AnTix Holdings, Inc 10-K, filed Feb 1, 2021
AnTix Holdings, Inc. (IMTH)
About this 10-K
AnTix Holdings, Inc filed this 10-K on February 1, 2021, covering the fiscal year ended October 31, 2014.
Headline figures
Fiscal year ended October 31, 2014, as reported in this filing, compared with the same period a year earlier where the filing states it.
- Revenue
- $0
- compared with $0 a year earlier
- Net loss
- $365.34K
- compared with a net loss of $566.86K a year earlier
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
| ☒ | ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended: October 31, 2014
or
| ☐ | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from ________ to ________
Commission File Number 000-51390
| FRESH HARVEST PRODUCTS, INC. |
| (Exact name of registrant as specified in its charter) |
| Delaware |
| 33-1130446 |
| State or other jurisdiction of incorporation or organization |
| (I.R.S. Employer Identification No.) |
2310 York St, Suite 200
Blue Island, IL 60406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 917.566.1080
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
| Not applicable. | Note applicable. | Not applicable. |
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: None.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. ☐ Yes ☒ No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. ☒ Yes ☐ No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☐ Yes ☒ No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☐ Yes ☒ No
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:
| Large accelerated filer | ☐ | Accelerated filer | ☐ |
| Non-accelerated filer | ☒ | Smaller reporting company | ☒ |
|
| Emerging growth company | ☐ |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ☒
State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter (April 30, 2014): $654,244 (1,635,610,445 shares at a per share price of $.0004).
As of October 31, 2014, there were 1,635,610,445 shares of Common Stock, $0.0001 par value per share, issued and outstanding.
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NOTE REGARDING FORWARD-LOOKING STATEMENTS
Unless stated otherwise or the context otherwise requires, the words “we,” “us,” “our,” the “Company” or “Fresh Harvest” in this “Annual Report on Form 10-K collectively refers to Fresh Harvest Products, Inc., a New Jersey corporation (the “Company”). The information in this Annual Report on Form 10-K contains “forward-looking statements” relating to the Company, within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). In some cases, you can identify forward-looking statements by terminology such as "may", "should", "expects", "plans", "anticipates", "believes", "estimates", "predicts", "potential" or "continue" or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors that may cause our or our industry's actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
This report contains information that may be deemed forward-looking, that is based largely on the Company’s current expectations, and is subject to certain risks, trends and uncertainties that could cause actual results to differ materially from those anticipated.
Among such risks, trends and other uncertainties, which in some instances are beyond its control, may be the Company’s ability to generate cash flows and maintain liquidity sufficient to service its debt, and comply with or obtain amendments or waivers of the financial covenants contained in its credit facilities, if necessary. Other risks and uncertainties include the impact of continuing adverse economic conditions, potential changes in energy costs, interest rates and the availability of credit, labor costs, legislative and regulatory rulings and other results of operations or financial conditions, increased capital and other costs, competition and other risks detailed from time to time in the Company’s publicly filed documents.
The words “may”, “will”, “would”, “could”, “believes”, “expects”, “anticipates”, “intends”, “plans”, “projects”, “considers” and similar expressions generally identify forward-looking statements. Readers are cautioned not to place undue reliance on such forward-looking statements, which are made as of the date of this report. The Company does not undertake to publicly update or revise its forward-looking statements.
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ITEM 1. DESCRIPTION OF BUSINESS
OVERVIEW
Fresh Harvest Products, Inc. (the “Company”) is a corporation formed in the State of New Jersey. Until October of 2012, we operated as a natural and organic food products company before management decided to transition the Company's line of business to capitalize on its relationships within the rapidly growing Software-as-a-Service (SaaS), enterprise software and mobile application markets. The Company is engaged in the software and mobile application development and video production businesses.
During October 2012, the Company began integrating a digital plan and strategy which shifted the Company’s focus to expanding the online network and community, as well as an expansion of online services, with a focus on developing various SaaS models in the health, wellness, fitness, lifestyles of health and sustainability (LOHAS) and healthcare industries.
During the fiscal year ended October 31, 2014, we did not generate any revenues as we were integrating our new business model, and developing software products. The Company was in development of a calorie calculator and comparison operator for web and mobile applications, as well as other related software.
The Company expects to develop, license and acquire software applications that will generate revenue through subscription fees, in-app upgrades, purchases and advertising. The Company is currently working on several software applications including a calorie calculator and food comparison software solution so that consumers can be informed and compare what foods they are eating and be able to accurately calculate their daily calories per item, as well as compare foods with each other to learn and understand what the healthier options are. The Company is actively seeking strategic partners and acquisition targets in order to grow and expand.
The Company continues to have limited capital resources and has experienced net losses and negative cash flows from operations and expects these conditions to continue for the foreseeable future. As of October 31, 2014, the Company had $608 cash available for operations and had an accumulated deficit of $10,250,388. Management believes that cash on hand as of October 31, 2014 is not sufficient to fund operations through October 31, 2015. The Company will be required to raise additional funds to meet its short and long-term planned goals. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company.
The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has limited revenue and without realization of additional capital, it would be highly unlikely for the Company to continue as a going concern.
Since October 31, 2012, the Company has engaged in the software and mobile application development and video production businesses.
Employees and Employment Agreements
As of October 31, 2014, we had one full time employee and several full and part-time third party independent contractors. Currently, the Company’s sole employee, is our President and Chief Executive Officer. We anticipate retaining additional sales and marketing (employees or consultants) and clerical personnel within the next 12 months, if and when our financial resources permit.
We are subject to various risks that may materially harm our business, financial condition and results of operations. An investor should carefully consider the risks and uncertainties described below and the other information in this Annual Report on Form 10-K before deciding to purchase our securities. If any of these risks or uncertainties actually occurs, our business, financial condition or operating results could be materially harmed. In that case, the trading price of our common stock could decline or we may be forced to cease operations.
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RISKS RELATED TO OUR BUSINESS
We have limited capital resources and have experienced net losses and negative cash flows and we expect these conditions to continue for the foreseeable future, as such we expect that we will need to obtain additional financing to continue to operate our business. Such financing may be unavailable or available only on disadvantageous terms, which could cause the Company to curtail its business operations and delay the execution of its business plan. To date, we have not generated significant revenues. Our net losses for the years ended October 31, 2014 and 2013 were $365,344 and $566,859 respectively. As of October 31, 2014, we realized an accumulated deficit of $10,250,388 and we had $608 cash on hand. Our revenues have not been sufficient to sustain our operations and we expect that our revenues will not be sufficient to sustain our operations for the foreseeable future. As such, we expect that we will continue to need significant financing to operate our business. Furthermore, there can be no assurance that additional financing will be available or that the terms of such additional financing, if available, will be acceptable to us. If additional financing is not available or not available on terms acceptable to us, our ability to fund our operations or otherwise respond to competitive pressures may be significantly impaired. We could also be forced to curtail our business operations, reduce our investments, decrease or eliminate capital expenditures and delay the execution of our business plan, including, without limitation, all aspects of our operations, which would have a material adverse affect on our business. The items discussed above raise substantial doubt about our ability to continue as a going concern. We cannot assure you that we can achieve or sustain profitability in the future. Our operations are subject to the risks and competition inherent in the establishment of a business enterprise. There can be no assurance that future operations will be profitable. Revenues and profits, if any, will depend upon various factors, including whether our products achieve market acceptance and whether we obtain additional financing. We may not achieve our business objectives and the failure to achieve such goals would have a materially adverse impact on us.
We are currently in default with respect to various outstanding debt obligations, which if we fail to repay, could result in foreclosure upon our assets. We are currently in default with respect to a number of our debt obligations. In the event we are unable to repay such debt obligations, we could lose all of our assets and be forced to cease our operations.
We may be required to raise additional financing by issuing new securities with terms or rights superior to those of our shares of common stock, which could adversely affect the market price of our shares of common stock and our business. We will require additional financing to fund future operations. We may not be able to obtain financing on favorable terms, if at all. If we raise additional funds by issuing equity securities, the percentage ownership of our current stockholders will be reduced, and the holders of the new equity securities may have rights superior to those of the holders of shares of common stock, which could adversely affect the market price and the voting power of shares of our common stock. If we raise additional funds by issuing debt securities, the holders of these debt securities may similarly have some rights senior to those of the holders of shares of common stock, and the terms of these debt securities could impose restrictions on operations and create a significant interest expense for us which could have a materially adverse affect on our business.
Accrued and Unpaid Payroll Taxes. As of October 31, 2014, the Company owed the Internal Revenue Service and New York State payroll related taxes in the amounts of $135,875 and $30,084, respectively, plus applicable interest and penalties. The total amount due to both taxing authorities including penalties and interest was $165,959 as of October 31, 2014 and 2013, subject to further penalties and interest plus accruals on unpaid wages. The Internal Revenue Service has placed a federal tax lien on all of the assets of the Company. If we are unable to resolve these tax liabilities such failure could have a material adverse effect on our business, financial condition, results of operations or liquidity.
We may suffer the loss of key personnel or may be unable to attract and retain qualified personnel to maintain and expand our business which have a material adverse affect on our business. Our success is highly dependent on the continued services of certain skilled management and personnel. The loss of any of these individuals could have a material adverse effect on us. In addition, our success will depend upon, among other factors, the recruitment and retention of additional highly skilled and experienced management and personnel. There can be no assurance that we will be able to retain existing employees or to attract and retain additional personnel on acceptable terms given the competition for such personnel and our limited financial resources. In addition, we are highly dependent on the services of our President and Chief Executive Officer, Michael Friedman, and Mr. Friedman devotes a portion of his time to unrelated business interests.
Significant Control of the Company is held by management and the Board of Directors. As of October 31, 2014, our directors and officers hold the power to vote an aggregate of 52.50% of our common shares. As a result, any person who acquires our common shares will likely have little or no ability to influence or control the Company.
Our common stock is considered a “penny stock” and as a result, related broker-dealer requirements may hamper its trading and liquidity. Our common stock is considered to be a “penny stock” since it meets one or more of the definitions in Rules 15g-2 through 15g-6 promulgated under Section 15(g) of the Exchange Act. These include but are not limited to the following: (i) the common stock trades at a price less than $5.00 per share; (ii) the common stock is not traded on a “recognized” national exchange; or (iii) the common stock is issued by a company with average revenues of less than $6.0 million for the past three (3) years. The principal result or effect of being designated a “penny stock” is that securities broker-dealers cannot recommend our common stock to investors, thus hampering its liquidity.
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Section 15(g) and Rule 15g-2 require broker-dealers dealing in penny stocks to provide potential investors with documentation disclosing the risks of penny stocks and to obtain a manually signed and dated written receipt of the documents before effecting any transaction in a penny stock for the investor’s account. Potential investors in our common stock are urged to obtain and read such disclosure carefully before purchasing any of our shares.
Moreover, Rule 15g-9 requires broker-dealers in penny stocks to approve the account of any investor for transactions in such stocks before selling any penny stock to that investor. This procedure requires the broker-dealer to (i) obtain from the investor information concerning his or her financial situation, investment experience and investment objectives; (ii) reasonably determine, based on that information, that transactions in penny stocks are suitable for the investor and that the investor has sufficient knowledge and experience as to be reasonably capable of evaluating the risks of penny stock transactions; (iii) provide the investor with a written statement setting forth the basis on which the broker-dealer made the determination in (ii) above; and (iv) receive a signed and dated copy of such statement from the investor, confirming that it accurately reflects the investor’s financial situation, investment experience and investment objectives.
We may have difficulty raising necessary capital to fund operations as a result of market price volatility for our shares of common stock. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including:
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| · | new products by us or our competitors; |
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| · | additions or departures of key personnel; |
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| · | sales of our common stock; |
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| · | our ability to integrate operations and products; |
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| · | our ability to execute our business plan; |
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| · | operating results below expectations; |
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| · | industry developments; |
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| · | economic and other external factors; and |
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| · | period-to-period fluctuations in our financial results. |
Because we have limited revenues to date, you may consider any one of these factors to be material. Our stock price may fluctuate widely as a result of any of the above listed factors. In recent years, the securities markets in the U.S. have experienced a high level of price and volume volatility, and the market price of securities of many companies have experienced wide fluctuations that have not necessarily been related to the operations, performances, underlying asset values or prospects of such companies. For these reasons, our shares of common stock can also be expected to be subject to volatility resulting from purely market forces over which we will have no control. If our business development plans are successful, we may require additional financing to continue to develop our products and to expand into new markets. The success of our products may, therefore, be dependent upon our ability to obtain financing through debt and equity or other means.
