ITEM 1. DESCRIPTION OF BUSINESS
Overview
Southern Bella, Inc. was incorporated in Delaware on February 22, 2007. Southern Bella, Inc. was organized to acquire catering companies throughout the United States. The first catering company acquired by Southern Bella, Inc. was Dupree Catering, Inc. (“Dupree”). Dupree is a Kentucky corporation, formed on October 28, 1991. On March 1, 2007, Southern Bella, Inc. acquired all of the shares of stock of Dupree for $110,000 and Dupree became the wholly-owned subsidiary of Southern Bella, Inc. Southern Bella, Inc. sold all of the assets of Dupree on July 1, 2008.
Southern Bella Inc.’s address is 3505 Castlegate Court, Lexington, Kentucky 40502, and its telephone number is 859.268.6264.
Business
Through Dupree, a Kentucky corporation, our wholly-owned subsidiary, we engaged in the catering business until July 1, 2008, when we sold the assets of Dupree to Harriet Dupree Bradley. Southern Bella seeks to acquire other catering businesses throughout the United States and is seeking merger candidates. Southern Bella currently does not have any agreements and is not currently in negotiations with any other catering businesses to acquire such businesses.
Markets We Serve
Dupree primarily provided catering services in Central Kentucky. Dupree’s target market consisted of companies of all sizes and high net worth individuals in the Central Kentucky Market. Southern Bella seeks to acquire other catering businesses throughout the United States to expand its market outside Central Kentucky.
Business Challenges
Because Southern Bella sold the assets of Dupree, it will not be able to operate the catering business until it acquires another existing and operational catering business.
Management of Southern Bella is looking for merger candidates to maximize shareholder value. Management has not identified any targets or merger candidates at this time.
Employees
We currently have no employees. We have two members of management, Viola J. Heitz and Terry Riggleman.
Patents and Trademarks
We do not own, either legally or beneficially any patent or trademarks.
ITEM 1A.
ITEM 1A. RISK FACTORS
Not Applicable.
ITEM 1B.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2.
ITEM 2. PROPERTIES
Southern Bella, Inc. does not own any real estate and does not plan on leasing any space until it has acquired another catering company.
ITEM 3.
ITEM 3. LEGAL PROCEEDINGS
None
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
Common Stock
We are authorized to issue 1,000,000,000 shares of common stock with $0.000001 par value. As of March 15, 2010, there were 8,666,667 shares of common stock issued and outstanding held by 43 shareholders of record.
Market Information
We are not registered on any public stock exchange. There is no established public trading market for our securities and a regular trading market may not develop, or if developed, may not be sustained. We have no plans, proposals, arrangements, or understandings with any person with regard to the development of a trading market in any of our securities. There is no guarantee that our securities will ever trade on the OTC Bulletin Board or other exchange.
Dividends
Holders of common stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of the surplus of Southern Bella, Inc. We have not paid any dividends since our inception, and we presently anticipate that all earnings, if any, will be retained for development of our business. There are no restrictions in our Articles of Incorporation or Bylaws that prevent us from declaring dividends. Any future disposition of dividends will be at the discretion of our Board of Directors and will depend upon, among other things, our future earnings, operating and financial condition, capital requirements, and other factors.
Preferred Stock
The Company is authorized to issue 20,000,000 shares of preferred stock with a par value of $0.000001 per share. As of the date of this Annual Report, there are no preferred shares outstanding.
Preferred stock may be issued in series with preferences and designations as the Board of Directors may from time to time determine. The board may, without shareholders approval, issue preferred stock with voting, dividend, liquidation and conversion rights that could dilute the voting strength of our common shareholders and may assist management in impeding an unfriendly takeover or attempted changes in control.
Securities Authorized for Issuance under Equity Compensation Plans
We do not have any compensation plans or arrangement under which equity securities are authorized for issuance.
Purchases of Equity Securities
No purchases of our own equity securities, either as a part of a publicly announced plan or otherwise, were made during any month in 2009.
ITEM 6.
