. If we are unable to continue to devote adequate funding and the resources
needed to maintain such compliance, while continuing our operations, we could be forced to deregister with the SEC. After the
deregistration process, our common stock would only be tradable on the “Pink Sheets” and could suffer a decrease in
or absence of liquidity.
Because
we became public by means of a “reverse merger”, we may not be able to attract the attention of major brokerage firms.
Additional
risks may exist since we became public through a “reverse merger”. Securities analysts of major brokerage firms may
not provide coverage of us since there is little incentive to brokerage firms to recommend the purchase of our common stock. We
cannot assure you that brokerage firms will want to conduct any secondary offerings on behalf of our Company in the future.
Future
sales of our common stock in the public market could lower the price of our common stock and impair our ability to raise funds
in future securities offerings.
Future
sales of a substantial number of shares of our common stock in the public market, or the perception that such sales may occur,
could adversely affect the then prevailing market price of our common stock and could make it more difficult for us to raise funds
in the future through a public offering of our securities.
Our
common stock is thinly traded, so you may be unable to sell at or near asking prices or at all if you need to sell your shares
to raise money or otherwise desire to liquidate your shares.
Currently,
the Company’s common stock is quoted in the OTCQB and future trading volume may be limited by the fact that many major institutional
investment funds, including mutual funds, as well as individual investors follow a policy of not investing in OTCQB stocks and
certain major brokerage firms restrict their brokers from recommending OTCQB stocks because they are considered speculative, volatile
and thinly traded. The OTCQB market is an inter-dealer market much less regulated than the major exchanges and our common stock
is subject to abuses, volatility and shorting. Thus, there is currently no broadly followed and established trading market for
the Company’s common stock. An established trading market may never develop or be maintained. Active trading markets generally
result in lower price volatility and more efficient execution of buy and sell orders. Absence of an active trading market reduces
the liquidity of the shares traded there.
The
trading volume of our common stock has been and may continue to be limited and sporadic. As a result of such trading activity,
the quoted price for the Company’s common stock on the OTCQB may not necessarily be a reliable indicator of its fair market
value. Further, if we cease to be quoted, holders would find it more difficult to dispose of our common stock or to obtain accurate
quotations as to the market value of the Company’s common stock and as a result, the market value of our common stock likely
would decline.
Our
common stock is subject to price volatility unrelated to our operations.
The
market price of our common stock could fluctuate substantially due to a variety of factors, including market perception of our
ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in
our common stock, changes in general conditions in the economy and the financial markets or other developments affecting the Company’s
competitors or the Company itself. In addition, the OTCQB is subject to extreme price and volume fluctuations in general. This
volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their
operating performance and could have the same effect on our common stock.
We
are subject to penny stock regulations and restrictions and you may have difficulty selling shares of our common stock.
Our
common stock is currently quoted on the OTCQB. Our common stock is subject to the requirements of Rule 15(g)-9, promulgated under
the Securities Exchange Act as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers
who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special
sales practice requirements, including a requirement that they make an individualized written suitability determination for the
purchaser and receive the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock
Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock.
Generally, the Commission defines a penny stock as any equity security not traded on a national exchange that has a market price
of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure
schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market
liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.
Because
we do not intend to pay dividends, shareholders will benefit from an investment in our common stock only if it appreciates in
value.
We
have never declared or paid any cash dividends on our preferred stock or common stock. For the foreseeable future, it is expected
that earnings, if any, generated from our operations will be used to finance the growth of our business, and that no dividends
will be paid to holders of the Company’s common stock. As a result, the success of an investment in our common stock will
depend upon any future appreciation in its value. There can be no guarantee that our common stock will appreciate in value.
The
price of our common stock may become volatile, which could lead to losses by investors and costly securities litigation.
The
trading price of our common stock is likely to be highly volatile and could fluctuate in response to factors such as:
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actual
or anticipated variations in our operating results; |
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announcements
of developments by us or our competitors; |
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announcements
by us or our competitors of significant acquisitions, strategic partnerships, joint ventures or capital commitments; |
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adoption
of new accounting standards affecting the our industry; |
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additions
or departures of key personnel; |
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introduction
of new products by us or our competitors; |
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sales
of the our common stock or other securities in the open market; and |
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other
events or factors, many of which are beyond our control. |
The
stock market is subject to significant price and volume fluctuations. In the past, following periods of volatility in the market
price of a company’s securities, securities class action litigation has often been initiated against such a company. Litigation
initiated against us, whether or not successful, could result in substantial costs and diversion of our management’s attention
and Company resources, which could harm our business and financial condition.
Investors
may experience dilution of their ownership interests because of the future issuance of additional shares of our common stock.
We
intend to continue to seek financing through the issuance of equity or convertible securities to fund our operations. In the future,
we may also issue additional equity securities resulting in the dilution of the ownership interests of our present shareholders.
We may also issue additional shares of our common stock or other securities that are convertible into or exercisable for our common
stock in connection with hiring or retaining employees, future acquisitions or for other business purposes. The future issuance
of any such additional shares of common stock will result in dilution to our shareholders and may create downward pressure on
the trading price of our common stock.
Provisions
in our corporate charter documents and under Delaware law could make an acquisition of our company, which may be beneficial to
our stockholders, more difficult and may prevent attempts by our stockholders to replace or remove our current management.
Provisions
in our certificate of incorporation and our bylaws may discourage, delay or prevent a merger, acquisition or other change in control
of our company that stockholders may consider favorable, including transactions in which you might otherwise receive a premium
for your shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of
our common stock, thereby depressing the market price of our common stock. In addition, because our board of directors is responsible
for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders
to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General
Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining
with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding
voting stock, unless the merger or combination is approved in a prescribed manner.
NOTE
REGARDING FORWARD-LOOKING STATEMENTS
This
prospectus, including the sections entitled “Prospectus Summary,” “Risk Factors,” “Management’s
Discussion and Analysis of Financial Condition and Results of Operations” and “Business,” contains forward-looking
statements. We may, in some cases, use words such as “anticipate”, “believe”, “could”, “estimate”,
“expect”, “intend”, “may”, “plan”, “potential”, “predict”,
“project”, “should”, “will”, “would” or the negative of those terms, and similar
expressions that convey uncertainty of future events or outcomes to identify these forward-looking statements. Any statements
contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements
in this prospectus include, but are not limited to, statements about:
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the
success, cost and timing of our sales and licensing activities; |
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our
ability to attract collaborators with development, marketing and commercialization expertise; |
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the
size and growth potential of the markets for our products, and our ability to serve those markets; |
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the
performance of our third-party suppliers and manufacturers; |
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our
ability to attract and retain key management personnel; |
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the
accuracy of our estimates regarding expenses, future revenues, capital requirements and needs for additional financing; and |
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our
expectations regarding our ability to maintain and protect intellectual property protection for our products. |
These
forward-looking statements reflect our management’s beliefs and views with respect to future events and are based on estimates
and assumptions as of the date of this prospectus and are subject to risks and uncertainties. We discuss many of these risks in
greater detail under “Risk Factors”. In addition, we operate in a very competitive and rapidly changing environment.
New risks emerge from time to time. It is not possible for our management to predict all risks, nor can we assess the impact of
all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially
from those contained in any forward-looking statements we may make. Given these uncertainties, you should not place undue reliance
on these forward-looking statements.
You
should read this prospectus and the documents that we reference in this prospectus and have filed as exhibits to the registration
statement, of which this prospectus is a part, completely and with the understanding that our actual future results may be materially
different from what we expect. We qualify all of the forward-looking statements in this prospectus by these cautionary statements.
Except as required by law, we undertake no obligation to publicly update any forward-looking statements, whether as a result of
new information, future events or otherwise.
USE
OF PROCEEDS
We
will not receive any of the proceeds from the sale of the shares of common stock offered under this prospectus by the selling
shareholders. Rather, the selling shareholders will receive those proceeds directly.
However,
we may receive up to an aggregate of $3,730,950 from the exercise by selling shareholders of warrants to purchase the common stock
we are registering under this registration statement. We expect to use any cash proceeds from the exercise of warrants for general
working capital purposes.
SELLING
SHAREHOLDERS
We
are registering 16,780,333 shares of our common stock, par value $0.000001 per share, of which 958,333 are issuable upon exercise
of Series N Warrants and 5,387,000 are issuable upon exercise of Series G Warrants and 135,000 are issuable upon exercise of other
Warrants. The shares of common stock being registered include such indeterminate number of shares of common stock as may be issuable
with respect to the shares of common stock being registered hereunder only as a result of stock splits, stock dividends or similar
transactions. The shares of common stock being registered do not include additional shares of common stock issuable as a result
of changes in market price of the common stock, issuance by us of equity securities below a certain price or other anti-dilutive
adjustments or variables not covered by Rule 416. All shares that may be issued will be restricted securities as that term is
defined in Rule 144 under the Securities Act, and will remain restricted unless and until such shares are sold pursuant to this
prospectus, or otherwise are sold in compliance with Rule 144.
No
shareholder may offer or sell shares of our common stock under this prospectus unless such shareholder has notified us of such
shareholder’s intention to sell shares of our common stock and the registration statement of which this prospectus is a
part has been declared effective by the SEC and remains effective at the time such selling shareholder offers or sells such shares.
We are required to amend the registration statement of which this prospectus is a part to reflect material developments in our
business and current financial information. Each time we file a post-effective amendment to our registration statement with the
SEC, it must first become effective prior to the offer or sale of shares of our common stock by the selling shareholders.
The
following table sets forth as of April 10, 2015, information regarding the current ownership of our common stock by the persons
identified, based on information provided to us by them, which we have not independently verified. We have assumed for purposes
of the table that the selling shareholders will sell all of the shares offered by this prospectus. The selling shareholders may,
from time to time, offer all or some of their shares under this prospectus or in another manner. No assurance can be given as
to the actual number of shares that will be resold by the selling shareholders (or any of them). In addition, a selling shareholder
may have already sold or otherwise disposed of shares in transactions exempt from the registration requirements of the Securities
Act. The selling shareholders are not making any representation that the shares covered by this prospectus will be offered for
sale. Except as set forth below, no selling shareholder has held any position nor had any material relationship with our affiliates
or us during the past three years. Except as set forth below, each of the selling shareholders has advised the Company that it
is not a registered broker-dealer or an affiliate of a registered broker-dealer.
Name
of Selling Shareholder | |
Number
of
Shares Owned
Before Offering | | |
Number
of Shares
Being Offered | | |
Number
of
Shares Owned
After Offering | | |
Percent
of
Shares
Owned After
Offering | |
Lazarus Investment Partners
LLLP1 | |
| 18,673,192 | 2 | |
| 833,333 | | |
| 17,839,859 | | |
| 20.2 | % |
Michael Donnelly | |
| 83,333 | 3 | |
| 83,333 | | |
| 0 | | |
| 0 | |
J. Scott Liolios | |
| 371,667 | 4 | |
| 41,667 | | |
| 330,000 | | |
| * | |
Algonquin Capital Management, LLC5 | |
| 600,000 | 6 | |
| 600,000 | | |
| 0 | | |
| 0 | |
Dillon Hill Capital LLC7 | |
| 3,000,000 | 8 | |
| 3,000,000 | | |
| 0 | | |
| 0 | |
Dillon Hill Investment Company LLC9 | |
| 1,500,000 | 10 | |
| 1,500,000 | | |
| 0 | | |
| 0 | |
Elliot-Herbst, LP11 | |
| 160,000 | 12 | |
| 130,000 | | |
| 30,000 | | |
| * | |
J&V Schimmelpfennig Family Trust13 | |
| 90,000 | 14 | |
| 90,000 | | |
| 0 | | |
| 0 | |
SC Investing, LLC15 | |
| 60,000 | 16 | |
| 60,000 | | |
| 0 | | |
| 0 | |
Libertas Law Group, Inc.17 | |
| 155,000 | 18 | |
| 90,000 | | |
| 65,000 | | |
| * | |
Marathon Micro Fund, LP19 | |
| 750,000 | 20 | |
| 750,000 | | |
| 0 | | |
| 0 | |
Marc Nuccitelli | |
| 300,000 | 21 | |
| 300,000 | | |
| 0 | | |
| 0 | |
Schwary Family Trust22 | |
| 115,000 | 23 | |
| 45,000 | | |
| 70,000 | | |
| * | |
Squidblues & Co.24 | |
| 900,000 | 25 | |
| 900,000 | | |
| 0 | | |
| 0 | |
Steven P. Cugine | |
| 300,000 | 26 | |
| 300,000 | | |
| 0 | | |
| * | |
The Daniel and Lauren Friedman Living
Trust27 | |
| 15,000 | 28 | |
| 15,000 | | |
| 0 | | |
| 0 | |
The Debs Family Trust August 9729 | |
| 45,000 | 30 | |
| 45,000 | | |
| 0 | | |
| 0 | |
Abalos Family Trust dated February 17,
199731 | |
| 4,000 | 32 | |
| 2,000 | | |
| 2,000 | | |
| * | |
Baron Discovery Fund33 | |
| 900,000 | 34 | |
| 900,000 | | |
| 0 | | |
| 0 | |
Richard Olicker | |
| 600,000 | 35 | |
| 600,000 | | |
| 0 | | |
| 0 | |
Wolverine Asset Management, LLC36 | |
| 6,000,000 | | |
| 6,000,000 | | |
| 0 | | |
| 0 | |
London Family Trust37 |
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1,056,000 |
|
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|
300,000 |
|
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|
756,000 |
|
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* |
|
Beachform ATF the Crichton Superannuation
Fund38 |
|
|
20,000 |
|
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|
20,000 |
|
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|
0 |
|
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|
0 |
|
Marathon Micro Fund, LP39 |
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750,000 |
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|
750,000 |
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|
0 |
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0 |
|
Daniel and Sarah Grover Living Trust40 |
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45,000 |
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45,000 |
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0 |
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0 |
|
Jeffrey M. Ng41 |
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60,000 |
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60,000 |
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0 |
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0 |
|
Kensington Partners LP42 |
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750,000 |
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750,000 |
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|
0 |
|
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|
0 |
|
Dylide PTY Limited43 |
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60,000 |
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20,000 |
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40,000 |
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* |
|
Pensel PTY Limited as Trustee for the
Selig Superannuation Fund44 |
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220,000 |
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20,000 |
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200,000 |
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* |
AMLM Pty
Ltd. ATF The Mitchell Family Trust45 |
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25,000 |
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25,000 |
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|
0 |
|
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0 |
|
Greenridge Global, LLC46 |
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300,000 |
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135,000 |
|
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165,000 |
|
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|
* |
|
Phascolomis Nominees
Pty Ltd47 |
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120,000 |
|
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|
20,000 |
|
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|
100,000 |
|
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* |
|
*
Less than 1%
1
Lazarus Management Company LLC, a Colorado limited liability company (“Lazarus Management”), is the investment
adviser and general partner of Lazarus Investment Partners LLLP (“Lazarus Partners”), and consequently may be deemed
to have voting control and investment discretion over securities owned by Lazarus Partners. Justin B. Borus is the managing member
of Lazarus Management. As a result, Mr. Borus may be deemed to be the beneficial owner of any shares deemed to be beneficially
owned by Lazarus Management. The foregoing should not be construed in and of itself as an admission by Lazarus Management or Mr.