We will not pay cash dividends and investors may have to sell their shares in order to realize their investment. We do not intend to pay cash dividends on our common stock in the foreseeable future. We intend to retain future earnings, if any, for reinvestment in the development and marketing of our products. As a result, investors may have to sell their shares of common stock to realize their investment.
Our business and future operating results may be adversely affected by events that are outside of our control. Our business and operating results are vulnerable to interruption by events outside of our control, such as pandemics, earthquakes, fire, power loss, telecommunications failures and uncertainties arising out of terrorist attacks throughout the world, the economic consequences of military action and the associated political instability, and the effect of heightened security concerns on domestic and international travel and commerce.
RISKS RELATING TO OUR TECHNOLOGY BUSINESS
We can provide no assurance that our business will be able to maintain a competitive technology advantage in the future. The Company’s ability to generate revenues now and in the future is based upon maintaining a competitive technology advantage over its competition. We can provide no assurances that we will be able to garner nor maintain a competitive technology advance in the future over our competitors, which have significantly more experience and are better capitalized than us.
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No assurances can be given that we will be able to keep up with a rapidly changing technology market or that we can prevent unauthorized access to our customer data. Failure to keep up with rapidly changing technologies and marketing practices could cause our products and services to become less competitive or obsolete, which could result in loss of market share and revenues. Advances in information technology are changing the way clients use and purchase information products and services. Maintaining a technological competitiveness of any products, software systems and services is key to our future success. However, the complexity and uncertainty regarding the development of new technologies and the extent and timing of market acceptance of innovative products and services create difficulties in maintaining this competitiveness. Without the timely introduction of new products, services and enhancements, our products and services will become technologically or commercially obsolete over time, in which case our revenue and operating results would suffer. Consumer needs and the business information industry as a whole are in a constant state of change. Our ability to continually improve our current processes and products in response to changes in technology and to develop new products and services are essential in maintaining our competitive position and meeting the increasingly sophisticated requirements of our clients. If we fail to enhance our current products and services or fail to develop new products in light of emerging technologies and industry standards, we could lose clients to current or future competitors, which could result in impairment of our growth prospects and revenues. A significant breach of the confidentiality of the information we may hold or of the security of our or our customers’, suppliers’, or other partners’ computer systems could be detrimental to our business, reputation and results of operations. Our business may require the storage, transmission and utilization of data.
If we fail to respond quickly to technological developments, our service may become uncompetitive and obsolete. The markets in which we plan to compete are expected to experience rapid technology developments, changes in industry standards, changes in customer requirements and frequent new improvements. If we are unable to respond quickly to these developments, we may lose competitive position, and our technologies may become uncompetitive or obsolete, causing revenues and operating results to suffer. In order to compete, we may be required to develop or acquire new technology and improve our existing technology and processes on a schedule that keeps pace with technological developments. We must also be able to support a range of changing customer preferences. We cannot guarantee that we will be successful in any manner in these efforts.
We May Not Be Able To Garner Technological Expertise, Which Would Adversely Impact Our Business. The markets for our information technology services are characterized by rapidly changing technology and evolving process development. Our business will depend upon our ability to:
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| · | enhance our technological capabilities; |
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| · | develop and market services which meet changing customer needs; and |
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| · | successfully anticipate or respond to technological changes in e-government processes on a cost-effective and timely basis. |
We cannot be certain that we will develop capabilities required by potential customers in the future. Also, the emergence of new technologies, industry standards or customer requirements may render our equipment, inventory or processes obsolete or noncompetitive. In addition, we may have to acquire new testing technologies and equipment and train personnel to remain competitive. The acquisition and implementation of new technologies and equipment and training of new personnel may require significant expense or capital investment. Our failure to anticipate and adapt to our customers’ changing technological needs and requirements would harm our ability to attract new customers and maintain existing customers. Our inability to maintain and expand our customer base could force us to curtail or cease our business operations.
We Have An Unproven Business Model And No Technical Operating History, Which Makes It Difficult To Evaluate Our Current Business And Future Prospects For Generating Revenues. We have only a very limited operating history upon which to base an evaluation of our current business and future prospects and we have yet to receive widespread acceptance of our services. We started our current business in October 2012. Our limited operating history and the overall economic environment make an evaluation of our business and prospects very difficult. We encounter certain risks and difficulties including, but not limited to, the following:
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| · | our new and unproven business model and technology; |
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| · | the difficulties we face in managing rapid growth in personnel and operations; |
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| · | the response by potential customers and strategic partners to our products and services; |
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| · | the timing and success of new product and service introductions and new technologies by our competitors; and, |
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| · | our ability to build awareness and receive recognition in the information technology and software market. |
We may not be able to successfully address any of these risks. Failure to adequately do so could seriously impair our ability to operate, cause our revenues to decline and force us to curtail or cease our business operations.
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We May Incur Significant Operating Losses In The Future, Which May Force Us to Cease Operations Or Significantly Curtail Our Business. Our success to generate revenues depends on numerous factors, including the ability to service our clients, provide needed information technology services and products, collect revenues from potential clients, and to develop new markets. However, developing new products and markets will lead to more expenses, being incurred as we have to, among other things:
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| · | hire additional personnel, including marketing personnel, engineers and other technical staff; |
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| · | hire senior executives and members of our senior management team; |
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| · | expand our selling and marketing activities; |
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| · | expand our product and service offerings; and, |
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| · | upgrade our operational and financial systems, procedures and controls. |
If our revenue does not grow to offset these expected increased expenses, we will not be profitable. Furthermore, if our operating expenses exceed our expectations, or if we encounter difficulties in collecting the revenue from our customers, our financial performance will be adversely affected and we could be forced to curtail or cease our business operations.
We Depend On The Continued Services Of Our Executive Officers, And The Loss Of Key Personnel Could Affect Our Ability To Successfully Grow Our Business. We are highly dependent upon the services of Mr. Friedman, our CEO, President and Chairman. The permanent loss of our key executive could have a material adverse effect upon our operating results. We may not be able to locate a suitable replacement if his services were lost. We do not maintain key man life insurance on him. Our future success will also depend, in part, upon our ability to attract and retain highly qualified personnel. Our inability to retain additional key executives and to attract new, qualified personnel could cause us to curtail our business operations.
ITEM 1B. UNRESOLVED STAFF COMMENTS
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
ITEM 2. DESCRIPTION OF PROPERTIES
The Company maintains its office in New York, New York. There is a month-to-month office lease. The rent is approximately $1,050 per month for our current office located in New York and we did not pay, but accrued, rent for our office during 2014 and 2013. We maintain a limited amount of office equipment and do not lease any vehicles.
As of October 31, 2014, we were not a party to any material legal proceedings. We currently have twenty-four (24) convertible promissory notes that are in default, and we may be subject to legal proceedings or lawsuits from any number of those convertible noteholders, including the below Notice of Commencement of Action Subject to Mandatory Electronic Filing.
On April 7, 2013, three note holders (Brook Hazelton, Benjamin M. Manalaysay, Jr., and Diego McDonald, the “Plaintiffs”), whom together invested a total principal amount of $45,000 in the form of Convertible Promissory Notes (the “Notes”) to the Company, together filed a “Notice of Commencement of Action Subject to Mandatory Electronic Filing” in the Supreme Count of the State of New York, County of New York. The Plaintiffs alleged that the Company breached their contracts with the Plaintiffs, and included causes of action for unjust enrichment and related claims, seeking repayment of each of their respective convertible promissory notes plus interest. Since the initial filing, the Plaintiffs have not proceeded with the case.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
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Market Information
The Company’s common stock is quoted on the OTCQB. The following table sets forth the range of high and low bid prices per share of the Company’s common stock for each of the periods indicated, as reported on www.otcmarkets.com.
| QUARTER |
| HIGH BID |
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| LOW BID |
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| 4th Quarter 2014 |
| $ | 0.0010 |
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| $ | 0.0001 |
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| 3rd Quarter 2014 |
| $ | 0.0006 |
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| $ | 0.0002 |
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| 2nd Quarter 2014 |
| $ | 0.0007 |
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| $ | 0.0001 |
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| 1st Quarter 2014 |
| $ | 0.0003 |
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| $ | 0.0001 |
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|
|
|
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|
|
|
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| 4th Quarter 2013 |
| $ | 0.0004 |
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| $ | 0.0001 |
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| 3rd Quarter 2013 |
| $ | 0.0003 |
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| $ | 0.0001 |
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| 2nd Quarter 2013 |
| $ | 0.0003 |
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| $ | 0.0001 |
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| 1st Quarter 2013 |
| $ | 0.0005 |
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| $ | 0.0001 |
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These quotations reflect inter-dealer prices, without retail mark-up, markdown or commissions, and may not necessarily represent actual transactions. As of October 31, 2014, the last reported price of our common was $0.0003 per share.
Holders
As of October 31, 2014 there were 132 qualified holders of record of the Company’s common stock. This does not reflect persons or entities that hold their stock in nominee or “street name”.
Dividends
There are no restrictions in our Articles of Incorporation or Bylaws that restrict us from declaring dividends. The New Jersey Business Law, however, does prohibit us from declaring dividends where, after giving effect to the distribution of the dividend, we would not be able to pay our debts as they become due in the usual course of business or our total assets would be less than the sum of our total liabilities.
We have not paid any cash dividend to date and we will not be able to pay any cash dividends on our common stock in the foreseeable future. The declaration and payment of dividends is subject to the discretion of our Board of Directors and to the above mentioned limitations imposed under the New Jersey Business Corporations Act. The timing, amount and form of dividends, if any, will depend on, among other things, our results of operation, financial condition, cash requirements and other factors deemed relevant by our Board of Directors.
Equity Compensation Plan Information
As of October 31, 2014, we did not have any equity compensation plans.
During the fiscal year ended October 31, 2014, the Company did not enter into agreements with any creditors and note holders of the Company to convert any debt owed by the Company into shares of the Company’s common stock, which have been issued.
ITEM 6. SELECTED FINANCIAL DATA
We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.
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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
Some of the information in this section contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate” and “continue,” or similar words.
While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth elsewhere in this Annual Report on Form 10-K.
Unless stated otherwise, the words “we,” “us,” “our,” “the Company” or “Fresh Harvest” in this Annual Report on Form 10-K collectively refers to Fresh Harvest Products, Inc., a New Jersey corporation (the “Company”).
Overview
We were formed in New Jersey as a blank check company on April 21, 2005 with no operations, assets or purpose other than the purpose of seeking a privately held operating company as an acquisition or merger candidate.
On December 16, 2005, the Company entered into an Agreement and Plan of Acquisition and Merger (the “Merger Agreement”) with Fresh Harvest Products, Inc., a New York corporation (“New York FHP”), Michael Friedman, Marcia Roberts and Illuminate, Inc. The Merger Agreement contemplates the merger of the Company and New York FHP (the “Merger”). Although the Company has operated as if the Merger was consummated in December 2005, it has come to the Company’s attention that certain required filings were not made in the State of New Jersey and the State of New York to properly consummate the Merger. As a result, as of the date of this Annual Report on Form 10-K, the Company and New York FHP had not completed the Merger, and the Company does not now plan to do so as the Company’s business plan has changed.
From December 16, 2005 through October 11, 2012, our business plan had been to develop proprietary natural, organic and healthy products to sell, market and distribute. Our goal was to bring healthy, great tasting natural and organic products at affordable prices to the mass markets. We sold our products to select supermarkets chains and retailers in the United States.
Since October 11, 2012, our primary efforts have been devoted to developing software. Accordingly, we have limited capital resources and have experienced net losses and negative cash flows from operations since inception and expect these conditions to continue for the foreseeable future.
During October 2012, the Company began integrating a digital plan and strategy which shifted the Company’s focus to expanding the online network and community, as well as an expansion of online services, with a focus on developing various Software-as-a-Service (SaaS) models in the health, wellness, fitness LOHAS and healthcare industries.
During the fiscal year ended October 31, 2014, we did not generate any revenues as we were integrating our new business model, and developing software products. The Company was in development of a calorie calculator and comparison operator for web and mobile applications, as well as other related software.