ITEM 6. SELECTED FINANCIAL DATA
Not applicable
ITEM 7.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
SPECIAL INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some of the statements in this Form 10-K are “forward-looking statements.” These forward-looking statements involve certain known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. The words “believe,” “expect,” “anticipate,” “intend,” “plan,” and similar expressions identify forward-looking statements. We caution you not to place undue reliance on these forward-looking statements. We undertake no obligation to update and revise any forward-looking statements or to publicly announce the result of any revisions to any of the forward-looking statements in this document to reflect any future or developments.
The following discussion should be read in conjunction with our financial statements and the notes thereto which appear elsewhere in this report. The results shown herein are not necessarily indicative of the results to be expected in any future periods. This discussion contains forward-looking statements based on current expectations, which involve uncertainties. Actual results and the timing of events could differ materially from the forward-looking statements as a result of a number of factors.
Overview
In July, 2008, the Company sold the assets of Dupree Catering, Inc., its sole subsidiary, to Harriet Dupree Bradley, and re-entered the development stage. The Company seeks to acquire other catering businesses throughout the United States, but currently does not have any agreements and is not currently in negotiations with any other catering businesses to acquire such businesses.
Management of Southern Bella is looking for merger candidates to maximize shareholder value. Management has not identified any targets or merger candidates at this time.
Plan of Operation
The Company is seeking to acquire operational catering companies or other merger candidates.
Presentation of Predecessor and Successor Financial Statement Information
Southern Bella was formed on February 22, 2007, to acquire Dupree Catering, Inc. Since Southern Bella had no prior operations but succeeded to the business of Dupree, Dupree is considered the “predecessor” entity and Southern Bella as the “successor” entity. As a result of this treatment, the consolidated statements of operations shows the successor information from February 22, 2007, through December 31, 2007. The consolidated statements of operations also shows the successor financial information from January 1, 2009, through December 31, 2009.
Analysis of Financial Condition and Results of Operation
Southern Bella was formed on February 22, 2007. On March 1, 2007, Southern Bella acquired Dupree Catering, Inc. (“Dupree”). Southern Bella has had no operations other than through its wholly-owned subsidiary, Dupree, since the acquisition of Dupree.
On July 1, 2008, the Company entered into a Bill of Sale with Harriet Dupree Bradley for the acquisition of the assets of Dupree. The transaction was for the assets of Dupree having a cost of $13,407 and accumulated depreciation of $5,805, which left a net book value of $7,602. In addition, Southern Bella’s line of credit of $27,000 and its accrued interest of $461 was forgiven, a shareholder loan to Bradley of $10,000 along with accrued interest of $1,239 was forgiven, and other payables of $127 were forgiven, for a total benefit received by Southern Bella of $38,827. Southern Bella had transferred $1,600 of cash to Dupree, which was also forgiven. The result is a net gain on the sale of assets from the Company to Bradley of $29,625. This gain was recorded as an increase in paid in capital, as Ms. Bradley is a related party. The financial statements show Dupree as discontinued operations.
Comparison of 2009 to 2008
Set forth below is an analysis of the financial condition and results of operation of Southern Bella for the year ended December 31, 2009 compared to the year ended December 31, 2008.
Southern Bella’s revenues for year ended December 31, 2009 were unchanged since both years revenues were 0. We hope to have catering revenue in the future.
For year ended December 31, 2009, Southern Bella’s operating expenses were 7.33% higher than expenses for year ended December 31, 2008. This is due to a increase of 9.99% in professional fees from $20,500 in 2008, to $22,548 in 2009. We believe the professional fees will remain at a constant level in the future.
Accordingly, Southern Bella had the following total operating expenses and net operating income (loss) before other income (expense):
There was an $22,614 operating loss for year ended December 31, 2009, and a $21,070 operating loss for year ended December 31, 2008.
There was an impairment of the customer list of Dupree of $50,180 in 2008. These are due to Harriet Dupree Bradley acquiring the assets of Dupree on July 1, 2008.