Borus as to beneficial ownership of the shares owned by Lazarus Partners. Each of Lazarus Management and Mr. Borus disclaims beneficial
ownership of the securities, except to the extent of its or his pecuniary interests therein.
2
Includes 10,613,320 shares underlying exercisable warrants.
3
Includes 83,333 shares underlying exercisable warrants.
4
Includes 271,667 shares underlying exercisable warrants.
5
Michael David Lockwood, President, exercises voting and investment control over all shares beneficially owned.
6
Includes 200,000 shares underlying exercisable warrants.
7
Bruce Grossman, Chief Executive Officer and Managing Partner, exercises voting and investment control over all shares beneficially
owned.
8
Includes 1,000,000 shares underlying exercisable warrants.
9
Bruce Grossman, President, exercises voting and investment control over all shares beneficially owned.
10
Includes 500,000 shares underlying exercisable warrants.
11
Alice Elliot exercises voting and investment control over all shares beneficially owned.
12
Includes 130,000 shares underlying exercisable warrants.
13
Joe Schimmelpfennig exercises voting and investment control over all shares beneficially owned.
14
Includes 30,000 shares underlying exercisable warrants.
15
George H. Schwary and Martha Schwary each exercise voting and investment control over all shares beneficially owned.
16
Includes 20,000 shares underlying exercisable warrants.
17
Mark Abdou exercises voting and investment control over all shares beneficially owned.
18
Includes 30,000 shares underlying exercisable warrants.
19
James G. Kennedy exercises voting and investment control over all shares beneficially owned.
20
Includes 250,000 shares underlying exercisable warrants.
21
Includes 100,000 shares underlying exercisable warrants.
22
George H. Schwary and Martha Schwary each exercise voting and investment control over all shares beneficially owned.
23
Includes 15,000 shares underlying exercisable warrants.
24
Ronald Baron exercises voting and investment control over all shares beneficially owned.
25
Includes 300,000 shares underlying exercisable warrants.
26
Includes 100,000 shares underlying exercisable warrants.
27
Daniel Friedman, Trustee, exercises voting and investment control over all shares beneficially owned.
28
Includes 5,000 shares underlying exercisable warrants.
29
John Frederick Debs, Trustee, exercises voting and investment control over all shares beneficially owned.
30
Includes 15,000 shares underlying exercisable warrants.
31
Alfonso Abalos and Janette Dye, Trustees, exercise voting and investment control over all shares beneficially owned.
32
Includes 2,000 shares underlying exercisable warrants.
33
Ronald Baron exercises voting and investment control over all shares beneficially owned.
34
Includes 300,000 shares underlying exercisable warrants.
35
Includes 200,000 shares underlying exercisable warrants.
36
The sole member and manager of Wolverine Asset Management, LLC (“WAM”) is Wolverine Holdings, L.P. (“Wolverine
Holdings”). Robert R. Bellick and Christopher L. Gust may be deemed to control Wolverine Trading Partners, Inc., the general
partner of Wolverine Holdings. Each of Mr. Bellick and Mr. Gust disclaim beneficial ownership of these securities.
37
Includes 300,000 shares underlying exercisable warrants. Shares being offered include 200,000 shares underlying exercisable
warrants. Robert S. London, trustee, exercises voting and investment control over all shares beneficially owned.
38
Consists of 20,000 shares underlying exercisable warrants.
39
Includes 250,000 shares underlying exercisable warrants. James G. Kennedy exercises voting and investment control over all
shares beneficially owned.
40
Includes 15,000 shares underlying exercisable warrants. Daniel Jonathan Grover and Sarah Ann Goldsmith-Grover exercise voting
and investment control over all shares beneficially owned.
41
Includes 20,000 shares underlying exercisable warrants.
42
Includes 250,000 shares underlying exercisable warrants. Richard Keim exercises voting and investment control over all shares
beneficially owned.
43
Includes 20,000 shares underlying exercisable warrants. Shares offered consist of 20,000 shares underlying exercisable warrants.
Shahen Mekertichian exercises voting and investment control over all shares beneficially owned.
44
Includes 100,000 shares underlying exercisable warrants. Shares offered consist of 20,000 shares underlying exercisable
warrants. David Paul Selig exercises voting and investment control over all shares beneficially owned.
45
Consists of 20,000 shares underlying exercisable warrants. Luke Mitchell exercises voting and investment control over all
shares beneficially owned.
46
Consists of 300,000 shares underlying exercisable warrants. William Robert Gregozeski exercises voting and investment control
over all shares beneficially owned.
47
Consists of 20,000 shares underlying exercisable warrants and 100,000 shares underlying convertible notes. Allan William
Blaikie exercises voting and investment control over all shares beneficially owned.
PLAN
OF DISTRIBUTION
We
are registering the shares of common stock previously issued and the shares of common stock issuable upon exercise of the warrants
to permit the resale of these shares of common stock by the holders of the common stock and warrants from time to time after the
date of this prospectus. We will not receive any of the proceeds from the sale by the selling shareholders of the shares of common
stock. We will bear all fees and expenses incident to our obligation to register the shares of common stock.
The
selling shareholders may sell all or a portion of the shares of common stock held by them and offered hereby from time to time
directly or through one or more underwriters, broker-dealers or agents. If the shares of common stock are sold through underwriters
or broker-dealers, the selling shareholders will be responsible for underwriting discounts or commissions or agent’s commissions.
The shares of common stock may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of
the sale, at varying prices determined at the time of sale or at negotiated prices. These sales may be effected in transactions,
which may involve crosses or block transactions, pursuant to one or more of the following methods:
● |
on
any national securities exchange or quotation service on which the securities may be listed or quoted at the time of sale; |
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in
the over-the-counter market; |
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in
transactions otherwise than on these exchanges or systems or in the over-the-counter market; |
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through
the writing or settlement of options, whether such options are listed on an options exchange or otherwise; |
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● |
ordinary
brokerage transactions and transactions in which the broker-dealer solicits purchasers; |
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● |
block
trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block
as principal to facilitate the transaction; |
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● |
purchases
by a broker-dealer as principal and resale by the broker-dealer for its account; |
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● |
an
exchange distribution in accordance with the rules of the applicable exchange; |
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● |
privately
negotiated transactions; |
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|
● |
short
sales made after the date the Registration Statement is declared effective by the SEC; |
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● |
broker-dealers
may agree with a selling security holder to sell a specified number of such shares at a stipulated price per share; |
● |
a
combination of any such methods of sale; and |
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any
other method permitted pursuant to applicable law. |
The
selling shareholders may also sell shares of common stock under Rule 144 promulgated under the Securities Act of 1933, as amended,
if available, rather than under this prospectus. In addition, the selling shareholders may transfer the shares of common stock
by other means not described in this prospectus. If the selling shareholders effect such transactions by selling shares of common
stock to or through underwriters, broker-dealers or agents, such underwriters, broker-dealers or agents may receive commissions
in the form of discounts, concessions or commissions from the selling shareholders or commissions from purchasers of the shares
of common stock for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions
as to particular underwriters, broker-dealers or agents may be in excess of those customary in the types of transactions involved).
In connection with sales of the shares of common stock or otherwise, the selling shareholders may enter into hedging transactions
with broker-dealers, which may in turn engage in short sales of the shares of common stock in the course of hedging in positions
they assume. The selling shareholders may also sell shares of common stock short and deliver shares of common stock covered by
this prospectus to close out short positions and to return borrowed shares in connection with such short sales. The selling shareholders
may also loan or pledge shares of common stock to broker-dealers that in turn may sell such shares.
The
selling shareholders may pledge or grant a security interest in some or all of the warrants or shares of common stock owned by
them and, if they default in the performance of their secured obligations, the pledgees or secured parties may offer and sell
the shares of common stock from time to time pursuant to this prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act amending, if necessary, the list of selling shareholders to include the pledgee,
transferee or other successors in interest as selling shareholders under this prospectus. The selling shareholders also may transfer
and donate the shares of common stock in other circumstances in which case the transferees, donees, pledgees or other successors
in interest will be the selling beneficial owners for purposes of this prospectus.
To
the extent required by the Securities Act and the rules and regulations thereunder, the selling shareholders and any broker-dealer
participating in the distribution of the shares of common stock may be deemed to be “underwriters” within the meaning
of the Securities Act, and any commission paid, or any discounts or concessions allowed to, any such broker-dealer may be deemed
to be underwriting commissions or discounts under the Securities Act. At the time a particular offering of the shares of common
stock is made, a prospectus supplement, if required, will be distributed, which will set forth the aggregate amount of shares
of common stock being offered and the terms of the offering, including the name or names of any broker-dealers or agents, any
discounts, commissions and other terms constituting compensation from the selling shareholders and any discounts, commissions
or concessions allowed or re-allowed or paid to broker-dealers.
Under
the securities laws of some states, the shares of common stock may be sold in such states only through registered or licensed
brokers or dealers. In addition, in some states the shares of common stock may not be sold unless such shares have been registered
or qualified for sale in such state or an exemption from registration or qualification is available and is complied with.
There
can be no assurance that any selling shareholder will sell any or all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a part.
The
selling shareholders and any other person participating in such distribution will be subject to applicable provisions of the Securities
Exchange Act of 1934, as amended, and the rules and regulations thereunder, including, without limitation, to the extent applicable,
Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the shares of common stock by the
selling shareholders and any other participating person. To the extent applicable, Regulation M may also restrict the ability
of any person engaged in the distribution of the shares of common stock to engage in market-making activities with respect to
the shares of common stock. All of the foregoing may affect the marketability of the shares of common stock and the ability of
any person or entity to engage in market-making activities with respect to the shares of common stock.
We
will pay all expenses of the registration of the shares of common stock pursuant to the registration rights agreement, estimated
to be $33,200 in total, including, without limitation, Securities and Exchange Commission filing fees and expenses of compliance
with state securities or “blue sky” laws; provided, however, a selling shareholder will pay all underwriting discounts
and selling commissions, if any. We will indemnify the selling shareholders against liabilities, including some liabilities under
the Securities Act in accordance with the registration rights agreements or the selling shareholders will be entitled to contribution.
We may be indemnified by the selling shareholders against civil liabilities, including liabilities under the Securities Act that
may arise from any written information furnished to us by the selling shareholder specifically for use in this prospectus, in
accordance with the related registration rights agreements or we may be entitled to contribution.
Once
sold under the registration statement, of which this prospectus forms a part, the shares of common stock will be freely tradable
in the hands of persons other than our affiliates.
LEGAL
PROCEEDINGS
We
are not party to any lawsuits or legal proceedings, the adverse outcome of which, in management’s opinion, individually
or in the aggregate, would have a material adverse affect on our results of operations and financial position, and have no knowledge
of any threatened or potential lawsuits or legal proceedings against us. From time to time, we may be involved in litigation relating
to claims arising out of operations in the ordinary course of business.
DIRECTORS,
EXECUTIVE OFFICERS, PROMOTERS, CONTROL PERSONS
Directors
and Executive Officers
The
following sets forth information about our directors and executive officers as of the date of this Report:
Name |
|
Age |
|
Position |
Riccardo
Delle Coste |
|
36 |
|
President,
Chief Executive Officer and Chairman |
Steven
Lang |
|
62 |
|
Director |
Arnold
Tinter |
|
69 |
|
Chief
Financial Officer, Secretary and Director |
Joseph
M. Cugine |
|
54 |
|
Director |
Alice
Elliot |
|
58 |
|
Director |
Riccardo
Delle Coste has been the Chairman of our board of directors, President and Chief Executive Officer since January 10, 2012.
He has also been the President and Chief Executive Officer of Barfresh Inc., a Colorado corporation and our wholly owned subsidiary
(“Barfresh CO”), since its inception. Mr. Delle Coste is the inventor of the patent pending technology and the creator
of Smoo Smoothies. Mr. Delle Coste started the business in 2005 and developed a unique system using controlled pre-packaged portions,
to deliver a freshly made smoothie that is quick, cost efficient, healthy and with no waste. In building the business, he is responsible
for securing new business tenders and maintaining key client relationships. He is also responsible for the development of new
product from testing to full-scale production, establishment of the manufacturing facilities that have all necessary accreditation
(HACCP, Halal, and Kosher), technology development, product improvement and R&D with new product launches. Mr. Delle Coste
also has over five years of investment banking experience. Mr. Delle Coste attended Macquarie University, Sydney, Australia while
studying for a Bachelor of Commerce for 3.5 years but left to pursue business interests and did not receive a degree.
Qualifications:
Mr. Delle Coste has 17 years of experience within retail, hospitality and dairy manufacturing.
Steven
Lang was appointed as Director of the Company on January 10, 2012. He has also served as Secretary of Barfresh CO since
its inception. Prior to joining Barfresh CO, from 2003 to 2007, Mr. Lang was a director of Vericap Finance Limited, a company
that specializes in providing advice to and investing in Australian companies with international growth potential. From 1990 to
1999, he served as a director of Babcock & Brown’s Australian operations where he was responsible for international
structured finance transactions. Mr. Lang received a Bachelor of Commerce and a Bachelor of Laws from the University of New South
Wales in 1976 and a Master of Laws from the University of Sydney in 1984. He has been a member of the Institute of Chartered Accountants
in Australia and was licensed to practice foreign law in New York.
Qualifications:
Mr. Lang has over 35 years of experience in business, accounting, law and finance and served as Chairman of an Australian public
company.
Arnold
Tinter was appointed as Director, Chief Financial Officer and Secretary of the Company on January 10, 2012. Mr. Tinter
founded Corporate Finance Group, Inc., a consulting firm located in Denver, Colorado, in 1992, and is its President. Corporate
Finance Group, Inc., is involved in financial consulting in the areas of strategic planning, mergers and acquisitions and capital
formation. He is the chief financial officer to two other public companies: LifeApps Digital Media Inc. and Arvana Inc. From 2006
to 2010 he was the chief financial officer of Spicy Pickle Franchising, Inc., a public company, where his responsibilities included
oversight of all accounting functions, including SEC reporting, strategic planning and capital formation. From May 2001 to May
2003, he served as chief financial officer of Bayview Technology Group, LLC, a privately held company that manufactured and distributed
energy-efficient products. From May 2003 to October 2004, he also served as that company’s chief executive officer. Prior
to 1990, Mr. Tinter was chief executive officer of Source Venture Capital, a holding company with investments in the gaming, printing
and retail industries. Mr. Tinter currently serves as a director of LifeApps Digital Media Inc., a public company. Mr. Tinter
received a B.S. degree in Accounting in 1967 from C.W. Post College, Long Island University, and is licensed as a Certified Public
Accountant in Colorado.
Qualifications:
Mr. Tinter has over 40 years of experience as a Certified Public Accountant and a financial consultant. During his career
he served as a director of numerous public companies.