As of October 31, 2014, the Company had current assets of $608. The Company has no liquid cash and other liquid assets on hand as of October 31, 2014 and does not have sufficient funds to operate for the next 12 months. Accordingly, we will be required to raise additional funds to meet our short and long-term planned goals. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to us. In this regard, we have obtained and will continue to attempt to obtain (short and long term) loans for inventory purchases, new product development, expansion, advertising and marketing. We cannot assure you that we will be successful in obtaining the aforementioned financings (either debt or equity) on terms acceptable to us, or otherwise.
Our audited financial statements contained in this Annual Report on Form 10-K have been prepared on a going concern basis, which assumes that we will be able to realize our assets and discharge our obligations in the normal course of business.
| 10 |
| Table of Contents |
As of and for the year ended October 31, 2014, our auditors have expressed substantial doubt we will continue as a going concern.
Results of Operations for the Fiscal Year Ending October 31, 2014 and October 31, 2013 Financial Information from Comparative Fiscal Year Periods
For the year ended October 31, 2014, we recorded gross revenues of $0 versus $0 for a 0% change from the previous year ended October 31, 2013. The Company believes that the $0 revenue was due to the Company’s shift in its business model.
For the year ended October 31, 2014, gross profit was $0 versus $0 for a 0% change from the previous year ended October 31, 2013. The Company believes that the zero gross profit is due to the Company’s shift in its business model.
For the year ended October 31, 2014, operating expenses increased to $335,965 from $284,279 or 18.18% over the year ended October 31, 2013. The increase is due to the Company’s increasing expenses related to developing our software and mobile applications which caused an increase in operations, sales, and marketing expenses.
For the year ended October 31, 2014, interest expense on our convertible notes payable decreased to $156,206 from $231,591 or 32.55% decrease over the year ended October 31, 2013. This decrease is primarily due to the notes payable interest accruals and derivative adjustments.
For the year ended October 31, 2014, we realized a net loss of $365,344 as compared to a net loss of $566,859 for the year ended October 31, 2013. The decrease of $201,515 was due to increases in derivative adjustments.
Liquidity and Capital Resources
Since inception, we have not been able to finance our business from cash flows from operations and have been reliant upon loans and proceeds from the sale of equity which may not be available to us in the future, or if available, on reasonable terms. Accordingly, if we are unable to obtain funding from loans and the sale of our equity, it is unlikely that we will be able to continue as a going concern.
As of October 31, 2014, we had current assets of $608 and we had total liabilities of $3,032,828.
Currently, we do not have sufficient financial resources to implement or complete our business plan. We cannot be assured that revenue from operations will be sufficient to fund our activities during the next 12 months. Accordingly, we will have to seek alternate sources of capital. We can offer no assurance that we will be able to raise such funds on acceptable terms to us or otherwise. If we are unsuccessful in our attempts to raise sufficient capital, we may have to cease operations or postpone our plans to initiate or complete our business plan. Our insolvent financial condition also may create a risk that we may be forced to file for protection under applicable bankruptcy laws or state insolvency statutes. We also may face the risk that a receiver may be appointed. We face that risk and other risks resulting from our current financial condition. For these and other reasons, our management recognizes the adverse difficulties and continuing severe challenges we face. Apart from the limited funds that we have received there can be no assurance that we will receive any financing or funding from any source or if any financing should be obtained, that existing shareholders will not incur substantial, immediate, and permanent dilution of their existing investment.
If we are unable to raise the required financing, we may have to cease operations. Currently, we have a limited credit history with vendors, suppliers, manufacturers, packagers and food producers; we must pay for our purchases “up front” and are not granted credit terms. This will continue until we have established a satisfactory credit history. We cannot estimate, with any certainty, how long this may take, or if it will occur at all. Our inability to obtain credit from such providers has a significant impact upon our liquidity and our ability to utilize funds for other purposes. Similarly, if and when we hire additional personnel, including management and sales personnel, the cost related to such hiring will have a significant impact on our liquidity and deployment of funds.
As of October 31, 2014, the Company owed the Internal Revenue Service and New York State payroll related taxes in the amounts of $135,875 and $30,084, respectively, plus applicable interest and penalties. The total amount due to both taxing authorities including penalties and interest was $165,959 as of October 31, 2014 and 2013, subject to further penalties and interest plus accruals on unpaid wages. The Internal Revenue Service has placed a federal tax lien on all of the assets of the Company.
| 11 |
| Table of Contents |
Inflation
We do not believe that inflation had a significant impact on our results of operations for the periods presented.
Off Balance Sheet Arrangements
We do not have any off balance sheet arrangements that are reasonably likely to have a current or future effect on our financial condition, revenues, results of operations, liquidity or capital expenditures.
Critical Accounting Estimates
Our financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of financial statements in accordance with generally accepted accounting principles requires our management to make estimates and assumptions that affect the reported amounts of assets and liabilities, including the recoverability of tangible and intangible assets, disclosure of contingent assets and liabilities as of the date of the financial statements, and the reported amounts of expenses during the periods covered.
A summary of accounting policies that have been applied to the historical financial statements can be found in the notes to our financial statements.
We evaluate our estimates on an on-going basis. The most significant estimates relate to deferred financing and issuance costs, and the fair value of financial instruments. We base our estimates on historical company and industry experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which, form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Our actual results may differ materially from those estimates.
The following is a brief discussion of our critical accounting policies and methods, and the judgments and estimates used by us in their application.
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent in the financial reporting process, actual results may differ significantly from those estimates.
Cash and Cash Equivalents
The Company maintains cash balances in a non-interest bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents.
Net Loss Per Share Calculation
Basic net loss per common share (“EPS”) is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
Revenue Recognition and Sales Incentives
Sales will be recognized when an online transaction is processed, which occurs when a user of one of the Company’s software products purchases the products online or in an app. Sales are reported net of sales incentives, which could include discounts and promotions.
Income Taxes
The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.
Advertising
Advertising is expensed when incurred.
| 12 |
| Table of Contents |
Fair value of financial instruments
Fresh Harvest’s financial instruments include cash and cash equivalents, accounts payable, accrued liabilities, and debt. The carrying value of these financial instruments is considered to be representative of their fair value due to the short maturity of these instruments. The carrying amount of the debt approximates fair value, because the interest rates on these instruments approximate the interest rate on debt with similar terms available to the Company. Fresh Harvest’s derivative liabilities were adjusted to fair market value at the end of each reporting period, using Level 3 inputs.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and interest, certain notes payable and notes payable – due to related parties, approximate their fair values because of the short maturity of these instruments.
The Company accounts for its derivative liabilities, at fair value, on a recurring basis under Level 3 (See Note 6).
Embedded Conversion Features
The Company evaluates embedded conversion features within convertible debt under Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial feature.
Derivative financial instruments
When the Company issues debt that contains a conversion feature, it first evaluates whether the conversion feature meets the requirements to be treated as a derivative: a) one or more underlying, typically the price of the Company's stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. There are certain scope exceptions from derivative treatment, but these typically exclude conversion features that provide for a variable number of shares.
If the conversion feature within convertible debt meet the requirements to be treated as a derivative, Fresh Harvest estimates the fair value of the derivative liability using the Monte Carlo Simulation Model upon the date of issuance. If the fair value of the derivative liability is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the derivative liability is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The derivative liability is revalued at the end of each reporting period and any change in fair value is recorded as a change in fair value in the statements of operations. The debt discount is amortized through interest expense over the life of the debt. Derivative instrument liabilities and the host debt agreement are classified on the balance sheets as current or non-current based on whether settlement of the derivative instrument could be required within twelve months of the balance sheet date.
The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into warrant agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy in accordance with ASC 815-40-35-12 “Derivatives and Hedging” (provides comprehensive guidance on derivative and hedging transactions) whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors.
| 13 |
| Table of Contents |
Debt Issue Costs and Debt Discount
The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Share-based compensation
The Company accounts for common stock issued to employees, directors, and consultants in accordance with the provisions of the ASC 718 Stock Based Compensation. The compensation cost relating to share-based payment transactions will be recognized in the financial statements. The cost associated with common stock issued to employees, directors and consultants will be recognized, at fair value, on the date issued. Awards granted to non-employee consultants will be subsequently re-measured to current fair value until performance is completed or a performance commitment exists.
For the years ended October 31, 2014 and 2013, the Company recognized $0 in stock based compensation expense.
Accounting for Uncertain Tax Positions
The Company files income tax returns in the U.S. federal jurisdiction and various state, and local jurisdictions. The Company is no longer subject to U.S. federal income tax examination by tax authorities for the years prior to October 31, 2006. With respect to state and local jurisdictions, with limited exception, the Company is no longer subject to income tax audits prior to October 31, 2007. In the normal course of business, the Company is subject to examination by various taxing authorities. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that may result from these open tax years.
As of October 31, 2014, based on Management’s review of the Company’s tax position, the Company had no significant unrecognized tax liabilities
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
We are a smaller reporting company, as defined in Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.
| 14 |
| Table of Contents |
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Immediately following are our audited financial statements and notes for the fiscal year ended October 31, 2014.
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| 15 |
| Table of Contents |
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Fresh Harvest Products, Inc.
Opinion on the Financial Statements
We have audited the accompanying balance sheets of Fresh Harvest Products, Inc. (the Company) as of October 31, 2014 and 2013, and the related consolidated statements of operations, changes in stockholders’ deficit, and cash flows for the years then ended, and the related notes (collectively referred to as the financial statements). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of October 31, 2014 and 2013, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America.
Basis for Opinion
These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.
Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Substantial Doubt about the Company’s ability to Continue as a Going Concern
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2, the Company has incurred net losses and has no revenues. These factors, and the need for additional financing in order for the Company to meet its business plans raises substantial doubt about the Company’s ability to continue as a going concern. Our opinion is not modified with respect to that matter.
We have served as the Company’s auditor since 2011.
Tampa, Florida
January 29, 2021
| 3001 N. Rocky Point Dr. East, Suite 200 • Tampa, Florida 33607 • 813.367.3527, Ext 3527 |
| 16 |
| Table of Contents |
BALANCE SHEETS
|
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| October 31, 2014 |
|
| October 31, 2013 |
| ||||||
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| ||||||||
| ASSETS | ||||||||||||
| Current assets |
|
|
|
|
|
| ||||||
| Cash |
| $ | 608 |
|
| $ | - |
| ||||
| Total assets |
| $ | 608 |
|
| $ | - |
| ||||
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|
|
|
|
|
|
|
|
| ||||
| LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||||||||
| Current liabilities |
|
|
|
|
|
|
|
| ||||
| Accounts payable and accrued expenses |
| $ | 1,616,202 |
|
| $ | 1,384,629 |
| ||||
| Accrued interest |
|
| 312,976 |
|
|
| 248,687 |
| ||||
| Notes payable, related party, current |
|
| 16,312 |
|
|
| 32,312 |
| ||||
| Notes payable, current, net of debt discount |
|
| 728,650 |
|
|
| 565,733 |
| ||||
| Derivative liability |
|
| 358,688 |
|
|
| 435,515 |
| ||||
| Total current liabilities |
|
| 3,032,828 |
|
|
| 2,666,876 |
| ||||
| Total liabilities |
|
| 3,032,828 |
|
|
| 2,666,876 |
| ||||
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| ||||
| Commitments and contingencies (Note 10) |
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| ||||
| Stockholders' deficit Preferred stock, $.0001 par value, 5,000,000 shares authorized, issued and outstanding |
|
| 500 |
|
|
| 500 |
| ||||
| Common stock, $.0001 par value, 2,000,000,000 authorized, 1,635,610,445 shares outstanding |
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| 163,562 |
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|
| 163,562 |
| ||||
| Additional paid in capital |
|
| 7,054,106 |
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|
| 7,054,106 |
| ||||
| Accumulated deficit |
|
| (10,250,388 | ) |
|
| (9,885,044 | ) | ||||
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| ||||
| Total stockholders' deficit |
|
| (3,032,220 | ) |
|
| (2,666,876 | ) | ||||
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| ||||
| Total liabilities and stockholders' deficit |
| $ | 608 |
|
| $ | - |
| ||||
See accompanying notes to audited financial statements.
