Item 1. Business
Business
We were formed in May 2010 as a Florida corporation to develop and market barbecue sauce and other condiments. All activity to date has been related to the formation of our business, formulation of our business plan and initial start-up operations such as formulating and testing recipes, investigating sources of supply for raw materials and services, investigating potential distribution channels for our products and financing activities. There can be no assurance that we will be able to successfully introduce our initial products or any other products into the commercial marketplace.
Implementation of our Business Plan
Below is a brief description of the activities which we have established to achieve the launch of our first product into the commercial marketplace. These activities will be undertaken by our officers.
The following activities have already been accomplished:
·
Finalized recipe, labels and packaging for our initial barbecue sauce product.
·
Selected and established sources of supply for ingredients and packaging, including labels, bottles and cartons.
·
Obtained nutritional analysis and stability testing of the product.
We anticipate taking the following actions in the near future:
·
Final selection of a contract packer to produce the product, including blending, bottling, labeling, packing in cartons and shipping to customers.
·
Purchase of initial product inventory in sufficient quantity to distribute samples to potential customers and fulfill anticipated orders for product.
·
Initiate marketing activities including contacting potential customers, distribution of samples, initiate promotions such as in-store sampling and coupons, initiate advertising and other promotional activities.
·
Publish a website and initiate other promotional activities.
Distribution
Our target market for initial product distribution will be specialty gourmet grocery stores. These retailers compete by selling products which are not generally available at large supermarket chains and they are highly selective in their merchandising. We believe that consumers choose to shop at specialty gourmet food stores for a different shopping experience and that they are open to try a new product not available at the chain supermarkets or supported by large advertising budgets. We believe that gourmet food stores are more willing to try a new product and will place initial orders in small amounts.
In order to establish initial distribution we anticipate that we will directly approach gourmet food stores to purchase our products through our management and attend trade shows for the gourmet food trade. We will also seek to establish our brand through public relations, an internet site and an internet blog.
Subject to a successful introduction of our initial product, we will seek to engage food brokers to represent us in contacting distributors and larger retailers. At that point we anticipate formulating a sales and marketing presentation to aid the brokers in representing our products to retail and distributor buyers. The key competitive factors in influencing a purchasing decision on this level include the product quality, packaging, sales history, profitability, and consumer demand. If a buyer decides to accept our product, other issues such as the cost of acquiring shelf space (slotting fees) and our specific commitments to marketing programs will be negotiated. Slotting fees can take the form of cash payments and/or free product allowances.
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We cannot assure you that we will be successful in establishing distribution for our products or that our sales will be sufficient to enable us to achieve positive cash flow and earnings.
Manufacturing
We anticipate using contract packers to manufacture our products according to our specifications, which will include our products’ recipes, ingredients, labels and packaging. We will be responsible for having all the components of the products shipped to the contract packer. Based on our initial discussions with several contract packers we believe that we will be able to engage one or more contract packers that could manufacture our products. However, we have not engaged a contract packer at this time. We do not anticipate entering into an exclusive or long term agreement with any packers.
Raw Materials and Suppliers
Based upon our initial investigations, we believe that there are a number of sources available for product ingredients, packaging, and labels for our products. We do not anticipate that it will be necessary to execute any exclusive or long term agreements for such raw material and supplies.
Promotion and Advertising
We intend to initially rely upon point of purchase promotions, trade magazines, public relations and the internet to promote our products. Point of purchase promotional advertising will constitute the most significant portion of our promotion and advertising activities. This will include sampling programs, displays and brochures which we intend to provide to each retail outlet for our products in an effort to get customers to try our product. We will rely on public relations to trade publications to enhance retailer awareness of our products. Internet will be utilized for consumer awareness and retailer awareness purposes. We may also seek to establish brand awareness by advertising and product placement on specialized television programs featuring cooking.
Trademarks, Patents and Intellectual Property
We expect to seek trademark protection for our products as soon as each product trademark is selected, as well as trademark protection for any advertising slogans we adopt. We will do a search of existing trademarks prior to selecting trademarks for our products. We believe that trademark protection will be important to brand name recognition and distributor and consumer loyalty to our products. We intend to register our important trademarks in the United States. We will use our best efforts to maintain the confidentiality of our product recipes through confidentiality agreements and physical security but do not anticipate that it will be possible to secure patents for our products or prevent competitors from developing similar products.
Government Regulation
The production, distribution and sale of food products are subject to the Federal Food, Drug and Cosmetic Act, the Occupational Safety and Health Act and various federal and state statutes regulating the production, sale, safety, advertising, promotion, labeling and ingredients of such products. We intend to comply with all such regulations.
We cannot predict the impact of possible changes that may be required in response to future legislation, rules or regulations. Food and Drug Administration regulations may, in certain circumstances, affect the ability of the Company, as well as others in the industry, to develop and market new products.