Joseph
M. Cugine was appointed as Director of the Company on July 29, 2014. Mr. Cugine is the owner and president of Cugine Foods
and JC Restaurants, a franchisee of Taco Bell and Pizza Hut in New York. He is also president and owner of Restaurant Consulting
Group LLC. Prior to owning and operating his own firms, Mr. Cugine held a series of leadership roles with PepsiCo, lastly as chief
customer officer and senior vice president of PepsiCo’s Foodservice division. Mr. Cugine also serves on the board of directors
of The Chef’s Warehouse, Inc., a publicly traded specialty food products distributor in the U.S., as well as Ridgefield
Playhouse and R4 Technology. He received his B.S. degree from St. Joseph’s University in Philadelphia.
Qualifications:
Mr. Cugine’s career in sales, marketing, operations and supply chain spans more than 25 years. He has extensive industry
contacts and proven experience leading and advising numerous successful food distribution companies.
Alice
Elliot was appointed as Director of the Company on October 15, 2014. Ms. Elliot is the founder and chief executive of
The Elliot Group, a global retained executive search firm specializing in the hospitality, foodservice, retail and service sectors.
For more than 20 years, Ms. Elliot has hosted the exclusive invitation only ‘Elliot Leadership Conference.’ She was
a co-founder of ‘The Elliot Leadership Institute,’ a nonprofit organization dedicated to leadership development and
advancement in the foodservice industry, and is known for her philanthropic and educational endeavors and contributions. Throughout
her career, Ms. Elliot has received various industry honors, including the Trailblazer Award from the Women’s Foodservice
Forum and induction into the National Restaurant Association Educational Foundation’s College of Diplomates. She was also
recently named to the Nation’s Restaurant News list of the 50 Most Powerful People in Foodservice.
Qualifications:
Well recognized for the placement of senior-level executives at public and privately held restaurant organizations nationwide,
Ms. Elliot is sought out for their intellectual and strategic thought leadership.
Employment
Agreements
There
are currently no employment agreements between the Company and its officers and directors.
Term
of Office
Directors
are appointed for a one-year term to hold office until the next annual general meeting of shareholders or until removed from office
in accordance with our bylaws. Our officers are appointed by our board of directors and hold office until the earlier of resignation
or removal.
Director
Independence
We
use the definition of “independence” standards as defined in the NASDAQ Stock Market Rule 5605(a)(2) provides that
an “independent director” is a person other than an officer or employee of the company or any other individual having
a relationship, which, in the opinion of the Company’s board of directors, would interfere with the exercise of independent
judgment in carrying out the responsibilities of a director. We have determined that only one of our directors is independent,
which constitutes less than a majority.
Board
Committees
We
do not have an audit, nominating or compensation committee. We intend, however, to establish an audit committee and a compensation
committee of our board in the future. We envision that the audit committee will be primarily responsible for reviewing the services
performed by our independent auditors and evaluating our accounting policies and our system of internal controls. The compensation
committee will be primarily responsible for reviewing and approving our salary and benefits policies (including stock options)
and other compensation of our executive officers.
Family
Relationships
There
are no family relationships among any of our officers or directors.
Legal
Proceedings
To
the best of our knowledge, none of our executive officers or directors are parties to any material proceedings adverse to the
Company, have any material interest adverse to the Company or have, during the past ten years:
|
● |
been
convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other
minor offenses); |
|
|
|
|
● |
had
any bankruptcy petition filed by or against him/her or any business of which he/she was a general partner or executive officer,
either at the time of the bankruptcy or within two years prior to that time; |
|
|
|
|
● |
been
subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining, barring, suspending or otherwise limiting his/her involvement in any type of business,
securities, futures, commodities or banking activities; |
|
|
|
|
● |
been
found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed,
suspended, or vacated; |
|
|
|
|
● |
been
subject to, or party to, any judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended
or vacated, relating to an alleged violation of (i) any Federal or State securities or commodities law or regulation, (ii)
any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary
or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist
order, or removal or prohibition order or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection
with any business entity; or been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended
or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))),
any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent
exchange, association, entity or organization that has disciplinary authority over its members or persons associated with
a member. |
Code
of Ethics
The
Company has not yet adopted a code of ethics.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth certain information regarding our shares of common stock beneficially owned as of April 29, 2015 for
(i) each shareholder known to be the beneficial owner of 5% or more of our outstanding shares of common stock, (ii) each named
executive officer and director, and (iii) all executive officers and directors as a group. A person is considered to beneficially
own any shares: (i) over which such person, directly or indirectly, exercises sole or shared voting or investment power, or (ii)
of which such person has the right to acquire beneficial ownership at any time within 60 days through an exercise of stock options
or warrants or otherwise. Unless otherwise indicated, voting and investment power relating to the shares shown in the table for
our directors and executive officers is exercised solely by the beneficial owner or shared by the owner and the owner’s
spouse or children.
For
purposes of this table, a person or group of persons is deemed to have “beneficial ownership” of any shares of common
stock that such person has the right to acquire within 60 days of April 29, 2015. For purposes of computing the percentage of
outstanding shares of our common stock held by each person or group of persons named above, any shares that such person or persons
has the right to acquire within 60 days of April 29, 2015 is deemed to be outstanding, but is not deemed to be outstanding for
the purpose of computing the percentage ownership of any other person. The inclusion herein of any shares listed as beneficially
owned does not constitute an admission of beneficial ownership.
Name and address of beneficial owner (1) | |
Amount and
nature of
beneficial
ownership | | |
Percent of
class o/s | |
Riccardo Delle Coste (2) (3) (4) (5) | |
| 20,049,310 | | |
| 25.25 | % |
| |
| | | |
| | |
R.D. Capital Holdings Pty Ltd. | |
| 18,966,664 | | |
| 24.09 | % |
| |
| | | |
| | |
Steven Lang (6) (7) (8) (9) | |
| 20,249,310 | | |
| 25.37 | % |
| |
| | | |
| | |
Sidra Pty Limited | |
| 19,249,310 | | |
| 24.37 | % |
| |
| | | |
| | |
Arnold Tinter (10) | |
| 800,000 | | |
| 1.02 | % |
| |
| | | |
| | |
Joseph M. Cugine (11) (12) (13) | |
| 1,714,100 | | |
| 2.18 | % |
| |
| | | |
| | |
Alice Elliot (14) (15) (16) | |
| 490,000 | | |
| 0.62 | % |
| |
| | | |
| | |
All directors and officers as a group (5 persons) | |
| 43,302,720 | | |
| 53.68 | % |
| |
| | | |
| | |
Lazarus Investment Partners LLLP 3200 Cherry Creek South Drive Suite 670 Denver,
CO 80209 (17) | |
| 18,093,295 | | |
| 20.62 | % |
| |
| | | |
| | |
Wolverine Flagship Fund Trading Limited 175 West Jackson Blvd., Suite 340 Chicago, IL
60604 (18) | |
| 6,000,000 | | |
| 7.53 | % |
| |
| | | |
| | |
Bruce Grossman (19)
c/o Dillon Hill Capital LLC
200 Business Park Drive, Suite 306
Armonk, NY 10504
| |
| 4,500,000 | | |
| 5.68 | % |
(1) |
The address of all officers
and directors listed is c/o Barfresh Food Group Inc., 8530
Wilshire Blvd,, Suite 450, Beverly Hills, CA 90211.
|
(2) |
Mr.
Delle Coste is the Chief Executive Officer, President and a Director of the Company. |
(3) |
Includes
18,966,664 shares owned by R.D. Capital Holdings PTY Ltd. and of which Riccardo Delle Coste is deemed to be a beneficial owner. |
(4) |
Includes
200,000 shares underlying convertible debt and 200,000 shares underlying warrants related to the convertible debt owned by
the Delle Coste Family Trust. Mr. Delle Coste may be deemed to indirectly beneficially own these shares but disclaims beneficial
ownership of these shares pursuant to Rule 13d-4 promulgated under the Securities Exchange Act of 1934, as amended. |
(5) |
Includes
282,646 shares underlying warrants issued in connection with a promissory note the holder of which is the Delle Coste Family
Trust. Mr. Delle Coste may be deemed to indirectly beneficially own these shares but disclaims beneficial ownership of these
shares pursuant to Rule 13d-4 promulgated under the Securities Exchange Act of 1934, as amended. |
(6) |
Mr.
Lang is a Director of the Company. |
(7) |
Includes
18,966,664 shares owned by Sidra Pty Limited of which Steven Lang is deemed to be a beneficial owner. |
(8) |
Includes
800,000 shares underlying options granted. |
(9) |
Includes
282,6469 shares underlying warrants issued in connection with a promissory note the holder of which is Sidra PTY Limited. |
(10) |
Mr.
Tinter is the Chief Financial Officer, Secretary and a Director of the Company. |
(11) |
Mr.
Cugine is a Director of the Company. |
(12) |
Includes
500,000 shares owned by Restaurant Consulting Group LLC of which Joe Cugine is deemed to be a beneficial owner. |
(13) |
Includes
50,000 shares underlying warrants issued in connection with purchase of common stock. |
(14) |
Ms.
Elliot is a Director of the Company. |
(15) |
Includes
160,000 shares owned by Elliot-Herbst LP of which Alice Elliot is deemed to be a beneficial owner. |
(16) |
Includes
30,000 shares underlying warrants issued in connection with purchase of common stock. |
(17) |
Includes
10,033,333 shares underlying warrants issued in connection with purchase of common stock. Lazarus Management Company LLC,
a Colorado limited liability company (“Lazarus Management”), is the investment adviser and general partner of
Lazarus Investment Partners LLLP (“Lazarus Partners”), and consequently may be deemed to have voting control and
investment discretion over securities owned by Lazarus Partners. Justin B. Borus is the managing member of Lazarus Management.
As a result, Mr. Borus may be deemed to be the beneficial owner of any shares deemed to be beneficially owned by Lazarus Management.
The foregoing should not be construed in and of itself as an admission by Lazarus Management or Mr. Borus as to beneficial
ownership of the shares owned by Lazarus Partners. Each of Lazarus Management and Mr. Borus disclaims beneficial ownership
of the securities, except to the extent of its or his pecuniary interests therein. |
(18) |
Includes
2,000,000 shares underlying warrants issued in connection with purchase of common stock. Wolverine Asset Management, LLC (“WAM”)
is the investment manager of Wolverine Flagship Fund Trading Limited and has voting and dispositive power over these securities.
The sole member and manager of WAM is Wolverine Holdings, L.P. (“Wolverine Holdings”). Robert R. Bellick and Christopher
L. Gust may be deemed to control Wolverine Trading Partners, Inc., the general partner of Wolverine Holdings. |
(19) |
Dillon Hill Capital, LLC, of
which the Mr. Grossman is the sole member, directly owns 2,000,000 shares are common
stock and warrants to purchase an additional 1,000,000 shares of common stock. Dillon
Hill Investment Company, LLC, the sole member of which is a trust of which Mr. Grossman’s
spouse is a co-trustee, directly owns 1,000,000 shares of common stock and warrants
to purchase an additional 500,000 shares of common stock. By virtue of the relationships
described above, the Mr. Grossman n may be deemed to have sole voting and dispositive
power over the shares and warrants held by Dillon Hill Capital LLC and shared voting
and dispositive power over the shares and warrants held by Dillon Hill Investment Company,
LLC.
|
DESCRIPTION
OF SECURITIES
Authorized
Capital Stock
Our authorized share capital consists of 95,000,000
shares of common stock, par value $0.000001 per share and 5,000,000 shares of preferred stock, par value $0.000001 per share.
As of April 29, 2015, 78,720,788 shares of our common stock were outstanding.
Common
Stock
Each
share of our common stock entitles its holder to one vote in the election of each director and on all other matters voted on generally
by our shareholders, other than any matter that (i) solely relates to the terms of any outstanding series of preferred stock or
the number of shares of that series and (ii) does not affect the number of authorized shares of preferred stock or the powers,
privileges and rights pertaining to the common stock. No share of our common stock affords any cumulative voting rights. This
means that the holders of a majority of the voting power of the shares voting for the election of directors can elect all directors
to be elected if they choose to do so. Holders of our common stock will be entitled to dividends in such amounts and at such times
as our board of directors in its discretion may declare out of funds legally available for the payment of dividends. We currently
intend to retain our entire available discretionary cash flow to finance the growth, development and expansion of our business
and do not anticipate paying any cash dividends on the common stock in the foreseeable future. Any future dividends will be paid
at the discretion of our board of directors after taking into account various factors, including:
|
● |
general
business conditions; |
|
|
|
|
● |
industry
practice; |
|
|
|
|
● |
our
financial condition and performance; |
|
|
|
|
● |
our
future prospects; |
|
|
|
|
● |
our
cash needs and capital investment plans; |
|
|
|
|
● |
our
obligations to holders of any preferred stock we may issue; |
|
|
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|
● |
income
tax consequences; and |
|
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|
● |
the
restrictions Delaware and other applicable laws and our credit arrangements then impose. |
If
we liquidate or dissolve our business, the holders of our common stock will share ratably in all our assets that are available
for distribution to our shareholders after our creditors are paid in full and the holders of all series of our outstanding preferred
stock, if any, receive their liquidation preferences in full.
Our
common stock has no preemptive rights and is not convertible or redeemable or entitled to the benefits of any sinking or repurchase
fund.
Series
G Warrants
Series
G Warrants to purchase up to 5,275,000 shares of common stock are currently outstanding. The Series G Warrants are exercisable
for a term of five-years at a per share exercise price of $0.60 and are subject to customary protective provisions for price and
certain events. The shares of common stock issuable upon exercise of the warrants are subject to mandatory registration rights.
Holders of Series G Warrants may elect cashless exercise in the event a registration statement is not available at the time of
sale. The Series G Warrants may not be exercised by a holder to the extent that after giving effect to such exercise, the holder
would beneficially own in excess of 9.99% of the issued and outstanding common stock of the Company.
Series
N Warrants
Series
N Warrants to purchase up to 1,291,667 shares common stock are currently outstanding. Series G Warrants are exercisable for a
term of five- years at a per share exercise price of $0.45 or via cashless exercise, at the holder’s option. The Series
G Warrants are subject to customary protective provisions for certain events. The shares of common stock issuable upon exercise
of the warrants are subject to mandatory registration rights.
Other
Warrants
Other
Warrants registered hereunder to purchase up to 135,000 shares common stock are exercisable for a term of three years at a per
share exercise price of $0.50 or via cashless exercise, at the holder’s option. The shares of common stock issuable upon
exercise of the warrants are subject to piggyback registration rights.
LEGAL
MATTERS
The
validity of the common stock to be sold under this prospectus will be passed upon for us by Libertas Law Group, Inc. Libertas
Law Group holds 130,000 shares of common stock and a Series E warrant to purchase 25,000 shares.
EXPERTS
Our
financial statements, as of and for the years ended March 31, 2013 and March 31, 2014 appearing in the prospectus, have been audited
by Eide Bailly LLP, an independent registered public accounting firm, to the extent and for the periods indicated in their report
appearing herein, which report expresses an unqualified opinion, and are included in reliance upon such report and upon authority
of such firm as experts in accounting and auditing.