| 17 |
| Table of Contents |
STATEMENTS OF OPERATIONS
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| For the |
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| For the |
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| year ended |
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| year ended |
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| October 31, 2014 |
|
| October 31, 2013 |
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| Revenue |
| $ | - |
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| $ | - |
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| Cost of goods sold |
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| - |
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| - |
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| Gross profit |
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| - |
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| - |
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| Operating expenses |
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|
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| Salaries and wages |
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| 144,000 |
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| 144,000 |
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| Sales and marketing |
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| 101,474 |
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| 50,000 |
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| General and administrative expenses |
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| 83,722 |
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|
| 86,179 |
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| Legal and professional fees |
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| 6,769 |
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| 4,100 |
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| Total operating expenses |
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| 335,965 |
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|
| 284,279 |
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|
|
|
|
|
|
|
|
|
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| Income (loss) from operations |
|
| (335,965 | ) |
|
| (284,279 | ) |
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|
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|
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| Other income (expense) |
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|
|
|
|
|
|
|
| Change in fair value of derivatives |
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| 126,827 |
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|
| (50,989 | ) |
| Interest expense |
|
| (156,206 | ) |
|
| (231,591 | ) |
| Total other income (expenses) |
|
| (29,379 | ) |
|
| (282,580 | ) |
| Loss before provision for income taxes |
|
| (365,344 | ) |
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| (566,859 | ) |
| Provision for income taxes |
|
| - |
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|
| - |
|
| Net income (loss) |
| $ | (365,344 | ) |
| $ | (566,859 | ) |
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|
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| Basic and dilutive loss per share |
| $ | (0.00 | ) |
| $ | (0.00 | ) |
| Weighted average common shares outstanding - basic and dilutive |
|
| 1,635,610,445 |
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|
| 1,635,610,445 |
|
See accompanying notes to audited financial statements
| 18 |
| Table of Contents |
STATEMENTS OF CHANGES IN STOCKHOLDERS' DEFICIT
For the years ended October 31, 2014 and 2013
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| Additional |
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| ||||||||||
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| Preferred Stock |
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| Common Stock |
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| Paid-in |
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| Accumulated |
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| Amount |
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| Deficit |
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| Balance, October 31, 2012 (Unaudited) |
|
| 5,000,000 |
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| $ | 500 |
|
|
| 1,635,610,445 |
|
| $ | 163,562 |
|
| $ | 7,054,106 |
|
| $ | (9,318,185 | ) |
| $ | (2,100,017 | ) |
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|
|
|
|
|
|
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|
|
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|
|
|
| Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (566,859 | ) |
|
| (566,859 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, October 31, 2013 |
|
| 5,000,000 |
|
|
| 500 |
|
|
| 1,635,610,445 |
|
|
| 163,562 |
|
|
| 7,054,106 |
|
|
| (9,885,044 | ) |
|
| (2,666,876 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Net Loss |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| (365,344 | ) |
|
| (365,344 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance, October 31, 2014 |
|
| 5,000,000 |
|
| $ | 500 |
|
|
| 1,635,610,445 |
|
| $ | 163,562 |
|
| $ | 7,054,106 |
|
| $ | (10,250,388 | ) |
| $ | (3,032,220 | ) |
See accompany notes to audited financial statements
| 19 |
| Table of Contents |
STATEMENTS OF CASH FLOWS
|
|
| For the |
|
| For the |
| ||
|
|
| year ended |
|
| year ended |
| ||
|
|
| October 31, 2014 |
|
| October 31, 2013 |
| ||
|
|
|
|
|
| ||||
| Cash flows from operating activities: |
|
|
|
|
|
| ||
| Net loss |
| $ | (365,344 | ) |
| $ | (566,859 | ) |
| Adjustments to reconcile net loss to net cash (used in) operating activities: |
|
|
|
|
|
|
|
|
| Amortization of debt discount |
|
| 81,197 |
|
|
| 159,650 |
|
| Change in fair value of derivative |
|
| (76,827 | ) |
|
| 50,989 |
|
|
|
|
|
|
|
|
|
|
|
| Changes in operating assets and liabilities: |
|
|
|
|
|
|
|
|
| Accounts payable and accrued expenses |
|
| 292,293 |
|
|
| 284,280 |
|
| Accrued interest |
|
| 64,289 |
|
|
| 71,940 |
|
| Net cash (from) from operating activities |
|
| (4,392 | ) |
|
| - | |
|
|
|
|
|
|
|
|
|
|
| Cash flows from financing activities: |
|
|
|
|
|
|
|
|
| Proceeds from issuance of notes payable |
|
| 5,000 |
|
|
| - |
|
| Net cash provided by financing activities |
|
| 5,000 |
|
| - |
| |
|
|
|
|
|
|
|
|
|
|
| Net (decrease) increase in cash |
|
| 608 |
|
|
| - |
|
| Cash, beginning of year |
|
| - |
|
|
| - |
|
| Cash, end of year |
| $ | 608 |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| Supplemental disclosure of cash flow information: |
|
|
|
|
|
|
|
|
| Taxes paid |
| $ | - |
|
| $ | - |
|
| Interest paid |
| $ | - |
|
| $ | - |
|
|
|
|
|
|
|
|
|
|
|
| Non-cash financing activities: |
|
|
|
|
|
|
|
|
| Convertible notes issued for accounts payable |
| $ | 110,720 |
|
| $ | 50,000 |
|
| Assignment of notes payable, related party, current to notes payable |
| $ | 16,000 |
|
|
| - |
|
See accompanying notes to audited financial statements.
| 20 |
| Table of Contents |
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
NOTE 1. GENERAL ORGANIZATION AND BUSINESS
Fresh Harvest Products, Inc. (the “Company”) is a corporation formed in the State of New Jersey. During the fiscal year ended October 31, 2014, we did not generate any revenues as we were integrating our new business model, and developing software products. The Company was in development of a calorie calculator and comparison operator for web and mobile applications, as well as other related software.
The Company previously operated as a natural and organic food products company before management decided to transition the Company’s line of business to capitalize on its relationships within the rapidly growing Software-as-a-Service (SaaS), enterprise software and mobile application markets.
During October 2012, the Company began integrating a digital plan and strategy which will shift the Company’s focus on expanding the online network and community, as well as an expansion of online services, with a focus on developing various SaaS models in the health, wellness, fitness, lifestyles of health and sustainability (LOHAS) and healthcare industries.
The Company expects to develop, license and acquire software applications that will generate revenue through subscription fees, in-app upgrades, purchases and advertising. The Company is currently working on several software applications including a calorie calculator and food comparison software solution so that consumers can be informed and compare what foods they are eating and be able to accurately calculate their daily calories per item, as well as compare foods with each other to learn and understand what the healthier options are. The Company is actively seeking strategic partners and acquisition targets in order to grow and expand.
The Company continues to have limited capital resources and has experienced net losses and negative cash flows from operations and expects these conditions to continue for the foreseeable future. As of October 31, 2014, the Company had $608 cash available for operations and had an accumulated deficit of $10,250,388. Management believes that cash on hand as of October 31, 2014 is not sufficient to fund operations through October 31, 2015. The Company will be required to raise additional funds to meet its short and long-term planned goals. There can be no assurance that such funds, if available at all, can be obtained on terms reasonable to the Company.
The financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. However, the Company has limited revenue and without realization of additional capital, it would be highly unlikely for the Company to continue as a going concern.
NOTE 2. LIQUIDITY, CAPITAL RESOURCES AND GOING CONCERN
The accompanying financial statements have been prepared on a going-concern basis, which contemplates the continuation of operations, realization of assets and liquidation of liabilities in the ordinary course of business.
For the years ended October 31, 2014 and 2013, the Company reported a net loss of $365,344 and $566,859, respectively.
As of October 31, 2014, the Company maintained total assets of $608, total liabilities including notes payable of $3,032,828 along with an accumulated deficit of $10,250,388.
Management believes that additional capital will be required to fund operations through the year ended October 31, 2015 and beyond, as it attempts to generate increasing revenue, and develop new products. Management intends to attempt to raise capital through additional equity offerings and debt obligations. There can be no assurance that the Company will be successful in obtaining financing at the level needed or on terms acceptable to the Company. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty.
| 21 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
The Company’s insolvent financial condition also may create a risk that we may be forced to file for protection under applicable bankruptcy laws or state insolvency statutes. We also may face the risk that a receiver may be appointed. We face that risk and other risks resulting from our current financial condition. For these and other reasons, our management recognizes the adverse difficulties and continuing severe challenges we face. Apart from the limited funds that we have received there can be no assurance that we will receive any financing or funding from any source or if any financing should be obtained, that existing shareholders will not incur substantial, immediate, and permanent dilution of their existing investment.
The Company’s operations are subject to certain additional risks and uncertainties including, among others, dependence on outside suppliers and manufacturers, competition, dependence on its exclusive license and relationship with the licensor, uncertainties regarding patents and proprietary rights, dependence on key personnel, and other business risks. In addition, there is no assurance, assuming the Company is successful in raising additional capital that the Company will be successful in achieving profitability or positive cash flow.
NOTE 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with generally accepted accounting principles (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC”) and reflect all adjustments, consisting of normal recurring adjustments, which management believes are necessary to fairly present the financial position, results of operations and cash flows of the Company as of and for the years ended October 31, 2014 and 2013.
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported revenues and expenses during the reporting periods. Because of the use of estimates inherent in the financial reporting process, actual results may differ significantly from those estimates.
Cash and Cash Equivalents
The Company maintains cash balances in a non-interest bearing account that currently does not exceed federally insured limits. For the purpose of the statements of cash flows, all highly liquid investments with a maturity of three months or less are considered to be cash equivalents. There were no cash equivalents as of October 31, 2014 and 2013.
Net Loss Per Share Calculation
Basic net loss per common share ("EPS") is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per shares is computed by dividing net income by the weighted average shares outstanding, assuming all dilutive potential common shares were issued.
Revenue Recognition and Sales Incentives
Sales will be recognized when an online transaction is processed, which occurs when a user of one of the Company’s software products purchases the products online or in an app. Sales are reported net of sales incentives, which could include discounts and promotions.
Income Taxes
The provision for income taxes is the total of the current taxes payable and the net of the change in the deferred income taxes. Provision is made for the deferred income taxes where differences exist between the period in which transactions affect current taxable income and the period in which they enter into the determination of net income in the financial statements.
| 22 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
Fair value of financial instruments
Fresh Harvest’s financial instruments include cash and cash equivalents, accounts payable, accrued liabilities, and debt. The carrying value of these financial instruments is considered to be representative of their fair value due to the short maturity of these instruments. The carrying amount of the debt approximates fair value, because the interest rates on these instruments approximate the interest rate on debt with similar terms available to the Company. Fresh Harvest’s derivative liabilities were adjusted to fair market value at the end of each reporting period, using Level 3 inputs.
Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability, in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy is based on three levels of inputs, of which the first two are considered observable and the last unobservable, as follows:
Level 1 – Quoted prices in active markets for identical assets or liabilities.
Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
Level 3 – Unobservable inputs that are supported by little or no market activity and that are significant to the measurement of the fair value of the assets or liabilities.
The carrying amounts of the Company’s financial assets and liabilities, such as cash, accounts payable, accrued expenses and interest, certain notes payable and notes payable – due to related parties, approximate their fair values because of the short maturity of these instruments.
The Company accounts for its derivative liabilities, at fair value, on a recurring basis under Level 3 (See Note 6).
Embedded Conversion Features
The Company evaluates embedded conversion features within convertible debt under Accounting Standards Codification (“ASC”) 815 “Derivatives and Hedging” to determine whether the embedded conversion feature(s) should be bifurcated from the host instrument and accounted for as a derivative at fair value with changes recorded in earnings. If the conversion feature does not require derivative treatment under ASC 815, the instrument is evaluated under ASC 470-20 “Debt with Conversion and Other Options” for consideration of any beneficial feature.
Derivative financial instruments
When the Company issues debt that contains a conversion feature, it first evaluates whether the conversion feature meets the requirements to be treated as a derivative: a) one or more underlying, typically the price of the Company's stock; b) one or more notional amounts or payment provisions or both, generally the number of shares upon conversion; c) no initial net investment, which typically excludes the amount borrowed; and d) net settlement provisions, which in the case of convertible debt generally means the stock received upon conversion can be readily sold for cash. There are certain scope exceptions from derivative treatment, but these typically exclude conversion features that provide for a variable number of shares.
