UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
8-K
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of
1934
Date
of
Report (Date of earliest event reported)
October
27, 2006
Amish
Naturals, Inc.
(Exact
name of registrant as specified in its charter)
Nevada
(State
or other jurisdiction
of
incorporation)
|
000-50662
(Commission
File
Number)
|
98-0377768
(IRS
Employer
Identification
No.)
|
6399
State Route 83, Holmesville, OH
(Address
of principal executive offices)
|
44633
(Zip
Code)
|
(330)
674-0998
(Registrant’s
telephone number, including area code)
FII
International Inc.
110
Melville Street, 6th
Floor
Vancouver,
British Columbia V6E4A6
Canada
(Former
name or former address, if changed since last report.)
Check
the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
o
Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange
Act
(17 CFR 240.14d-2(b))
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange
Act
(17 CFR 240.13e-4(c))
Item
1.01 Entry
into a Material Definitive Agreement.
See
Item
2.01 for a description of the agreement and plan of merger, dated October 27,
2006, among Amish Pasta Company, Inc., FII International Inc. and APC
Acquisition Corp.
Item
2.01 Completion
of Acquisition or Disposition of Assets.
On
October 27, 2006, Amish Pasta Company, Inc. (“Amish Pasta Company”), FII
International Inc. (“FII”) and a newly created, wholly owned subsidiary of FII,
APC Acquisition Corp. (the “Acquisition Subsidiary”) entered into an agreement
and plan of merger (the “Merger Agreement”). The merger contemplated by the
Merger Agreement (the “Merger”) closed on October 30, 2006.
Immediately
prior to the closing, FII effected a 2.8-for-1 split of its authorized and
outstanding common shares, par value $.001 per share. As a result of the Merger
and a private placement of our common shares that closed immediately thereafter,
the former stockholders of Amish Pasta Company now hold approximately 60%
of our outstanding common shares. Immediately following the Merger, the
Acquisition Subsidiary was merged with and into FII, and FII changed its name
to
“Amish Naturals, Inc.”
Additional
information in response to this Item 2.01 below is keyed to the Item numbers
of
Form 10-SB. References throughout to “Amish Pasta Company” refer to Amish Pasta
Company, Inc. prior to the Merger. References to “FII” or “our predecessor”
refer to FII International Inc. prior to the Merger. References to the
“Company,” “we” or “our” refer to Amish Naturals, Inc. following the
Merger.
PART
I
Item
1. Description
of Business
General
We
are
engaged in the manufacture, marketing and sales of gourmet, all-natural, kosher
dried organic pasta and a fiber-rich pasta made with 100% organic durum wheat.
We were founded in September 2005 as a Nevada corporation. Our principal
executive offices are located at 6399 State Route 83, Holmesville, OH 44633
and
our telephone number is 330-674-0998.
Products
We
manufacture, market and sell a variety of dried pastas under the Amish Naturals™
brand label. All of our products are made using either 100% organic durum flour
or organic whole wheat flour. We use century-old methods of lamination, as
opposed to the extruded production line method used by others in the pasta
industry. Our mixing, sheeting and cutting methods have been used in Amish
kitchens for generations to product a “homemade” quality, taste and texture. Our
products include Organic Plain Fettuccine, Organic Whole Wheat Fettuccine,
Organic Tomato-Basil Fettuccine, Organic Garlic-Parsley Fettuccine, and High
Fiber Fettuccine.
We
expect
that our pastas will be marketed with a price range for individual selections
from $2.99 to $3.59 for a 12 oz. serving.
Sales,
Marketing and Distribution
Prior
to
the Merger, Amish Pasta Company offered its products through the internet
website, www.amishpasta.com,
and one
distributor. We intend for our products to be sold and distributed through
direct sales, wholesale and specialty distributors. We plan to contract with
nationally recognized food brokers to coordinate our marketing and sales
efforts. We are currently finalizing our negotiations with one such broker
and
expect to have entered into a contract by mid-November 2006. We also will have
a
website for internet sales at www.amishnaturals.com.
Our
products are marketed toward health-conscious and kosher-observant adults,
in
additional to the general pasta and specialty foods markets. We believe our
consumers are people who prefer to buy a natural, better-tasting product and
are
willing to pay a premium price.
We
intend
to rely primarily on brand loyalty that we expect to create and word-of-mouth
to
promote our products. Our marketing strategy is designed to encourage consumers
to try our products for the first time and develop brand loyalty. We intend
to
accomplish this by educating consumers about the differences between our
all-natural products and the competition’s products, as well as through food
tastings in various markets, use of advertising media, food show demonstrations,
coupon incentives, participation with other food industry incentives and other
marketing methods. We will have a marketing division within our company to
coordinate all of our marketing efforts. Our sales and marketing will be
overseen by our Vice President of Sales, who has over 20 years experience in
the
food sales business. In addition, our Chairman of the Board, retired Executive
Vice President of Hebrew National, will offer his 32 years of sales and
marketing experience.
We
plan
to market our products to national retain chains initially in the Northeast
and
Mid-Atlantic regions of the United States, as well as to pursue both commissary
and institutional accounts. We also plan to distribute to private markets via
distributors, beginning in our Ohio location. For our organic products, we
may
consider marketing to the specialty organic markets as direct sales, in addition
to internet sales.
Our
Vice
President of Sales is currently working on the category placement of our
products with specific regard to shelf space. We will work closely with our
broker to gain maximum exposure of our products in the retail marketplace,
concentrating on both regular and specialty markets.
Manufacturing
Process
We
believe our pasta manufacturing process is one of the more important differences
between our products and those of our competitors. Our products are manufactured
using a “homemade” method of mixing, sheeting, rolling and cutting each strand
of pasta. We have been able to use this same method to produce large quantities
with the design and set up of our production line. This process is called
“lamination.” After the pasta product is cut, we use a drying system that allows
our pasta to dry so that the result leaves the end product with the right amount
of moisture once the process is completed. Ingredients are carefully measured
to
ensure that each pasta product is made using the exact ingredients.
All
of
our ingredients are carefully selected from suppliers that are able to
demonstrate the ability to produce the quality of products that we require.
All
of our flours are 100% organic and packaged to our requirements. The other
added
ingredients are also obtained from suppliers that can demonstrate that their
products are kosher and, when required, organic. We do not expect material
shortages or delays in the manufacture of our products. However, our products
are subject to inherent risks in agriculture. We believe that there are numerous
companies that could deliver the ingredients for our products under our quality
specifications without a substantial increase in cost or delay in delivery.
We
intend to monitor our supply closely at all times to ensure the best possible
ingredients and availability.
Competition
The
specialty foods industry is highly competitive. Customer choices among pasta
products include fresh, refrigerated pasta, mass-produced dried pasta and
specially produced dried pasta, such as our pastas. Our products compete with
those of many large companies that make mass-produced pasta products, as well
as
smaller companies that focus on “premium” pasta and sauces. Almost all of the
companies that compete in the mass-produced pasta category are larger then
we
are and have significantly greater resources than we do.
Because
we have positioned our products as all-natural, kosher, gourmet pastas, we
believe that we do not compete directly with the mass-produced pasta companies.
We are positioning ourselves as a natural alternative to these processed brands.
We compete with other branded products, national and regional, based on our
quality and all-natural and/or kosher ingredients. In the all-natural foods
market, we compete with several brands that are produced by companies that
are
larger than we are.
The
principal methods of competition in the pasta market include product quality
and
taste, brand advertising, and packaging. We believe we compete favorably with
respect to those factors, although there can be no assurance that we will be
able to continue to do so. Our ability to compete successfully in the future
will depend on factors both within and outside our control, including general
market conditions and our ability to respond to changing market conditions
and
the activities of our competitors, to control costs, to introduce successful
new
products, and to grow our customer base. We can give no assurance that we will
be able to compete successfully with respect to these factors in the future
or
that present or future competitors will not successfully compete with us in
the
future.
Intellectual
Property
We
have
the following trademarks pending registration in the United States: “Amish
Naturals” and “Amish Organics.” We use appropriate copyright notices with our
packaging and promotional materials. All of our employees have entered into
confidentiality agreements with us, pursuant to which they have agreed to keep
confidential and not use our trade secrets, including our processes, formulae,
ingredients and recipes, except to our benefit. We do not have any patents.
Because our manufacturing processes and recipes are not protected by patents
or
by registered copyrights, our competitors may be able to use our processes
and
recipes to compete against us notwithstanding our protection efforts. We believe
that we are not infringing on the intellectual property rights of any third
party, and we intend to take all necessary and appropriate action to protect
against dilution or imitation of our products, packaging and promotional
materials, and to defend our trademarks, copyrights, and trade secrets against
such infringements.
Regulation
We
and
our distributors are subject to extensive regulation by federal, state and
local
authorities that affect our business. All of our pasta products and packaging
materials are subject to regulations administered by the Food and Drug
Administration (“FDA”) and the U.S. Department of Agriculture (“USDA”). Under
the Federal Food, Drug and Cosmetic Act of 1938, as amended, the FDA prescribes
the requirements and establishes the standards for quality, purity and labeling.
Among other things, the FDA enforces statutory prohibitions against misbranded
and adulterated foods, establishes safety standards for food processing,
establishes ingredients and manufacturing procedures for certain foods,
establishes standards of identity for certain foods, and establishes labeling
standards and nutrition labeling requirements for food products. Among other
requirements, the FDA must approve our products, including a review of the
manufacturing processes and facilities used to produce these products before
they can be marketed in the United States. We are also subject to USDA
regulations for the manufacturing and sale of organic products requiring
detailed inspection of our facilities, labeling, use of organic certified
ingredients and handling procedures.
The
Federal Trade Commission (“FTC”) regulates the advertising of our products and
business. In addition, various states regulate our business by enforcing federal
and state standards of identity for selected food products, grading food
products, inspecting our manufacturing facilities and, in a few instances,
imposing their own labeling requirements on food products. Some food commodities
are subject to governmental agricultural programs. These programs have
substantial effects on prices and supplies and are subject to Congressional
and
administrative review.