DISCLOSURE
OF COMMISSION POSITION ON INDEMNIFICATION FOR
SECURITIES ACT LIABILITIES
The
Company’s directors and executive officers are indemnified as provided by the Delaware General Corporation Law and the Company’s
Certificate of Incorporation. These provisions state that the Company’s directors may cause the Company to indemnify a director
or former director against all costs, charges and expenses, including an amount paid to settle an action or satisfy a judgment,
actually and reasonably incurred by him as a result of him acting as a director. The indemnification of costs can include an amount
paid to settle an action or satisfy a judgment. Such indemnification is at the discretion of the Company’s board of directors
and is subject to the SEC’s policy regarding indemnification.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a
director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
At
present, there is no pending litigation or proceeding involving any of our directors, officers or employees as to which indemnification
is sought, nor are we aware of any threatened litigation or proceeding that may result in claims for indemnification.
DESCRIPTION
OF BUSINESS
Business
Overview
Barfresh
is a leader in the creation of, manufacturing and distributing ready to blend beverages. The current portfolio of products is
made up of smoothies, shakes and frappes. All of the products are portion controlled and ready to blend beverage ingredient packs
or “beverage packs”. The beverage packs contain all of the ingredients necessary to make the beverage, including the
base (either sorbet, frozen yogurt or ice cream), fruit pieces, juices and ice.
Domestic
and international patents and patents pending are owned by Barfresh, as well as related trademarks for all of the products. In
November 2011, the Company acquired the patent rights in the United States and Canada. The Canadian patent has been granted and
the United States patent is “patent pending”. On October 15, 2013, the Company acquired all of the related international
patent rights, which were filed pursuant to the Patent Cooperation Treaty and have been granted in 13 jurisdictions. The patents
are pending in the remainder of the jurisdictions that have signed the treaty. In addition, on October 15, 2013, the Company purchased
all of the trademarks related to the patented products.
Product
development and new flavor creation is a critical element of the business. The leadership team has been developing flavor profiles
for each beverage category that will appeal to tastes in the United States. The Company has been in discussions with a number
of companies including both large and small quick service restaurant (“QSR”) chains and full service restaurant chains
(“FSR”). Additionally, there are also discussions with national food service companies that serve alternative venues
such as stadiums, arenas and universities with national footprints in the United States. Preliminary agreements with three potential
customers have been reached and testing in these venues will begin in the near future. There are also other ongoing negotiations
taking place with several of national foodservice companies.
In
addition to the large fast food, fast casual and full service restaurant chains, the Company will sell to food distributors that
supply products to the food services market place. Effective July 2, 2014, the Company entered into an agreement with Sysco Merchandising
and Supply Chain Services, Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s
ready-to-blend smoothies, shakes and frappes. All Barfresh products will be included in Sysco’s national core selection
of beverage items, making Barfresh its exclusive single-serve, pre-portioned beverage provider. The agreement is mutually exclusive;
provided however, the products are supplied to other foodservice distributors, but only to the extent required for such foodservice
distributors to service multi-unit chain operators with at least 20 units and where Sysco is not such multi-unit chain operators
nominated distributor for our products. The Company has started shipping to Sysco under this agreement and anticipates a national
rollout to approximately 74 distribution centers over the next 18 months.
Finally,
the Company intends to monetize the international patents outside of the current area of operations, North America, by expanding
contract manufacturing to other countries and selling either through selling agents or internal sales personnel. The Company will
also consider entering into some form of license or royalty agreements with third parties.
Barfresh
plans to utilize contract manufacturers to manufacture all of the products in the United States. Ice cream manufacturers are best
suited to produce the products and a second production line has been installed and commissioned in Salt Lake City. This manufacturer
is currently producing products being sold to existing customers as well as new product development for new large customers.
Although
there currently is not a contract in place with any suppliers for the raw materials needed to manufacture smoothie packs, there
are a significant number of sources available and the company does not anticipate becoming dependent on any one supplier. As demand
for the range of products grows, the plan will be to contract a level of raw material requirements to ensure continuity of supply.
There
are five employees and one consultant selling our product. The process of obtaining orders from potential customers will likely
follow the following process:
|
● |
Meet
with and introduce products to customer; |
|
|
|
|
● |
For
larger accounts, develop custom flavor profiles for the specific customer; |
|
|
|
|
● |
Participate
in test marketing of the product with the flavors developed for the customer; and |
|
|
|
|
● |
Agree
to a roll out schedule for the customer. |
Although
we have agreements with potential customers (representing approximately 10,000 outlets) to develop flavors, test a variety of
the beverage offerings and develop new flavor profiles for others, there is no assurance that the products will be supplied to
any chain. However, the products are currently shipping to a number of contracted customers and to a number of smaller customers.
Most
recently, as part of the Company’s expansion due to the acquisition of the international patents, a leading regional Australian
food ingredient supply and product developer has been engaged as the wholesaler and distributor for Barfresh. The first order
to Australia shipped in January 2014.
Corporate
History and Background
The
Company incorporated on February 25, 2010 in the state of Delaware. The Company was originally formed to acquire scripts for movie
opportunities, to produce the related movies and to sell, lease, license, distribute and syndicate the movies and develop other
related media products related to the movies. As the result of the reverse merger, more fully described below, the Company is
now engaged in the manufacturing and distribution of ready to blend beverages, particularly, smoothies, shakes and frappes.
Reorganization
and Recapitalization
During
January, 2012, the Company entered into a series of transactions pursuant to which Barfresh Inc., a Colorado corporation (“Barfresh
CO”), was acquired, spun-out prior operations to the former principal shareholder, completed a private offering of securities
for an aggregate purchase price of approximately $999,998, conducted a four for one forward stock split and changed the name of
the Company. The following describes the foregoing transactions:
|
● |
Acquisition
of Barfresh CO. We acquired all of the outstanding capital stock of Barfresh CO in exchange for the issuance of 37,333,328
shares of our $0.000001 par value common stock pursuant to a Share Exchange Agreement between us, our former principal shareholder,
Barfresh CO and the former shareholders of Barfresh CO. As a result of this transaction, Barfresh CO became our wholly owned
subsidiary and the former shareholders of Barfresh CO became our controlling shareholders. |
|
|
|
|
● |
Spinout
of prior business. Immediately prior to the acquisition of Barfresh CO, we spun-out our previous business operations to
a former officer, director and principal shareholder, in exchange for all of the shares of our common stock held by that person.
Such shares were cancelled immediately following the acquisition. |
|
|
|
|
● |
Financing
transaction. Immediately following the acquisition of Barfresh, we sold an aggregate of 1,333,332 shares of our common
stock and five-year warrants to purchase 1,333,332 shares of common stock at a per share exercise price of $1.50 in a private
offering for gross proceeds of $999,998, less expenses of $26,895. |
|
|
|
|
● |
Change
of name. Subsequent to the merger, we changed the name of the Company from Moving Box Inc. to Barfresh Food Group Inc. |
|
|
|
|
● |
Forward
stock split. Subsequent to the merger, we conducted a four for one forward stock split of the Company’s common stock. |
Products
All
of the products are portion controlled beverage ingredient packs, suitable for smoothies, shakes and frappes that can also be
utilized for cocktails and mocktails. They contain all of the ingredients necessary to make a smoothie, shake or frappe, including
the ice. Simply add water, empty the packet into a blender, blend and serve.
The following
shows the product with the package opened:
The
following flavors are available for sale as part of the standard line:
Smoothies:
Shakes:
Frappes:
In
addition to the standard product range, the Company is currently working on customized flavor profiles for some key accounts.
Some
of the key product benefits for operators include:
|
● |
Portion
controlled |
|
● |
Zero
waste |
|
● |
Product
consistency – every time a smoothie is made |
|
● |
Unitized
inventory |
|
● |
Long
shelf life (24 months) |
|
● |
Little
to no capital investment necessary |
|
● |
Very
quick to make (less than 60 seconds) |
|
● |
Ability
to itemize the ingredients of the smoothie on menus |
|
● |
Products
require less retail space |
Some
of the key benefits of the products for the end consumers that drink the products include:
|
● |
From as little
as 150 calories (per serving) |
|
● |
At least ¼
cup of real fruit per serving |
|
● |
Dairy free options |
|
● |
Kosher approved |
|
● |
Gluten Free |
Customer
Marketing Material
A
wide range of consumer marketing materials has been created to assist customers in selling blended beverages. Examples of our
“SMOO” branded marketing materials are detailed below.
Research
and Development
An
incurrence of $47,035 and $103,293 in research and development expenses for the fiscal years ended March 31, 2014, and March 31,
2013, respectively.
Competition
There
is significant competition in the smoothie market at both the consumer purchasing level and also the product level.
The
competition at the consumer level is primarily between specialized juice bars (e.g. Jamba Juice) and major fast casual and fast
food restaurant chains (such as McDonalds). Barfresh does not compete specifically at this level but intends to supply its product
to customers that fall within these segments to enable them to compete for consumer demand.
There
may also be new entrants to the smoothie market that may alter the current competitor landscape.
The
existing competition from a product perspective can be separated into three categories:
|
● |
Specialized
juice bar products: The product is made in-store and each ingredient is added separately. |
|
|
|
|
● |
Syrup
based products: The fruit puree is supplied in bulk and not portion controlled for each smoothie. These types of products
still require the addition of juice, milk or water and/or yogurt and ice. While there are a number of competitors for this
style of product, the two dominant competitors are Island Oasis and Minute Maid, which are both owned by Coca Cola. |
|
|
|
|
● |
Portion
pack products: These products contain only the fruit and yogurt and require the addition of juice or milk and ice. The two
dominant competitors are General Mills’ Yoplait Smoothies and Inventure Group’s Jamba Smoothies. |
The
Company believes their ability to offer customer’s equipment packages with no upfront cost is a significant competitive
advantage and will assist in gaining traction in the market and securing long-term agreements with customers. The Company also
believes that the product’s attributes will make it more attractive to competitors. However, there are other factors that
may influence the adoption of a particular product by customers, including their dependence on prior relationships with competition.
Intellectual
Property
Barfresh
owns the domestic and intellectual property rights to its products’ sealed pack of ingredients.
In
November 2011, the Company acquired patent applications filed in the United States (Patent Application number 11/660415) and Canada
(Patent Application number 2577163) from certain related parties. The United States patent was originally filed on December 4,
2007 and its current status is patent pending. The Canadian patent was originally filed on August 16, 2005 and it has been granted.
On
October 15, 2013, the Company acquired all of the related international patent rights, which were filed pursuant to the Patent
Cooperation Treaty, have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions that have signed
the PCT. In addition, the Company purchased all of the trademarks related to the patented products.
Governmental
Approval and Regulation
The
Company is not aware of the need for any governmental approvals of its products.
Since
the Company will initially utilize a contract manufacturer, regulations of the United States Food and Drug Administration, as
they apply to the manufacturing, will be the responsibility of the contract manufacturers. Before entering into any manufacturing
contract, the Company will determine that the manufacturer has met all government requirements.
The
Company will be subject to certain labeling requirements as to the contents and nutritional information of our products.
Environmental
Laws
The
Company does not believe that it will be subject to any environmental laws, either state or federal. Any laws concerning manufacturing
will be the responsibility of the contract manufacturer.
Employees
Currently,
the Company has 10 full time employees. From time to time, we may hire additional workers on a contract basis as the need arises.
MANAGEMENT’S
DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This
discussion includes forward-looking statements, as that term is defined in the federal securities laws, based upon current expectations
that involve risks and uncertainties, such as plans, objectives, expectations and intentions. Actual results and the timing of
events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors.
Words such as “anticipate”, “estimate”, “plan”, “continuing”, “ongoing”,
“expect”, “believe”, “intend”, “may”, “will”, “should”,
“could” and similar expressions are used to identify forward-looking statements.
We
caution you that these statements are not guarantees of future performance or events and are subject to a number of uncertainties,
risks and other influences, many of which are beyond our control, which may influence the accuracy of the statements and the projections
upon which the statements are based. Factors that may affect our results include, but are not limited to, the risk factors set
forth in this prospectus under the heading “Risk Factors”. Any one or more of these uncertainties, risks and other
influences could materially affect our results of operations and whether forward-looking statements made by us ultimately prove
to be accurate. Our actual results, performance and achievements could differ materially from those expressed or implied in these
forward-looking statements. We undertake no obligation to publicly update or revise any forward-looking statements, whether from
new information, future events or otherwise.
We
are engaged in the manufacturing and distribution of ready to blend beverages, particularly, smoothies, shakes and frappes. Our
products are portion controlled ready to blend beverage ingredient packs or “beverage packs”. They contain all of
the ingredients necessary to make the beverage, including the base (either sorbet, frozen yogurt or ice cream), fruit pieces,
juices and ice. Ingredients used are natural, no syrups or powders.
We
own the domestic and international patents and patents pending, as well as related trademarks for our products. In November 2011
we acquired the patent rights in the United States and Canada. The Canadian patent has been granted and the United States patent
is “patent pending”. On October 15, 2013, we acquired all of the related international patent rights, which were filed
pursuant to the Patent Cooperation Treaty, have been granted in 13 jurisdictions and are pending in the remainder of the jurisdictions
that have signed the treaty. In addition, on October 15, 2013, we purchased all of the trademarks related to the patented products.
We
have been developing flavor profiles of our smoothies that we believe will be appealing to tastes in the United States. We have
been in discussions with a number of companies including both large and small quick service restaurant (“QSR”) chains
and national food services companies that serve alternative venues such as stadiums, arenas and universities with national footprints
in the United States and have reached preliminary agreements with three potential customers to begin testing in the near future.
We are in ongoing negotiations with a number of other companies. In addition to the large retail fast food and fast casual chains,
we will sell to food distributors that supply products to the food services market place. Finally, we intend to monetize the international
patents outside of our current area of operations, North America, by expanding contract manufacturing to other countries and selling
either through selling agents or our own sales personnel or by entering into some form of license or royalty agreements with third
parties. We began selling product to Australia during the final months of our fiscal year ended March 31, 2014.
To
date, we have funded our operations through the sale of our equity securities, issuance of convertible debt, issuance of promissory
notes and advances from related parties.
The
acquisition of the international patents and trademarks on October 15, 2013 was funded through an advance of $672,157 from an
affiliate of a director and significant shareholder. Two hundred thousand ($200,000) of the advance was satisfied through the
participation in the Company’s December 20, 2013 private placement of notes and warrants by the affiliate of the aforementioned
director and significant shareholder and also an affiliate of an officer and director and significant shareholder. The net proceeds
to the Company from the private placement that closed on December 20, 2013, including the aforementioned $200,000, was $775,000.
The $775,000 in notes bears interest at a rate of 2% per annum and is due and payable on December 20, 2014, with certain provisions
for extension. Warrants to purchase 1,291,667 shares of the Company’s common stock were issued to these investors and the
warrants have an exercise price of $0.45 per share. In addition to the related parties discussed above, a significant shareholder
purchased $500,000 of notes. All of the related parties participated in the offering upon the same terms offered to other investors.
The balance of the remaining loan for the acquisition of the patents and trademarks, including interest, was paid in cash, in
full by the Company.
Our
plan is to utilize contract manufacturers to manufacture our products. Ice cream manufacturers are best suited for our products.
Our first production line has been installed and commissioned in Salt Lake City and is currently producing products being sold
to our customers as well as new product development for new large customers.