Although we expect to package our sauce and condiment products in glass bottles, such bottles are not currently required to be in returnable containers in compliance with recycling laws which are applicable to beverage containers. If such recycling laws are extended to our products we may be required to make material expenditures which may have a material adverse effect on our business.
Employees
As of August 31, 2011, we have no full-time employees. All activities to date have been undertaken by our officers as needed. Our officers do not currently spend all of their time on our business and estimate they devote approximately 10% of their business time on the business of the Company. We anticipate that we will begin hiring employees as needed to support our entry into specialty food business.
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Item 1A.
Item 1A. Risk Factors
An investment in our securities involves a high degree of risk. There have been no material changes to the risk factors previously disclosed in our Form S-1. You should consider carefully all of the material risks described in such registration statement before making a decision to invest in our securities. If any of the events described therein occur, our business, financial conditions and results of operations may be materially adversely affected. In that event, the trading price of our securities could decline, and you could lose all or part of your investment.
Item 1B.
Item 1B. Unresolved Staff Comments
None
Item 2.
Item 2. Properties
We lease office space on a month-to-month basis from a non-affiliated landlord. We anticipate that we will rent additional office and warehouse facilities when needed to support the growth of our business.
Item 3.
Item 3. Legal Proceedings
The Company is not a party to, and its property is not the subject of, any material pending legal proceedings.
Item 4.
Item 4. (Removed and Reserved)
PART II
Item 5.
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Market Information
As of August 31, 2011, there were approximately 47 shareholders of record of the Company’s Common Stock.
Dividends and Dividend Policy
In the event any dividend or other distribution payable in cash or other property (other than shares of our Common Stock) is declared on our Common Stock, each Holder of shares of Series A Convertible Preferred Stock on the record date for such dividend or distribution shall be entitled to receive per share on the date of payment or distribution of such dividend or other distribution the amount of cash or property equal to the cash or property which would be received by the Holders of the number of shares of Common Stock into which such share of Series A Convertible Preferred Stock would be converted pursuant immediately prior to such record date.
Purchases of Equity Securities by the Issuer and Affiliated Purchasers
None.
Securities Authorized for Issuance under Equity Compensation Plans
No securities are authorized for issuance by the Company under equity compensation plans.
Use of proceeds from initial public offering.
Our Registration Statement on Form S-1 (Commission File No. 333-170662) became effective on May 11, 2011. We registered 20,000 shares of Series A Convertible Preferred Stock for sale by the Company for the aggregate price of $300,000 and also registered the 2,000,000 shares of our Common Stock into which the shares of our Series A Convertible Preferred Stock may be converted without further payment. Each share of Series A Convertible Preferred Stock may be converted into 100 shares of our common stock. The shares were offered without an underwriter.
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There were no fees, commissions or expenses paid to underwriters or finders’ in connection with the offering. The offering was commenced on May 11, 2011 and is continuing as of the date hereof. As of August 31, 2011 the Company sold 4,430 of the 20,000 shares of Series A Convertible Preferred Stock registered in the offering and received the offering price of $66,450. We paid other expenses in connection with the offering of $17,500 and the net proceeds to us were $48,950. As of August 31, 2011 the net proceeds were used as follows:
Working capital $ 48,950
$0 of the net proceeds was paid directly or indirectly, to our officers, directors or their associates or to persons owning 10% or more of any class of our equity securities or to any of our affiliates.
Item 6.
Item 6. Selected Financial Data.
Not applicable.
Item 7.
Item 7. Management’s Discussions and Analysis of Financial Condition and Results of Operations.
Results of Operations
In the twelve months ended August 31, 2011 we had $360 in sales of products and $500 in Cost of Sales. Selling, general and administrative expenses were $39,546. As a result we lost $39,750 in the twelve months ended August 31, 2011
Liquidity and Capital Resources
During the twelve months ended August 31, 2011, working capital increased $7,349 to a surplus of $43,474 from a surplus of $36,125. The primary reason for the increase was the increase in cash of $10,155 and a decrease in accounts payable of $2,488 offset by the increase in due to shareholder of $4,944, and accrued expenses of $350. During this same period, stockholders’ equity increased $9,200 to $45,325 from $36,125. The increase in stockholders’ equity is due to the net proceeds from the sale of the preferred stock $48,950 offset by the net loss for the period of ($39,750).
Cash flows
Net cash used in operating activities was $36,880 for the twelve months ended August 31, 2011. In the 2011 period cash was used by our loss from operations and decreases in accounts payable offset by cash provided by our increases in accrued expenses and due to shareholder account.
Net cash used in investing activities was $1,915 for the twelve months ended August 31, 2011. In the 2011 period cash was used by the purchase of property and equipment.
Net cash provided by financing activities for the twelve months ended August 31, 2011 was $48,950 and reflects proceeds we received from our 2011 preferred stock offering described below, offset by payments of offering costs.