We
and
our distributors are also subject to various federal, state and local laws
and
regulation concerning the discharge of materials into the environment, or
otherwise related to environmental protection, including the Clean Air Act,
the
Clean Water Act, the Resource Conversation and Recovery Act and the
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
also known as Superfund. Superfund imposes joint and several liability on
parties that arrange for the disposal of hazardous substances, and on current
and previous owners and operators of a facility for the clean-up of hazardous
substances released from the facility into the environment.
New
government laws and regulations may be introduced in the future that could
result in additional compliance costs, seizures, confiscation, recall or
monetary fines, any of which could prevent or inhibit the development,
distribution and sale of our products. If we fail to comply with applicable
laws
and regulations, we may be subject to civil remedies, including fines,
injunctions, recalls or seizures, as well as potential criminal sanctions,
which
could have a material adverse effect on the business, results of operations
and
financial condition. We have not experienced any regulatory problems in the
past
and have not been subject to any fines or penalties.
Employees
As
of
October 30, 2006, we had eight employees. We believe the relationship we have
with our employees is good.
Risk
Factors
An
investment in our securities involves a high degree of risk. In determining
whether to purchase or sell our securities, you should carefully consider all
of
the material risks described below, together with the other information
contained in this filing before making a decision to purchase our securities.
You should only purchase our securities if you can afford to suffer the loss
of
your entire investment.
Risks
Related to our Business
Because
Amish Pasta Company has a limited operating history, it is difficult to predict
the future performance of the Company.
Amish
Pasta Company was incorporated in September 2005 and, therefore, has limited
operating and financial history available to help stockholders evaluate its
past
performance. Moreover, Amish Pasta Company’s limited historical financial
results may not accurately predict the future performance of the Company.
Companies in their initial stages of development present substantial business
and financial risks and may suffer significant losses. As a result of the risks
specific to the Company’s new business and those associated with new companies
in general, it is possible that we may not be successful in implementing our
business strategy.
We
are dependent on our chief executive officer and certain other key officers,
the
loss of any of which could significantly harm our business and
operations.
Amish
Pasta Company depended, and the Company will depend, on the efforts of our
executive officers and other key personnel, including David C. Skinner, Sr.,
our
President and Chief Executive Officer. The loss of Mr. Skinner or other key
employees could materially and adversely affect the business, financial
condition and results of operations of the Company. The Company has employment
or consulting agreements with all of its executive officers, but does not have
key person insurance on the lives of any of them.
Our
future growth and profitability will depend in large part upon the effectiveness
and efficiency of our marketing expenditures and our ability to select the
right
markets and media in which to advertise.
Our
future growth and profitability will depend in large part upon the effectiveness
and efficiency of our marketing expenditures, including our ability
to:
-
create
greater awareness of our brand;
-
identify the most effective and efficient level of spending in each market,
media and specific media vehicle;
-
determine the appropriate creative message and media mix for advertising,
marketing and promotional expenditures;
-
effectively manage marketing costs (including creative and media) in order
to
maintain acceptable customer acquisition costs;
-
select
the right market, media and specific media vehicle in which to advertise; and
-
convert
consumer inquiries into actual orders.
Our
planned marketing expenditures may not result in increased revenue or generate
sufficient levels of brand name and program awareness. We may not be able to
manage our marketing expenditures on a cost-effective basis whereby our customer
acquisition cost may exceed the contribution profit generated from each
additional customer.
If
aggregate production capacity in the U.S. pasta industry increases or is
under-utilized, we may have to adopt a more aggressive pricing strategy, which
would negatively affect our results of operations.
Our
competitive environment depends on the relationship between aggregate industry
production capacity and aggregate market demand for pasta products. Production
capacity above market demand can have a material adverse effect on our business,
financial condition and results of operations.
The
market for pasta products is highly competitive, and we face competition from
many established domestic and foreign producers. We may not be able to compete
effectively with these producers.
The
markets in which we operate are highly competitive. We compete against numerous
well-established national, regional, local and foreign companies in every aspect
of our business. Customers may not buy our products, and we may not be able
to
compete effectively with these competitors. Some of our competitors have longer
operating histories, significantly greater brand recognition and financial
and
other resources than we do.
Cost
increases or crop shortages in durum wheat or cost increases in packaging
materials could adversely affect us.
The
costs
of organic durum and whole wheat, organic ingredients and packaging materials
have varied widely in recent years and future changes in such costs may cause
our results of operations and our operating margins to fluctuate significantly.
Increases in the cost of durum wheat or packaging materials could have a
material adverse effect on our operating profit and margins unless and until
we
are able to pass the increased cost along to our customers. Competitive
pressures may also limit our ability to raise prices in response to increased
raw or packaging material costs. Accordingly, we do not know whether, or the
extent to which, we will be able to offset durum wheat or packaging material
cost increases with increased product prices. We also rely on the supply of
plastic, corrugated and other packaging materials, which fluctuate in price
due
to market conditions beyond our control.
The
sale of ingested products involves product liability and other risks.
Like
other companies that sell food products, the Company faces an inherent risk
of
exposure to product liability claims if the use of its products results in
illness or injury. The successful assertion or settlement of a claim or a
significant number of insured claims could harm the Company by adding costs
to
the business and by diverting the attention of senior management from the
operation of the business. The Company may also be subject to claims that its
products contain contaminants, are improperly labeled, include inadequate
instructions as to preparation or inadequate warnings covering food borne
illnesses or allergies. While we have product liability insurance, product
liability litigation, even if not meritorious, is very expensive and could
also
entail adverse publicity for the Company, thereby reducing revenue and operating
results.
We
may not successfully manage our growth.
Our
success will depend upon the expansion of our operations and the effective
management of our growth, which will place a significant strain on our
management and administrative, operational, and financial resources. To manage
this growth, should there be growth, we must expand our facilities, augment
our
operational, financial and management systems, and hire and train additional
qualified personnel. If we are unable to manage our growth effectively, our
business would be harmed.
We
may need additional financing to continue and grow operations, which financing
may not be available on acceptable terms or at all.
We
may
need to raise additional funds to fund our operations or grow our business.
Additional financing may not be available on terms or at times favorable to
us,
or at all. If adequate funds are not available when required or on acceptable
terms, we may be unable to continue and grow our operations. In addition, such
additional financing transactions, if successful, may result in additional
dilution of our stockholders. They may also result in the issuance of securities
with rights, preferences, and other characteristics superior to those of the
common stock and, in the case of debt financings, may subject the Company to
covenants that restrict its ability to freely operate its business.
The
food industry is subject to governmental regulation that could increase in
severity and hurt results of operations.
The
food
industry is subject to federal, state and other governmental regulation relating
to the operation of production facilities, the production, packaging, labeling
and marketing of products and pollution control, including air emissions. For
example, food manufacturers are subject to rigorous inspection and other
requirements of the USDA and FDA. If federal, state, or local regulation of
the
industry increases for any reason, then the Company may be required to incur
significant expenses, as well as modify its operations to comply with new
regulatory requirements, which could harm operating results. Additionally,
remedies available in any potential administrative or regulatory actions may
require the Company to refund amounts paid by all affected customers or pay
other damages, which could be substantial. Any determination by the FDA or
other
agencies that our facilities are not in compliance with applicable regulations
could interfere with the continued manufacture and distribution of the affected
products, up to the entire output of the facility or facilities involved, and,
in some cases, might also require the recall of previously distributed products.
Any such determination could have a material adverse effect on our business,
financial condition and results of operations. Under environmental laws, we
are
exposed to liability primarily as an owner and operator of real property, and
as
such, we may be responsible for the clean-up or other remediation of
contaminated property. Environmental laws and regulations can change rapidly
and
we may become subject to more stringent environmental laws and regulations
in
the future that may be retroactively applied to earlier events. In addition,
compliance with more stringent environmental laws and regulations could involve
significant capital investments.
Our
business is dependent on several major customers.
We
expect
that we will rely on a limited number of major retail customers and wholesale
distributors for a substantial portion of our revenues in the future. If our
relationship with one or more of them does not materialize as planned or,
thereafter, changes or ends, our sales could suffer, which could have a material
adverse effect on our business, financial condition and results of
operations.
Our
manufacturing processes and recipes are not protected by patents or by
registered copyrights and, as a result, our competitors may be able to use
our
processes and recipes to compete against us.
We
do not
have any patents. All of our employees have entered into confidentiality
agreements with us, pursuant to which they have agreed to keep confidential
and
not use our trade secrets, including our processes, formulae, ingredients and
recipes, except to our benefit. We use appropriate copyright notices with our
packaging and promotional materials. Despite these efforts, it may be possible
for our competitors or customers to copy aspects of our trade secrets. This
could have a material adverse effect on our business, financial condition,
and
results of operations.
Risks
associated with investing in our common shares
There
have been no trades in our common shares, and there can be no assurance that
an
established trading market will develop.
There
have been no trades in our common shares. Although quotations for our common
shares appear on the Over-the-Counter Bulletin Board (the “OTC Bulletin Board”),
the absence of any transactions in the shares indicates that there is no
established trading market for the shares. There is no assurance that any
established trading market will develop and, if it does not, our shares may
have
no value to their holders.
If
a trading market for our common shares does develop, trading prices may be
volatile.
In
the
event that a trading market develops for our common shares, the market price
of
such shares may be based on factors that may not be indicative of future market
performance. Consequently, the market price of our shares may vary greatly.
If a
market for our shares develops, there is a significant risk that our share
price
may fluctuate dramatically in the future in response to any of the following
factors, some of which are beyond our control:
-
variations in our quarterly operating results;
-
announcements that our revenue or income/loss levels are below analysts’
expectations;
-
general
economic slowdowns;
-
changes
in market valuations of similar companies;
-
announcements by us or our competitors of significant contracts;
-
acquisitions, strategic partnerships, joint ventures or capital commitments.
Because
we became public by means of a “reverse acquisition”, we may not be able to
attract the attention of major brokerage firms.
Additional
risks may exist since we will become public through a “reverse acquisition.”
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 shares. No assurance can be given that brokerage firms will want
to
conduct any secondary offerings on behalf of our company in the future.
Our
common shares may be considered a “penny stock” and may be difficult to
sell.