If the conversion feature within convertible debt meet the requirements to be treated as a derivative, Fresh Harvest estimates the fair value of the derivative liability using the Monte Carlo Simulation Model upon the date of issuance. If the fair value of the derivative liability is higher than the face value of the convertible debt, the excess is immediately recognized as interest expense. Otherwise, the fair value of the derivative liability is recorded as a liability with an offsetting amount recorded as a debt discount, which offsets the carrying amount of the debt. The derivative liability is revalued at the end of each reporting period and any change in fair value is recorded as a change in fair value in the statements of operations. The debt discount is amortized through interest expense over the life of the debt. Derivative instrument liabilities and the host debt agreement are classified on the balance sheets as current or non-current based on whether settlement of the derivative instrument could be required within twelve months of the balance sheet date.
| 23 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
The accounting treatment of derivative financial instruments requires that the Company record the embedded conversion option at their fair values as of the inception date of the agreement and at fair value as of each subsequent balance sheet date. Any change in fair value is recorded as non-operating, non-cash income or expense for each reporting period at each balance sheet date. The Company reassesses the classification of its derivative instruments at each balance sheet date. If the classification changes as a result of events during the period, the contract is reclassified as of the date of the event that caused the reclassification. As a result of entering into warrant agreements, for which such instruments contained a variable conversion feature with no floor, the Company has adopted a sequencing policy in accordance with ASC 815-40-35-12 “Derivatives and Hedging” (provides comprehensive guidance on derivative and hedging transactions) whereby all future instruments may be classified as a derivative liability with the exception of instruments related to share-based compensation issued to employees or directors.
Debt Issue Costs and Debt Discount
The Company may record debt issue costs and/or debt discounts in connection with raising funds through the issuance of debt. These costs may be paid in the form of cash, or equity (such as warrants). These costs are amortized to interest expense over the life of the debt. If a conversion of the underlying debt occurs, a proportionate share of the unamortized amounts is immediately expensed.
Recently Issued Accounting Pronouncements
As of and for the year ended October 31, 2014, the Company does not expect any of the recently issued accounting pronouncements to have a material impact on its financial condition or results of operations.
Subsequent Events
In accordance with ASC 855, Subsequent Events, the Company evaluated subsequent events through the date of this audit report; the date the financial statements were available for issue.
NOTE 4. NOTES PAYABLE - RELATED PARTIES
As of October 31, 2014 and October 31, 2013, the Company had $16,312 and $32,312, respectively, in outstanding notes payable to related parties. As of October 31, 2014 and October 31, 2013, the Company had $5,897 and $3,231, respectively, in outstanding interest to related parties. The outstanding notes payable have one-year terms and 10% interest rates. The principal amount of the notes and accrued and unpaid interest is convertible into common shares of the Company upon the due date at $0.0001 per share, subject to adjustments.
| 24 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
NOTE 5. NOTES PAYABLE
The Company entered into five (5) notes payable during the year ended October 31, 2014. As of October 31, 2014 and 2013, the notes payable were as follows:
| Date of Note Issuance |
| Original Principal Balance |
|
| Maturity Date |
| Interest Rate % |
|
| Conversion Rate |
|
| Principal Balance 10/31/14 |
|
| Principal Balance 10/31/13 |
| |||||
| 10/17/14 |
| $ | 8,500 |
|
| 10/17/15 |
|
| 10 | % |
| $ | 0.00010 |
|
| $ | 8,500 |
|
| $ | - |
|
| 8/26/14 |
|
| 50,000 |
|
| 2/26/15 |
|
| 10 | % |
| $ | 0.00010 |
|
|
| 52,500 |
|
|
| - |
|
| 8/26/14 |
|
| 50,000 |
|
| 2/26/15 |
|
| 10 | % |
| $ | 0.00010 |
|
|
| 50,000 |
|
|
| - |
|
| 8/26/14 |
|
| 50,000 |
|
| 2/26/15 |
|
| 10 | % |
| $ | 0.00010 |
|
|
| 50,000 |
|
|
| - |
|
| 8/26/14 |
|
| 50,000 |
|
| 2/26/15 |
|
| 10 | % |
| $ | 0.00010 |
|
|
| 50,000 |
|
|
| - |
|
| 2/1/13 |
|
| 50,000 |
|
| 2/1/14 |
|
| 10 | % |
| lesser $0.0015 or 50% discount to market |
|
|
| 50,000 |
|
|
| 50,000 |
| |
| 10/31/12 |
|
| 104,278 |
|
| 10/31/13 |
|
| 10 | % |
| lesser $0.0015 or 50% discount to market |
|
|
| 22,624 |
|
|
| 104,278 |
| |
| 3/16/12 |
|
| 50,000 |
|
| 9/16/12 |
|
| 10 | % |
| $ | 0.00200 |
|
|
| 60,000 |
|
|
| 60,000 |
|
| 2/14/12 |
|
| 14,900 |
|
| 2/14/13 |
|
| 10 | % |
| $ | 0.00100 |
|
|
| 24,900 |
|
|
| 24,900 |
|
| 2/10/12 |
|
| 25,000 |
|
| 8/10/12 |
|
| 10 | % |
| $ | 0.00119 |
|
|
| 25,000 |
|
|
| 25,000 |
|
| 1/26/12 |
|
| 40,000 |
|
| 7/26/12 |
|
| 10 | % |
| $ | 0.00113 |
|
|
| 8,000 |
|
|
| 8,000 |
|
| 1/26/12 |
|
| 65,595 |
|
| 7/26/12 |
|
| 10 | % |
| $ | 0.00113 |
|
|
| 30,095 |
|
|
| 27,595 |
|
| 10/18/11 |
|
| 1,900 |
|
| 10/18/11 |
|
| 8 | % |
| no written agreement |
|
|
| 6,900 |
|
|
| 6,900 |
| |
| 10/11/11 |
|
| 2,500 |
|
| 4/11/12 |
|
| 12 | % |
| $ | 0.00390 |
|
|
| 2,500 |
|
|
| 2,500 |
|
| 8/25/11 |
|
| 108,101 |
|
| 2/25/12 |
|
| 10 | % |
| $ | 0.01000 |
|
|
| 2,631 |
|
|
| 2,631 |
|
| 10/3/10 |
|
| 20,000 |
|
| 10/3/12 |
|
| 10 | % |
| lesser $0.01 or 20% discount to market |
|
|
| 20,000 |
|
|
| 20,000 |
| |
| 10/31/09 |
|
| 4,000 |
|
| 10/31/10 |
|
| 8 | % |
| no written agreement |
|
|
| 4,000 |
|
|
| 4,000 |
| |
| 8/31/09 |
|
| 5,000 |
|
| 8/31/12 |
|
| 12 | % |
| lesser $0.01 or 20% discount to market |
|
|
| 5,000 |
|
|
| 5,000 |
| |
| 8/26/09 |
|
| 20,000 |
|
| 8/26/12 |
|
| 12 | % |
| lesser $0.01 or 20% discount to market |
|
|
| 20,000 |
|
|
| 20,000 |
| |
| 8/25/09 |
|
| 20,000 |
|
| 8/25/12 |
|
| 12 | % |
| lesser $0.01 or 20% discount to market |
|
|
| 20,000 |
|
|
| 20,000 |
| |
| 2/26/07 |
|
| 30,000 |
|
| 2/26/09 |
|
| 12 | % |
| lesser $0.50 or 35% discount to market |
|
|
| 30,000 |
|
|
| 30,000 |
| |
| 4/17/07 |
|
| 20,000 |
|
| 4/17/09 |
|
| 10 | % |
| lesser $0.45 or 35% discount to market |
|
|
| 20,000 |
|
|
| 20,000 |
| |
| 6/14/07 |
|
| 15,000 |
|
| 6/15/09 |
|
| 10 | % |
| lesser $0.50 or 25% discount to market |
|
|
| 15,000 |
|
|
| 15,000 |
| |
| 1/29/07 |
|
| 15,000 |
|
| 1/29/09 |
|
| 10 | % |
| $ | 0.95000 |
|
|
| 15,000 |
|
|
| 15,000 |
|
| 4/17/07 |
|
| 15,000 |
|
| 4/17/09 |
|
| 10 | % |
| lesser $0.45 or 35% discount to market |
|
|
| 15,000 |
|
|
| 15,000 |
| |
| 12/23/06 |
|
| 18,000 |
|
| 12/23/08 |
|
| 10 | % |
| $ | 0.95000 |
|
|
| 18,000 |
|
|
| 18,000 |
|
| 11/30/06 |
|
| 50,000 |
|
| 11/30/08 |
|
| 10 | % |
| $ | 0.85000 |
|
|
| 50,000 |
|
|
| 50,000 |
|
| 9/16/06 |
|
| 100,000 |
|
| 9/9/08 |
|
| 12 | % |
| 35% discount to market |
|
|
| 38,000 |
|
|
| 38,000 |
| |
| 10/1/05 |
|
| 15,000 |
|
| 4/1/07 |
|
| 10 | % |
| $ | 0.50000 |
|
|
| 15,000 |
|
|
| 15,000 |
|
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 728,650 |
|
| $ | 596,804 |
|
| Debt Discount |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| - |
|
|
| (31,071 | ) |
| Total |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| $ | 728,650 |
|
| $ | 565,733 |
|
The Company currently has a total of twenty-four convertible promissory notes that are in default and the Company may be subject to legal proceedings or lawsuits from any number of those convertible noteholders.
| 25 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
NOTE 6. DERIVATIVE LIABILITY
The following tables summarize the components of the Company’s derivative liabilities and linked common shares as of October 31, 2014 and 2013 and the amounts that were reflected in income related to derivatives for the years then ended:
|
|
| October 31, 2014 |
| |||||
|
|
| Indexed |
|
| Fair |
| ||
| The financings giving rise to derivative financial instruments |
| Shares |
|
| Values |
| ||
| Compound embedded derivative |
|
| 1,775,081,863 |
|
| $ | (358,688 | ) |
|
|
| October 31, 2013 |
| |||||
|
|
| Indexed |
|
| Fair |
| ||
| The financings giving rise to derivative financial instruments |
| Shares |
|
| Values |
| ||
| Compound embedded derivative |
|
| 2,549,713,618 |
|
| $ | (435,515 | ) |
The following tables summarizes the effects on the Company’s gain (loss) associated with changes in the fair values of the derivative financial instruments by type of financing for the years ended October 31, 2014 and 2013:
The financings giving rise to derivative financial instruments and the income effects:
|
|
| Years Ended |
| |||||
|
|
| October 31, 2014 |
|
| October 31, 2013 |
| ||
| Compound embedded derivative |
| $ | 135,494 |
|
| $ | (28,989 | ) |
| Day one derivative loss |
|
| (8,667 | ) |
|
| (22,000 | ) |
| Total derivative gain (loss) |
| $ | 126,827 |
|
| $ | (50,989 | ) |
| 26 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
The Company’s Convertible Notes gave rise to derivative financial instruments. The Notes embodied certain terms and conditions that were not clearly and closely related to the host debt agreement in terms of economic risks and characteristics. These terms and features consist of the embedded conversion option.
Current accounting principles that are provided in ASC 815 - Derivatives and Hedging require derivative financial instruments to be classified in liabilities and carried at fair value with changes recorded in income. In addition, the standards do not permit an issuer to account separately for individual derivative terms and features embedded in hybrid financial instruments that require bifurcation and liability classification as derivative financial instruments. Rather, such terms and features must be bundled together and fair valued as a single, compound embedded derivative. The Company has selected the Monte Carlo Simulations valuation technique to fair value the compound embedded derivative because it believes that this technique is reflective of all significant assumption types, and ranges of assumption inputs, that market participants would likely consider in transactions involving compound embedded derivatives. Such assumptions include, among other inputs, interest risk assumptions, credit risk assumptions and redemption behaviors in addition to traditional inputs for option models such as market trading volatility and risk-free rates. The Monte Carlo Simulations technique is a level three valuation technique because it requires the development of significant internal assumptions in addition to observable market indicators.