Recent Financing Transactions
During the fiscal year ended August 31, 2011, the Company sold 4,430 shares of Series A Convertible Preferred Stock at $15.00 per share, for a total of $66,450. Each share of Series A Convertible Preferred Stock may be converted into 100 shares of our common stock.
The Company is currently a development stage company and its continued existence is dependent upon the Company’s ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Company’s operations may cease to exist.
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Critical Accounting Policies and Estimates
Management’s discussion and analysis of its financial condition and results of operations is based upon our consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates, including those related to the reported amounts of revenues and expenses and the valuation of our assets and contingencies. We believe our estimates and assumptions to be reasonable under the circumstances. However, actual results could differ from those estimates under different assumptions or conditions. Our financial statements are based on the assumption that we will continue as a going concern. If we are unable to continue as a going concern we would experience additional losses from the write-down of assets.
Going Concern
The Company is currently a development stage company and its continued existence is dependent upon the Company’s ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Company’s operations may cease to exist.
New Accounting Pronouncements
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Item7a. Quantitative and Qualitative Disclosures About Market Risk
Not applicable.
Item 8.
Item 8. Financial Statements and Supplementary Data
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Dixie Foods International, Inc.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and
Stockholders of Dixie Foods International, Inc.
We have audited the accompanying balance sheet of Dixie Foods International, Inc. (a development stage Company) (the “Company”) as of August 31, 2011 and 2010, and the related statements of operations, stockholders’ equity, and cash flows for the year ended August 31, 2011 and the period from May 11, 2010 (Inception) to August 31, 2010, and for the period May 11, 2010 (Inception) to August 31, 2011. These financial statements are the responsibility of the company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Dixie Foods International, Inc. (a development stage Company) as of August 31, 2011 and 2010, and the results of its operations and its cash flows for the period from May 11, 2010 (Inception) through August 31, 2011 in conformity with accounting principles generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. The Company has been in the development stage since its inception and continues to incur significant losses. The Company’s viability is dependent upon its ability to obtain future financing and the success of its future operations. These factors raise substantial doubt as to the Company’s ability to continue as a going concern. Management’s plan in regard to these matters is also described in Note 8. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Lake & Associates, CPA’s LLC
Lake & Associates, CPA’s LLC
Schaumburg, Illinois
October 13, 2011
1905 Wright Boulevard
Schaumburg, IL 60193
Phone: 847.524.0800
Fax: 847.524.1655
Dixie Foods International, Inc.
(A Development Stage Company)
Balance Sheets
See accompanying notes to audited financial statements.
Dixie Foods International, Inc.
(A Development Stage Company)
Statement of Operations
For the Years Ended August 31, 2011 and 2010 and
Period from May 11, 2010 (inception) through August 31, 2011
** Less than $.01.
See accompanying notes to audited financial statements.
Dixie Foods International, Inc.
(A Development Stage Company)
Statement of Cash Flows
For the Years Ended August 31, 2011 and 2010 and
Period from May 11, 2010 (inception) through August 31, 2011
See accompanying notes to audited financial statements.
Dixie Foods International, Inc.
(A Development Stage Company)
Statements of Changes in Stockholders’ Equity
Period from May 11, 2010 (inception) through August 31, 2011
See accompanying notes to audited financial statements.
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
NOTE 1 - DESCRIPTION OF BUSINESS AND DEVELOPMENT STAGE RISK
Dixie Foods International, Inc. (The Company) was formed to operate a specialty food business for salad dressing, sauces and condiments. The Company was organized under the laws of the State of Florida. The Company’s year end is August 31. We operate from our office at 115 N.E 6th Blvd., Williston, Florida 32696.
Management has evaluated subsequent events, and the impact on the reported results and disclosures, through October 15, 2011, which is the date these financial statements were approved by management.
The Company has a limited operating history upon which to base an evaluation of the current business and future prospects and has yet to fully launch its services. The Company will continue to be considered a development stage until it has begun significant operations and is generating significant revenues.
The Company has minimal revenues to date. Since its inception, the Company has been dependent upon the receipt of capital investment to fund its continuing activities. In addition to the normal risks associated with a new business venture, there can be no assurance that the Company’s business plan will be successfully executed. Our ability to execute our business model will depend on our ability to obtain additional financing and achieve a profitable level of operations. There can be no assurance that sufficient financing will be obtained, or can we give any assurance that we will generate substantial revenues or that our business operations will prove to be profitable.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).
The accompanying financial statements were prepared assuming that the Company will continue as a going concern. This basis of accounting contemplates the recovery of the Company’s assets and the satisfaction of its liabilities in the normal course of operations.