The
Securities and Exchange Commission has adopted regulations which generally
define a “penny stock” to be an equity security that has a market price of less
than $5.00 per share or an exercise price of less than $5.00 per share, subject
to specific exemptions. The market price of our shares, if an active trading
market develops, may be less than $5.00 per share and, therefore, it may be
designated as a “penny stock” according to the Commission’s rules. This
designation requires any broker or dealer selling these securities to disclose
certain information concerning the transaction, obtain a written agreement
from
the purchaser and determine that the purchaser is reasonably suitable to
purchase the securities. These rules may restrict the ability of brokers or
dealers to sell our shares and may affect the ability of investors to sell
their
shares.
We
are not required to meet or maintain any listing standards for our common stock
to be quoted on the OTC Bulletin Board or in the Pink Sheets, which could affect
our stockholders’ ability to access trading information about our common
stock.
The
OTC
Bulletin Board and the Pink Sheets are each separate and distinct from the
Nasdaq Stock Market and any national stock exchange, such as the New York Stock
Exchange or the American Stock Exchange. Although the OTC Bulletin Board is
a
regulated quotation service operated by the National Association of Securities
Dealers (“NASD”), that displays real-time quotes, last sale prices, and volume
information in over-the-counter (“OTC”) equity securities like our common stock,
and although Pink Sheets’ Electronic Quotation Service is an Internet-based,
real-time quotation service for OTC equities for market makers and brokers
that
provides pricing and financial information for the OTC securities markets,
we
are not required to meet or maintain any qualitative or quantitative standards
for our common stock to be quoted on either the OTC Bulletin Board or in the
Pink Sheets. Our common stock does not presently meet the minimum listing
standards for listing on the Nasdaq Stock Market or any national securities
exchange, which could affect our stockholders’ ability to access trading
information about our common stock. Additionally, we are required to satisfy
the
reporting requirements under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). If we fail to do so, our shares may no longer be quoted on
the OTC.
We
do not intend to pay dividends; you will not receive funds without selling
shares.
We
have
never declared or paid any cash dividends on our capital stock and do not intend
to pay dividends in the foreseeable future. We intend to invest our future
earnings, if any, to fund our growth. Therefore, you will not receive any funds
without selling your shares.
Cautionary
Note Regarding Forward-Looking Statements
The
information contained in this Form 8-K, other than historical information,
may
include forward-looking statements as defined in the Private Securities
Litigation Reform Act of 1995. Words such as “may”, “will”, “expect”, “intend”,
“anticipate”, “believe”, “estimate”, “continue”, “plan” and similar expressions
in this report identify forward-looking statements. The forward-looking
statements are based on current views with respect to future events and
financial performance. Actual results may differ materially from those projected
in the forward-looking statements. The forward-looking statements are subject
to
risks, uncertainties and assumptions, including but not limited to, those
described in “Risk Factors” above.
Item
2. Management’s
Discussion and Analysis or Plan of Operation.
The
following discussion should be read in conjunction with the financial
information included elsewhere in this Form 8-K, including the Company’s audited
financial statements for the period ending September 30, 2006 and related notes.
Because of the reverse acquisition, the following discussion relates to the
separate financial statements of Amish Pasta, and reference to the Company
and
to “we”, “our” and similar words refer to Amish Pasta.
THE
FOLLOWING PRESENTATION OF AMISH PASTA COMPANY’S MANAGEMENT’S DISCUSSION AND
ANALYSIS SHOULD BE READ IN CONJUNCTION WITH THE FINANCIAL STATEMENTS AND OTHER
FINANCIAL INFORMATION INCLUDED ELSEWHERE IN THIS REPORT.
A
Note
About Forward-Looking Statements
This Current
Report on Form 8-K contains “forward-looking statements” within the meaning of
the Private Securities Litigation Reform Act of 1995 that are based on current
management’s expectations. These statements may be identified by their use of
words like “plans”, “expect”, “aim”, “believe”, “projects”, “anticipate”,
“intend”, “estimate”, “will”, “should”, “could” and other expressions that
indicate future events and trends. All statements that address expectations
or
projections about the future, including statements about our business strategy,
expenditures, and financial results are forward-looking statements. Management
of Amish Pasta Company believes that the expectations reflected in such
forward-looking statements are accurate. However, management cannot assure
you
that such expectations will occur.
Actual
results could differ materially from those in the forward looking statements
due
to a number of uncertainties including, but not limited to, those discussed
in
this section. Factors that could cause future results to differ from these
expectations include general economic conditions, further changes in our
business direction or strategy; competitive factors, oil and gas exploration
uncertainties, and an inability to attract, develop, or retain technical,
consulting, managerial, agents, or independent contractors. As a result, the
identification and interpretation of data and other information and their use
in
developing and selecting assumptions from and among reasonable alternatives
requires the exercise of judgment. To the extent that the assumed events do
not
occur, the outcome may vary substantially from anticipated or projected results,
and accordingly, no opinion is expressed on the achievability of those
forward-looking statements. No assurance can be given that any of the
assumptions relating to the forward-looking statements specified in the
following information are accurate, and management assumes no obligation to
update any such forward-looking statements. You should not unduly rely on these
forward-looking statements, which speak only as of the date of this Current
Report. Except as required by law, management is not obligated to release
publicly any revisions to these forward-looking statements to reflect events
or
circumstances occurring after the date of this report or to reflect the
occurrence of unanticipated events.
Overview
of Amish Pasta Company
Amish
Pasta Company is a start-up, development-stage company and has not yet generated
or realized any revenues from our business operations. During the period from
September 2, 2005 (inception) to September 30, 2006, Amish Pasta Company raised
capital in the form of a short-term note payable, and acquired a production
facility site and the equipment management believes is necessary for Amish
Pasta
Company to commence operations. Management’s plan is for a line of natural
organic, kosher pasta products and related items to be produced and sold through
food product distributors.
On
October 27, 2006 we completed a merger with FII. As the now-former stockholders
of Amish Pasta Company hold the majority of our outstanding common stock after
the merger, the transaction will be accounted for as a “reverse merger” and the
financial statements will be those of Amish Pasta Company. In connection with
the merger, we raised $2,610,000 through the sale of 2.9 million equity units.
Each unit includes one share of our common stock and a warrant to purchase
½
share of our common stock. Each unit sold for $.90. Neither the shares nor
the
warrants has any registration rights. We used a portion of the proceeds of
this
private placement to repay the note payable in full and to redeem shares of
FII
held by the former majority stockholder of FII.
There
is
no historical financial information about us upon which to base an evaluation
of
our performance. We are a development stage company and have not generated
any
revenues from our operations. We cannot guarantee we will be successful in
our
core business, or in any business operations. Our business is subject to risks
inherent in the establishment of a new business enterprise, including limited
capital resources.
We
have
no assurance that future financing will be available on acceptable terms, if
at
all. If financing is not available on satisfactory terms or on a timely basis,
we may be unable to continue with our current business plan. If equity, or
convertible debt, financing is available to us on acceptable terms, it could
result in additional dilution to our stockholders.
Results
of Operations for the Period from September 2, 2005 (inception) to September
30,
2006
From
inception to September 30, 2006, we had a loss of $371,207. Our expenses relate
to the development of a sales and marketing plan, product development activities
and costs associated with implementation of the infrastructure necessary to
support our operations once they commence.
We
expect
to commence commercial production by January 2007 and expect our sales to
commence shortly thereafter.
Liquidity
and Capital Resources
As
of
September 30, 2006, the total assets of Amish Pasta Company were $1,500,030,
which included cash balances of $186,257. Amish Pasta Company invested
$1,313,652 in property and equipment, none of which had been placed in service
at September 30, 2006. Amish Pasta Company’s total liabilities were $1,861,036,
all of which were current, resulting in negative working capital of
$1,674,779.
Despite
Amish Pasta Company’s negative cash flows from operation of $32,721 for the
period September 2, 2005 (inception) to September 30, 2006, it has been able
to
obtain operating capital through private debt funding sources since inception.
Management’s plan includes the continued development and eventual implementation
of our business plan.
As
of the
date of this Current Report, we have yet to generate revenues from our business
operations.
Plan
of
Operation for the Next Twelve Months
During
the next twelve months we plan to complete the installation of our production
equipment and commence producing our line of pasta products. We expect to
complete distribution agreements for our products with national food product
distributors by the end of 2006 and will continue our development of products
that are complimentary to our pasta lines. We expect to commence producing
inventory and commence sales to our distributors during the early part of
2007.
Since
inception, Amish Pasta Company funded its operations from the proceeds of
short-term borrowings, which were repaid in October 2006 from the proceeds
of a
private placement of common stock and warrants. Although we expect that, during
the next 12 months, our operating capital needs will be met by our current
economic resources and, if required, by additional private capital stock
transactions, there can be no assurance that funds required will be available
on
terms acceptable to us or at all. If we are unable to raise sufficient funds
on
terms acceptable to us or on a timely basis, we may be unable to continue with
our business plan. If equity, or convertible debt, financing is available to
us
on acceptable terms, it could result in additional dilution to our
stockholders.
Off-Balance
Sheet Arrangements
We
have
no off balance sheet arrangements at September 30, 2006.
Item
3. Description
of Property.
We
lease
approximately 16,000 square feet of space in Holmesville, Ohio, consisting
of a
processing facility, office and warehouse, with an option to purchase this
space
for $280,000. We believe this space is adequate for our current business
operations. However, we are in the process of locating additional space to
avoid
any delay in expansion possibilities. The lease and option expire on February
27, 2011, subject to extension at our election for an additional five years.
We
also have a right of first refusal to purchase an additional seven acres of
land
next to the leased property for $250,000, which right remains in effect so
long
as the adjacent property is leased or acquired by us.
Item
4. Security
Ownership of Certain Beneficial Owners and Management.
The
following table sets forth certain information regarding the shares of common
stock beneficially owned or deemed to be beneficially owned as of October 30,
2006 by (i) each person whom we know beneficially owns more than 5% of our
common stock, (ii) each of our directors and those persons who will become
our
directors on November 9, 2006, (iii) our Chief Executive Officer, and (iv)
all
of our directors and executive officers as a group.
Except
as
indicated by the footnotes below, we believe, based on the information furnished
to us, that the beneficial owners named in the table below have sole voting
and
investment power with respect to all shares of our common stock that they
beneficially own, subject to applicable community property laws. Except as
noted
below, the beneficial owners named in the table below have the following
address: c/o Amish Naturals, Inc., 6399 State Route 83, Holmesville, Ohio
44633.