Significant inputs and results arising from the Monte Carlo Simulations process are as follows for the compound embedded derivative that has been bifurcated from the Convertible Notes and classified in liabilities:
|
|
| October 31, 2014 |
|
| October 31, 2013 |
| ||
| Quoted market price on valuation date |
| $ | 0.0004 |
|
| $ | 0.0003 |
|
| Contractual conversion rate |
| $ | 0.00011 - $0.00038 |
|
| $ | 0.00015 - $0.00024 |
|
| Range of effective contractual conversion rates |
|
| -- |
|
|
| -- |
|
| Contractual term to maturity |
| 0.25 Years |
|
| 0.25 Year |
| ||
| Market volatility: |
|
|
|
|
|
|
|
|
| Volatility |
| 138.28% - 238.13% |
|
| 138.28% - 238.13% |
| ||
| Contractual interest rate |
| 5% - 12% |
|
| 5% - 12% |
| ||
The following table reflects the issuances of compound embedded derivatives and changes in fair value inputs and assumptions related to the compound embedded derivatives during the years ended October 31, 2014 and 2013.
|
|
| October 31, 2014 |
|
| October 31, 2013 |
| ||
| Beginning balance |
| $ | 435,515 |
|
| $ | 334,526 |
|
| Issuances: |
|
|
|
|
|
|
|
|
| Convertible Note Financing |
|
| 50,000 |
|
|
| 50,000 |
|
|
Changes in fair value inputs and assumptions reflected in income |
|
| (126,827 | ) |
|
| 50,989 |
|
| Ending balance |
| $ | 358,688 |
|
| $ | 435,515 |
|
The fair value of the compound embedded derivative is significantly influenced by the Company’s trading market price, the price volatility in trading and the interest components of the Monte Carlo Simulation technique.
| 27 |
| Table of Contents |
FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
NOTE 7. STOCKHOLDERS’ EQUITY
Series A Preferred Stock
Certificate of Designations
On February 23, 2011, the Company filed a Certificate of Designations of Series A Convertible Preferred Stock (the “Certificate of Designations”) with the Secretary of State of the State of New Jersey. The Certificate of Designations, subject to the requirements of New Jersey law, states the designation, number of shares, powers, preferences, rights, qualifications, limitations and restrictions of the Company’s Series A Convertible Preferred Stock, par value $0.0001 per share (the “Series A Preferred Stock”). In summary, the Certificate of Designations provides:
Number
5,000,000 shares of the Company’s Preferred Stock are designated as shares of Series A Convertible Preferred Stock.
Dividends
Any dividends (other than dividends on common stock payable solely in common stock or dividends on the Series A Preferred Stock payable solely in Series A Preferred Stock) declared or paid in any fiscal year will be declared or paid among the holders of the Series A Preferred Stock and common stock then outstanding in proportion to the greatest whole number of shares of common stock which would be held by each such holder if all shares of Series A Preferred Stock were converted into shares of common stock pursuant to the terms of the Certificate of Designations. The Company’s Board of Directors is under no obligation to declare dividends on the Series A Preferred Stock.
Conversion
Each share of Series A Preferred Stock is generally convertible into 100 shares of the Company’s common stock (the “Conversion Rate”).
Liquidation
In the event of any liquidation, dissolution or winding up of the Company, the assets of the Company legally available for distribution by the Company would be distributed with equal priority and pro rata among the holders of the Series A Preferred Stock and common stock in proportion to the number of shares of common stock held by them, with the shares of Series A Preferred Stock being treated for this purpose as if they had been converted to shares of common stock at the then applicable Conversion Rate.
Voting
On any matter presented to the stockholders of the Company for their action or consideration at any meeting of stockholders of the Company (or by written consent of stockholders in lieu of meeting), each holder of outstanding shares of Series A Preferred Stock would be entitled to cast the number of votes equal to the number of whole shares of common stock into which the shares of Series A Preferred Stock held by such holder are convertible as of the record date for determining stockholders entitled to vote on such matter. Except as provided by law or by the other provisions of the Company’s Certificate of Incorporation, holders of Series A Preferred Stock vote together with the holders of common stock as a single class.
NOTE 8. PROVISION FOR CORPORATE INCOME TAXES
The Company provides for income taxes by the use of an asset and liability approach in accounting for income taxes. Deferred tax assets and liabilities are recorded based on the differences between the financial statement and tax bases of assets and liabilities and the tax rates in effect when these differences are expected to reverse. This also requires the reduction of deferred tax assets by a valuation allowance if, based on the weight of available evidence, it is more likely than not that some or all of the deferred tax assets will not be realized.
The valuation allowance at October 31, 2014 was $2,909,710. The net change in allowance during the year ended October 31, 2014 was $124,217.
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FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
As of October 31, 2014, the Company has federal net operating loss carry forwards of approximately $8,560,000 available to offset future taxable income through 2034. The Company may be able to utilize its NOLs to reduce future federal and state income tax liabilities. However, these NOLs are subject to various limitations under Internal Revenue Code (“IRC”) Section 382. IRC Section 382 limits the use of NOLs to the extent there has been an ownership change of more than 50 percentage points. In addition, the NOL carry-forwards are subject to examination by the taxing authority and could be adjusted or disallowed due to such exams. Although the Company has not undergone an IRC Section 382 analysis, it is possible that the utilization of the NOLs could be substantially limited. The Company has no tax provision for the years ended October 31, 2014 and 2013 due to losses and full valuation allowances against net deferred tax assets.
As of October 31 2014 and 2013, the difference between the tax provision at the statutory federal income tax rate and the tax provision attributable to loss before income taxes is as follows (in percentages):
| Statutory federal income tax rate |
|
| (34 | )% |
| State taxes – net of federal benefits |
|
| (5 | )% |
| Valuation allowance |
|
| 39 | % |
| Income tax rate – net |
|
| 0 | % |
Fin 48 - Accounting for Uncertain Tax Positions
The Company files income tax returns in the U.S. federal jurisdiction and various state, and local jurisdictions. The Company is no longer subject to U.S. federal income tax examination by tax authorities for the years prior to October 31, 2005. With respect to state and local jurisdictions, with limited exception, the Company is no longer subject to income tax audits prior to October 31, 2005. In the normal course of business, the Company is subject to examination by various taxing authorities. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for any adjustments that may result from these open tax years.
Based on management’s review of the Company’s tax position, the Company had no significant unrecognized corporate tax liabilities as of October 31, 2014 and 2013 payable to the Internal Revenue Service due to the net operating loss carry-forward, however, the Company had yet to file its 2005 through 2009 Federal, New Jersey nor New York Corporate Income Tax Returns.
NOTE 9. UNPAID PAYROLL TAXES
As of October 31, 2014 and 2013, the Company owed the Internal Revenue Service and New York State payroll related taxes in the amounts of $135,875 and $30,084, respectively, plus applicable interest and penalties. The total amount due to both taxing authorities including penalties and interest was $165,959 as of October 31, 2014 and 2013, subject to further penalties and interest plus accruals on unpaid wages.
NOTE 10. COMMITMENTS AND CONTINGENCIES
Rent
As of October 31, 2014, the Company maintains its office in New York, New York. There is a month-to-month office lease. The rent is approximately $1,050 per month for the current office. The Company rents its office space from the father of the Company’s President and Chief Executive Officer.
As of October 31, 2014 and October 31, 2013, the total amount owed to related party was $49,450 and $36,650, including $30,250 and $17,450, respectively, for accumulated rent.
IRS Tax Lien
The Internal Revenue Service has placed a federal tax lien on all of the assets of the Company.
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FRESH HARVEST PRODUCTS, INC.
NOTES TO FINANCIAL STATEMENTS
October 31, 2014
NOTE 11. SUBSEQUENT EVENTS
The Company has evaluated subsequent events for recognition and disclosure through January 29, 2021, the date the financial statements were available to be issued, and determined that there were no such events requiring adjustment to, or disclosure in, the accompanying financial statements, other than included below.
Change of Domicile
On November 3, 2017 the Company changed its domicile from New Jersey to Delaware and authorized shares to 20 Billion shares of common stock, par value, $0.000001 per share, and 500 Million shares of Series A Preferred Stock, par value, $0.000001 per share, and 500 Million Shares of Series B Preferred Stock, par value, $0.000001 per share. Each share of Series A and Series B Preferred Stock is convertible into 100 shares of the Company’s common stock.
Release of Federal Tax Liens
Between the period of May 2016 and April 2018 federal tax liens in the amount of $103,156 were released.
D&E Agreements – Convertible Promissory Notes and Put Option Agreement
On May 5, 2020, the Company entered into 4 agreements with D&E Holdings 20, LLC (“D&E”). The Agreements were: Convertible Promissory Note for $50,000 (the note has a 6-month term, a 10% interest rate and a conversion price of $0.0001), a Stock Purchase Agreement, a Note Purchase Agreement and a Put Option Agreement. The Put Option Agreement describes a transaction where, once D&E loans the Company a total of $100,000, then D&E may, at its sole discretion, exercise their Put Option to merge their real estate asset (a laboratory space consisting of between 30, 000 and 40,000 sq ft within the Former MetroSouth Medical Center Campus Illinois) with the Company. Upon D&E exercising the Put Option, D&E shall be issued a total of 83% of all of the outstanding shares of stock of the Company.
Increase of Authorized Common and Preferred Shares
On December 21, 2020, the Company increased its authorized shares to 1 Trillion shares of common stock, par value, $0.000001 per share, and 5 Billion shares of Series A Preferred Stock, par value, $0.000001 per share, and 5 Billion Shares of Series B Preferred Stock, par value, $0.000001 per share. Each share of Series A and Series B Preferred Stock is convertible into 100 shares of the Company’s common stock.
On December 31, 2020 the Company issued 1,050,000,000 common shares for services rendered to the Company. On December 31, 2020 five (5) Noteholders, including the Company’s Board of Director Members, converted a total of $1,965,460 of convertible promissory notes into 40,702,104,817 common shares of the Company. The Company’s two Board of Director Members converted a total of $1,644,825 of convertible promissory notes into a total of 34,267,187,500 common shares. The Company’s Board of Director Members control approximately 87.32% of the voting rights of the Company. The 3 (three) Noteholders converted a total of $325,666 of convertible promissory notes into a total of 6,439,917,317 common shares.
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ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There are not and have not been any disagreements between the Company and its accountants on any matter of accounting principles, practices or financial statement disclosure that is reportable under this Item 9.
ITEM 9A. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Annual Report on Form 10-K, an evaluation was carried out by the Company’s management, with the participation of the principal executive officer and the principal financial officer, of the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”)) as of October 31, 2014. Disclosure controls and procedures are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, and that such information is accumulated and communicated to management, including the chief executive officer and the chief financial officer, to allow timely decisions regarding required disclosures.
Based on that evaluation, the Company’s principal executive officer and principal financial officer concluded, as of the end of the period covered by this report, that the Company’s disclosure controls and procedures were not effective in recording, processing, summarizing, and reporting information required to be disclosed, within the time periods specified in the Commission’s rules and forms, and that such information was not accumulated and communicated to management, including the principal executive officer and the principal financial officer, to allow timely decisions regarding required disclosures.
Management’s Report on Internal Control over Financial Reporting
The management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting is a process, under the supervision of the principal executive officer and the principal financial officer, designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with United States generally accepted accounting principles (GAAP). Internal control over financial reporting includes those policies and procedures that:
| ● | Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets; |
| ● | Provide reasonable assurance that transactions are recorded as necessary to permit preparation of the financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures are being made only in accordance with authorizations of management and the board of directors; and |
| ● | Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements. |
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
The Company’s management conducted an assessment of the effectiveness of our internal control over financial reporting as of October 31, 2014, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission, which assessment identified material weaknesses in internal control over financial reporting. A material weakness is a control deficiency, or a combination of deficiencies in internal control over financial reporting that creates a reasonable possibility that a material misstatement in annual or interim financial statements will not be prevented or detected on a timely basis. Since the assessment of the effectiveness of our internal control over financial reporting did identify a material weakness, management considers its internal control over financial reporting to be ineffective.
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Management has concluded that our internal control over financial reporting had the following deficiency:
|
| ● | We were unable to maintain any segregation of duties within our business operations due to our reliance on a single individual fulfilling the role of sole officer. This control deficiency did result in audit adjustments to our 2014 interim and annual financial statements. Accordingly, we have determined that this control deficiency constitutes a material weakness. |
To the extent reasonably possible, given our limited resources, our goal is, upon sufficient operating cash flow and/or capital, to separate the responsibilities of principal executive officer and principal financial officer, intending to rely on two or more individuals. We will also seek to expand our current board of directors to include additional individuals willing to perform directorial functions. Since the recited remedial actions will require that we hire or engage additional personnel, this material weakness may not be overcome in the near term due to our limited financial resources. Until such remedial actions can be realized, we will continue to rely on the advice of outside professionals and consultants.
This Annual Report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting. We were not required to have, nor have we, engaged our independent registered public accounting firm to perform an audit of internal control over financial reporting pursuant to the rules of the Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.
Changes in Internal Controls over Financial Reporting
During the year ended October 31, 2014, there has been no change in internal control over financial reporting that has materially affected or is reasonably likely to materially affect our internal control over financial reporting.
None.