Liquidity and Capital Resources
We do not have any material commitments for capital during 2010. Due to the uncertainties involved, our auditors have included a going concern paragraph in their opinion on our audited financial statements.
Off-Balance Sheet Arrangements
There are no off-balance sheet arrangements.
ITEM 7A.
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not Applicable.
ITEM 8.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
SOUTHERN BELLA, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Southern Bella, Inc.
(A Development Stage Company)
We have audited the accompanying consolidated balance sheets of Southern Bella, Inc. (A Development Stage Company) as of December 31, 2009 and 2008 and the related consolidated statements of operations, shareholders' equity (deficit) and cash flows for each of the twelve month periods then ended and the period from re-entry to the development stage (July 1, 2008) through December 31, 2009. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with 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 includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Southern Bella, Inc. as of December 31, 2009 and 2008, and the results of its operations and cash flows for the periods described above in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the consolidated financial statement, the Company suffered a net loss from operations and has a net capital deficiency, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ M&K CPAS, PLLC
www.mkacpas.com
Houston, Texas
March 12, 2010
The accompanying notes are an integral part of these consolidated financial statements.
SOUTHERN BELLA, INC.
(A Development Stage Company)
Notes to Consolidated Financial Statements
NOTE 1 - ORGANIZATION AND BASIS OF PRESENTATION
On February 22, 2007, Southern Bella, Inc. (the “Company”) was incorporated in the State of Delaware. On March 1, 2007 the Company executed a Share Purchase Agreement whereby the Company acquired 100% of the outstanding shares of Dupree Catering, Inc., (“Dupree”) a corporation incorporated in the State of Kentucky on October 28, 1991.
Dupree was formed to provide catering services to individuals, corporations and foundations. They provide catering services for corporate events and parties, weddings, fundraising events for foundations and kosher style events including bar and bat mitzvahs.
The transaction is treated as an acquisition under the purchase method of accounting. The new management of the Company will maintain control of the operations of Dupree, and thus the transaction is treated as a purchase under FASB standards.
On July 1, 2008, the Company entered into a Bill of Sale with Harriet Dupree Bradley for the acquisition of these assets. The transaction was for the assets of Dupree with a cost of $13,407 and accumulated depreciation of $5,805, which left a net book value of $7,602. In addition, Southern Bella’s line of credit of $27,000 and its accrued interest of $461 was forgiven, a shareholder loan to Bradley of $10,000 along with accrued interest of $1,239 was forgiven, and other payables of $127 were forgiven, for a total benefit received by Southern Bella of $38,827. Southern Bella had transferred $1,600 of cash to Dupree, which was also forgiven. The result is a net gain on the sale of assets from the Company to Bradley of $29,625.
The Company seeks to acquire other catering businesses throughout the United States, but currently does not have any agreements and is not currently in negotiations with any other catering businesses to acquire such businesses.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The Company follows accounting principles generally accepted in the United States of America. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the periods presented have been reflected herein.
Use of Estimates
The preparation of financial statements, in conformity with accounting principles generally accepted in the United States, requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from these estimates.
Cash and Cash Equivalents
The Company considers all highly liquid debt instruments and other short-term investments with a maturity of three months or less, when purchased, to be cash equivalents. There are no cash equivalents at December 31, 2009 and 2008.
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts, which is based upon a review of outstanding receivables as well as historical collection information. The Company receives approximately 99% of its sales through credit card payments prior to shipment. In determining the amount of the allowance, management is required to make certain estimates and assumptions. Management has determined that as of December 31, 2009 and 2008, no allowance for doubtful accounts is required.
Revenue Recognition
The Company generates revenue from the sales of their products as follows:
1)
Persuasive evidence of an arrangement exists;
2)
Delivery has occurred or services have been rendered;
3)
The seller’s price to the buyer is fixed or determinable, and
4)
Collectability is reasonably assured.
In accordance with the above criteria, the Company generally recognizes the revenue upon completion of the event being catered.