In
computing the number of shares of common stock beneficially owned by a person
and the percentage ownership of that person, we deemed outstanding shares of
common stock subject to options or warrants held by that person that are
currently exercisable or exercisable within 60 days of October 27, 2006. We
did
not deem those shares outstanding, however, for the purpose of computing the
percentage ownership of any other person.
Name
and Address of Beneficial Owner
|
|
Amount
and Nature of Beneficial Ownership
|
|
Percent
of Class (1)
|
|
David
C. Skinner, Sr. (5)
|
|
|
8,400,000
(2
|
)
|
|
20.05
|
%
|
Martin
Silver (5)
|
|
|
6,000,000
(3
|
)
|
|
14.32
|
%
|
Alexander
Ngan
|
|
|
0
|
|
|
-
|
|
Carlo
Varesco
|
|
|
0
|
|
|
-
|
|
Kenneth
Troyer (5) (6)
|
|
|
1,000,000
|
|
|
2.3
|
%
|
Ronald
Sparkman (5)
|
|
|
4,800,000
|
|
|
11.46
|
%
|
Shlomie
Stein (5)
|
|
|
3,800,000
(4
|
)
|
|
9.07
|
%
|
Current
directors and executive officers as a group (7 persons)
|
|
|
15,400,000
|
|
|
36.75
|
%
|
(1) |
Based
on 41,900,000 common shares issued and outstanding as of October
30,
2006.
|
(2) |
Includes
5,200,000 shares held jointly by David C. Skinner, Sr. and his wife,
Kimberly Skinner, 2,200,000 shares held by the Kimberly Skinner and
David
C. Skinner, Sr. Family Trust, Kristine Coalson and Kimberly Skinner
co-trustees, and 1,000,000 total shares held by the children of David
C.
Skinner, Sr. and Kimberly Skinner, with 125,000 shares each in the
name of
Jolene Skinner Haney, Darlene Skinner Smith, David C. Skinner, Jr.,
Kristine Skinner Coalson, Sanna V. Skinner, Justin Husted, Brittany
Stein,
and Kimberly Husted Skinner in trust for Lauren Stein.
|
(3) |
Held
jointly by Martin Silver and his wife, Madeline
Silver.
|
(4) |
Includes
1,900,000 shares held by his wife, Rachelle
Stein and 1,900,000 shares held by Regency Capital Management LLC,
a
company wholly owned by him.
|
(5) |
These
persons are party to a Stockholders Agreement dated October 27, 2006
that
restricts the voting and transfer right of the Company’s shares held by
them and by the other parties to the Stockholders Agreement A total
of
25,000,000 shares are subject to the Stockholders Agreement. See
Item 8. Description of Securities.
|
(6) |
Held
on behalf of The Amish Community
Trust.
|
Item
5. Directors
and Executive Officers, Promoters and Control Persons.
The
following table sets forth the names, ages and principal positions of our
executive officers and directors as of October 30, 2006, as well as those person
who will become our directors on November 9, 2006:
Name
|
|
Age
|
|
Position
|
|
|
|
|
|
David
C. Skinner, Sr.
|
|
64
|
|
President,
Chief Executive Officer and Director
|
Dale
Paisley
|
|
65
|
|
Chief
Financial Officer
|
Donald
Alarie
|
|
50
|
|
Vice
President of Sales
|
Martin
Silver
|
|
65
|
|
Chairman
of the Board
|
Alexander
Ngan
|
|
55
|
|
Director
|
Kenneth
Troyer
|
|
45
|
|
Director
|
Carlo
Varesco
|
|
74
|
|
Director
|
David
C.
Skinner, Sr. is the President and Chief Executive Officer of the Company. He
co-founded Amish Pasta Company, Inc. in September 2005 and served as its
President until the merger that resulted in the Company. From June 1999 to
September 2005, Mr. Skinner served as co-owner with his wife of his family
business, Chadi Farms, a full-service equestrian facility and vacation resort
with an Amish country store.
Dale
Paisley is the Chief Financial Officer of the Company Mr. Paisley has been
a
financial and accounting consultant to primarily small public companies since
2000. He assists his clients with regulatory reporting with the Securities
and
Exchange Commission and state regulators and has served as temporary chief
financial officer and chief executive officer of several public and private
companies. From October 2002 until December 2003, Mr. Paisley served as
president of SoCal Waste Group, Inc., and from February 2003 until December
2003, he served as chief executive officer and chief financial officer of USA
Biomass Corporation. Prior to that time, Mr. Paisley was a partner in the
international accounting firm of Coopers & Lybrand (now
PricewaterhouseCoopers).
Donald
Alarie is the Company’s Vice President of Sales. From October 2005 through
October 2006, he served as Director of Fresh Foods at Acosta Sales &
Marketing. Prior to that, from June 2003 through July 2005, he was Director
Business Development - Franks Category and then Director Customer Development
-
C&S/Ahold Team at ConAgra Foods, Inc. From May 1999 to June 2003, Mr. Alarie
was General Manager of Hebrew National Kosher Foods, a division of ConAgra.
Mr.
Alarie has over 25 years of sales and marketing experience in the food industry,
including a decade working on the Hebrew National brand and was instrumental
in
its national expansion.
Martin
Silver, now retired, served most recently as Executive Vice President and
General Manager of the Hebrew National Division of ConAgra Foods, Inc., a
position he held from November 2000 until his retirement in December 2005.
Alexander
Ngan served as our President from September 29, 2006 until the Merger. He has
also been a director of the Company since September 29, 2006. Mr. Ngan has
served as a director for Clearant, Inc. since 2005. Mr. Ngan also has served
as
a director of Singamas Container Holdings, Ltd., the world’s second largest
manufacturer of containers, since July 2003. From 1993 through May 2002, he
was
a partner at ChinaVest Limited, a private equity investment firm. From May
1998
to October 2001, Mr. Ngan served as President and CEO of OEM manufacturer
Zindart Ltd.
Kenneth
Troyer has been the owner and operator of Spotted Acres, an Ohio horse breeding
and equestrian facility, including horse sales, for sixteen years. Since June
2004, he has also owned and operated KT Barns, which constructs farms and other
buildings and equipment in central Ohio. From 1994 to June 2004, Mr. Troyer
operated KT Horsetrack, a seller of horse equipment and supplies. He is a member
of the old order Amish Community and strictly abides by their
traditions.
Carlo
Varesco is currently self-employed as a consultant to the pasta-making industry.
He previously served as General Manager and Vice President of Golden Grain,
a
division of the Quaker Oats Company, a position he held from 1980 until 1986,
when he became self-employed. Mr. Varesco first began working at Golden Grain
in
1956.
There
are
no family relationships among our directors or among our executive
officers.
Our
Board
of Directors has not had an Audit Committee, Compensation Committee, or
Nominating and Corporate Governance Committee because, due to the Board’s
composition and our relatively limited operations, we were able to effectively
manage the issues normally considered by such committees. Our new Board of
Directors effective November 9, 2006 may undertake a review of the need for
these committees.
Security
holders may send communications to our board of directors by writing to 6399
State Route 83, Holmesville, OH 44633, attention Board of Directors or any
specified director. Any correspondence received at the foregoing address to
the
attention of one or more directors is promptly forwarded to such director or
other directors.
Item
6. Executive
Compensation
The
following table provides certain summary information concerning the compensation
earned for services rendered to us by our Chief Executive Officer during the
period from September 30, 2005 through September 30, 2006.
Summary
Compensation Table
|
|
Annual
Compensation
|
|
Name
and Principal Position
|
|
Year
|
|
Salary
($)
|
|
David
C. Skinner, Sr., President and Chief Executive Officer
|
|
|
2006
|
|
$
|
34,800
|
|
We
did
not grant any options during the last fiscal year. On October 26, 2006, the
Board of Directors adopted the 2006 Incentive Plan, pursuant to which stock
options and other equity-based awards may be made to the Company’s directors,
officers and third-party service providers.
Upon
appointment of the Director Designees to the board of directors, Alexander
Ngan
and the Director Designees will receive five-year options to purchase shares
of
our common stock at an exercise price of $0.90 per share as follows: David
C.
Skinner, Sr., 1,000,000 (vesting 250,000 per year over four years); Martin
Silver, 500,000 (vesting 125,000 per year over four years); Alexander Ngan,
100,000 (vesting 50,000 per year over two years); Kenneth Troyer, 125,000
(vesting 50,000 in 12 months and 75,000 in 24 months); Carlo Varesco, 250,000
(vesting 100,000 in six months, 100,000 in 12 months and 50,000 in 18 months).
Our directors have not been paid any compensation in the past. In the future,
our directors will be reimbursed for their travel expenses and will receive
$2,500 per year as compensation for their service as directors.
In
connection with David C. Skinner, Sr.’s appointment as our President and Chief
Executive Officer, we entered into an employment agreement with Mr. Skinner
on
October 27, 2006. The employment agreement provides for Mr. Skinner to receive
the following:
|
● |
Initial
base salary of $180,000;
|
|
● |
Annual
bonus determined by the Board of Directors in its sole discretion;
|
|
● |
Participation
in employee medical, health, pension, welfare and insurance benefit
plans
as maintained by the Company from time to time for the general benefit
of
its executive employees, as well as all other benefits and perquisites
as
are made generally available to the Company’s executive
employees;
|
|
● |
At
least three weeks annual vacation;
and
|
|
● |
Monthly
car allowance of $750.00 per month.
|
In
addition, Mr. Skinner was granted an option to purchase 1,000,000 shares of
the
Company’s common stock, which is described above. The agreement also contains a
confidentiality provision.
If
Mr.
Skinner’s employment is terminated by the Company without cause (as defined in
the agreement):
|
● |
Mr.
Skinner will receive payment of his base salary through and including
the
date of termination, payment of any earned but unpaid bonus for the
prior
fiscal year, payment for all accrued but unused vacation time existing
as
of the date of termination, and reimbursement of business expenses
incurred prior to the date of termination;
|
|
● |
Mr.