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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Each of our current directors were appointed to serve until his successor is qualified and elected. The names, addresses, ages and positions of our executive officers and directors as of October 31, 2014 are set forth below:
| NAME AND ADDRESS |
| AGE |
| POSITIONS |
| Michael Jordan Friedman |
| 43 |
| President, Chief Executive Officer, Chief Financial Officer and Chairman |
| 280 Madison Avenue, Ste 1005 New York, New York 10016 |
|
|
|
|
|
|
|
|
|
|
| Jay Odintz |
| 61 |
| Director |
| 280 Madison Avenue, Ste 1005 New York, New York 10016 |
|
|
|
|
Backgrounds of our executive officers and directors
Michael Jordan Friedman – President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board.
2003 – Present – President, CEO, CFO and Chairman - Fresh Harvest Products, Inc.
2003 – Present – Board of Director Member, Talk Entertainment, Inc.
2001 – 2004 – Partner, The Willis Group, Inc. – New York, NY
Mr. Friedman has served as the Company’s President, Chief Executive Officer, Chief Financial Officer and Chairman of the Company’s Board of Directors since December 2005. Mr. Friedman previously served as the President, Chief Executive Officer and Chairman of the Board of Directors of New York FHP. Since 2003, Mr. Friedman has also served as the President and as a member of the Board of Directors of Talk Entertainment, Inc., an entertainment company. Mr. Friedman was also previously a partner in The Willis Group, Inc., a food consulting company, from 2001 to 2004. Mr. Friedman received a Master of Law in Taxation from New York Law School and Juris Doctor degree from New York Law School.
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Jay Odintz – Director.
2003 – Present – Board of Director Member, Fresh Harvest Products, Inc.
1982 – Present –CPA with the firm of Arthur Friedman, CPA, Inc.
1986 – Present – Certified Financial Planner
1983 – Present – Certified Public Accountant
Mr. Odintz has served as a member of the Company’s Board of Directors since December 2005. Mr. Odintz previously served as a member of the Board of Directors of New York FHP. Mr. Odintz is a certified financial planner and a certified public accountant. Since 1982, Mr. Odintz has been a CPA and worked with Arthur Friedman CPA.
DIRECTOR QUALIFICATIONS AND EXPERIENCE.
The following table identifies some of the experience, qualifications, attributes and skills that the Board considered in making its decision to appoint and nominate directors to the Board. This information supplements the biographical information provided above. The vertical axis displays the primary factors reviewed by the Board in evaluating a board candidate.
| Experience, Qualification, Skill or Attribute |
| Friedman |
|
| Odintz |
|
| Professional standing in chosen field |
| x |
|
| x |
|
| Expertise in industry |
| x |
|
|
|
|
| Other public company experience |
| x |
|
| x |
|
| Specific skills/knowledge |
| x |
|
| x |
|
NOMINATION CRITERIA
Members of the Company’s Board of Directors were nominated to serve as directors based on reasons that included, among others, their experience with the Company and its industry and business experience.
FAMILY RELATIONSHIPS
There is no family relationship between our sole officer and our directors.
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INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
In the past ten years no director or person nominated to become a director or executive officer of the Company: (1) has had a petition under the Federal bankruptcy laws or any state insolvency law filed by or against him, or a receiver, fiscal agent or similar officer was appointed by a court for the business or property of such person, or any partnership in which he was a general partner at or within two years before the time of such filing, or any corporation or business association of which he or she was an executive officer at or within two years before the time of such filing; (2) has been convicted in a criminal proceeding or named subject of a pending criminal proceeding (excluding traffic violations and other minor offenses); (3) has been the subject of any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining him from, or otherwise limiting, the following activities: (i) as a futures commission merchant, introducing broker, commodity trading advisor, commodity pool operator, floor broker, leverage transaction merchant, any other person regulated by the Commodity Futures Trading Commission, or an associated person of any of the foregoing, or as an investment adviser, underwriter, broker or dealer in securities, or as an affiliated person, director or employee of any investment company, bank, savings and loan association or insurance company, or engaging in or continuing any conduct or practice in connection with such activity; (ii) engaging in any type of business practice; (iii) or engaging in any activity in connection with the purchase or sale of any security or commodity or in connection with any violation of Federal or State securities laws or Federal commodities laws; (4) has been the subject of any order, judgment or decree, not subsequently reversed, suspended or vacated, of any Federal or State authority barring, suspending or otherwise limiting for more than 60 days the right of such person to engage in any activity described in paragraph 3 of this section, or to be associated with persons engaged in any such activity; (5) has been found by a court of competent jurisdiction in a civil action or by the Commission to have violated any Federal or State securities law, and the judgment in such civil action or finding by the Commission has not been subsequently reversed, suspended, or vacated; (6) has been found by a court of competent jurisdiction in a civil action or by the Commodity Futures Trading Commission to have violated any Federal commodities law, and the judgment in such civil action or finding by the Commodity Futures Trading Commission has not been subsequently reversed, suspended or vacated; (7) has been the subject of, or a party to, any Federal or State judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated, relating to an alleged violation of: (i) any Federal or State securities or commodities law or regulation; or (ii) any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order; or (iii) any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or (8) has been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
BOARD COMMITTEES
As of October 31, 2014, our board of directors did not have nominating, audit or compensation committees. Our Board currently approves all services to be provided by the Company’s independent registered public accounting firm.
Board Meetings; Nominating and Compensation Committees
The Board of Directors took a number of actions by written consent of all of the directors during the fiscal year ended October 31, 2014. Such actions by the written consent of all directors are, according to New Jersey corporate law and the Company's by-laws, as valid and effective as if they had been passed at a meeting of the directors duly called and held. The Company's directors and officers do not receive remuneration from the Company unless approved by the Board of Directors or pursuant to an employment contract. No compensation has been paid to the Company's directors for attendance at any meetings during the last fiscal year.
The Company does not have standing nominating or compensation committees, or committees performing similar functions. The Company's board of directors believes that it is not necessary to have a compensation committee at this time because the functions of such committee are adequately performed by the board of directors. The board of directors also is of the view that it is appropriate for the Company not to have a standing nominating committee because the board of directors has performed and will perform adequately the functions of a nominating committee. The Company is not a "listed company" under SEC rules and is therefore not required to have a compensation committee or a nominating committee.
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AUDIT COMMITTEE FINANCIAL EXPERT
The Company’s Board of Directors does not have an “audit committee financial expert” as defined by Item 407 of Regulation S-K. The Company has not been able to attract anyone to its Board of Directors with the requisite background.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company’s directors, executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Specifically, for the year ending October 31, 2014, our officers, directors, and greater than ten percent beneficial shareholders were required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. To the Company’s knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments thereof) received by the Company, for the year ending October 31, 2014, each of the Company’s directors, executive officers, and persons who beneficially own more than ten percent of a registered class of the Company’s equity securities during the year ending October 31, 2014 made the required filings.
CODE OF ETHICS
We have adopted a code of ethics that applies to all of our executive officers and employees. A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:
| · | Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships; |
| · | Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the SEC and in other public communications made by an issuer; |
| · | Compliance with applicable governmental laws, rules and regulations; |
| · | The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and |
| · | Accountability for adherence to the code. |
Due to the limited scope of the Company's current operations, the Company has not adopted a corporate code of ethics that applies to its executive officers.
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Conflicts of Interest
Certain conflicts of interest exist and may continue to exist between the Company and its officers and directors due to the fact that each has other business interests to which they devote their primary attention. Each officer and director may continue to do so notwithstanding the fact that management time should be devoted to the business of the Company.
Certain conflicts of interest may exist between the Company and its management, and conflicts may develop in the future. The Company has not established policies or procedures for the resolution of current or potential conflicts of interest between the Company, its officers and directors or affiliated entities. There can be no assurance that management will resolve all conflicts of interest in favor of the Company, and conflicts of interest may arise that can be resolved only through the exercise by management their best judgment as may be consistent with their fiduciary duties. Management will try to resolve conflicts to the best advantage of all concerned.
Shareholder Communications
There has not been any defined policy or procedure requirements for stockholders to submit recommendations or nomination for directors. The board of directors does not believe that a defined policy with regard to the consideration of candidates recommended by stockholders is necessary at this time because it believes that, given the limited scope of the Company's operations, a specific nominating policy would be premature and of little assistance until the Company's business operations are at a more advanced level. There are no specific, minimum qualifications that the board of directors believes must be met by a candidate recommended by the board of directors. Currently, the entire board of directors decides on nominees, on the recommendation of any member of the board of directors followed by the board's review of the candidates' resumes and interview of candidates. Based on the information gathered, the board of directors then makes a decision on whether to recommend the candidates as nominees for director. The Company does not pay any fee to any third party or parties to identify or evaluate or assist in identifying or evaluating potential nominee.
The Company does not have any restrictions on shareholder nominations under its certificate of incorporation or by-laws. The only restrictions are those applicable generally under New Jersey corporate law and the federal proxy rules, to the extent such rules are or become applicable. The board of directors will consider suggestions from individual shareholders, subject to evaluation of the person's merits. Stockholders may communicate nominee suggestions directly to the board of directors, accompanied by biographical details and a statement of support for the nominees. The suggested nominee must also provide a statement of consent to being considered for nomination. There are no formal criteria for nominees.
Indemnification
Under New Jersey corporate law and pursuant to our certificate of incorporation and bylaws and contractual agreement, the Company may indemnify its officers and directors for various expenses and damages resulting from their acting in these capacities. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to the Company's officers or directors pursuant to the foregoing provisions, the Company has been informed that, in the opinion of the SEC, this indemnification is against public policy as expressed in the Securities Act, and is therefore unenforceable.
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ITEM 11. EXECUTIVE COMPENSATION
The following summary compensation table sets forth all compensation earned and accrued, in all capacities, during the fiscal years ended October 31, 2014 and 2013, by Michael J. Friedman, the Company’s President, Chief Executive Officer and Chief Financial Officer:
| SUMMARY COMPENSATION TABLE | ||||||||||||||||||||||||||||||||||
|
| ||||||||||||||||||||||||||||||||||
| Name and Principal position |
| Year |
| Salary ($) |
|
| Bonus ($) |
|
| Stock Awards ($) |
|
| Option Awards ($) |
|
| Non-Equity Incentive Plan Compensation ($) |
|
| Nonqualified Deferred Compensation Earnings ($) |
|
| All Other Compensation ($) |
|
| Total ($) |
| ||||||||
| Michael J. Friedman, |
| 2014 |
| $ | 144,000 | (1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 144,000 |
|
| President, CFO and CEO |
| 2013 |
| $ | 144,000 | (1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 144,000 |
|
___________
| (1) | Salary and all other compensation was accrued and none of it was paid in the form of cash as of October 31, 2014. |
Stock Option and Equity Compensation Plans
As of October 31, 2014, the Company did not have any stock option or equity plans.
Employees and Employment Agreements
As of October 31, 2014, we had one full time employee and several full and part-time third party independent contractors.
Currently, the Company’s sole employee, is Michael Friedman, our President and Chief Executive Officer, who is employed on a full time basis. Mr. Friedman’s employment contract with the Company expired on October 31, 2010 and as of October 31, 2014, had not yet been renewed.
We anticipate retaining additional sales and marketing (employees or consultants) and clerical personnel within the next 12 months, if and when our financial resources permit.
Retirement, Resignation or Termination Plans
We sponsor no plan, whether written or verbal, that would provide compensation or benefits of any type to an executive upon retirement, or any plan that would provide payment for retirement, resignation, or termination as a result of a change in control of our Company or as a result of a change in the responsibilities of an executive following a change in control of our Company.
Directors’ Compensation
During the year ended October 31, 2014, each director received compensation for their services in the form of $24,000; all of which was accrued and none of it was paid in the form of cash.
The following table provides information concerning the compensation of our directors for the year ended October 31, 2014.
| Name |
| Fees Earned or Paid in Cash |
|
| Stock Awards |
|
| Option Awards |
|
| Non-Equity Incentive Plan Compensation |
|
| Nonqualified Deferred Compensation Earnings |
|
| All Other Compensation |
|
| Total |
| |||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||
| Michael J. Friedman |
| $ | 24,000 | (1) |
|
| - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | - |
|
| $ | 24,000 |
|
| Jay Odintz |
| $ | 24,000 | (1) |
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
|
| - |
|
| $ | 24,000 |
|
_______________
| (1) | In lieu of the payment the Company accrued the compensation due as a fee for their service on the Company’s Board of Directors. |
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Indebtedness to Management
As of October 31, 2014, the CEO of the Company has an accrued and unpaid annual salary of $144,000 and $24,000 in accrued and unpaid annual Directors Fees.