For the twelve months ended December 31, 2009 and 2008, the Company had zero and one major customer that represented approximately 0% and 11% of the Company’s sales, respectively.
For the twelve months ended December 31, 2009 and 2008 the Company had zero and two major vendors that represented approximately 0% and 65% of the Company’s food and beverage purchases, respectively.
Basic and Diluted Net Loss Per Share
The Company follows ASC No. 260l that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common stockholders by the weighted average number of common shares outstanding for the period. The calculation of diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC No. 260, any anti-dilutive effects on net earnings (loss) per share are excluded. For the periods ended December 31, 2009 and 2008, there were no common stock equivalents.
For the year ended December 31, 2009, there were no potentially dilutive securities outstanding.
Fair Value of Financial Instruments
Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of December 31, 2009. The Company’s financial instruments consist of cash. The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.
Income Taxes
The Company recognizes deferred tax assets and liabilities based on differences between the financial reporting and tax bases of assets and liabilities using the enacted tax rates and laws that are expected to be in effect when the differences are expected to be recovered. The Company provides a valuation allowance for deferred tax assets for which it does not consider realization of such assets likely.
Recent Accounting Pronouncements
In June 2009, the Financial Accounting Standards Board (FASB) issued ASC Statement No. 105. The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principles (ASC 105). ASC 105 has become the single source authoritative nongovernmental U.S. generally accepted accounting principles (GAAP), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force, and related accounting literature. ASC 105 reorganized the thousands of GAAP pronouncements into roughly 90 accounting topics and displays them using a consistent structure. Also included is relevant SEC guidance organized using the same topical structure in separate sections. The Company adopted ASC 105 on July 1, 2009. The adoption of ASC 105 did not have an impact on the Company’s financial position or results of operations.
On April 1, 2009, the Company adopted ASC 825-10-65, Financial Instruments - Overall - Transition and Open Effective Date Information (ASC 825-10-65). ASC 825-10-65 amends ASC 825-10 to require disclosures about fair value of financial instruments in interim financial statements as well as in annual financial statements and also amends ASC 270-10 to require those disclosures in all interim financial statements. The adoption of ASC 825-10-65 did not have a material impact on the Company’s results of operations or financial condition.
On April 1, 2009, the Company adopted ASC 855, formerly SFAS 165, Subsequent Events (ASC 855). ASC 855 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date - that is, whether that date represents the date the financial statements were issued or were available to be issued. This disclosure should alert all users of financial statements that an entity has not evaluated subsequent events after that date in the set of financial statements being presented. The adoption of ASC 855 did not have a material impact on the Company’s results of operations or financial condition.
On July 1, 2009, the Company adopted ASU No. 2009-05, Fair Value Measurements and Disclosures (Topic 820) (ASU 2009-05). ASU 2009-05 provided amendments to ASC 820-10, Fair Value Measurements and Disclosures - Overall, for the fair value measurement of liabilities. ASU 2009-05 provides clarification that in circumstances in which a quoted price in an active market for the identical liability is not available, a reporting entity is required to measure fair value using certain techniques. ASU 2009-05 also clarifies that when estimating the fair value of a liability, a reporting entity is not required to include a separate input or adjustment to other inputs relating to the existence of a restriction that prevents the transfer of a liability. ASU 2009-05 also clarifies that both a quoted price in an active market for the identical liability at the measurement date and the quoted price for the identical liability when traded as an asset in an active market when no adjustments to the quoted price of the asset are required are Level 1 fair value measurements. The adoption of ASU 2009-05 did not have a material impact on the Company’s results of operations or financial condition.
In October 2009, the FASB issued ASU 2009-13, Multiple-Deliverable Revenue Arrangements, (amendments to ASC 605, Revenue Recognition) (ASU 2009-13). ASU 2009-13 requires entities to allocate revenue in an arrangement using estimated selling prices of the delivered goods and services based on a selling price hierarchy. The amendments eliminate the residual method of revenue allocation and require revenue to be allocated using the relative selling price method. ASU 2009-13 should be applied on a prospective basis for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010, with early adoption permitted. The Company does not expect adoption of ASU 2009-13 to have a material impact on the Company’s results of operations or financial condition.