Skinner will be eligible to receive a severance payment based on
his
length of service, provided he signs a general release of all claims
in a
form approved by the Board of Directors; and
|
|
● |
The
options granted under the agreement will cease vesting on the date
of
termination of employment, and to the extent vested and not previously
exercised or expired, may be exercised in accordance with the terms
and
conditions of the 2006 Incentive Plan.
|
If
Mr.
Skinner’s employment is terminated by the Company with cause (as defined in the
agreement), or by Mr. Skinner for any reason by providing written notice to
the
Company prior to the date of resignation:
|
● |
Mr.
Skinner will receive payment of his base salary through and including
the
date of termination, payment of any earned but unpaid bonus for the
prior
fiscal year, payment for all accrued but unused vacation time existing
as
of the date of termination, and reimbursement of business expenses
incurred prior to the date of
termination;
|
|
● |
The
options granted under the agreement will cease vesting on the date
of
termination of employment, and to the extent vested and not previously
exercised or expired, may be exercised in accordance with the terms
and
conditions of the 2006 Incentive Plan;
and
|
|
● |
Mr.
Skinner may continue to participate in the Company’s employee benefit
plans to the extent permitted by and in accordance with the terms
thereof
or as otherwise required by law.
|
In
the
event that Mr. Skinner’s employment terminates for reason of death or permanent
disability (as defined in the agreement), Mr. Skinner, his beneficiary or estate
shall be entitled to receive the payments that would have been payable to Mr.
Skinner under a termination without cause as of the date of death or the date
as
of which the Company determines in its sole discretion that Mr. Skinner had
become permanently disabled.
Item
7. Certain
Relationships and Related Transactions.
There
are
no material relationships between the Company and the current directors and
executive officers or any of the persons expected to become directors or
executive officers of the Company other than the transactions and relationships
described below, or contemplated in the Merger Agreement.
Pursuant
to an agreement with Amish Pasta Company in March 2006, Mr. Troyer, who will
become a director of the Company, constructed various buildings on Amish Pasta
Company’s property in Ohio, including a utility building and laboratory, as well
as installed a production line and oversaw contractors. Amish Pasta Company
paid
Mr. Troyer $75,000 for this work.
Item
8. Description
of Securities.
Our
authorized capital stock consists of 560,000,000 common shares, par value $.001
per share. On October 30, 2006, there were 41,900,000 common shares issued
and
outstanding.
Under
our
Articles of Incorporation, our common shares are identical in all respects,
and
each share entitles the holder to the same rights and privileges as are enjoyed
by other holders and is subject to the same qualifications, limitations and
restrictions as apply to other shares.
Our
common stock is the only class of voting securities issued and outstanding.
Holders of our common shares are entitled to one vote for each share held of
record on all matters submitted to a vote of stockholders. Holders of our common
shares do not have cumulative voting rights.
The
holders of our common shares are entitled to dividends when and if declared
by
our Board of Directors from legally available funds. The holders of our common
shares are also entitled to share pro rata in any distribution to stockholders
upon our liquidation or dissolution.
The
persons receiving our 25,000,000 common shares in connection with the merger
(the “Stockholders”) are parties to a Stockholders Agreement dated October 27,
2006 that restricts the voting and transfer right of the Company’s shares held
by them. Pursuant to the Stockholders Agreement, no Stockholder may transfer,
sell or otherwise dispose of any shares of the Company’s capital stock, except
to another Stockholder. In addition, the Stockholders Agreement grants David
C.
Skinner, Sr. an irrevocable proxy to vote the shares of the Company’s capital
stock collectively held by the Stockholders as a single block in the manner
directed by the Stockholders holding a majority of such shares. The Stockholders
Agreement will expire on the earlier of the date on which (i) our common shares
are traded on the American Stock Exchange or Nasdaq Stock Market or (ii) the
holders of a majority of shares subject to the Stockholders Agreement consent
to
its termination (which date cannot be prior to the first anniversary of the
Stockholders Agreement). Messrs. Skinner (our chief executive officer and a
designee to become a member of our board of directors), Silver (designated
to
become chairman of our board of directors), and Troyer (a designee to become
a
member of our board of directors) control 33.6%, 24.0%, and 4.0%, respectively,
of the shares subject to the Stockholders Agreement. The other two former
stockholders of Amish Pasta Company, Shlomie Stein and Ronald Sparkman,
each control 19.2% of the shares subject to the Stockholders
Agreement.
PART
II
Item
1. Market
Price of and Dividends on Registrant’s Common Equity and Related Stockholder
Matters.
Our
common shares are not listed on any stock exchange, but are quoted on the OTC
Bulletin Board under the symbol “AMNT.” Until October 27, 2006, our common
shares were quoted on the OTC Bulletin Board under the symbol “FIII” and had not
been traded.
The
approximate number of stockholders of record at October 30, 2006 was 27. The
number of stockholders of record does not include beneficial owners of our
common stock, whose shares are held in the names of various dealers, clearing
agencies, banks, brokers and other fiduciaries. We have declared no dividends
on
our common shares and are not subject to any restrictions that limit such
ability. Dividends are declared at the sole discretion of our Board of
Directors.
Item
2. Legal
Proceedings.
We
are
not currently a party to any legal proceedings.
Item
4. Recent
Sales of Unregistered Securities.
On
May
27, 2005, FII issued 5.6 million restricted shares of FII’s common stock to
Patrizia Leone-Mitchell in reliance upon Section 4(2) of the Securities Act
of
1933. Ms. Leone-Mitchell is a sophisticated investor, was at the time an officer
and a director of FII, and was in possession of all material information
relating to FII. Further, no commissions were paid to anyone in connection
with
the sale of the shares and no general solicitation was made in connection with
the offering.
See
also
Item 3.02 of this Form 8-K, which describes sales of unregistered securities
in
connection with the Merger.
Item
5. Indemnification
of Directors and Officers.
Under
our
Articles of Incorporation, no director or officer will be held personally liable
to us or our stockholders for damages of breach of fiduciary duty as a director
or officer unless such breach involves intentional misconduct, fraud, a knowing
violation of law, or a payment of dividends in violation of the law. Under
our
Bylaws, directors and officers will be indemnified to the fullest extent allowed
by the law against all damages and expenses suffered by a director or officer
being party to any action, suit, or proceeding, whether civil, criminal,
administrative or investigative. This same indemnification is provided pursuant
to Nevada Revised Statutes, Chapter 78, except the director or officer must
have
acted in good faith and in a manner that he believed to be in our best interest,
and the stockholders or the board of directors unless ordered by a court, must
approve any discretionary indemnification.
The
general effect of the foregoing is to indemnify a control person, officer or
director from liability, thereby making the company responsible for any expenses
or damages incurred by such control person, officer or director in any action
brought against them based on their conduct in such capacity, provided they
did
not engage in fraud or criminal activity.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Index
to the Financial Statements
As
of September 30, 2006 and
For
the Nine-Month Period
from
January 1, 2006 (Commencement of Operations) to September 30,
2006
Report
of Independent Registered Public Accounting Firm:
|
|
F-1
|
|
|
|
Financial
Statements of Amish Pasta Company, Inc.
|
|
|
|
|
|
Balance
Sheet, September 30, 2006
|
|
F-2
|
|
|
|
Statement
of Operations For the Nine-Month Period from January 1, 2006(Commencement
of Operations) to September 30, 2006
|
|
F-3
|
|
|
|
Statement
of Shareholders’ Deficit For the Nine-Month Period from January 1, 2006
(Commencement of Operations) to September 30, 2006
|
|
F-4
|
|
|
|
Statement
of Cash Flows For the Nine-Month Period from January 1, 2006 (Commencement
of Operations) to September 30, 2006
|
|
F-5
|
|
|
|
Notes
to the Financial Statements
|
|
F-6
- F-16
|
Report
of Independent Registered Public Accounting Firm
To
the
Board of Directors
Amish
Pasta Company, Inc.
We
have
audited the accompanying balance sheet of Amish Pasta Company, Inc. (a Company
in the Development Stage) as of September 30, 2006 and the related statements
of
operations, shareholders’ deficit and cash flows for the nine-month period from
January 1, 2006 (commencement of operations) to September 30, 2006. These
financial statements are the responsibility of the Company’s management. Our
responsibility is to express an opinion on these financial statements based
on
our audit.
We
conducted our audit in accordance with the standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining,
on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used
and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audit provides a
reasonable basis for our opinion.
In
our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Amish Pasta Company, Inc. as of
September 30, 2006, and the results of its operations and its cash flows for
nine-month period from January 1, 2006 (Commencement of Operations) to September
30, 2006, in conformity with accounting principles generally accepted in the
United States of America.
The
accompanying financial statements have been prepared assuming that the Company
will continue as a going concern. As discussed in Note 6, Financial
Results, Liquidity and Management’s Plan
to the
financial statements, the Company has suffered losses since inception, has
negative cash flows from operations and must continue to obtain operating
capital through private debt sources to meet its obligations and sustain its
operations, has negative working capital, has a stockholders’ capital deficit,
and has not as of yet completely implemented its business plan, which raise
substantial doubt about its ability to continue as a going concern. Management’s
plans in regard to these matters are also described in Note 6. The financial
statements do not include any adjustments that might result from the outcome
of
this uncertainty.