The Company’s independent accountants issued a “going concern” opinion on the Company’s August 31, 2010 financial statements, since the Company has experienced losses from operations from May 11, 2010 (inception) through May 31, 2011. This matter raises substantial doubt about the Company’s ability to continue as a going concern.
A summary of the significant accounting policies consistently applied in the preparation of the accompanying financial statements is as follows:
Cash and Cash equivalents
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At August 31, 2011 the Company had no amounts in excess of FDIC insured limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden possible failures of such institutions.
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles accepted in the United States of America requires Management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
Property and equipment
The Company records property, equipment at historical cost. Expenditures for maintenance and repairs are recorded to expense; additions and improvements are capitalized. The Company generally provides for depreciation using the straight-line method at rates that approximate the estimated useful lives of the assets.
Depreciation for the fiscal year end periods ended August 31, 2011 and 2010 was $64 and $0, respectively.
Preferred Stock
At August 31, 2011, the Company had 4,430 shares outstanding of its Series A Convertible Preferred Stock (“Series A”). Series A has a stated liquidation preference value of $15 per share, and each preferred share is convertible to 100 shares of the Company’s common stock upon written notice of the record holder to the Company at any time.
Income Taxes
Under the asset and liability method prescribed under ASC 740, Income Taxes, The Company uses the liability method of accounting for income taxes. The liability method measures deferred income taxes by applying enacted statutory rates in effect at the balance sheet date to the differences between the tax basis of assets and liabilities and their reported amounts on the financial statements. The resulting deferred tax assets or liabilities are adjusted to reflect changes in tax laws as they occur. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized.
The Company recognizes the financial statement benefit of an uncertain tax position only after considering the probability that a tax authority would sustain the position in an examination. For tax positions meeting a “more-likely-than-not” threshold, the amount recognized in the financial statements is the benefit expected to be realized upon settlement with the tax authority. For tax positions not meeting the threshold, no financial statement benefit is recognized. As of August 31, 2011, the Company has had no uncertain tax positions. The Company recognizes interest and penalties, if any, related to uncertain tax positions as general and administrative expenses. The Company currently has no federal or state tax examinations nor has it had any federal or state examinations since its inception. All of the Company’s tax years are subject to federal and state tax examination.
Revenue Recognition
The Company recognizes revenue when:
·
Persuasive evidence of an arrangement exists;
·
Shipment has occurred;
·
Price is fixed or determinable; and
·
Collectability is reasonably assured
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
The Company closely follows the provisions of Staff Accounting Bulletin No. 104 as described above. For the fiscal years ended August 31, 2011 and 2010 and the period from May 11, 2010 (inception) through August 31, 2011 the Company has recognized $360 in revenues.
Cost of Goods Sold
Cost of goods sold includes cost of equipment.
Earnings (loss) Per Common Share
The Company adopted FASB ASC 260, Earnings Per Share. Basic earnings (loss) per share is based on the weighted effect of all common shares issued and outstanding and is calculated by dividing net income (loss) available to common stockholders by the weighted average shares outstanding during the period. Diluted earnings per share is calculated by dividing net income available to common stockholders by the weighted average number of common shares used in the basic earnings per share calculation plus the number of common shares, if any, that would be issued assuming conversion of all potentially dilutive securities outstanding. For the years ended August 31, 2011 and 2010, no potentially issuable shares were reflected in a diluted calculation as the inclusion of potentially issuable shares would be anti-dilutive.
Shares potentially issuable were as follows:
Fair value of Financial Instruments
ASU 2010-06. In January 2010, the FASB issued Accounting Standards Update (“ASU”) No. 2010-06, “Fair Value Measurements and Disclosures (Topic 820) - Improving Disclosures about Fair Value Measurements” (“ASU 2010-06”). ASU 2010-06 amends ASC Topic 820, “Fair Value Measurements and Disclosures” (“ASC 820”) to require additional disclosures regarding fair value measurements. Specifically, ASU 2010-06 requires entities to disclose additional information regarding (i) the reconciliation of recurring Level 3 measurements about purchases, sales, issuances and settlements on a gross basis, (ii) the amounts of significant transfers between Level 1 and Level 2 of the fair value hierarchy and the reasons for these transfers and (iii) the reasons for any transfers in or out of Level 3. In addition to these new disclosure requirements, ASU 2010-06 also amends ASC 820 to further clarify existing guidance pertaining to the level of disaggregation at which fair value disclosures should be made and the requirements to disclose information about the valuation techniques and inputs used in estimating Level 2 and Level 3 fair value measurements. The update is effective for interim and annual periods beginning after December 15, 2009, except for the requirement to separately disclose information about purchases, sales, issuances, and settlements in the reconciliation of recurring Level 3 measurements on a gross basis which becomes effective for fiscal years (and interim periods within those fiscal years) beginning after December 15, 2010, and is not expected to have a material impact on the Company’s results of operations or financial condition. The Company adopted the first portion of the updates effective January 1, 2010, with no material impact on the Company’s financial condition, results of operations or cash flows. The Company does not expect the adoption of the remainder of the update to have a material impact on the Company’s financial condition, results of operations or cash flows.