NOTE 3 - GOING CONCERN
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As shown in the accompanying financial statements, the Company suffered a loss from continuing operations of $22,614 for the period ending December 31, 2009, and has an accumulated deficit of $224,091 at December 31, 2009. These conditions raise substantial doubt as to the Company's ability to continue as a going concern. The financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern. Management intends to finance these deficits by selling its common stock.
NOTE 4 - LINE OF CREDIT
Southern Bella had a revolving line of credit that is secured by the personal guarantee of certain stockholders. The line of credit had a maximum borrowing amount of $75,000, an interest rate of prime, (5.25% at June 30, 2008) and a balance due of $0 at December 31, 2008. The line of credit was transferred on July 1, 2008 when Southern Bella sold Dupree’s assets to Harriet Bradley Dupree.
NOTE 5 - CUSTOMER LISTS
During March 2008 management reassessed the future cash flow and concluded that the prior expectations do not appear to be obtainable. Due to the sale of Dupree’s assets on July 1, 2008, Southern Bella’s customer lists hold no value. This updated analysis resulted in management’s decision to impair intangible assets totally, as of December 31, 2008, resulting in impairment losses of $50,180 during the twelve months ended December 31, 2008.
NOTE 6 - STOCKHOLDERS’ EQUITY (DEFICIT)
The Company was incorporated with 1,000,000,000 shares of common stock at $0.000001 par value and 20,000,000 shares of preferred stock at $0.000001 par value. On February 22, 2007, the Company issued 8,166,667 shares of common stock for $122,500 to its founder.
The Company has also issued an additional 500,000 shares of common stock at $.10 for $50,000 as part of a private placement from March through April 2007.
The president contributed $1,750 to capital in December of 2009.
The Company has issued no options or warrants since inception.
NOTE 7 - PROVISION FOR INCOME TAXES
Deferred income taxes are determined using the liability method for the temporary differences between the financial reporting basis and income tax basis of the Company’s assets and liabilities. Deferred income taxes are measured based on the tax rates expected to be in effect when the temporary differences are included in the Company’s tax return. Deferred tax assets and liabilities are recognized based on anticipated future tax consequences attributable to differences between financial statement carrying amounts of assets and liabilities and their respective tax bases.
As of December 31, 2009 and 2008, there is no provision for income taxes, current or deferred.
At December 31, 2009, the Company had net operating loss carryforward in the approximate amount of $224,000, available to offset future taxable income through 2029. The Company established valuation allowances equal to the full amount of the deferred tax assets due to the uncertainty of the utilization of the operating losses in future periods.
NOTE 8 - FAIR VALUE ACCOUNTING
Fair Value Measurements
On January 1, 2008, the Company adopted ASC No. 820-10 (ASC 820-10), Fair Value Measurements. ASC 820-10 relates to financial assets and financial liabilities.
ASC 820-10 defines fair value, establishes a framework for measuring fair value in accounting principles generally accepted in the United States of America (GAAP), and expands disclosures about fair value measurements. The provisions of this standard apply to other accounting pronouncements that require or permit fair value measurements and are to be applied prospectively with limited exceptions.
ASC 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. This standard is now the single source in GAAP for the definition of fair value, except for the fair value of leased property as defined in SFAS 13. ASC 820-10 establishes a fair value hierarchy that distinguishes between (1) market participant assumptions developed based on market data obtained from independent sources (observable inputs) and (2) an entity’s own assumptions, about market participant assumptions, that are developed based on the best information available in the circumstances (unobservable inputs). The fair value hierarchy consists of three broad levels, which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1) and the lowest priority to unobservable inputs (Level 3). The three levels of the fair value hierarchy under ASC 820-10 are described below:
•
Level 1
Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.