Kelly
& Company
Costa
Mesa, California
October
27, 2006, except for Note 8
as
to
which the date is October 30, 2006.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Balance
Sheet
As
of September 30, 2006
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
Cash
|
|
$
|
186,258
|
|
Total
current assets
|
|
|
186,258
|
|
Property
and equipment
|
|
|
1,313,652
|
|
Deposits
|
|
|
120
|
|
|
|
|
|
|
Total
assets
|
|
$
|
1,500,030
|
|
LIABILITIES
AND SHAREHOLDERS’ DEFICIT
|
Current
liabilities:
|
|
|
|
|
Accounts
payable - trade
|
|
$
|
100,580
|
|
Accrued
interest
|
|
|
29,835
|
|
Advances
payable - related party
|
|
|
60,526
|
|
Accrued
payroll taxes
|
|
|
9,101
|
|
Note
payable
|
|
|
1,699,930
|
|
Total
current liabilities
|
|
|
1,899,972
|
|
|
|
|
|
|
Commitments
and Contingencies
|
|
|
|
|
|
|
|
|
|
Shareholders’
deficit:
|
|
|
|
|
Series
A convertible preferred , $0.001 par value, 20,000,000 shares authorized,
none issued
|
|
|
—
|
|
Common
stock, $0.0001 par value, 100,000,000 shares authorized, 10,416,667
shares
issued and outstanding
|
|
|
1,042
|
|
Additional
paid-in capital
|
|
|
58
|
|
Deficit
accumulated during the development stage
|
|
|
(401,042
|
)
|
Total
shareholders’ deficit
|
|
|
(399,942
|
)
|
Total
liabilities and shareholders’ deficit
|
|
$
|
1,500,030
|
|
The
accompanying notes are an integral part of the financial
statements.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Statement
of Operations
For
the Nine-Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
Operating
expenses:
|
|
|
|
Marketing
|
|
$
|
175,214
|
|
General
and administrative
|
|
|
92,703
|
|
Product
development
|
|
|
84,623
|
|
Professional
fees
|
|
|
22,217
|
|
Total
operating expenses
|
|
|
374,757
|
|
Operating
loss
|
|
|
(374,757
|
)
|
Other
income (expense):
|
|
|
|
|
Interest
income
|
|
|
3,550
|
|
Interest
expense
|
|
|
(29,835
|
)
|
Total
other expense
|
|
|
(26,285
|
)
|
Net
loss
|
|
$
|
(401,042
|
)
|
Net
loss per common share - basic and diluted
|
|
$
|
(0.04
|
)
|
Weighted
average number of shares outstanding - basic and
diluted
|
|
|
10,416,667
|
|
The
accompanying notes are an integral part of the financial
statements.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Statement
of Shareholders’ Deficit
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
|
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated
|
|
|
|
|
|
Convertible
Preferred Stock
|
|
Common
Stock
|
|
|
|
In
The Development
|
|
|
|
|
|
Shares
|
|
Value
|
|
Shares
|
|
Value
|
|
Capital
|
|
Stage
|
|
Total
|
|
Balance
at September 2, 2005
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Stock
issued for cash ($0.0001 per share)
|
|
|
—
|
|
|
—
|
|
|
10,416,667
|
|
$
|
1,042
|
|
$
|
58
|
|
|
—
|
|
$
|
1,100
|
|
Net
loss
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
$
|
(401,042
|
)
|
|
(401,042
|
)
|
Balance,
September 30, 2006
|
|
|
—
|
|
$
|
—
|
|
|
10,416,667
|
|
$
|
1,042
|
|
$
|
58
|
|
$
|
(401,042
|
)
|
$
|
(399,942
|
)
|
The
accompanying notes are an integral part of the
financial statements.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Statement
of Cash Flows
For
the Nine Month Period from January 1, 2006 (Commencement of
Operations) to September 30, 2006
Cash
flows used in operating activities:
|
|
|
|
Net
loss
|
|
$
|
(401,042
|
)
|
Adjustments
to reconcile net loss to net cash used in operating
activities:
|
|
|
|
|
Advances
payable - related party
|
|
|
60,526
|
|
Changes
in operating assets and liabilities:
|
|
|
|
|
(Increase)
decrease in:
|
|
|
|
|
Other
assets
|
|
|
(120
|
)
|
Increase
(decrease) in:
|
|
|
|
|
Accounts
payable - trade
|
|
|
100,580
|
|
Accrued
interest
|
|
|
29,835
|
|
Accrued
payroll taxes
|
|
|
9,101
|
|
Net
cash used in operating activities
|
|
|
(201,120
|
)
|
Cash
flows used in investing activities:
|
|
|
|
|
Purchase
of equipment
|
|
|
(1,313,652
|
)
|
Net
cash used in investing activities
|
|
|
(1,313,652
|
)
|
Cash
flows provided by financing activities:
|
|
|
|
|
Proceeds
from issuance of common stock
|
|
|
1,100
|
|
Proceeds
from issuance of notes payable
|
|
|
1,699,930
|
|
Net
cash provided by financing activities
|
|
|
1,701,030
|
|
Net
increase in cash
|
|
|
186,258
|
|
Cash
- beginning of period
|
|
|
—
|
|
Cash
- end of period
|
|
$
|
186,258
|
|
Supplemental
Disclosure of Cash Flow Information
|
|
|
|
|
|
|
|
|
|
Interest
paid
|
|
$
|
—
|
|
Income
taxes paid
|
|
$
|
—
|
|
The
accompanying notes are an integral part of the
financial statements.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
1.
Description
of Business
Amish
Pasta Company, Inc. (the “Company”) was incorporated in Nevada on September 2,
2005 and commenced operations in January 2006. The Company has been in the
development stage since commencing operations. The Company’s plan is to produce
a line of natural dry pasta products and related items.
2.
Summary
of Significant Accounting Policies
Basis
of Presentation
These
financial statements are presented in United States dollars and have been
prepared in accordance with accounting principles generally accepted in the
United States.
Development
Stage Operations
The
Company is considered a development stage company in accordance with Statement
of Financial Accounting Standards No. 7, Accounting and Reporting by Development
Stage Enterprises. Its operations have been limited to marketing and general
administrative activities, the acquisition of plant and equipment, and a
limited
amount of product development. It has incurred a loss during its initial
period
of operations of $401,042 for the nine-month period from January 1, 2006
(commencement of operations) to September 30, 2006. The Company’s ability to
continue as a going concern is dependent on its ability to obtain additional
operating capital through private debt funding sources to fund future operations
and ultimately to attain profitable operations (Note 6 - Financial
Results, Liquidity and Management’s Plan).
Use
of Estimates
Preparing
the Company’s financial statements in conformity with accounting principles
generally accepted in the United States of America (“GAAP”) requires management
to make estimates and assumptions that affect reported amounts of assets
and
liabilities and disclosure of contingent assets and liabilities at the date
of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual results could differ from those estimates.
The
financial statements include some amounts that are based on management’s best
estimates and judgments. The most significant estimates are the determination
of
the useful lives of property and equipment and the determination of the
valuation reserve of the United States income tax assets. These estimates
may be
adjusted as more current information becomes available, and any adjustment
could
be significant.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
2.
Summary
of Significant Accounting Policies, Continued
Fair
Value of Financial Instruments
Statement
of Financial Accounting Standards (“SFAS”) No. 107, Disclosures About Fair Value
of Financial Instruments, requires management to disclose the estimated fair
value of certain assets and liabilities defined by SFAS No. 107 as financial
instruments. Financial instruments are generally defined by SFAS No. 107
as cash
and cash equivalents, evidence of ownership interest in equity, or a contractual
obligation that both conveys to one entity a right to receive cash or other
financial instruments from another entity and imposes on the other entity
the
obligation to deliver cash or other financial instruments to the first entity.
At
September 30, 2006, the Company’s financial instruments are cash and cash
equivalents, accounts payable-trade, accrued liabilities, advance
payable-related party, and a note payable. The recorded values of cash and
cash
equivalents, accounts payable, accrued liabilities and advance payable-related
party approximate their fair values based on their short-term nature. The
recorded value of the note payable approximates the fair value, as interest
approximates market rates and the note is short-term in nature.
Cash
The
Company considers deposits that can be redeemed on demand and investments
that
have original maturities of less than three months, when purchased, to be
cash
equivalents. As of September 30, 2006, the Company’s cash and cash equivalents
were deposited primarily in two financial institutions.
At
September 30, 2006, the Company had $79,981 on deposit that exceeded the
United
States (FDIC) federally insurance limit.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
2.
Summary
of Significant Accounting Policies, Continued
Property
and Equipment
Property
and equipment are recorded at cost. Expenditures for major additions and
improvements are capitalized, and minor replacements, maintenance, and repairs
are charged to expense as incurred. When property and equipment are retired
or
otherwise disposed of, the cost and accumulated depreciation are removed
from
the accounts and any resulting gain or loss is included in the results of
operations for the respective period. Depreciation is provided over the
estimated useful lives of the related assets using the straight-line method
for
financial statement purposes. The Company uses other depreciation methods
(generally accelerated) for tax purposes where appropriate. The estimated
useful
lives for significant property and equipment categories are as follows:
Office
equipment
|
|
|
3
to 5 years
|
|
Machinery
and equipment
|
|
|
5
to 15 years
|
|
Buildings
and improvements
|
|
|
20
years
|
|
The
Company’s property and equipment have not been placed in service at September
30, 2006, and therefore, depreciation has not commenced.
Share-Based
Payment
The
Company will account for employee stock-based payments using the fair value
method provided in Statement of Financial Accounting Standards (“SFAS”) No. 123:
Share-Based Payment. The fair value of options granted will be
recognized as compensation expense over the vesting period of the options.
The
Company will account for non-employee stock-based payments using the fair
value
method provided by SFAS No. 123(R). When stock options are granted to
non-employees, the Company will estimate the fair value of the award and
recognize related expenses over the performance period as prescribed by EITF
96-18: Accounting for Equity Instruments that are Issued to Other than
Employees for Acquiring, or in Conjunction with Selling, Goods or Services.
No share based payments have been granted at September 30, 2006.
Loss
Per Common Share
Basic
net
loss per common share is computed by dividing net earnings (loss) applicable
to
common shareholders by the weighted-average number of common shares outstanding
during the period. Diluted net loss per common share is determined using
the
weighted-average number of common shares outstanding during the period, adjusted
for the dilutive effect of common stock equivalents, consisting of shares
that
might be issued upon exercise of common stock options. When losses are reported,
the weighted-average number of common shares outstanding excludes common
stock
equivalents, because their inclusion would be anti-dilutive. There were no
common stock equivalents at September 30, 2006.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
2.
Summary
of Significant Accounting Policies, Continued
Income
Tax
Deferred
tax assets and liabilities are recognized for the future tax consequences
attributable to differences between the financial statement carrying amounts
of
existing assets and liabilities and their respective tax bases. Deferred
tax
assets, including tax loss and credit carryforwards, and liabilities are
measured using enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a change in
tax
rates is recognized in income in the period that includes the enactment date.
Deferred income tax expense represents the change during the period in the
deferred tax assets and deferred tax liabilities. The components of the deferred
tax assets and liabilities are individually classified as current and
non-current based on their characteristics.