Although
we do not have a contract with any suppliers for the raw materials needed to manufacture smoothie packs we believe that there
are a significant number of sources available and we do not anticipate becoming dependent on any one supplier. As demand for our
range of products grows, we will look to contract a level of our raw material requirements to ensure continuity of supply.
We
currently have five sales people selling our product. The process of obtaining orders from potential customers will likely follow
the following process:
● |
Meeting
with and introducing products to customer |
|
|
● |
Developing
flavor profiles for the specific customer |
|
|
● |
Participating
in test marketing of the product with the flavors developed for the customer |
|
|
● |
Agreeing
to a roll out schedule for the customer. |
Although
we have agreements with potential customers representing approximately 10,000 outlets to develop flavors and test our products
and have begun to develop flavor profiles for others, we have no assurance that we will supply any chain with our products. During
the year ended March 31, 2014 we began shipping our products to one of the customers with whom we have contracts and to a number
of smaller customers.
In
addition to the large retail fast food and fast casual chains, we will sell to food distributors that supply products to the food
services market place. Effective July 2, 2014 we entered into an agreement with Sysco Merchandising and Supply Chain Services,
Inc. for resale by the Sysco Corporation (“Sysco”) to the foodservice industry of the Company’s ready-to-blend
smoothies, shakes and frappes. Our products will be included in Sysco’s national core selection of beverage items, making
Barfresh its exclusive single-serve, pre-portioned beverage provider. The Agreement is mutually exclusive; provided however, we
may supply our products to other foodservice distributors, but only to the extent required for such foodservice distributors to
service multi-unit chain operators with at least 20 units and where Sysco is not such multi-unit chain operators nominated distributor
for our products. We have begun shipping to Sysco under this agreement and anticipate a national rollout to approximately 74 distribution
centers over the next 12 months.
There
can be no assurance that we will not become dependent on one or a few major customers.
We
intend to monetize the international patents outside of our current area of operations, North America, by expanding contract manufacturing
to other countries and selling either through selling agents or our own sales personnel or by entering into some form of license
or royalty agreements with third parties. Most recently, as part of our expansion due to the acquisition of the international
patents, we engaged a leading regional Australian food ingredient supply and product developer as our wholesaler and distributor.
Our first order was shipped to Australia in January 2014.
We
are currently assessing our personnel needs in order to provide the best possible service and to maximize our sales potential
in connection with our relationship with Sysco.
Critical
Accounting Policies
The
significant accounting policies set forth in Note 2 to our audited consolidated financial statements included in our Annual Report
on Form 10-K for the year ended March 31, 2014, as updated by Note 1 to the Unaudited Condensed Consolidated Financial Statements
included herein, and Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our
Annual Report on Form 10-K for the year ended March 31, 2014, appropriately represent, in all material respects, the current status
of our critical accounting policies and estimates, the disclosure with respect to which is incorporated herein by reference
Results
of Operations
Results
of Operation for Three Months Ended December 31, 2014 as Compared to the Three Months Ended December 31, 2013
(References
to 2014 and 2013 are to the three months ended December 31, 2014 and 2013 respectively, unless otherwise specified.)
Revenue
and cost of revenue
Revenue
for 2014 was $56,109 as compared to $7,541 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited
number of customers were testing our products.
Cost
of revenue for 2014 was $36,353 as compared to $4,414 in 2013. Our gross profit was $19,756 (35%) and $3,127 (41%) for 2014 and
2013, respectively. There was no significant change in our selling prices. Sales in both 2014 and 2013 included sales of blenders
and freezers. We only make a nominal profit on these items as they are to accommodate our customers. We have no specific plan
as to major sales of equipment to customers in the future.
Operating
expenses
Our
operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles. We are currently evaluating
our needs in regards to increased overhead as a result of the agreement with Sysco. We anticipate increases to selling costs mostly
related to increasing our sales and marketing staff.
Our
general and administrative expenses increased $140,099 as we grew the business and may not necessarily be indicative of the rate
of future increases.
The
following is a breakdown of our general and administrative expenses for the three months ended December 31, 2014 and 2013:
| |
2014 | | |
2013 | | |
Difference | |
Personnel costs | |
$ | 237,952 | | |
$ | 213,857 | | |
$ | 24,095 | |
Stock based compensation/options | |
| 24,903 | | |
| - | | |
| 24,903 | |
Legal and professional fees | |
| 84,255 | | |
| 61,191 | | |
| 23,064 | |
Travel | |
| 65,480 | | |
| 45,008 | | |
| 20,472 | |
Rent | |
| 34,574 | | |
| 22,257 | | |
| 12,317 | |
Marketing and selling | |
| 46,858 | | |
| 24,158 | | |
| 22,700 | |
Director fees | |
| 26,202 | | |
| - | | |
| 26,202 | |
Investor and public relations | |
| 23,036 | | |
| 9,000 | | |
| 14,036 | |
Research and development | |
| 19,949 | | |
| 31,866 | | |
| (11,917 | ) |
Consulting fees | |
| 16,680 | | |
| 36,416 | | |
| (19,736 | ) |
Other expenses | |
| 23,009 | | |
| 19,046 | | |
| 3,963 | |
| |
$ | 602,898 | | |
$ | 462,799 | | |
$ | 140,099 | |
Personnel
cost represents the cost of employees including salaries, employee benefits and employment taxes and continues to be our largest
cost. Personnel cost increased $24,095 (11.3%) from $213,857 to $237,952. At December 31, 2014, we had seven full time employees.
We anticipate personnel cost to increase in the future as we add more staff.
Stock
based compensation is used as an incentive to attract new employees and to compensate existing employees. Stock based compensation,
which includes stock issued and options granted to employees and non-employees. The amount in 2014 represents the amortization
of stock grants and option grants to two directors. The fair value of the stock was based on the trading value of the shares on
the date of grant and is being amortized over the vesting period. The fair value of the stock option was calculated using the
Black-Sholes model using the following assumptions: expected life in years, 5; volatility, 91.82%; risk free rate of return, 1.45%
and no annual dividends and are being amortized over the vesting period. We anticipate making additional grants in the future.
We anticipate making additional grants in the future. No grants were made in 2013.
Legal
and professional fees increased $23,064 (37.7%) from $61,191 in 2013 to $84,255 in 2014, as a result of increased activity. We
anticipate legal fees related to ongoing Securities and Exchange Commission reporting to remain the same and additional legal
fees to be related to the number of contracts we are negotiating.
Travel
and entertainment expenses increased $20,472 (45.5%) from $45,008 in 2013 to $65,480 in 2014. The increase is due to increased
travel related to selling and marketing activities. We anticipate that travel and entertainment cost will increase as we increase
the number of customers that we are selling to.
Rent
expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $7,000 per month. The lease
on the office commenced in October 2012 and expires in October 2014. We have negotiated an extension to the lease, which now expires
in November 2016. Our rent has increased to approximately $7,600 per month. Rent expense also includes monthly parking fees as
well as the cost of an offsite storage facility
Marketing
and selling expenses increased $22,700 (93.9%) from $24,158 in 2013 to $46,858 in 2014. The increase relates primarily to overall
sales and marketing activities. We anticipate a continued increase in these costs.
We
had no director fees in 2013. We will continue to incur director fees in the future. We approved a fee of $12,500 per quarter
for all non-employee directors. We currently have three non-employee directors who will receive payments in the future.
Investor
and public relation expenses increased by $14,036 (156%) from $9,000 in 2013 to $23,036 in 2014. The increase is primarily a result
of engaging an IR/PR firm to increase awareness of the company as well as attendance a conferences.
Consulting
fees decreased by $19,736 (54.2%) from $36,416 in 2013 to $16,680 in 2014. Our consulting fees vary based on needs. We engage
consultants in the area of sales, operations and accounting. Future consulting fees will be variable depending on our needs
Research
and development expenses decreased $11,917 (37.4%) from $31,866 in 2013 to $19,949 in 2014. Research and development represents
the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing
in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent
on new formulations and new flavor profiles as our customer base increases.
Other
expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. We anticipate increases
in these expenses.
We
had operating losses of $620,049 and $487,324 for 2014 and 2013, respectively.
Interest
expense increased $98,239 (227%) from $43,284 in 2013 to $141,523 in 2014. Interest primarily relates to convertible debt that
was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013. The stated interest
rate on the convertible debt is 12%. After giving effect to the debt discount the effective rate of interest on the short-term
debt is estimated to be approximately 53% and approximately 74% on the convertible notes. Interest expense includes direct interest
of $16,842 and $17,600 for 2014 and 2013, respectively, calculated based on the interest rates stated in our various debt instruments.
In addition, interest expense includes non-cash amortization of the debt discount of $124,680 and $25,217 for 2014 and 2013, respectively
We
had net losses of $761,572 and $530,608 for 2014 and 2013, respectively.
Results
of Operation for Nine Months Ended December 31, 2014 as Compared to the Nine Months Ended December 31, 2013
(References
to 2014 and 2013 are to the nine months ended December 31, 2014 and 2013 respectively, unless otherwise specified.)
Revenue
and cost of revenue
Revenue
for 2014 was $157,834 as compared to $39,799 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited
number of customers were testing our products.
Cost
of revenue for 2014 was $97,456 as compared to $25,733 in 2013. Our gross profit was $60,378 (38%) and $14,066 (35%) for 2014
and 2013, respectively. There was no significant change in our selling prices. Sales in both periods included sales of blenders
and freezers. We only make a nominal profit on these items as they are to accommodate our customers. We have no specific plan
as to significant sales of equipment to customers in the future. We anticipate that our gross profit percentage for the remainder
of 2014 will approximate the current period.
Operating
expenses
Our
operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles. We are currently evaluating
our needs in regards to increased overhead as a result of the agreement with Sysco.
Our
general and administrative expenses increased $693,498 as we grew the business and may not necessarily be indicative of the rate
of future increases.
The
following is a breakdown of our general and administrative expenses for the nine months ended December 31, 2014 and 2013:
| |
2014 | | |
2013 | | |
Difference | |
Personnel costs | |
$ | 719,704 | | |
$ | 669,777 | | |
$ | 49,927 | |
Stock based compensation/options | |
| 345,726 | | |
| (103,488 | ) | |
| 449,214 | |
Legal and professional fees | |
| 218,561 | | |
| 133,889 | | |
| 84,672 | |
Travel | |
| 153,377 | | |
| 119,703 | | |
| 33,674 | |
Consulting fees | |
| 127,675 | | |
| 209,178 | | |
| (81,503 | ) |
Marketing and selling | |
| 115,525 | | |
| 65,145 | | |
| 50,380 | |
Rent | |
| 93,734 | | |
| 62,209 | | |
| 31,525 | |
Investor and public relations | |
| 83,567 | | |
| 75,094 | | |
| 8,473 | |
Director fees | |
| 61,341 | | |
| | | |
| 61,341 | |
Research and development | |
| 53,526 | | |
| 40,305 | | |
| 13,221 | |
Other expenses | |
| 86,193 | | |
| 93,619 | | |
| (7,426 | ) |
| |
$ | 2,058,929 | | |
$ | 1,365,431 | | |
$ | 693,498 | |
Personnel
costs represent the cost of employees including salaries, employee benefits and employment taxes and continue to be our largest
cost. Personnel cost increased $49,927 (7.5%) from $669,777 to $719,704. As of December 31, 2014, we had seven full time employees.
We anticipate personnel cost to increase in the future as we add more staff.
Stock
based compensation is used as an incentive to attract new employees and to compensate existing employees. Stock based compensation,
which includes stock issued and options granted to employees and non-employees. The amount in 2014 represents stock grants made
to an officer/director, a director, two employees and an international consultant. The fair value of the stock was based on the
trading value of the shares on the date of grant. The fair value of the stock option was calculated using the Black-Sholes model
using the following assumptions: expected life in years, 3-5; volatility, 83.6 % - 91.82%; risk free rate of return, .94% - 1.45%
and no annual dividends and are being amortized over the vesting period. We anticipate making additional grants in the future.
No grants were made in 2013 and the negative amount represents adjustment to previous grants.
Legal
and professional fees increased $84,672 (63.2%) from $133,889 in 2013 to $218,561 in 2014, as a result of increased activity.
During 2014 we issued 105,000 shares of our common stock as partial payment for services rendered. The shares were valued at the
trading price at the date of grant, $80,850 ($0.77 per share). We anticipate legal fees related to ongoing Securities and Exchange
Commission reporting to remain the same and additional legal fees to be related to the number of contract we are negotiating.
Travel
and entertainment expenses increased $33,674 (28.1%) from $119,703 in 2013 to $153,377 in 2014. The increase is due to increased
travel related to selling and marketing activities. We anticipate that travel and entertainment cost will increase as we increase
the number of customers that we are selling to.
Consulting
fees decreased by $81,503 (39%) from $209,178 in 2013 to $127,675 in 2014. Our consulting fees vary based on needs. We engage
consultants in the area of sales, operations and accounting. Future consulting fees will be variable depending on our needs.
Marketing
and selling expenses increased $50,380 (77.3%) from $65,145 in 2013 to $115,525 in 2014. The increase relates primarily to overall
sales and marketing activities. We anticipate a continued increase in these costs.
Rent
expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $7,000 per month. The lease
on the office commenced in October 2012 and expired in October 2014. We have negotiated an extension to the lease that now expires
in November 2016. Our rent has increased to approximately $7,600 per month. Rent expense also includes monthly parking fees as
well as an offsite storage facility.
We
had no director fees in 2013. We will continue to incur director fees in the future. In 2014 we approved a fee of $12,500 per
quarter for all non-employee directors. We currently have two non-employee directors who will receive payments in the future.
Research
and development expenses increased $13,221 (32.8%) from $40,305 in 2013 to $53,526 in 2014. Research and development represents
the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing
in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent
on new formulations and new flavor profiles as our customer base increases.
Other
expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. We anticipate increases
in these expenses.
We had operating
losses of $2,093,374 and $1,407,494 for 2014 and 2013, respectively.
Interest
expense increased $183,966 (94.2%) from $195,313 in 2013 to $379,279 in 2014. Interest primarily relates to convertible debt that
was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013. The stated interest
rate on the convertible debt is 12%. After giving effect to the debt discount the effective rate of interest on the short-term
debt is estimated to be approximate 53% and approximately 74% on the convertible notes. Interest expense includes direct interest
of $49,884 and $48,741 for 2014 and 2013, respectively, calculated based on the interest rates stated in our various debt instruments.
In addition, interest expense includes non-cash amortization of the debt discount of $329,395 and $146,839 for 2014 and 2013,
respectively.
We
had net losses of $2,472,653 and $1,602,807 for 2014 and 2013, respectively.
Liquidity
and Capital Resources
As
of December 31, 2014 we had negative working capital of $99,329.
During
the nine months ended December 31, 2014 we used cash of $1,839,495 in operations, $235,023 for the purchase of equipment and $11,838
for patents and trademarks. We generated cash flow from the sale of equipment of $28,053
We
generated $247,000 in financing activity from the sale of common stock during the nine months ended December 31, 2014.
Our
operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term
debt, including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised
we will be required to raise additional funds either in the form of capital or debt. There are no assurances that we will be able
to generate the necessary capital or debt to carry out our current plan of operations.