The company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
Reclassifications
Certain prior period balances have been reclassified to conform to the current year’s presentation. These reclassifications had no impact on previously reported results of operations or stockholders’ equity.
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
Business Segments
The Company operates in one segment and therefore segment information is not presented.
Recent Authoritative Accounting Pronouncements
The Company has adopted all recently issued accounting pronouncements. The adoption of the accounting pronouncements, including those not yet effective, is not anticipated to have a material effect on the financial position or results of operations of the Company.
NOTE 3 - STOCKHOLDERS’ EQUITY
Our authorized capital stock consists of 100,000,000 shares of common stock, $0.001 par value per share, and 15,000,000 shares of preferred stock, par value $0.001 per share. As of August 31, 2011 and 2010, there are 6,200,000 shares of common stock issued and outstanding, and 4,430 and 0 shares of preferred stock issued and outstanding, respectively.
Common Stock
The holders of our Common Stock are entitled to one vote for each share held of record on all matters to be voted on by stockholders. There is no cumulative voting with respect to the election of directors, with the result that the holders of more than 50% of the shares voting for the election of directors can elect all of the directors then up for election. The holders of our Common Stock are entitled to receive dividends when, as and if declared by the Board of Directors out of funds legally available therefore. In the event of liquidation, dissolution or winding up of the Company, the holders of Common Stock are entitled to share ratably in all assets remaining which are available for distribution to them after payment of liabilities and after provision has been made for each class of stock, if any, having preference over the Common Stock. Holders of shares of our Common Stock, as such, have no conversion, preemptive or other subscription rights, and there are no redemption provisions applicable to the Common Stock. All of the outstanding shares of Common Stock are fully paid and non-assessable.
On May 11, 2010, the Company issued 3,000,000 shares of common stock to an initial investor for cash of $3,000.
On June 1, 2010, the Company issued 280,000 shares of common stock for services rendered at $0.02 per share, for a total of $5,600.
On August 1, 2010, the Company issued 280,000 shares of common stock for services rendered to a related party at $0.02 per share, for a total of $5,600 (Note 4).
On August 1, 2010, the Company issued 240,000 shares of common stock for services rendered at $0.02 per share, for a total of $4,800.
On August 1, 2010, the Company issued 2,250,000 shares of common stock at $.02 per share, for a total of $45,000.
On August 1, 2010, the Company issued 150,000 shares of common stock to directors for services rendered at $0.02 per share, for a total of $3,000.
Preferred Stock
Our board of directors has the authority, without stockholder approval, to issue up to 15,000,000 shares of preferred stock, $.001 par value. 500,000 shares of our Preferred Stock have been designated as Series A Convertible Preferred Stock. The balance of our 14,500,000 shares of authorized preferred stock may be issued by the Board of Directors in one or more series and with the rights, privileges and limitations of the preferred stock determined by the Board of Directors. The rights, preferences, powers and limitations on different series of preferred stock may differ with respect to dividend rates, amounts payable on liquidation, voting rights, conversion rights, redemption provisions, sinking fund provisions, and other matters.
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
During the year ended August 31, 2011, the Company issued 4,430 shares of Series A Convertible Preferred Stock at $15.00 per share, for a total of $66,450
During the year ended August 31, 2011, The Company charged the $17,500 in expenses it had incurred in connection with a private offering against the proceeds received. These costs had been carried by the Company previously in deferred offering costs.
NOTE 4 - RELATED PARTY
On August 1, 2010, the Company issued 280,000 shares of common stock at $0.02 to its President for services, for a total of $5,600.
A shareholder of the Company has paid expenses on behalf of the Company in exchange for a payable bearing no interest and due on demand. The balance payable to the shareholder at August 31, 2011 and August 31, 2010 were $4,944 and $0, respectively.
NOTE 5 - INCOME TAXES
For income tax purposes, the Company has elected to capitalize start-up costs incurred during the period from May 11, 2010 (inception) through August 31, 2011 totaling $70,625. The start-up costs are being amortized over sixty months beginning in the year of initial operations.
NOTE 6 - CONCENTRATION OF CREDIT RISK
Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. Accounts at each institution are insured by the Federal Deposit Insurance Corporation (FDIC) up to $250,000. At August 31, 2011, the Company had no amounts in excess of FDIC insured limit. While the Company periodically evaluates the credit quality of the financial institutions in which it holds deposits, it cannot reasonably alleviate the risk associated with the sudden possible failures of such institutions.
NOTE 7 - NET LOSS PER SHARE
Basic loss per common share has been calculated based on the weighted average number of shares outstanding during the period after giving retroactive effect to stock splits.