Deferred
tax assets are reduced by a valuation allowance when, in the opinion of
management, it is more likely than not that some portion or all of the deferred
tax assets will not be realized. Realization of the deferred income tax asset
is
dependent on generating sufficient taxable income in future years.
The
Company will recognize the amount of taxes payable or refundable for the
current
year and recognize deferred tax liabilities and assets for the expected future
tax consequences of events and transactions that have been recognized in
the
Company’s financial statements or tax returns. The Company currently has
substantial net operating loss carryforwards. The Company has recorded a
100%
valuation allowance against net deferred tax assets due to uncertainty of
their
ultimate realization.
Advertising
Costs
Advertising
costs will be expensed when they are incurred. There were no advertising
expenses for the period ended September 30, 2006.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
2.
Summary
of Significant Accounting Policies, Continued
Product
Development
The
Company’s product development activities principally involve product name
selection, product shape determination, artistic design of the product
packaging, arrangement for the related manufacturing extrusion tools and
dies,
selection of seasonings, grains and other ingredients considered as recipe
development, taste and market testing. The costs of these activities are
expensed as incurred.
Contingencies
Certain
conditions may exist as of the date the financial statements are issued,
which
may result in a loss to the Company but which will only be resolved when
one or
more future events occur or fail to occur. The Company’s management and its
legal counsel assess such contingent liabilities, and such assessment inherently
involves an exercise of judgment. In assessing loss contingencies related
to
legal proceedings that are pending against the Company or unasserted claims
that
may result in such proceedings, the Company’s legal counsel evaluates the
perceived merits of any legal proceedings or unasserted claims as well as
the
perceived merits of the amount of relief sought or expected to be sought
therein.
If
the
assessment of a contingency indicates that it is probable that a material
loss
has been incurred and the amount of the liability can be estimated, then
the
estimated liability would be accrued in the Company’s financial statements. If
the assessment indicates that a potentially material loss contingency is
not
probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, together with an estimate of
the
range of possible loss if determinable and material, would be
disclosed.
Loss
contingencies considered remote are generally not disclosed unless they involve
guarantees, in which case the guarantees would be disclosed.
Comprehensive
Income or Loss
The
Company has no items of other comprehensive income or loss in the nine-month
period from January 1, 2006 (commencement of operations) to September 30,
2006.
Therefore, net loss as presented in the Company’s Statement of Operations equals
the comprehensive loss.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
2.
Summary
of Significant Accounting Policies, Continued
New
Accounting Pronouncements
In
September 2006 the Financial Accounting Standards Board issued Statement
No.
157: Fair Value Measurements. This Statement defines fair value,
establishes a framework for measuring fair value in generally accepted
accounting principles, and expands disclosures about fair value measurements.
This Statement applies under other accounting pronouncements that require
or
permit fair value measurements. This Statement does not require any new fair
value measurements. The Company does not expect the adoption of this statement
to have a material impact on its financial position, results of operations
or
cash flows.
In
November 2004 the Financial Accounting Standards Board issued Statement No.
151:
Inventory Costs. This Statement amends the guidance in ARB No. 43,
Chapter 4, “Inventory Pricing,” to clarify the accounting for abnormal amounts
of idle facility expense, freight, handling costs, and wasted material
(spoilage). Paragraph 5 of ARB 43, Chapter 4, previously stated that “. . .
under some circumstances, items such as idle facility expense, excessive
spoilage, double freight, and rehandling costs may be so abnormal as to require
treatment as current period charges . . . .” This Statement requires that those
items be recognized as current-period charges regardless of whether they
meet
the criterion of “so abnormal.” In addition, this Statement requires that
allocation of fixed production overheads to the costs of conversion be based
on
the normal capacity of the production facilities. The Company does not expect
the adoption of this Statement to have a material impact on its financial
position, results of operations or cash flows.
3.
Property
and Equipment
The
following is a summary of property and equipment, at cost as of September
30,
2006:
Buildings
and improvements
|
|
$
|
312,202
|
|
Office
equipment
|
|
|
19,031
|
|
Equipment
|
|
|
982,419
|
|
Total
property and equipment
|
|
$
|
1,313,652
|
|
No
property and equipment has been placed in service at September 30, 2006,
and
therefore, no depreciation was recorded for the nine-month period from January
1, 2006 (commencement of operations) to September 30, 2006.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
4.
Note
Payable
Note
payable consists of the following at September 30, 2006:
Note
payable, due December 31, 2006, interest at 5% per annum, with
property
and equipment with a
book
value of $1,313,652 pledged as collateral
|
|
$
|
1,699,930
|
|
The
note
payable provides for Company borrowings up to $2,000,000. Interest expense
for
the period ended September 30, 2006 was $29,835.
5.
Income
Taxes
There
is
no current or deferred income tax provision due to the Company’s losses and
valuation allowance.
Significant
components of the Company’s deferred tax assets are as follows at September 30,
2006:
Deferred
tax assets:
|
|
|
|
Net operating loss carryforward
|
|
$
|
136,354
|
|
Valuation allowance
|
|
|
(136,354
|
)
|
Net
deferred tax assets
|
|
$
|
—
|
|
The
Company, based upon its limited history of losses and management’s assessment of
when operations are anticipated to generate taxable income, has concluded
that
it is more likely than not that none of the net deferred income tax assets
will
be realized through future taxable earnings and has established a valuation
allowance for them. The valuation allowance incurred during the nine-month
period from January 1, 2006 (commencement of operations) to September 30,
2006
amounted to $136,354.
Reconciliation
of the effective tax rate to the U.S. statutory rate is as follows:
Tax
benefit at U.S. statutory rate
|
|
|
(34.0
|
)%
|
Change
in valuation allowance
|
|
|
34.0
|
%
|
Effective
income tax rate
|
|
|
—
|
%
|
The
Company has federal net operating loss carryforwards of $401,042. The federal
net operating loss carryforward will expire in 2026. Due to the uncertainty
of
its realization on the loss carry-forward, a full valuation allowance has
been
provided for the deferred tax assets.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations)
to
September 30, 2006
6.
Contingencies,
Risks, Uncertainties, Managements Plan and
Concentrations
Financial
Results, Liquidity and Management’s Plan
At
September 30, 2006, the Company has negative working capital and a shareholders’
capital deficit. Also, the Company has incurred losses for the nine-month
period
from January 1, 2006 (commencement of operations) to September 30, 2006 of
$401,042. Despite its negative cash flows from operations, the Company has
been
able to obtain operating capital through a private debt funding source.
Management’s plans include the continued development and eventual implementation
of its business plan. The Company has relied upon debt funding since
inception.
No
assurances can be given that the Company can obtain sufficient working capital
through the sale of the Company’s common stock and borrowing or that the
continued implementation of its business plan will generate sufficient revenues
in the future to sustain ongoing operations. These factors raise substantial
doubt about the Company’s ability to continue as a going concern. The financial
statements do not include any adjustments that might be necessary if the
Company
is unable to continue as a going concern.
Operating
Leases
The
Company leases the property on which its facilities are located. The lease
is
for 5 years with a 5 year renewal option and annual evergreen renewals
thereafter. The Company has the option to purchase the property for $280,000.
The lease was entered into by the shareholders of the Company and was assigned
to the Company in October 2006. Future minimum lease payments are as follows
at
September 30, 2006:
2007
|
|
$
|
16,200
|
|
2008
|
|
|
16,200
|
|
2009
|
|
|
16,200
|
|
2010
|
|
|
16,200
|
|
2011
and after
|
|
|
5,400
|
|
Total
minimum lease payments
|
|
$
|
70,200
|
|
For
the
nine-month period from January 1, 2006 (commencement of operations) to September
30, 2006, rental expense was $14,305 and was paid to the officers as rental
expense-related party.
Concentration
of Suppliers
The
Company expects to purchase its raw materials from producers of organic produce
and grains. There is a regionally limited supply of these products. If the
Company is unable to obtain these products from the supplier, the Company
believes that the impact on its financial
statements from such an uncertainty could be substantial.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations)
to
September 30, 2006
6.
Contingencies,
Risks, Uncertainties, Managements Plan and Concentration
(Continued)
Litigation
The
Company, on an ongoing basis, will be subject to various claims and legal
proceedings covering a wide range of matters that arise in the ordinary
course
of its business activities. Management believes that any liability that
may
ultimately result from the resolution of these matters will not have a
material
adverse effect on the financial condition or results of operations of the
Company.
Unused
Borrowing Capacity
The
Company, as of September 30, 2006, had a note payable agreement that allowed
for
borrowing of up to $2,000,000 (Note 4 - Note
Payable)
under
which the Company may borrow at the rate of 5%. As of September 30, 2006
the
unused portion of the note payable was $300,070.
Lease
Expense - Related Party
The
two
major shareholders of the Company entered into a lease on the property
that the
Company’s facilities have been built upon. The lease and purchase option were
subsequently assigned in October 2006 to the Company. The lease payments
made to
the two major shareholders during the nine-month period from January 1,
2006
(commencement of operations) to September 30, 2006 was $14,305, which was
the
same amount paid to the owner of the property by the two major
shareholders.
7. Related
Party Transactions
Advance
Payable - Related Party
The
Company’s Chief Executive Officer, who is the majority shareholder, paid certain
expenses on behalf of the Company. These amounts do not bear interest and
are
due on demand. The expenses paid by the related party consisted of the
following
items:
Marketing
plan
|
|
$
|
53,500
|
|
Rent
|
|
|
5,150
|
|
Equipment
|
|
|
1,360
|
|
Travel
expenses
|
|
|
516
|
|
Total
|
|
$
|
60,526
|
|
In
addition, an entity owned by the Company’s Chief Executive Officer’s relative
made deposits
on equipment for the benefit of the Company. These deposits totaled $90,000
and
were repaid without interest.
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
8.
Subsequent
Event
On
October 27, 2006, the Company entered into a merger agreement with FII
International, Inc. (“FII”), as a result of which, on October 30, 2006, the
Company changed its name to Amish Naturals, Inc. The shareholders of the
Company
received 25,000,000 shares of FII common stock, which represented the majority
of the outstanding shares after the merger. Therefore, the merger is treated
as
a “reverse merger” and the previously outstanding shares of FII are treated as
an equity transaction by the Company. At the merger, the Company redeemed
11,200,000 shares of FII common stock from the prior majority shareholder
for
cash of $235,000. In addition, the Company sold 2,900,000 shares of its common
stock and warrants to purchase 1,450,000 shares of its common stock at $0.90
per
share (the “units”). The unit price was $0.90 per unit, for total proceeds of
$2,610,000.