Indemnification of Directors and Officers
Currently, our certificate of incorporation and by-laws provide for the indemnification of our directors of the Company. Our board of directors can amend the by-laws, and since they own a majority of our shares outstanding, they can cause our certificate of incorporation to be amended so that we can indemnify our officers, employees and other agents to the fullest extent permitted by New Jersey law; provided, that such indemnified persons acted in good faith and in a manner reasonably believed to be in our best interest, and, with respect to any criminal proceeding, had no reasonable cause to believe such conduct was unlawful. We do not currently maintain liability insurance for our officers and directors. However, we may obtain such insurance in the future.
Similarly, our certificate of incorporation does provide for the exculpability of our directors from personal liability for claims of breach of duty made by our company or our shareholders. However, present board of directors because of their majority ownership of our shares, can amend our certificate of incorporation to provide that our officers will not be personally liable to us or our shareholders for damages for breach of any duty owed to us or our shareholders, except for liabilities arising from any breach of duty based upon an act or omission (i) in breach of the duty of loyalty to us, (ii) not in good faith or involving a knowing violation of law or (iii) resulting in receipt by such director or officer of an improper personal benefit.
Section 14A:3-5(2) of the New Jersey Business Corporation Act (the “Act”) empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative, arbitrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a corporate agent (i.e., a director, officer, employee or agent of the corporation or a director, officer, trustee, employee or agent of another related corporation or enterprise), against reasonable costs (including attorneys’ fees), judgments, fines, penalties and amounts paid in settlement incurred by such person in connection with such action, suit or proceeding, if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal proceedings, had no reasonable cause to believe that the conduct was unlawful.
Section 14A:3-5(3) of the Act empowers a corporation to indemnify a corporate agent against reasonable costs (including attorneys’ fees) incurred by him or her in connection with any proceeding by or in the right of the corporation to procure a judgment in its favor which involves the corporate agent by reason of the fact that he or she is or was a corporate agent, if he or she acted in good faith and in a manner reasonably believed to be in or not opposed to the best interests of the corporation. However, no indemnification may be made in respect to any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation, unless and only to the extent that the Superior Court of New Jersey or the court in which such action or suit was brought shall determine that despite the adjudication of liability, such person is fairly and reasonably entitled to indemnity for such expenses which the court shall deem proper.
Section 14A:3-5(4) of the Act provides that to the extent that a corporate agent has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he or she shall be indemnified against expenses (including attorneys’ fees) incurred by him or her in connection therewith. Section 14A:3-5(8) provides that the indemnification provided for by Section 14A:3-5 shall not be deemed exclusive of any rights to which the indemnified party may be entitled, with certain exceptions. Section 14A:3-5(9) empowers a corporation to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him or expenses incurred by him or her in any such capacity or arising out of his or her status as such whether or not the corporation would have the power to indemnify him or her against such liabilities and expenses under Section 14A:3-5.
Section 14A:2-7 of the Act provides that a New Jersey corporation's "certificate of incorporation may provide that a director or officer shall not be personally liable, or shall be liable only to the extent therein provided, to the corporation or its shareholders for damages for breach of any duty owed to the corporation or its shareholders, except that such provision shall not relieve a director or officer from liability for any breach of duty based upon an act or omission (a) in breach of such person's duty of loyalty to the corporation or its shareholders, (b) not in good faith or involving a knowing violation of law or (c) resulting in receipt by such person of an improper personal benefit. As used in this subsection, an act or omission in breach of a person's duty of loyalty means an act or omission which that person knows or believes to be contrary to the best interests of the corporation or its shareholders in connection with a matter in which he has a material conflict of interest."
Regarding indemnification for liabilities arising under the Securities Act of 1933, as amended, that may be permitted to directors or officers under New Jersey, we have been informed that, in the opinion of the Securities and Exchange Commission, indemnification is against public policy, as expressed in the Securities Act of 1933 and is, therefore, unenforceable.
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The following table sets forth information about the beneficial ownership of our common stock as of October 31, 2014 by (i) each person who we know is the beneficial owner of more than 5% of the outstanding shares of our common stock (ii) each of our directors, (iii) each of our executive officers and (iv) all of our directors and executive officers as a group.
| Title of Class |
| Name and Address of Beneficial Owner (2) |
| Amount and Nature of Beneficial Ownership |
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| Percentage of Class (1) |
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| Common Stock |
| Michael Friedman (3) |
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| 956,928,040 |
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| 44.81 | % |
| Common Stock |
| Jay Odintz (4) |
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| 164,333,333 |
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| 7.70 | % |
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| All executive officers and directors as a group (two people) |
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| 1,121,361,373 |
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| 52.51 | % |
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| (1) | Applicable percentage of ownership is based on 1,635,610,445 shares of common stock outstanding as of October 31, 2014 together with securities exercisable or convertible into shares of common stock within 60 days of October 31, 2013 for each shareholder. Beneficial ownership is determined in accordance with the rules of the SEC and generally includes voting or investment power with respect to securities. Shares of common stock subject to securities exercisable or convertible into shares of common stock that are currently exercisable or exercisable within 60 days of October 31, 2013 are deemed to be beneficially owned by the person holding such securities for the purpose of computing the percentage of ownership of such person, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. For purposes of this table, the Company has assumed that all outstanding shares of Series A Preferred Stock will be convertible into shares of the Company’s common stock within 60 days of October 31, 2013. |
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| (2) | Unless otherwise indicated, the shareholder’s address is c/o Fresh Harvest Products, Inc., 280 Madison Avenue, Suite 1005, New York, New York 10016. |
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| (3) | Mr. Friedman is the President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board of Directors of the Company. Includes 456,928,040 shares of common stock and assumes the conversion of 5,000,000 shares of Series A Preferred Stock held by Mr. Friedman into 500,000,000 shares of common stock. |
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| (4) | Member of the Company’s Board of Directors. Includes 164,333,333 shares of common stock held by Mr. Odintz. The exemption from registration for the issuances of the Series A Preferred Shares was based on Section 4(2) of the Securities Act. |
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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related Party Transactions
During the fiscal year, the Company rents an office space from Arthur Friedman, the father of the Company’s President and Chief Executive Officer. The rent is approximately $1,050 per month for our current office located in New York and we did not pay, but accrued, rent for our office during the years ended 2014 and 2013. For the years ended October 31, 2014 and 2013, rent expense was $12,800 and $12,600, respectively.
As of October 31, 2014 and October 31, 2013, the Company had $16,312 and $32,312, respectively, in outstanding notes payable to related parties. As of October 31, 2014 and October 31, 2013, the Company had $5,897 and $3,231, respectively, in outstanding interest to related parties. The outstanding notes payable have one-year terms and 10% interest rates. The principal amount of the notes and accrued and unpaid interest is convertible into common shares of the Company upon the due date at $0.0001 per share, subject to adjustments.
Director Independence
Mr. Friedman is not considered an “independent” member of the Company’s Board of Directors as that term is defined by NASDAQ Listing Rule 5605.
Mr. Odintz was considered to be an “independent” member of the Company’s Board of Directors as that term is defined by NASDAQ Listing Rule 5605. We believe that Mr. Friedman would not be considered “independent” pursuant to NASDAQ Listing Rule 5605 for purposes of membership on any audit, compensation or nominating committees established by the Company’s Board of Directors.
Our common stock was currently quoted on the OTC Bulletin Board, or the OTCBB, and OTCQB. Since neither the OTCBB nor the OTCQB has its own rules for director independence, we use the definition of independence established by the NYSE Amex (formerly the American Stock Exchange). Under applicable NYSE Amex rules, a director will only qualify as an “independent director” if, in the opinion of our Board, that person does not have a relationship which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. We periodically review the independence
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
The following table sets forth fees billed to us by our independent auditors for the years ended 2014 and 2013 for (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services rendered that are reasonably related to the performance of the audit or review of our financial statements that are not reported as Audit Fees, and (iii) services rendered in connection with tax preparation, compliance, advice and assistance.
| SERVICES |
| 2014 |
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| 2013 |
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| Audit fees |
| $ | 5,000 |
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| $ | 5,000 |
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| Audit-related fees |
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| - |
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| - |
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| Tax fees |
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| - |
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| - |
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| All other fees |
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| - |
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| - |
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| Total fees |
| $ | 5,000 |
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| $ | 5,000 |
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Audit Fees: Represents fees for professional services provided for the audit of our annual financial statements, services that are performed to comply with generally accepted auditing standards, and review of our financial statements included in our quarterly reports and services in connection with statutory and regulatory filings.
Audit-Related Fees: Represents the fees for assurance and related services that are reasonably related to the performance of the audit or review of our financial statements. The Board of Directors considers Accell Audit & Compliance P.A., to be well qualified to serve as our independent public accountants.
The Audit Committee will approve all auditing services and the terms thereof (which may include providing comfort letters in connection with securities underwriting) and non-audit services (other than non-audit services published under Section 10A(g) of the Exchange Act or the applicable rules of the SEC or the Pubic Company Accounting Oversight Board) to be provided to us by the independent auditor; provided, however, the pre-approval requirement is waived with respect to the provisions of non-audit services for us if the "de minimus" provisions of Section 10A(i)(1)(B) of the Exchange Act are satisfied. This authority to pre-approve non-audit services may be delegated to one or more members of the Audit Committee, who shall present all decisions to pre-approve an activity to the full Audit Committee at its first meeting following such decision. The Audit Committee may review and approve the scope and staffing of the independent auditors' annual audit plan.
Tax Fees: This represents professional services rendered for tax compliance, tax advice and tax planning.
All Other Fees: Our Auditor was paid no other fees for professional services during the fiscal years ended October 31, 2014 and October 31, 2013.
Policy on Audit Committee Pre-Approval of Audit and Permissible Non-audit Services of Independent Auditors
The Board of Directors acts as the audit committee of the Company, and accordingly, all services are approved by all the members of the Board of Directors. The Board of Director’s policy is to pre-approve all audit and non-audit services provided by the independent registered public accounting firm, including the estimated fees and other terms of any such engagement.
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ITEM 15. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
Financial Statements: See Index to Financial Statements under Part II, Item 8 of this Annual Report on Form 10-K
EXHIBITS
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| 101 |
| The following materials from the Company’s Annual Report on Form 10-K for the year ended October 31, 2014 formatted in Extensible Business Reporting Language (XBRL): (i) the Balance Sheets, (ii) the Statements of Operations, (iii) the Statements of Deficiency of Assets (iv) the Statements of Cash Flows and (v) related notes. |
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| February 1, 2021 | By: | /s/ Michael J. Friedman | |
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| Name: | Michael J. Friedman | |
| Titles: | President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| February 1, 2021 | By: | /s/ Michael J. Friedman | |
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| Name: | Michael J. Friedman | |
| Titles: | President, Chief Executive Officer, Chief Financial Officer and Chairman of the Board (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer) | ||
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| February 1, 2021 |
| /s/ Jay Odintz |
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| Jay Odintz – Director. |
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EXHIBIT 31.1
CERTIFICATIONS
I, MICHAEL JORDAN FRIEDMAN, certify that:
| 1. | I have reviewed this Annual Report on Form 10-K for the year ended October 31, 2014 of Fresh Harvest Products, Inc.; |
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| 2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
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| 3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
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| 4. | The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have: |
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| (a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
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| (b) | Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles; |
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| (c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
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| (d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
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| 5. | The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
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| (a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
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| (b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
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| FRESH HARVEST PRODUCTS, INC. |
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| Dated: February 1, 2021 | By: | /s/ Michael Jordan Friedman |
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| Michael Jordan Friedman Chief Executive Officer, President, Chief Financial Officer and Chairman |
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EXHIBIT 32.1
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Quarterly Report of Fresh Harvest Products, Inc. (the “Registrant”) on Form 10-K for the year ended October 31, 2014 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Michael Jordan Friedman, Principal Executive Officer and the Principal Financial Officer of the Registrant, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:
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| (1) | the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
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| (2) | the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Registrant. |
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| FRESH HARVEST PRODUCTS, INC. |
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| Dated: February 1, 2021 | By: | /s/ Michael Jordan Friedman |
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| Michael Jordan Friedman Chief Executive Officer, President, Chief Financial Officer and Chairman |
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