•
Level 2
Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets or liabilities in active markets; quoted prices for identical or similar assets or liabilities in markets that are not active; inputs other than quoted prices that are observable for the asset or liability (e.g., interest rates); and inputs that are derived principally from or corroborated by observable market data by correlation or other means.
•
Level 3
Inputs that are both significant to the fair value measurement and unobservable. These inputs rely on management's own assumptions about the assumptions that market participants would use in pricing the asset or liability. (The unobservable inputs are developed based on the best information available in the circumstances and may include the Company's own data.)
The following presents the Company's fair value hierarchy for those assets and liabilities measured at fair value on a non-recurring basis as of December 31, 2009 and 2008:
Level 1: None
Level 2: None
Level 3: None
Total Gain (Losses): None
NOTE 9 -DISCONTINUED OPERATIONS
In an effort to secure additional capital, Southern Bella began actively seeking a purchaser for the assets of Dupree, a company owned 100% by Southern Bella. On July 1, 2008, the Company entered into a Bill of Sale with Harriet Dupree Bradley for the acquisition of these assets. The transaction was for the assets of Dupree with a cost of $13,407 and accumulated depreciation of $5,805, which left a net book value of $7,602, In addition, Southern Bella received the line of credit of $27,000 and its accrued interest of $461 was forgiven, a shareholder loan to Bradley of $10,000 along with accrued interest of $1,239 was forgiven, and other payables of $127 were forgiven, for a total benefit received by Southern Bella of $38,827. Southern Bella had transferred $1,600 of cash to Dupree, which was also forgiven. The result is a net gain on the sale of assets from the Company to Bradley of $29,625
The following table shows the income statement impact of discontinued operations.
NOTE 10 - SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date these financial statements were issued. There are no reporting subsequent events requiring disclosure.
ITEM 9.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.
ITEM 9A. CONTROLS AND PROCEDURES
We carried out an evaluation under the supervision and with the participation of our management, including the Chief Executive Officer ("CEO") and Chief Financial Officer ("CFO"), of the effectiveness of our disclosure controls and procedures as of December 31, 2009. Based on that evaluation, the CEO and CFO have concluded that our disclosure controls and procedures are not effective to provide reasonable assurance that: (i) information required to be disclosed by us in reports that we file or submit under the Securities Exchange Act of 1934 is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure by us; and (ii) information required to be disclosed by us in 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 Securities and Exchange Commission rules and forms.
Management's Report on Internal Control Over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was 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. Because of inherent limitations, a system of 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 due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework. Based on its evaluation, our management concluded that there is a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.
The material weakness relates to the lack of sufficient accounting staff and the performance of the principal accounting functions by one officer. Our chief executive officer also serves as our chief financial officer. All of our financial reporting is carried out by one individual, and we do not have an audit committee. Our board of directors consists of one individual, who serves as our chief executive officer and chief financial officer. This lack of accounting staff results in a lack of segregation of duties and accounting technical expertise necessary for an effective system of internal control.
In order to remedy our existing internal control deficiencies, as soon as our finances allow, we will hire a Chief Financial Officer who will be sufficiently versed in public company accounting to implement appropriate procedures for timely and accurate disclosures. We will also establish an audit committee and recruit members to serve on our board of directors.
Management’s report was not subject to attestation by Southern Bella’s registered public accounting firm pursuant to temporary rules of the SEC that permit Southern Bella, Inc. to provide only management’s report in this annual report.
Changes in Internal Control Over Financial Reporting
There were no changes in our internal control over financial reporting during the fourth quarter of fiscal 2009 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
ITEM 9B.
ITEM 9B. OTHER INFORMATION
None.