We
lease office space under a non-cancelable operating lease, which expired October 31, 2014. We renewed the lease and it will now
expire on November 7, 2016.
The
aggregate minimum requirements under non-cancelable leases as of December 31, 2014 is as follows:
Fiscal Years ending March 31, | | |
| |
2015 | | |
| 19,011 | |
2016 | | |
| 91,252 | |
2017 | | |
| 53,231 | |
| | |
$ | 163,494 | |
Results
of Operation for Year Ended March 31, 2014 as Compared to the Year Ended March 31, 2013
(References
to 2014 and 2013 are to the year ended March 31, 2014 and 2012 respectively, unless otherwise specified.)
Revenue
and cost of revenue
Revenue
for 2014 was $110,085 as compared to $8,928 in 2013. We began shipping to new customers in 2014 whereas in 2013 only a limited
number of customers were testing our products.
Cost
of revenue for 2014 was $48,534 as compared to $8,884 in 2013. Our gross profit was $61,551 (55.9%) and $44 for 2014 and 2013,
respectively. The significant change in our cost and gross profit relates primarily to selling prices. Our selling prices to overseas
customers yields higher gross profit. We anticipate that our gross profit percentage in 2014 is more indicative of our expected
results going forward than the percentage in 2013.
Operating
expenses
Our
operations during 2014 and 2013 were directed towards increasing sales and finalizing flavor profiles.
Our
general and administrative expenses increased $463,105 as we grew the business and are not necessarily indicative of the rate
of future increases.
The
following is a breakdown of our general and administrative expenses for the years ended March 31, 2014 and 2013:
| |
2014 | | |
2013 | | |
Difference | |
Personnel cost | |
$ | 877,646 | | |
$ | 434,747 | | |
$ | 442,899 | |
Stock based compensation/options | |
| 291,631 | | |
| 103,488 | | |
| 188,143 | |
Consulting fees | |
| 259,346 | | |
| 569,514 | | |
| (310,168 | ) |
Legal and professional fees | |
| 176,334 | | |
| 173,353 | | |
| 2,981 | |
Travel | |
| 166,621 | | |
| 156,921 | | |
| 9,700 | |
Investor and public relations | |
| 122,224 | | |
| 70,202 | | |
| 52,022 | |
Marketing and selling | |
| 109,104 | | |
| 82,817 | | |
| 26,287 | |
Rent | |
| 77,007 | | |
| 38,119 | | |
| 38,888 | |
Research and development | |
| 47,035 | | |
| 103,293 | | |
| (56,258 | ) |
Other expenses | |
| 140,322 | | |
| 71,713 | | |
| 68,611 | |
| |
$ | 2,267,270 | | |
$ | 1,804,167 | | |
| 463,105 | |
Personnel
cost represents the cost of employees including salaries, employee benefits and employment taxes. Personnel cost increased $442,899
(102%) from 434,747 to 877,646. During 2014 we had more personnel than in 2013. In addition the average salary was high due to
hiring more experienced personnel. One consultant in 2013 became an employee in 2014. We anticipate personnel cost to increase
in the future.
Stock
based compensation, which includes stock issued and warrants granted to employee, and non-employees increased $188,143 (189%)
from $103,488 in 2013 to 291,631. The increase is due to grants made to an Officer and Director. Stock based compensation is used
as an incentive to attract new employees and to compensate existing employees.
Consulting
fees decreased by $310,168 (54.5%) from $569,514 in 2013 to $259,346 in 2014. During 2014 and 2013, we had from four to six consultants
providing services to us. As of March 31, 2014 we have only two consultants providing services. Future consulting fees will be
variable depending on our needs.
Legal
and professional fees as well as travel cost did not vary significantly.
Investor
and public relation expenses increased $52,022 (74.1%) from $70,202 in 2013 to $122,224 in 2014. We are currently using an outside
firm to assist us with our investor and public relations needs. We incurred the cost associated with attending two investor conferences
in 2014. We anticipate continuing the use of outside sources and attending conferences in the future.
Marketing
and selling expenses increased $26,287 (31.7%), from $82,817 in 2013 to $109,104 in 2014. The increase relates primarily to sample
expenses. We gave away more products in 2014 than in 2013.
Rent
expense is primarily for our location in Beverly Hills, California. Our rent expense is approximately $6,700 per month. The lease
on the office commenced in October 2012 and expires in October 2014. We are currently negotiating with our landlord to extend
the lease.
Research
and development expenses decreased by $56,258 (54.5%) from $103,293 in 2013 to $47,035 in 2014. Research and development represents
the cost of developing flavor profiles of our products and the development of future equipment. We anticipate cost continuing
in future periods, the amounts of which cannot be estimated at this point in time. Our research and development cost will be dependent
on new formulations and new flavor profiles as our customer base increases.
Other
expenses consist of ordinary operating expenses such as office, telephone, insurance, and stock related costs. These costs have
increased as our business has grown. We anticipate additional increases in these expenses.
We
had operating losses of $2,290,562 and $1,839,499 for 2014 and 2013, respectively.
Interest
expense increased $96,399 (26.9%) from $196,489 in 2013 to $292,888 in 2014. Interest primarily relates to convertible debt that
was issued in August 2012 and renewed in September 2013 and short-term notes that were issued in December 2013.
Interest
expense includes direct interest of $96,339 and $30,822 in 2014 and 2013, respectively, calculated based on the interest rate
stated in our various debt instruments.
In
addition, interest expense includes non-cash amortization of the debt discount of $228,165 and $165,689, for 2014 and 2013, respectively.
Interest
expense also included various finance charges of $1,447 for the year ended March 31, 2014.
We
had net losses of $2,583,450 and $2,035,988 for 2014 and 2013, respectively.
Liquidity
and Capital Resources
As
of March 31, 2014 we had working capital of $1,824,889.
During
the year ended March 31, 2014 we used cash of $1,885,160 in operations, $699,561 for the purchase of patents and trademarks, $104,532
for investment in equipment.
We
received $4,806,500 less expenses of $295,320 for a net amount of $4,511,180 for the sale of (i) 14,226,000 shares our common
stock and (ii) warrants to purchase 14,739,000 shares of common stock, which have terms from three to five year and exercise prices
between $0.25 and $0.60 per share.
We
issued $775,000 in short-term notes payable, $500,000 of which was purchased by a significant shareholder, $100,000 was purchased
by an affiliate of an Officer, Director and significant shareholder and $100,000 was purchased by an affiliate of a director and
significant shareholder. The short-term notes are due and payable in one year but we have the right to a six-month extension.
We also issued 1,291,667 warrants to the short-term note holders for the right to purchase shares of our common stock. Each warrant
entitles the holder to purchase one share of our common stock at a price of $0.45 per share, may be exercised on a cashless basis
and is exercisable for a period of five years. In addition we borrowed $485,132 and repaid $515,404 in advances from related parties.
The advance from related parties was primarily used towards the acquisition of the patents and trademarks and the cash used to
repay the advances came from the issuance of the short-term debt. We also repaid $40,000 and borrowed $20,000 of principal on
our convertible debt.
Our
operations to date have been financed by the sale of securities, the issuance of convertible debt and the issuance of short-term
debt, including related party advances. If we are unable to generate sufficient cash flow from operations with the capital raised
we will be required to raise additional funds either in the form of capital or debt. There are no assurances that we will be able
to generate the necessary capital or debt to carry out our current plan of operations.
The
aggregate minimum requirements under non-cancelable leases as of March 31, 2014 are as follows:
Fiscal Years ending March
31, 2015 | | |
$ | 39,993 | |
The
aggregate amount of principal payments due as of December 31, 2013 is as follows:
Fiscal Years ending March 31, | | |
| |
2014 | | |
$ | - | |
2015 | | |
| 775,000 | |
2016 | | |
| 420,000 | |
| | |
$ | 1,195,000 | |
Off-Balance
Sheet Arrangements
We
have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial
condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital
resources that are material to stockholders.
DESCRIPTION
OF PROPERTY
Our principal executive offices are located
at 8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211. We lease this office space for $6,700 per month.
CERTAIN
RELATIONSHIPS AND RELATED TRANSACTIONS
The
following includes a summary of transactions since the beginning of fiscal 2011, or any currently proposed transaction, in which
we were or are to be a participant and the amount involved exceeded or exceeds the lesser of $120,000 or one percent of the average
of our total assets at year end for the last two completed fiscal years and in which any related person had or will have a direct
or indirect material interest (other than compensation described under “Executive Compensation”). We believe the terms
obtained or consideration that we paid or received, as applicable, in connection with the transactions described below were comparable
to or better than terms available or the amounts that would be paid or received, as applicable, in arm’s-length transactions.
The
acquisition of the international patents on October 15, 2013 was funded through an advance of $672,157 from an affiliate of Steven
Lang at an interest rate of 6.0%. Two hundred thousand ($200,000) of the advances were satisfied through the participation of
Riccardo Delle Coste and Steven Lang, separately through their affiliates, in the Company’s December 20, 2013 private placement
of notes and warrants. Five-year warrants to purchase 333,334 shares of common stock at an exercise price of $0.45 per share were
issued to each of these related parties as part of their investment. The related parties participated in the offering upon the
same terms offered to other investors. The balance of the remaining loan, plus accrued interest of $5,617, was paid in full and
in cash by the Company prior to the end of 2013.
Lazarus Investment Partners LLP, a greater
than 10% shareholder of the Company (“Lazarus”) participated in the private placement that closed on December 20,
2013. Lazarus purchased a 2%, one-year $500,000 note and five-year warrants to purchase 833,333 shares of common stock at an exercise
price of $0.45 in this offering.
During the year ended March 31, 2014 and the
year ended March 31, 2013 we received cash advances in the amounts of $12,975 and $30,272, respectively, from a relative of an
officer of the Company. The advances bear no interest and were repaid.
During
the quarterly period ended September 30, 2011 the Company received advances of $17,000 from Garrett LLC, Ian McKinnon and Brad
Miller.
During
the period beginning April 1, 2010 and ending March 31, 2012, a related party that is under common control of Riccardo Delle Coste
and Steven Lang made advances to us of $144,011. These advances were non-interest bearing. As of March 31, 2012, we repaid these
advances. The company under common control was located in Australia and was in the same line of business of the Company; however,
at the time, we did not conduct business in the same territories.
Pursuant
to the Share Exchange Agreement dated January 10, 2012 we issued 37,333,328 shares of our common stock to Riccardo Delle Coste
and Steven Lang, through the entities that they controlled. Accordingly, Riccardo Delle Coste and Steven Lang, together, control
more than 50% of the votes eligible to be cast by shareholders in the election of directors and generally. Immediately following
the share exchange, Messrs. Delle Coste and Lang became our principal shareholders and were appointed as members of our board
of directors.
In
December 2009 we entered into a contract whereby entities controlled by Riccardo Delle Coste and Steven Lang agreed to assign
to us certain intellectual property related to certain patent applications filed in the United States and Canada in respect to
the ingredient pack for an individual smoothie. The assignment was completed in November 2011. We issued two shares of our common
stock in consideration for such assignment.
Our principal executive offices were located
at 90 Madison Street, Suite 701, Denver, Colorado 80206, until recently. This office is co-located with the office of Corporate
Finance Group, a company that is owned by our Chief Financial Officer. We used this property free of charge.
The
Company’s policy with regard to related party transactions requires any related party loans that are (i) non-interest bearing
and in excess of $100,000 or (ii) interest bearing, irrespective of amount, must be approved by the Company’s board of directors.
All issuances of securities by the Company must be approved by the board of directors, irrespective of whether the recipient is
a related party. Each of the foregoing transactions, if required by its terms, was approved in this manner.
EXECUTIVE
COMPENSATION
The
following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to (i) all
individuals serving as the Company’s principal executive officers or acting in a similar capacity during the last two completed
fiscal years, regardless of compensation level, and (ii) the Company’s two most highly compensated executive officers other
than the principal executive officer serving at the end of the last two completed fiscal years (collectively, the “named
executive officers”).
The
following table summarizes all compensation for fiscal years 2014 and 2013 received by our principal executive officer and principal
financial officer, who were the only executive officers of the Company in fiscal year 2014, our “Named Executive Officers”:
Name and Principal Position | |
Year | | |
Salary ($) | | |
Bonus ($) | | |
Stock Awards ($) | | |
Option Awards ($) | | |
Non-Equity Incentive Plan Compensation ($) | | |
Change in Pension Value and Nonqualified
Deferred Compensation Earnings ($) | | |
All Other Compensation ($) | | |
Total ($) | |
| |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| | |
| |
Riccardo Delle Coste,
| |
| 2014 | | |
| 117,517 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 117,517 | |
Chief Executive Officer | |
| 2013 | | |
| 36,450 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 36,450 | |
| |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | |
Arnold Tinter,
| |
| 2014 | | |
| 72,000 | | |
| | | |
| 160,000 | | |
| | | |
| | | |
| | | |
| | | |
| 232,000 | |
Chief Financial Officer | |
| 2013 | | |
| 48,000 | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| | | |
| 48,000 | |
Outstanding
Equity Awards at Fiscal Year-End Table
At March
31, 2014, the Company had no outstanding equity awards to its Named Executive Officers.
Employment
Agreements
There
are no employment agreements between the Company and its officers and directors.
Compensation
of Directors
The
following table summarizes the compensation paid to our directors for the fiscal year ended March 31, 2014:
| |
Fees | | |
| | |
| | |
| | |
| | |
| |
| |
Earned or | | |
| | |
| | |
Non-Equity | | |
| | |
| |
| |
Paid in | | |
Stock | | |
Option | | |
Incentive Plan | | |
All Other | | |
| |
Name | |
Cash | | |
Awards | | |
Awards | | |
Compensation | | |
Compensation | | |
Total | |
Riccardo Delle Coste | |
$ | 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
| 0 | | |
$ | 0 | |
Arnold Tinter | |
$ | 0 | | |
| | | |
| | | |
| | | |
| | | |
$ | 0 | |
Steven Lang | |
$ | 12,500 | | |
| 0 | | |
$ | 115,119
(1) | | |
| 0 | | |
| 0 | | |
$ | 127,619 | |
(1) |
On
February 14, 2014, Steven Lang was granted an option to purchase 800,000 shares of the Company’s common stock under
the Company’s 2014 Equity Incentive Plan at a purchase price of $0.50 per share. The option was fully vested at the
time of grant and has a term of three years, expiring on February 14, 2017. |
CHANGES
IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There
were no changes in or disagreements with our accountants on accounting and financial disclosure during the last two fiscal years,
the quarterly period ended December 31, 2014 or the interim period from January 1, 2015 through the date of this prospectus.