The following reconciles amounts reported in the financial statements:
DIXIE FOODS INTERNATIONAL, INC.
(A DEVELOPMENT STAGE COMPANY)
YEARS ENDED AUGUST 31, 2011 AND 2010
NOTES TO AUDITED FINANCIAL STATEMENTS
NOTE 8 - MANAGEMENT PLAN
For the next 12 months, the Company’s Plan of Operations is as follows:
Our primary focus over the course of the next 12 months will be to concentrate on introducing our initial products into the commercial marketplace including acquiring inventory for sale and establishing channels of distribution for the marketing of our products.
We were recently formed and all activity to date has been related to our formation of our business, formulation of our business plan and initial start-up operations such as formulating and testing recipes, investigating sources of supply for raw materials and services, investigating potential distribution channels for our products and development of our proposed financing. Our ability to proceed with our plan to enter the commercial marketplace with our initial product depends upon our obtaining adequate financial resources through this offering. As of August 31, 2011, we had not incurred any material costs or expenses other than those associated with the formation and financing of our company.
NOTE 9 - GOING CONCERN
As reflected in the accompanying financial statements, the Company had a net loss for the twelve month period ended August 31, 2011 of $39,750, and net loss for the period from May 11, 2010 (inception) through August 31, 2011 of $70,625, At August 31, 2011, the Company has minimal operating revenues. The ability of the Company to continue as a going concern is dependent on the Company’s ability to further implement its business plan and raise capital. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
The Company is currently a development stage company and its continued existence is dependent upon the Company’s ability to resolve its liquidity problems, principally by obtaining additional debt financing and/or equity capital. The Company has yet to generate a significant internal cash flow, and until sales of products commence, the Company is highly dependent upon debt and equity funding, should continuing debt and equity funding requirements not be met the Company’s operations may cease to exist.
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated events and transactions that occurred subsequent to August 31, 2011 through October 15, 2011, the date the financial statements were issued, for potential recognition or disclosure in the accompanying financial statements. Other than the disclosures shown, the Company did not identify any events or transactions that should be recognized or disclosed in the accompanying financial statements.
Item 9.
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
None
Item9A. Controls and Procedures.
Disclosure Controls and Procedures
The Securities and Exchange Commission defines the term “disclosure controls and procedures” to mean a company’s controls and other procedures of an issuer that are designed to ensure that information required to be disclosed in the reports that it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Securities Exchange Act of 1934 is accumulated and communicated to the issuer’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. The Company maintains such a system of controls and procedures in an effort to ensure that all information which it is required to disclose in the reports it files under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified under the SEC’s rules and forms and that information required to be disclosed is accumulated and communicated to principal executive and principal financial officers to allow timely decisions regarding disclosure.
As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer and chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, our chief executive officer and chief financial officer concluded that our disclosure controls and procedures are designed to provide reasonable assurance of achieving the objectives of timely alerting them to material information required to be included in our periodic SEC reports and of ensuring that such information is recorded, processed, summarized and reported with the time periods specified. Our chief executive officer and chief financial officer also concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report to provide reasonable assurance of the achievement of these objectives.
Internal Control Over Financial Reporting
The management of the Company is responsible for the preparation of the financial statements and related financial information appearing in this Annual Report on Form 10-K. The financial statements and notes have been prepared in conformity with accounting principles generally accepted in the United States of America. The management of the Company also is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. A company’s internal control over financial reporting is defined as a process designed 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. Our internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the issuer are being made only in accordance with authorizations of management and directors of the Company; and (3) 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.
Management, including the chief executive officer and chief financial officer, does not expect that the Company’s disclosure controls and internal controls will prevent all error. Because of its inherent limitations, a system of internal control over financial reporting can provide only reasonable, not absolute, assurance that the objectives of the control system are met and may not prevent or detect misstatements. Further, over time control may become inadequate because of changes in conditions or the degree of compliance with the policies or procedures may deteriorate.
With the participation of the chief executive officer and chief financial officer, our management evaluated the effectiveness of the Company’s internal control over financial reporting as of December 31, 2010 based upon the framework in Internal Control -Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). Based on that evaluation, our management has concluded that, as of August 31, 2011 the Company’s internal control over financial reporting was effective.
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This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.
There was no change in the Company’s internal control over financial reporting during the Company’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.
Important Considerations
The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.
Item 9B.
Item 9B. Other Information
None
PART III
Item 10.
Item 10. Directors and Executive Officers and Corporate Governance
Our directors and executive officers are:
Robert E. Jordan, 57, has been our President, Chief Executive Officer and a director since May 2010. Mr. Jordan was President of Southern Sauce Company, Inc., a specialty food company, from December 2004 to February 2008. Mr. Jordan retired from practicing law in 1998 and was not employed between February 2008 and May 2010.