PART III
ITEM 10.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Directors and Executive Officers
Our directors and executive officers are as follows:
Ms. Viola J. Heitz, age 57, has been our Chief Executive Officer and Director since March 1, 2007. Ms. Heitz earned a Bachelor of Science degree from West Virginia University and an Master of Arts degree from Eastern Kentucky University. She taught high school English in public and private schools for 18 years. In 2000, she left her career in education to focus on traveling, volunteering on the local and international level, and working on a free-lance basis. From November 1, 2002, through December 1, 2004, Ms. Heitz was the president of Mega Machinery Movers, the only minority-owned industrial moving company in Kentucky. Ms. Heitz was also employed by the Multi-Specialty Foundation, an international medical organization, from November, 2004, through June, 2005. She organized its annual educational conference at the Bellagio Hotel in Las Vegas in 2006. Ms. Heitz has served on the Board of Directors for Habitat for Humanity, the Lexington Philharmonic Guild, and the McConnell’s Springs Foundation. She has built houses for Habitat for Humanity in Mexico, Costa Rica, New Zealand, South Africa, Mongolia, and Cambodia. Ms. Heitz devotes 30% of her time to our business and the remaining 70% of her time to family matters and public service.
Mr. Terry Riggleman, age 60, has been our Secretary and Director since March 1, 2007. Since November, 2002, Terry Riggleman has been the customer service manager for the Valley Gas and Oil Company in Moorefield, West Virginia. From 1970 to June, 2001, he was the manager of Arc Welders in Baltimore, Maryland. Mr. Riggleman devotes 2% of his time to our business.
Family Relationships
Terry Riggleman is the brother of Viola J. Heitz.
Legal Proceedings
No officer, director, or persons nominated for such positions, promoter or significant employee has been involved in the last ten years in any of the following:
•
Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;
•
Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);
•
Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring suspending or otherwise limiting his involvement in any type of business, securities or banking activities; and
•
Being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires the Company's directors and executive officers, and persons who beneficially own more than 10% of a registered class of the Company's equity securities, to file reports of beneficial ownership and changes in beneficial ownership of the Company's securities with the SEC on Forms 3 (Initial Statement of Beneficial Ownership), 4 (Statement of Changes of Beneficial Ownership of Securities) and 5 (Annual Statement of Beneficial Ownership of Securities). Based on our records and other information, we believe that in 2009 our directors, executive officers and shareholders owning 10% or more of the common stock of Southern Bella, Inc. met all applicable SEC filing requirements.
Code of Ethics
Southern Bella, Inc. has adopted a Code of Ethics that applies to the Company’s principal executive officer, principal financial officer, principal accounting officer and any other senior executive officers. Viola Heitz, the President of Southern Bella, Inc. has executed the Code of Ethics. A copy of the Code of Ethics is attached as Exhibit 14 to this Annual Report on Form 10-K.
Changes to Nomination Process
There were no material changes to the procedures by which shareholders may recommend nominees to Southern Bella, Inc.’s board of directors.
Audit Committee
Southern Bella, Inc. does not have a separately-designated audit committee. The entire board of directors serves as the audit committee of the company. Southern Bella, Inc. does not have an “audit committee financial expert” as defined in the applicable rules and regulations of the Securities Exchange Act of 1934, as amended.
ITEM 11.
ITEM 11. EXECUTIVE COMPENSATION
Compensation Agreements
Our directors or officers have not received any compensation since Southern Bella, Inc. was formed on February 22, 2007.
We have no formal plan for compensating our directors for their service in their capacity as directors; however, directors are entitled to reimbursement for reasonable travel and other out-of-pocket expenses incurred in connection with attendance at meetings of our board of directors.
There are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. We do not have any bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers.
We have not granted any stock options to any of our officers since inception and none of our officers hold any options to purchase any shares of our common or preferred stock.
Employment Agreements
We do not have employment agreements with either Viola J. Heitz or Terry Riggleman or any other officer or employee except for the Consulting Agreement with Harriet Dupree Bradley which terminated as of December 31, 2008.
Director Compensation
We do not pay directors any fees or other compensation for serving as a director. We have not granted any stock options or stock awards to our directors.
ITEM 12.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information concerning the number of shares of our common stock owned beneficially as of February 25, 2010, by: (i) each person known by us to be the beneficial owner of more than 5% of our outstanding common stock; (ii) each of our directors; (iii) each of our officers; and (iv) our executive officers and directors as a group.