MARKET
FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
Market
Information
Our
common stock is currently traded on the OTCQB under the symbol “BRFH”. Our common stock had been quoted on the OTC
Bulletin Board since July 27, 2011 under the symbol MVBX. Effective February 29, 2012, our symbol changed to BRFH based on the
forward split and name change. On March 21, 2012, our common stock was delisted to Pink Sheets. On January 21, 2014, we registered
our common stock under Section 12(g) of the Exchange Act. The following table sets forth the range of high and low bid quotations
for the applicable period. These quotations as reported by the OTCQB reflect inter-dealer prices without retail mark-up, markdown
or commissions and may not necessarily represent actual transactions.
| | |
Bid
Quotation | |
Financial Quarter
Ended | | |
High
($) | | |
Low
($) | |
March 31, 2015 | | |
| 0.64 | | |
| 0.42 | |
December 31, 2014 | | |
| 0.72 | | |
| 0.39 | |
September 30, 2014 | | |
| 0.85 | | |
| 0.57 | |
June 30, 2014 | | |
| 0.84 | | |
| 0.45 | |
March 31, 2014 | | |
| 0.84 | | |
| 0.40 | |
December 31, 2013 | | |
| 0.62 | | |
| 0.30 | |
September 30, 2013 | | |
| 0.50 | | |
| 0.24 | |
June 30, 2013 | | |
| 0.36 | | |
| 0.22 | |
Holders
At
April 29, 2015, there were 78,720,788 shares of our common stock outstanding. Our shares of common stock are held by approximately
43 stockholders of record. The number of record holders was determined from the records of our transfer agent and does not include
beneficial owners of common stock whose shares are held in the names of various security brokers, dealers and registered clearing
agencies.
Dividends
We
have never declared or paid a cash dividend. Any future decisions regarding dividends will be made by our board of directors.
We currently intend to retain and use any future earnings for the development and expansion of our business and do not anticipate
paying any cash dividends in the foreseeable future. Our board of directors has complete discretion on whether to pay dividends.
Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations
and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the
board of directors may deem relevant.
Securities
Authorized for Issuance Under Equity Compensation Plans
The
following table provides information, as of March 31, 2014, with respect to equity securities authorized for issuance under our
equity compensation plan:
Plan Category | |
Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights (a) | | |
Weighted-Average
Exercise Price of
Outstanding
Options, Warrants
and Rights (b) | | |
Number of
Securities
Remaining
Available for
Future Issuance
Under Equity
Compensation
Plans (excluding
securities reflected
in Column (a))(c) | |
| |
| | |
| | |
| |
Equity compensation plans approved by security holders | |
| 0 | | |
$ | 0 | | |
| 0 | |
Equity compensation plans not approved by security holders | |
| 800,000 | | |
$ | 0.50 | | |
| 8,200,000 | |
| |
| | | |
| | | |
| | |
TOTAL | |
| 800,000 | | |
$ | 0.50 | | |
| 8,200,000 | |
Transfer
Agent
Our
transfer agent, Action Stock Transfer, is located at 2469 E. Fort Union Blvd, Suite 214, Salt Lake City, Utah 84121, and its telephone
number is (801) 274-1088.
MATERIAL
CHANGES
There
have been no material changes in the Company’s affairs since its fiscal year ended March 31, 2014 that have not been described
in its subsequently filed Quarterly Reports or Current Reports on Form 8-K pursuant to the Securities Exchange Act of 1934.
INCORPORATION
BY REFERENCE
The
SEC allows us to “incorporate by reference” into this prospectus the information we have filed with the SEC. This
means that we can disclose important information to you by referring you to those documents. The information incorporated by reference
is considered to be part of this prospectus. We are incorporating by reference the following documents that we have filed with
the SEC (other than any filing or portion thereof that is furnished, rather than filed, under applicable SEC rules):
| ● | our
Annual Report on Form 10-K for the year ended March 31, 2014, filed with the SEC on June
30, 2014; |
| | |
| ● | our
Quarterly Reports on Form 10-Q for the quarterly periods ended June 30, 2014 and September
30, 2014, filed with the SEC on August 13, 2014 and November 14, 2014, respectively; |
| | |
| ● | our
Quarterly Report on Form 10-Q for the quarterly period ended March 30, 2015, filed with
the SEC on February 17, 2015 and as amended on Form 10-Q/A on February 19, 2015; |
| | |
| ● | our
Current Reports on Form 8-K and amendments thereto filed with the SEC on July 9, 2014,
August 4, 2014, October 17, 2014 and March 16, 2015; and |
| | |
| ● | the
description of our common stock contained in the prospectus, constituting part of our
Registration Statement on Form S-1 (File No. 333-168738), initially filed with the SEC
on August 11, 2010 . |
Our
website addresses are www.barfresh.com/us/ and www.smoothieinc.com and the URL where incorporated reports and other
reports may be accessed is http://barfresh.com/us/.
The
reports incorporated by reference into this prospectus are available from us upon request. We will provide a copy of any and all
of the reports and documents that are incorporated by reference, including exhibits to such reports and documents, in this prospectus
to any person, including a beneficial owner, to whom a prospectus is delivered, without charge, upon written or oral request.
Requests for such copies should be directed to the following:
Barfresh
Food Group, Inc.
Investor
Relations
8530 Wilshire Blvd.,
Suite 450, Beverly Hills, CA 90211
(310) 598-7113
info@smoothieinc.com
Except
as expressly provided above, no other information, including none of the information on our website, is incorporated by reference
into this prospectus.
WHERE
YOU CAN FIND ADDITIONAL INFORMATION
We
have filed with the SEC a registration statement on Form S-1, including exhibits and schedules, under the Securities Act, with
respect to the shares of common stock being offered by this prospectus. This prospectus, which constitutes part of the registration
statement, does not contain all of the information in the registration statement and its exhibits. For further about the Company
and the common stock offered by this prospectus, we refer you to the registration statement and its exhibits. Statements contained
in this prospectus as to the contents of any contract or any other document referred to are not necessarily complete, and in each
instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of
these statements is qualified in all respects by this reference.
You can read our SEC filings, including the
registration statement, over the Internet at the SEC’s website at www.sec.gov. You may also read and copy any document we
file with the SEC at its public reference facilities at 100 F Street, NE, Washington, D.C. 20549. You may also obtain copies of
these documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, D.C.
20549. Please call the SEC at 1-800-SEC-0330 for further information on the operation of the public reference facilities. You
may also request a copy of these filings, at no cost, by writing us at 8530 Wilshire Blvd., Suite 450, Beverly Hills, CA 90211
or calling us at (310) 598-7113.
We
are subject to the information reporting requirements of the Securities Exchange Act of 1934, as amended, and we will file reports,
proxy statements and other information with the SEC. These reports, proxy statements and other information will be available for
inspection and copying at the public reference room and web site of the SEC referred to above. We also maintain a website at www.barfresh.com/us/,
at which you may access these materials free of charge as soon as reasonably practicable after they are electronically filed with,
or furnished to, the SEC. Information contained on or accessible through our website is not a part of this prospectus, and the
inclusion of our website address in this prospectus is an inactive textual reference only.
PART
II
INFORMATION
NOT REQUIRED IN PROSPECTUS
Item
24. Indemnification of Directors and Officers
Section
145 of the Delaware General Corporation Law provides that a corporation may indemnify directors and officers as well as other
employees and individuals against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by such person in connection with any threatened, pending or completed actions, suits or proceedings
in which such person is made a party by reason of such person being or having been a director, officer, employee or agent of the
corporation. Section 145 of the Delaware General Corporation Law also provides that expenses (including attorneys’ fees)
incurred by a director or officer in defending an action may be paid by a corporation in advance of the final disposition of an
action if the director or officer undertakes to repay the advanced amounts if it is determined such person is not entitled to
be indemnified by the corporation. The Delaware General Corporation Law provides that Section 145 is not exclusive of other rights
to which those seeking indemnification may be entitled under any bylaw, agreement, vote of shareholders or disinterested directors
or otherwise. The provision does not affect directors’ responsibilities under any other laws, such as the federal securities
laws. The Company’s Certificate of Incorporation provides for such indemnification to the fullest extent of Section
145 and states that the indemnification is not exclusive of other rights of those seeking indemnification may be entitled.
Section
102(b)(7) of the Delaware General Corporation Law permits a corporation to provide in its certificate of incorporation that a
director of the corporation shall not be personally liable to the corporation or its shareholders for monetary damages for breach
of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the corporation
or its shareholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) for unlawful payments of dividends or unlawful stock repurchases, redemptions or other distributions, or (iv) for
any transaction from which the director derived an improper personal benefit. The Company’s Certificate of Incorporation
provides for such limitation of liability.
The
Company intends to enter into agreements with its directors and executive officers, that will require the Company to indemnify
such persons to the fullest extent permitted by law, against expenses, judgments, fines, settlements and other amounts incurred
(including attorneys’ fees), and advance expenses if requested by such person, in connection with investigating, defending,
being a witness in, participating, or preparing for any threatened, pending, or completed action, suit, or proceeding or any alternative
dispute resolution mechanism, or any inquiry, hearing or investigation (collectively, a “Proceeding”), relating to
any event or occurrence that takes place either prior to or after the execution of the indemnification agreement, related to the
fact that such person is or was a director or officer of the Company, or while a director or officer is or was serving at the
request of the Company as a director, officer, employee, trustee, agent or fiduciary of another foreign or domestic corporation,
partnership, joint venture, employee benefit plan, trust or other enterprise, or was a director, officer, employee or agent of
a foreign or domestic corporation that was a predecessor corporation of the Company or of another enterprise at the request of
such predecessor corporation, or related to anything done or not done by such person in any such capacity, whether or not the
basis of the Proceeding is alleged action in an official capacity as a director, officer, employee or agent or in any other capacity
while serving as a director, officer, employee, or agent of the Company. Indemnification is prohibited on account of any Proceeding
in which judgment is rendered against such persons for an accounting of profits made from the purchase or sale by such persons
of securities of the Company pursuant to the provisions of Section 16(b) of the Securities Exchange Act of 1934, as amended, or
similar provisions of any federal, state or local laws. The indemnification agreements also set forth certain procedures that
will apply in the event of a claim for indemnification thereunder.
The
Company may purchase and maintain insurance on behalf of any person who is or was a director, officer or employee of the Company,
or is or was serving at the request of the Company as a director, officer, employee or agent of another company, partnership,
joint venture, trust or other enterprise against liability asserted against him and incurred by him in any such capacity, or arising
out of his status as such, whether or not the Company would have the power to indemnify him against liability under the provisions
of this section.
The
right of any person to be indemnified is subject always to the right of the Company by its board of directors, in lieu of such
indemnity, to settle any such claim, action, suit or proceeding at the expense of the Company by the payment of the amount of
such settlement and the costs and expenses incurred in connection therewith.
Insofar
as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers or persons controlling
the Company pursuant to the foregoing provisions, or otherwise, the Company has been advised that in the opinion of the Securities
and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
In
the event that a claim for indemnification against such liabilities (other than the payment of expenses incurred or paid by a
director, officer or controlling person in a successful defense of any action, suit or proceeding) is asserted by such director,
officer or controlling person in connection with the securities being registered, we will, unless in the opinion of its counsel
the matter has been settled by controlling precedent, submit to the court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication
of such issue.
At
present, there is no pending litigation or proceeding involving any of our directors, officers or employees as to which indemnification
is sought, nor are we aware of any threatened litigation or proceeding that may result in claims for indemnification.
Item
25. Other Expenses of Issuance and Distribution
The
following table sets forth the costs and expenses payable by us in connection with the offering of the common stock being registered.
All amounts are estimates. The selling shareholders will pay none of the expenses set forth below.
SEC filing fees | |
$ | 1,100 | |
Legal fees and expenses | |
| 25,000 | |
Accounting fees and expenses | |
| 2,500 | |
Transfer agent fees and expenses | |
| 100 | |
Printing fees | |
| 2,500 | |
Miscellaneous | |
| 2,000 | |
Total | |
$ | 33,200 | |
Item
26. Recent Sales of Unregistered Securities
The
following sets forth all sales of unregistered securities we have completed during the last three years. Except as otherwise indicated
below, the following transactions were effected in reliance upon the exemption from registration set forth in Section 4(2) of
the Securities Act. We based such reliance upon the following facts and circumstances: (i) the investors were accredited investors,
as defined in Rule 501 of the Securities Act and were sophisticated, having sufficient knowledge and experience in financial and
business matters to make them capable of evaluating the merits and risks of the investment, (ii) the investors represented that
they were purchasing the securities for investment purposes without a view to distribution, (iii) the investors had access to
our management and information concerning the Company, its business and financial information and (iv) we conducted the sale of
the securities without general solicitation or advertising. Except as otherwise indicated below, no underwriting discounts or
commissions were paid in the transactions.
On
March 13, 2015 we sold in a private placement to institutional and accredited investors 10,550,000 shares of its common stock
and Series G Warrants to purchase up to 5,275,000 shares of common stock for gross proceeds to the Company of $5,275,000. The
warrants are exercisable for a term of five-years at a per share exercise price of $0.60 and are subject to customary protective
provisions for price and certain events.
During
November 2014 we issued 494,000 shares of our common stock for total consideration of $247,000. In addition to the Common Stock,
the Company issued 247,000 warrants to purchase shares of the Company’s common stock for a purchase price of $0.60 per share
and for a term of 5 years.
On
March 20, 2014 we completed a private placement to accredited investors of 5,000,000 shares of common stock and Series E Warrants
to purchase up to 2,500,000 shares for aggregate gross proceeds to the Company of $2,500,000. The Series E Warrants are exercisable
for a term of three-years at a per share price of $0.60. An additional 25,000 shares of common stock and Series E Warrants to
purchase 25,000 shares were issued to a service provider.
On
December 20, 2013 we completed a private offering of an aggregate of $775,000 in promissory notes. The notes bear interest at
a rate of 2.0% and are due and payable on December 20, 2014, with certain provisions for extension. In addition to the notes,
the Company issued to the holders five-year warrants to purchase 1,291,667 shares of the Company’s common stock for a purchase
price of $0.45 per share.
On
August 7, 2013 we completed a private placement of 7,626,000 units at a purchase price of $0.25 per unit for a total aggregate
amount of $1,906,500. Each unit consists of one share of common stock, one three-year Series C Warrant to purchase a share of
common stock at a purchase price of $0.25 per share, and one five-year Series D Warrant to purchase one-half share of common stock
at a purchase price of $0.25 per one-half share ($0.50 per share). Network 1 Financial Securities, Inc., a licensed broker dealer,
acted as placement agent and received a selling commission equal to $190,650 and non-accountable expense reimbursement of $57,195.
In
August 2012 we issued 50,000 shares of common stock to an investment banking firm for services.
During
the year ended March 31, 2013 we issued options to purchase 150,000 shares of common stock to a non-employee for services rendered.
During the year ended March 31, 2013 we issued
1,350,000 shares of our common stock to non-employees for various consulting services.
In
August 2012 we completed a private offering of $440,000 of 12.0% convertible notes and seven-year warrants to purchase 956,519
shares of common stock at a per share exercise price of $0.46. The notes were convertible to common stock at a per share conversion
price of $0.372. These notes matured and, as part of a settlement, we converted them into new 12.0% convertible notes in the amount
of $400,000, convertible at a exercise per share exercise price of $0.25, issued a new note in the amount of $20,000 and issued
new year warrants to purchase 1,680,000 shares of common stock at a per share exercise price of $0.25 to the holders.
In
June 2012 we issued 250,000 shares of common stock to an individual based on the terms of a new employment contract.