Anthony Q. Joffe, 69, has been our Vice President since September 2010. From March 2005 until August 2006 he was President and CEO of Networth Technologies,Inc., a global management consulting, technology services and acquisition company. Mr. Joffe currently has been a director for Creative Solutions International Group, Inc., a business consulting company, since September 2009, a director of Creative Brands International of Delaware, Inc., a business consulting company, since September 2009 and a director of Internet Holding Group, Inc., a boat financing company, since May 2005. He served as president of USA Boating Sales, Inc., a boat sales company, from December 2001 to May 2007. He has been president of Internet Holding Group, Inc., a boat financing company, since May 2006. He served as a business and finance consultant to EM8 Financial, a boat and recreational vehicle finance company, from October 2006 to December 2008. He served as specialty operations manager of Credit Law Group, a credit and loan modification company, from December 2008 to May 2009. He served as a business consultant to Select Debt and Select Health, a debt settlement and health insurance company, from November 2009 to January 2010.
Robert M. Snibbe, Jr., 66, has been a director since August 2010. He has been a Clearwater, Florida based financial consultant and real estate and business broker specializing in corporate development and renewals and commercial and investment real estate since 1978. He is a Florida licensed real estate broker.
Robert P. Bova, 52, has been a director since September 2010. Since 2005 he has been CEO and a director of Vangard Voice Systems, Inc., a mobile voice recognition software provider.
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Steven Silberman, 57, has been a director since September 2010. He has been a real estate appraiser since 1999. He was an associate appraiser for Applied Economics Group, Gainesville, Florida in 2005. He established his own appraisal firm in 2005 which was incorporated in September 2006 as North Florida Investor Services, Inc. which does business as SRS Appraisal Services, Inc. He is an associate member of the Appraisal Institute, a Florida State Certified General Appraiser and a realtor member of the Gainesville/Alachua County Board of Realtors.
Our directors are elected yearly and hold office until the next annual meeting of shareholders and the election and qualification of their successors.
Our officers are elected annually by the board of directors and may be replaced or removed by the board at any time. Our directors are elected by our shareholders annually and serve until the election and qualification of their successors or their earlier resignation or removal.
Board of Director Committees
Our board of directors also serves as our audit committee. We do not have any executive, compensation or any other committee of our board of directors.
Code of Ethics
We have adopted a code of ethics that applies to all of our employees, officers and directors, including those officers responsible for financial reporting. We will provide a copy to any person without charge upon written request to Robert Jordan, President, Dixie Foods International, Inc.115 NE 6th Blvd, Williston, FL 32696.
Item 11.
Item 11. Executive Compensation
At present, all of our operations are conducted by our executive officers for shares of our common stock. The board of directors and our officers will seek to agree upon employment arrangements providing a compensation package which will fairly compensate them for their future services and be within our available financial resources. We do not anticipate that any officer will receive a written employment agreement or compensation in excess of $50,000 until our business develops the ability to do so.
SUMMARY COMPENSATION TABLE
The table below sets forth information relating to the compensation paid by us during the fiscal year ended August 31, 2011 and 2010 to our president and chief executive officer. No executive officer received compensation in excess of $5,600 for such year.
(1) Represents the value of 280,000 shares of common stock issued to Mr. Jordan.
Director Compensation
We issued 50,000 shares of our common stock, valued at $1,000, to each of our non-executive directors in consideration of their serving as directors. We do not have any other arrangements for compensating our directors.
Other Compensation Arrangements
None of our executive officers have any written employment agreements or any arrangements for employee benefits, severance payments or change of control payments. We have not established any long term compensation plans, stock based compensation plans, incentive compensation plans or other compensation or benefit plans. We anticipate that such plans will be established as our business develops.
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Item 12.
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
The following table sets forth, as of October 1, 2011, the beneficial ownership of our 6,200,000 outstanding shares of Common Stock, by (1) the only persons who own of record or are known to own beneficially, more than 5% of our Common Stock; (2) each director and executive officer; and (3) all directors and officers as a group.
* address for all is c/o Dixie Foods International, Inc., 115 NE 6th Blvd., Williston, FL 32696
Promoters
We were founded in May 2010. Robert E. Jordan and Michael H. Jordan who are brothers, were instrumental in our organization and may be considered promoters of our company. They received no consideration for their services in connection with our organization, but Robert E. Jordan received 280,000 shares of common stock for serving as our president and CEO. Michael H. Jordan purchased 3,000,000 shares of our common stock for $3,000 in April 2010 and contributed a barbecue sauce recipe to us.
Item 13.
Item 13. Certain Relationships and Related Transactions, and Director Independence
Director Independence
The following information concerning director independence is based on the director independence standards of The NASDAQ Stock Market Corporate Governance Rules, although our common stock is not listed on The NASDAQ Stock Market.