The
pro
forma balance sheet of the Company at September 30, 2006, as if the above
transactions had occurred on that date is as follows:
|
|
Historical
|
|
Pro
Forma Adjustments
|
|
Pro
Forma
Balance
|
|
Cash
|
|
$
|
186,258
|
|
$
|
675,070
|
|
$
|
861,328
|
|
Property
and equipment
|
|
|
1,313,652
|
|
|
—
|
|
|
1,313,652
|
|
Other
assets
|
|
|
120
|
|
|
—
|
|
|
120
|
|
Total
assets
|
|
$
|
1,500,030
|
|
$
|
675,070
|
|
$
|
2,175,100
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$
|
100,580
|
|
|
—
|
|
$
|
100,580
|
|
Advances
payable — related party
|
|
|
60,526
|
|
|
—
|
|
|
60,526
|
|
Accrued
interest
|
|
|
29,835
|
|
|
—
|
|
|
29,835
|
|
Accrued
payroll taxes
|
|
|
9,101
|
|
|
—
|
|
|
9,101
|
|
Note
payable
|
|
|
1,699,930
|
|
$
|
(1,699,930
|
)
|
|
—
|
|
Total
liabilities
|
|
|
1,899,972
|
|
|
(1,699,930
|
)
|
|
200,042
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
|
1,042
|
|
|
40,858
|
|
|
41,900
|
|
Additional
paid-in capital
|
|
|
58
|
|
|
2,334,142
|
|
|
2,334,200
|
|
Deficit
accumulated during the
|
|
|
|
|
|
|
|
|
|
|
development
stage
|
|
|
(401,042
|
)
|
|
—
|
|
|
(401,042
|
)
|
Total
shareholders’ equity
|
|
|
|
|
|
|
|
|
|
|
(deficit)
|
|
|
(399,942
|
)
|
|
2,375,000
|
|
|
1,975,058
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities and
|
|
|
|
|
|
|
|
|
|
|
shareholders’
equity
|
|
|
|
|
|
|
|
|
|
|
(deficit)
|
|
$
|
1,500,030
|
|
$
|
675,070
|
|
$
|
2,175,100
|
|
Amish
Pasta Company, Inc.
(A
Company in the Development Stage)
Notes
to the Financial Statements
As
of September 30, 2006 and
For
the Nine Month Period from January 1, 2006 (Commencement of Operations) to
September 30, 2006
Pro
forma adjustments consist of the
following:
Cash:
|
|
|
|
Proceeds
from unit sales
|
|
$
|
2,610,000
|
|
Redemption
of FII common shares
|
|
|
(235,000
|
)
|
Repayment
of note payable
|
|
|
(1,699,930
|
)
|
Net
increase in cash
|
|
$
|
675,070
|
|
|
|
|
|
|
Note
payable:
|
|
|
|
|
Repayment
from offering proceeds
|
|
$
|
(1,699,930
|
)
|
|
|
|
|
|
Common
stock:
|
|
|
|
|
Shares
issued in sale of units
|
|
$
|
2,900
|
|
Outstanding
shares of FII
|
|
|
25,200
|
|
Redemption
of FII shares
|
|
|
(11,200
|
)
|
Change
in par value
|
|
|
23,958
|
|
Net
increase in common stock
|
|
$
|
40,858
|
|
|
|
|
|
|
Additional
paid-in capital:
|
|
|
|
|
Sale
of units
|
|
$
|
2,607,100
|
|
Outstanding
shares of FII
|
|
|
(25,200
|
)
|
Redemption
of FII shares
|
|
|
(223,800
|
)
|
Change
in par value of common shares
|
|
|
(23,958
|
)
|
Net
increase in additional paid-in capital
|
|
$
|
2,334,142
|
|
The
effect of these transactions is to increase the number of common shares
outstanding at September 30, 2006 as follows.
Common
shares outstanding
|
|
|
10,416,667
|
|
Shares
issued in unit offering
|
|
|
2,900,000
|
|
FII
shares outstanding
|
|
|
25,200,000
|
|
Redemption
and retirement of FII prior major
|
|
|
|
|
shareholders’
shares
|
|
|
(11,200,000
|
)
|
Additional
shares issued to Company shareholders
|
|
|
14,583,333
|
|
Pro
forma shares outstanding
|
|
|
41,900,000
|
|
|
|
|
|
|
Pro
forma loss per share for the nine-month
|
|
|
|
|
period
from January 1, 2006 (commencement of operations)
|
|
|
|
|
to
September 30, 2006
|
|
$
|
(0.01
|
)
|
PART
III
Item
1. Index
to Exhibits
Exhibits
are listed and described in Item 9.01 of this Form 8-K.
Item
3.02 Unregistered
Sales of Equity Securities.
In
connection with the Merger, on October 30, 2006, FII issued an aggregate
25,000,000 of its common shares to the holders of the common stock of Amish
Pasta Company, in exchange for their shares of common stock of Amish Pasta
Company. For each share of the common stock of Amish Pasta Company, the holder
thereof received 2.4 of our common shares. The issuance was made pursuant to
Rule 506 under Regulation D of the Securities Act of 1933, as amended. We
believe that exemption was available because (i) no advertising or general
solicitation was employed in offering the securities, (ii) the offering and
sales were made to seven persons, all of
whom
were accredited investors, and (iii) transfer was restricted in accordance
with
the requirements of the Securities Act of 1933 (including by legending of
certificates representing the securities).
On
October 30, 2006, simultaneous with the Merger, we issued and sold 2.9 million
shares of our common stock to five non-U.S. investors outside the U.S. for
an
aggregate price of $2.61 million. The sale was made in reliance upon Regulation
S under the Securities Act of 1933. Each of the investors has agreed to resell
the common stock only in accordance with the provisions of Regulation S,
pursuant to registration under the Securities Act of 1933 or pursuant to an
available exemption from such registration, and the shares issued contained
a
legend to such effect. No directed selling efforts were used in connection
with
the offering.
Item
5.01 Changes
in Control of Registrant.
The
Merger resulted in a change in control of FII on October 30, 2006. See Item
2.01
“Completion of Acquisition or Disposition of Assets” above.
Item
5.02. Departure
of Directors or Principal Officers; Election of Directors; Appointment of
Principal Officers.
On
October 30, 2006, Alexander Ngan resigned as the Company’s President. Also on
that date, David C. Skinner, Sr. was appointed as President and Chief Executive
Officer and Dale Paisley was appointed as Chief Financial Officer. See Part
I,
Item 5 “Directors and Executive Officers, Promoters and Control Persons” and
Part I, Item 6 “Executive Compensation” under Item 2.01 “Completion of
Acquisition or Disposition of Assets” above.
Item
5.03 Amendments
to Articles of Incorporation or Bylaws; Change in Fiscal
Year.
We
filed
an amendment to our articles of incorporation to effect a 2.8-for-1 split of
our
authorized and outstanding common shares, effective October 30, 2006. We filed
a
certificate of merger to effect the merger of our wholly owned subsidiary,
APC
Acquisition Corp., with and into the Company, effective October 30, 2006. In
connection with that merger, the Company changed its name to Amish Naturals,
Inc.
Item
5.06 Change
in Shell Company Status.
As
the
result of the completion of the Merger, the Registrant is no longer a shell
company. See Item 2.01 “Completion of Acquisition or Disposition of Assets”
above.
Item
9.01 Financial
Statements and Exhibits.
(a) Financial
Statements of Amish Pasta Company. See page F-1.
(b) Shell
Company Transactions. See (a) above.
(c) Exhibits.
Exhibit
No.
|
|
Description
|
|
|
|
2.1
|
|
Agreement
and Plan of Merger by and among FII International, Inc., Amish Pasta
Company, Inc., and APC Acquisition Corp., dated October 27, 2006
|
3.1
|
|
Corporate
Charter, incorporated by reference to Exhibit 3.1 to FII’s Registration
Statement on Form SB-2 filed on August 15, 2002
|
3.2
|
|
Articles
of Incorporation, incorporated by reference to FII’s Registration
Statement on Form SB-2 filed on August 15, 2002
|
3.3
|
|
Certificate
of Amendment to Articles of Incorporation as filed with the Secretary
of
State of the State of Nevada on October 30, 2006
|
3.4
|
|
Certificate
of Change in number of authorized shares as filed with the Secretary
of
State of the State of Nevada on October 30, 2006
|
3.5
|
|
Articles
of Merger as filed with the Secretary of State of the State of Nevada
on
October 30, 2006
|
3.6
|
|
Bylaws
of the Company
|
10.1
|
|
Lease
and Purchase Option Agreement by and between Lonnie Cutlip and David
C.
Skinner and Ronald Sparkman, dated February 27, 2006
|
10.2
|
|
Assignment
of Lease and Purchase Option Agreement between David C. Skinner and
Ronald
Sparkman and Amish Pasta Company, dated October 27, 2006
|
10.3
|
|
Employment
Agreement with David C. Skinner, Sr., dated as of October 27,
2006
|
10.4
|
|
Employment
Agreement with Donald G. Alarie, dated as of October 27, 2006
|
10.5
|
|
Consulting
Agreement with Dale Paisley, dated as of October 27,
2006
|
10.6
|
|
2006
Incentive Plan
|
10.7
|
|
Form
of Nonqualified Stock Option Award Agreement under the 2006 Incentive
Plan
|
23.1
|
|
Consent
of Independent Registered Accounting Firm
|
99.1
|
|
Press
release, dated October 30, 2006
|
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the registrant
has
duly caused this report to be signed on its behalf by the undersigned hereunto
duly authorized.
|
|
|
|
AMISH
NATURALS,
INC. |
|
(Registrant) |
|
|
|
Date:
October 30, 2006 |
By: |
/s/ David
C.
Skinner, Sr. |
|
Name:
David C. Skinner, Sr. |
|
Title:
President and Chief Executive
Officer
|