Item
27. Exhibits
(b) |
Exhibits required
by Item 601 of Regulation S-K |
Exhibit
Number |
|
Description |
2.1 |
|
Share Exchange Agreement
dated January 10, 2012 by and among Moving Box Inc., Andreas Wilcken, Jr., Barfresh Inc. and the shareholders of Barfresh
Inc. (incorporated by reference to Exhibit 2.1 to Current Report on Form 8-K as filed January 17, 2012 |
|
|
|
3.1 |
|
Certificate of Incorporation
of Moving Box Inc. dated February 25, 2010 (incorporated by reference to Exhibit 3.1 to Form S-1 (Registration No. 333-168738)
as filed August 11, 2010) |
|
|
|
3.2 |
|
Amended and Restated
Bylaws of Barfresh Food Group Inc. (incorporated by reference to Exhibit 3.1 to Current Report on Form 8-K as filed August
4, 2014) |
|
|
|
3.3 |
|
Certificate of Amendment
of Certificate of Incorporation of Moving Box Inc. dated February 13, 2012 (incorporated by reference to Exhibit 3.1 to Current
Report on Form 8-K as filed February 17, 2012) |
|
|
|
3.4 |
|
Certificate of Amendment
of Certificate of Incorporation of Smoothie Holdings Inc. dated February 16, 2012 (incorporated by reference to Exhibit 3.2
to Current Report on Form 8-K as filed February 17, 2012) |
|
|
|
4.1
|
|
Form
of Series A Warrant (incorporated by reference to Exhibit 10.3 to Current Report on Form 8-K
as filed January 17, 2012)
|
|
|
|
4.2 |
|
Form of Series B Warrant (incorporated
by reference to Exhibit 4.2 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) |
|
|
|
4.3 |
|
Form of Series C
Warrant (incorporated by reference to Exhibit 4.3 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) |
|
|
|
4.4
|
|
Form
of Series D Warrant (incorporated by reference to Exhibit 4.4 to Form 10K for the period ending
March 31, 2014, as filed June 30, 2014)
|
|
|
|
4.5 |
|
Form of Series PA Warrant (incorporated
by reference to Exhibit 4.5 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) |
|
|
|
4.6 |
|
Form of Series CN Warrant (incorporated
by reference to Exhibit 4.6 to Form 10K for the period ending March 31, 2014, as filed June 30, 2014) |
|
|
|
4.7 |
|
Form of Series N Warrant** |
|
|
|
4.8 |
|
Form of Series E
Warrant** |
|
|
|
4.9 |
|
Form of Series G
Warrant (incorporated by reference to Exhibit 4.1 to Current Report on Form 8-K as filed February 16, 2015) |
|
|
|
4.10 |
|
Form of Note dated
December 20, 2013 by Barfresh Food Group Inc. in favor of certain investors (incorporated by reference to Exhibit 4.1 to Form
10Q for the period ending December 31, 2013, as filed February 13, 2014) |
|
|
|
5.1 |
|
Opinion and Consent
of Libertas Law Group, Inc.* |
|
|
|
10.1 |
|
Form of Registration
Rights Agreement dated December 20, 2013 (incorporated by reference to Exhibit 4.2 to Form 10Q for the period ending December
31, 2013, as filed February 13, 2014) |
|
|
|
10.2 |
|
Intellectual Property
Sale Deed by and between National Australia Bank Limited and Barfresh Inc. dated October 15, 2013 (incorporated by reference
to Exhibit 10.1 to Quarterly Report on Form 10-Q as filed November 20, 2013) |
|
|
|
10.3 |
|
Agreement of Sale,
dated January 10, 2012, by and among Moving Box Inc. and Andreas Wilcken, Jr. (incorporated by reference to Exhibit 10.1 of
Current Report on Form 8-K as filed January 17, 2012) |
|
|
|
10.4 |
|
Form of Subscription
Agreement dated January 10, 2012 by and between Moving Box, Inc. and certain investors. (incorporated by reference to Exhibit
10.2 of Current Report on Form 8-K as filed January 17, 2012) |
|
|
|
10.5 |
|
Form of Lock Up
Agreement dated January 10, 2012 (incorporated by reference to Exhibit 10.4 to Current Report on Form 8-K as filed January
17, 2012) |
|
|
|
10.6 |
|
Amendment No. 2,
dated January 10, 2012 to Agreement dated March 21, 2010, by and among Moving Box Inc., Moving Box Entertainment LLC, Garrett
LLC, Ian McKinnon, Brad Miller, Andreas Wilckin, Jr. and Uptone Pictures, Inc. (incorporated by reference to Exhibit 10.5
to Current Report on Form 8-K, as filed January 17, 2012) |
|
|
|
10.7 |
|
Investor Release
dated January 10, 2012, by and among Moving Box Inc., Andreas Wilcken, Jr., Garrett LLC, Ian McKinnon and Brad Miller (incorporated
by reference to Exhibit 10.4 to Current Report on Form 8-K as filed January 17, 2012) |
|
|
|
10.8 |
|
Form of Registration
Rights Agreement dated March 13, 2015 (incorporated by reference to Exhibit 10.2 to Current Report on Form 8-K as filed February
16, 2015) |
|
|
|
21.0 |
|
Subsidiaries** |
|
|
|
23.1 |
|
Consent of Eide Bailly LLP* |
|
|
|
23.2 |
|
Opinion of Libertas
Law Group, Inc. (included in Exhibit 5.1)* |
*
Filed herewith.
**Previously
filed with the initial filing of this registration statement on Form S-1 on April 10, 2015.
Item
28. Undertakings
The
undersigned registrant hereby undertakes:
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement:
a.
To include any prospectus required by Section 10(a)(3) of the Securities Act;
b.
To reflect in the prospectus any facts or events which, individually or together, represent a fundamental change in the information
in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the
total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end
of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in the volume and rise represent no more than a 20% change in the maximum aggregate offering
price set forth in the “Calculation of Registration Fee” table in the effective registration statement; and
c.
To include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement
or any material changes to such information in the Registration Statement.
2.
For determining liability under the Securities Act, treat each post-effective amendment as a new registration statement of the
securities offered, and the offering of the securities at that time to be the initial bona fide offering.
3.
To file a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.
4.
For determining liability of the undersigned issuer under the Securities Act to any purchaser in the initial distribution of the
securities, the undersigned issuer undertakes that in a primary offering of securities of the undersigned issuer pursuant to this
registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities
are offered or sold to such purchaser by means of any of the following communications, the undersigned issuer will be a seller
to the purchaser and will be considered to offer or sell such securities to such purchaser:
i.
Any preliminary prospectus or prospectus of the undersigned issuer relating to the offering required to be filed pursuant to Rule
424;
ii.
Any free writing prospectus relating to the offering prepared by or on behalf of the undersigned issuer or used or referred to
by the undersigned issuer;
iii.
The portion of any other free writing prospectus relating to the offering containing material information about the undersigned
issuer or its securities provided by or on behalf of the undersigned issuer; and
iv.
Any other communication that is an offer in the offering made by the undersigned issuer to the purchaser.
5.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion
of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act and
is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer of controlling person of the Registrant in the successful defense
of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities
being registered, the Registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed
in the Securities Act and will be governed by the final adjudication of such issue.
6.
For determining any liability under the Securities Act, treat the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in a form of prospectus filed by the Registrant under
Rule 424(b)(1) or (4) or 497(h) under the Securities Act as part of this registration statement as of the time the Commission
declared it effective.
7.
For determining any liability under the Securities Act, treat each post-effective amendment that contains a form of prospectus
as a new registration statement for the securities offered in the registration statement, and that offering of the securities
at that time as the initial bona fide offering of those securities.
8.
That, for the purpose of determining liability under the Securities Act to any purchaser:
a.
If the issuer is relying on Rule 430B:
1.
Each prospectus filed by the undersigned issuer pursuant to Rule 424(b)(3) shall be deemed to be part of the registration statement
as of the date the filed prospectus was deemed part of and included in the registration statement; and
2.
Each prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) as part of a registration statement in reliance
on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i), (vii), or (x) for the purpose of providing the information
required by section 10(a) of the Securities Act shall be deemed to be part of and included in the registration statement as of
the earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of
securities in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any
person that is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement
relating to the securities in the registration statement to which that prospectus relates, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration
statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with
a time of contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement
or prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
or
b.
If the issuer is subject to Rule 430C: Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating
to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A,
shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness.
Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement
or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part
of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify
any statement that was made in the registration statement or prospectus that was part of the registration statement or made in
any such document immediately prior to such date of first use.
SIGNATURES
In
accordance with the requirements of the Securities Act of 1933, the registrant certifies that it has reasonable grounds to believe
that it meets all of the requirements of filing on Form S-1 and authorized this registration statement to be signed on its behalf
by the undersigned, in the City of Beverly Hills, State of California, on May 7, 2015.
|
BARFRESH FOOD GROUP, INC. |
|
|
|
/s/ Riccardo Delle
Coste |
|
Riccardo Delle Coste |
|
Chief Executive Officer |
In
accordance with the requirements of the Securities Act of 1933, this registration statement was signed by the following persons
in the capacities and on the dates stated.
Signature |
|
Title |
|
Date |
|
|
|
|
|
/s/
Riccardo Delle Coste |
|
Chief Executive Officer and Director |
|
May 7, 2015 |
Riccardo Delle
Coste |
|
(Principal Executive
Officer) |
|
|
|
|
|
|
|
/s/
Arnold Tinter |
|
Chief
Financial Officer, Secretary, Director
|
|
May 7, 2015 |
Arnold Tinter |
|
(Principal Financial
Officer) |
|
|
|
|
|
|
|
* |
|
Director |
|
May 7, 2015 |
Steven Lang |
|
|
|
|
|
|
|
|
|
*
|
|
Director |
|
May 7, 2015 |
Joseph M. Cugine |
|
|
|
|
|
|
|
|
|
* |
|
Director |
|
May 7, 2015 |
Alice Elliot |
|
|
|
|
By: |
/s/ Riccardo Delle Coste |
|
|
Riccardo Delle Coste |
|
|
Attorney in Fact |
|
May 7, 2015
Barfresh
Food Group, Inc.
8530 Wilshire
Blvd., Suite 450
Beverly
Hills, California 90211
Re: | Registration
Statement on Form S-1 |
Ladies and
Gentlemen:
We
have acted as counsel to Barfresh Food Group Inc., a Delaware corporation (the “Company”), with respect to the preparation
of the Registration Statement on Form S-1 (File No. 333-203340) (as amended, the “Registration Statement”) filed by
the Company with the Securities and Exchange Commission (the “Commission”) on April 10, 2015 for the resale of up
to 16,780,333 shares of the Company’s common stock, $0.000001 par value per share (the “Common Stock”), consisting
of 10,300,000 shares of Common Stock (the “Shares”) held by certain shareholders and 6,480,333 shares of Common Stock
issuable upon exercise of Common Stock Warrants (the “Warrant Shares”), as described in the Registration Statement.
We
have reviewed such documents and made such examination of law as we have deemed appropriate to give the opinions expressed below.
We have relied, without independent verification, on certificates of public officials and, as to matters of fact material to the
opinions set forth below, on certificates of officers of the Company. In our capacity as your counsel in connection with such
registration, we are familiar with the proceedings taken and proposed to be taken by the Company in connection with the authorization
and issuance of the Securities, and, for the purposes of this opinion, have assumed such proceedings will be timely completed
in the manner presently proposed. In addition, we have made such legal and factual examinations and inquiries, including an examination
of originals or copies certified or otherwise identified to our satisfaction of such documents, corporate records, certificates
of officers and representatives of the Company and instruments, and we have made such inquiries of such officers and representatives
of the Company, as we have deemed necessary or appropriate as a basis for our opinion. In our examination, we have assumed the
legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as
originals, the conformity to original documents of all documents submitted to us as certified or photostatic copies and the authenticity
of the originals of such latter documents. With your consent, we have relied upon the foregoing and upon certificates or other
assurances of officers of the Company and others as to factual matters without having independently verified such factual matters.
TEL
(310) 889-0699 | Fax (310) 889-0699 | LibertasLaw.com
| 225 Santa monica
blvd., 11th floor, santa monica, Ca 90401
The
opinion expressed herein is limited to the General Corporation Law of the State of Delaware, including the applicable provisions
of the Delaware Constitution and the reported judicial decisions interpreting such law, in each case as currently in effect, and
we express no opinion as to the effect of the laws of any other jurisdiction. While we are not licensed to practice law in the
State of Delaware, we have reviewed applicable provisions of the Delaware General Corporation Law as we have deemed appropriate
in connection with the opinions expressed herein.
For
purposes of the opinion expressed below, and without limiting any other exceptions or qualifications set forth herein, we have
assumed that at the time of exercise of the Warrants and after the issuance of the Shares underlying the Warrants (the “Warrant
Shares”), the total number of issued and outstanding shares of the Company’s Common Stock, together with the total
number of shares of the Company’s Common Stock reserved for issuance upon the exercise, exchange or conversion, as the case
may be, of any exercisable, exchangeable or convertible security, as the case may be, then outstanding, will not exceed the total
number of authorized shares of Common Stock under the Company’s Certificate of Incorporation, as amended and then in effect.
Based
on the foregoing, we are of the opinion that the Shares have been duly authorized and validly issued and are fully paid and non-assessable
and that the Warrant Shares have been duly authorized and, upon issuance and delivery against payment therefor in accordance with
the terms of the Warrants, will be validly issued, fully paid and non-assessable.
We
hereby consent to the inclusion of this opinion as Exhibit 5.1 to the Registration Statement and to the references to our firm
under the caption “Legal Matters” in the Registration Statement. In giving our consent, we do not admit that we are
in the category of persons whose consent is required under Section 7 of the Securities Act or the rules and regulations thereunder.
We
hereby consent to the filing of this letter as an exhibit to the Registration Statement and to the reference to this firm under
the caption “Legal Matters” in the Registration Statement. In giving this consent, we do not hereby admit that we
are in the category of persons whose consent is required under Section 7 of the Securities Act. This opinion is expressed as of
the date of effectiveness of the Registration Statement unless otherwise expressly stated, and we disclaim any undertaking to
advise you of any subsequent changes in the facts stated or assumed herein or of any subsequent changes in applicable laws after
that date.
Very
truly yours, |
|
|
|
/s/
Libertas Law Group, Inc. |
|
Consent of Independent Registered
Public Accounting Firm
We consent to the incorporation by reference
in the Amendment No. 1 to the Registration Statement on Form S-1 (the “Registration Statement”) of BarFresh Food Group,
Inc. of our report dated June 30, 2014, with respect to the consolidated balance sheets of BarFresh Food Group, Inc. as of March
31, 2014 and 2013, and the related consolidated statements of operations, shareholders’ equity (deficit) and cash flows
for each of the years then ended which report appears in the March 31, 2014 annual report on Form 10-K of BarFresh Food Group,
Inc.
We also consent to the reference of
our firm under the caption “Experts” in the Registration Statement.
/s/ Eide Bailly LLP
|
|
|
|
Greenwood Village, Colorado
May 6, 2015
|
|