The Board has determined that directors Robert M. Snibbe, Jr, Robert P. Bova and Steven Silberman are independent directors within The NASDAQ Stock Market’s director independence standards. Director Robert E. Jordan is not independent. In determining independence, the Board reviews and seeks to determine whether directors have any material relationship with the Company, direct or indirect, which would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The Board reviews business, professional, charitable and familial relationships of the directors in determining independence. The Board has not designated a separate compensation or nominating committee.
Since April 2010, we have been party to the following transactions in which a director, executive officer or holder of five percent or more of our common stock or any member of their immediate family had a direct or indirect material interest.
ISSUANCE OF COMMON STOCK TO OUR OFFICERS, DIRECTORS AND FOUNDER
We have compensated our officers and directors for their services solely by issuance of our common stock which we valued at $.02 per share, as follows:
·
Robert E. Jordan, president, CEO and director, 280,000 shares valued at $5,600.
·
Anthony Q. Joffe, vice president, 240,000 shares valued at $4,800.
·
Robert M. Snibbe, Jr, director, 50,000 shares valued at $1,000.
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·
Robert P. Bova, director, 50,000 shares valued at $1,000.
·
Steven Silberman, director, 50,000 shares valued at $1,000.
We sold 3,000,000 shares of our common stock to Michael H. Jordan, a founder, for $3,000. Mr. Jordan also contributed a barbecue sauce recipe to us for which we have not established any value.
The forgoing transactions with our founders, Robert E. Jordan and Michael H. Jordan, were agreed upon between them as in connection with the formation of the company. The issuances to Messrs. Joffe, Snibbe, Bova and Silberman were entered into by negotiation in connection with their recruitment to serve as directors or officers.
In the year ended August 31, 2011 Michael H. Jordan, a founder, paid expenses of $4,944 on our behalf and is entitled to reimbursement at any time without interest.
Our Board of Directors requires that all related party transactions be reviewed and approved by an independent body of the Board of Directors.
Audit Committee
The Board of Directors has not designated a separate audit committee and the entire board, whose members are named above, conducts the functions of such a committee. None of the directors is an audit committee financial expert.
Item 14.
Item 14. Principal Accountant Fees and Services.
Lake and Associates CPA’s, LLC served as our independent registered public accounting firm for 2011 and 2010. The following table shows the fees that were billed for the audit and other services provided by such firm for 2011 and 2010.
Tax Fees. We did not incur any aggregate tax fees and expenses from Lake and Associates CPA’s, LLC for the fiscal years ended August 31, 2011 and 2010, respectively, for professional services rendered for tax compliance, tax advice, and tax planning.
All Other Fees. We did not incur any other fees from Lake and Associates CPA’s LLC during fiscal years ended 2011 and 2010, respectively.
Pre-approved Policies
The board of directors, acting as the audit committee considered whether, and determined that, the auditor’s provision of non-audit services was compatible with maintaining the auditor’s independence. All of the services described above for the years ended August 31, 2011 and 2010 were approved by the board of directors pursuant to its policies and procedures.
Board of Directors Report
The Board of Directors has reviewed and discussed with the Company’s management and independent auditor the audited consolidated financial statements of the Company contained in the Company’s Annual Report on Form 10-K for the fiscal year ended August 31, 2011. The Board has also discussed with the independent auditor the matters required to be discussed pursuant to SAS No. 61 (Codification of Statements on Auditing Standards, AU Section 380), which includes, among other items, matters related to the conduct of the audit of the Company’s consolidated financial statements.
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The Board has received and reviewed the written disclosures and the letter from the independent auditor required by the applicable requirements of the Public Company Accounting Oversight Board regarding the independent auditor’s communications with the Board concerning independence, and has discussed with its independent auditor its independence from the Company.
The Board has considered whether the provision of services other than audit services is compatible with maintaining auditor independence.
Based on the review and discussions referred to above, the Board approved the inclusion of the audited consolidated financial statements in the Company’s Annual Report on Form 10-K for its fiscal year ended August 31, 2011 for filing with the SEC.
PART IV
Item 15.
Item 15. Exhibits
31.1
Certification pursuant to Rule 13a-14(a) or Rule 15d-14(a)
32.1
Certification pursuant to 18 U.S.C. Section 1350
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.
DIXIE FOODS INTERNATIONAL, INC.
November 3, 2011
By: /s/ Robert E. Jordan
Robert E. Jordan
President (principal executive and accounting officer)
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.
Signature
Title
Date
/s/ Robert E. Jordan
Robert E. Jordan
President (principal executive officer and principal accounting officer) and director
November 3, 2011
/s/ Robert M. Snibbe, Jr.
Robert M. Snibbe, Jr.
Director
November 3, 2011
/s/ Robert P. Bova
Robert P. Bova
Director
November 3, 2011
/s/ Steven Silberman
Steven Silberman
Director
November 3, 2011
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