The table above is based upon information derived from our stock records. Unless otherwise indicated in the footnotes to the table and subject to community property laws where applicable, each of the shareholders named in the table has sole or shared voting and investment power with respect to the shares indicated as beneficially owned. Except as set forth above, applicable percentages are based upon 8,166,667 shares of common stock outstanding as of February 25, 2010.
The information presented above regarding beneficial ownership of our voting securities has been presented in accordance with the rules of the Securities and Exchange Commission and is not necessarily indicative of ownership for any other purpose. Under these rules, a person is deemed to be a “beneficial owner” of a security if that person has or shares the power to vote or direct the voting of the security or the power to dispose or direct the disposition of the security. A person is deemed to own beneficially any security as to which such person has the right to acquire sole or shared voting or investment power within 60 days through the conversion or exercise of any convertible security, warrant, option or other right. More than one person may be deemed to be a beneficial owner of the same securities. The percentage of beneficial ownership by any person as of a particular date is calculated by dividing the number of shares beneficially owned by such person, which includes the number of shares as to which such person has the right to acquire voting or investment power within 60 days, by the sum of the number of shares outstanding as of such date plus the number of shares as to which such person has the right to acquire voting or investment power within 60 days. Consequently, the denominator used for calculating such percentage may be different for each beneficial owner. Except as otherwise indicated below and under applicable community property laws, we believe that the beneficial owners of our common stock listed above have sole voting and investment power with respect to the shares shown.
We are unaware of any contract or other arrangement the operation of which may at a subsequent date result in a change in control of the company.
Southern Bella, Inc. does not have a compensation plan under which equity securities are authorized for issuance.
ITEM 13.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Related Transactions
Harriet Dupree Bradley was the sole shareholder of Dupree Catering prior to the acquisition of Dupree Catering by Southern Bella in March, 2007.
Southern Bella, Inc. was leasing office space consisting of approximately 3,000 square feet located at 1006 Delaware Avenue, Lexington, Kentucky 40505 (the “Premises”) from Harriet Dupree Bradley pursuant to a Lease Agreement dated March 1, 2007. The lease was terminated in July, 2008, when the assets of Dupree were sold.
Director Independence
Our directors, Viola Heitz and Terry Riggleman, are not independent under the NASDAQ listing standards because they are executive officers of Southern Bella, Inc.
ITEM 14.
ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Audit
For fiscal year end December 31, 2009: $9,750 (payable to M&K CPAS, PLLC).
For fiscal year end December 31, 2008: $14,500 (payable to M&K CPAS, PLLC).
We did not pay any other fees as specified in Item 9(e) of Schedule 14A.
We do not have audit committee pre-approval policies and procedures.
ITEM 15.
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following exhibits are filed as part of this Form 10-K and this list includes the Exhibit Index.
No.
Description
(2)
Share Purchase Agreement*
(3)
(i) Articles of Incorporation *
(ii) Bylaws *
(10)
(i) Lease Agreement with Harriet Dupree Bradley*
(ii) Consulting Agreement with Harriet Dupree Bradley dated March 1, 2007*
(iii) Consulting Agreement with Harriet Dupree Bradley dated August 29, 2007*
(14)
Code of Ethics
(21)
Subsidiaries of Registrant
(31)
Certification as Adopted Pursuant to Section 302 (a) of the Sarbanes-Oxley Act of2002
(32)
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of Sarbanes-Oxley Act of 2002
* Incorporated herein by reference from Southern Bella Inc.’s Registration Statement on Form SB-2, filed with the Securities and Exchange Commission on November 14, 2007.
SIGNATURES
In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Southern Bella, Inc.
Date: March 23, 2010
By:
/s/ Viola Heitz
Name: Viola Heitz
Title:President, Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director
In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Date: March 23, 2010
By:
/s/ Viola Heitz
Name: Viola Heitz
Title:President, Chief Executive Officer, Principal Financial Officer, Principal Accounting Officer, and Director