Report of Independent Registered Public Accounting Firm
To the Board of Directors of
Greenfield Farms Food, Inc.
West Palm Beach, Florida
We have audited the accompanying consolidated balance sheets of Greenfield Farms Food, Inc. (the “Company”) as of December 31, 2013 and 2012 and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the years then ended. 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 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 audits 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 audits 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of Greenfield Farms Food, Inc. as of December 31, 2013 and 2012 and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.
The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 12 to the consolidated financial statements, the Company has incurred losses from operations, has negative working capital, and is in need of additional capital in order to grow its operations. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans with regard to these matters are described in Note 12. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Silberstein Ungar, PLLC
Bingham Farms, Michigan
June 12, 2014
GREENFIELD FARMS FOOD, INC.
|
CONSOLIDATED BALANCE SHEETS
|
|
|
December 31,
2013
|
|
|
December 31,
2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current Assets
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
5,022
|
|
|
|
4,089
|
|
Prepaid expense
|
|
|
3,691
|
|
|
|
704
|
|
Credit card receivables
|
|
|
4,918
|
|
|
|
2,391
|
|
Inventory
|
|
|
8,486
|
|
|
|
8,472
|
|
Deferred charges
|
|
|
4,361
|
|
|
|
-
|
|
Total Current Assets
|
|
|
26,478
|
|
|
|
15,656
|
|
|
|
|
|
|
|
|
|
|
PROPERTY AND EQUIPMENT
|
|
|
|
|
|
|
|
|
Equipment, computer hardware and software
|
|
|
148,390
|
|
|
|
120,179
|
|
Accumulated depreciation
|
|
|
(72,806
|
)
|
|
|
(51,294
|
)
|
Property and equipment, net
|
|
|
75,584
|
|
|
|
68,885
|
|
|
|
|
|
|
|
|
|
|
Other Assets
|
|
|
|
|
|
|
|
|
Security deposits
|
|
|
5,603
|
|
|
|
2,200
|
|
|
|
|
|
|
|
|
|
|
Total Assets
|
|
$
|
107,665
|
|
|
$
|
86,741
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
Current Liabilities
|
|
|
|
|
|
|
|
|
Checks written in excess of bank balance
|
|
$
|
13,555
|
|
|
$
|
-
|
|
Accounts payable
|
|
|
99,009
|
|
|
|
39,905
|
|
Accrued wages and payroll expenses
|
|
|
23,753
|
|
|
|
25,706
|
|
Accrued interest
|
|
|
9,742
|
|
|
|
-
|
|
Accrued interest – related parties
|
|
|
9,641
|
|
|
|
-
|
|
Accrued interest – convertible notes payable
|
|
|
19,290
|
|
|
|
-
|
|
Current portion of capital lease payable
|
|
|
-
|
|
|
|
5,670
|
|
Derivative liability
|
|
|
251,137
|
|
|
|
-
|
|
Notes payable
|
|
|
50,000
|
|
|
|
-
|
|
Notes payable – related parties
|
|
|
100,687
|
|
|
|
471,578
|
|
Convertible notes payable, net of debt discount
|
|
|
204,871
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Total Liabilities
|
|
|
781,685
|
|
|
|
542,859
|
|
|
|
|
|
|
|
|
|
|
Stockholders’ Deficit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred stock, par value $.001
|
|
|
|
|
|
|
|
|
50,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
96,623 series A convertible shares issued and outstanding (2013)
|
|
|
97
|
|
|
|
-
|
|
44,000 series B convertible shares issued and outstanding (2013)
|
|
|
44
|
|
|
|
-
|
|
Common stock, par value $.001
|
|
|
|
|
|
|
|
|
950,000,000 shares authorized;
|
|
|
|
|
|
|
|
|
145,732,680 and 0 shares issued and outstanding, respectively
|
|
|
145,733
|
|
|
|
-
|
|
Warrants
|
|
|
507,280
|
|
|
|
-
|
|
Additional paid-in capital
|
|
|
-
|
|
|
|
-
|
|
Accumulated deficit
|
|
|
(1,327,174
|
)
|
|
|
(456,118
|
)
|
|
|
|
|
|
|
|
|
|
Total Stockholders' Deficit
|
|
|
(674,020
|
)
|
|
|
(456,118
|
)
|
|
|
|
|
|
|
|
|
|
Total Liabilities and Stockholders’ Deficit
|
|
$
|
107,665
|
|
|
$
|
86,741
|
|
The accompanying notes are an integral part of these financial statements.
GREENFIELD FARMS FOOD, INC.
|
CONSOLIDATED STATEMENTS OF OPERATIONS
|
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Sales
|
|
|
|
|
|
|
Food and beverage
|
|
$
|
1,184,841
|
|
|
$
|
1,322,847
|
|
Vending receipts
|
|
|
4,638
|
|
|
|
16,813
|
|
Total sales
|
|
|
1,189,479
|
|
|
|
1,339,660
|
|
|
|
|
|
|
|
|
|
|
Cost of Goods Sold
|
|
|
955,848
|
|
|
|
1,207,109
|
|
|
|
|
|
|
|
|
|
|
Gross Profit
|
|
|
233,631
|
|
|
|
132,551
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
Telephone and utilities
|
|
|
92,408
|
|
|
|
71,299
|
|
Legal, accounting and professional fees
|
|
|
62,768
|
|
|
|
2,806
|
|
Rent
|
|
|
64,895
|
|
|
|
72,096
|
|
Advertising
|
|
|
49,323
|
|
|
|
31,243
|
|
Repairs and maintenance
|
|
|
27,533
|
|
|
|
50,273
|
|
Bank and credit card processing charges
|
|
|
24,481
|
|
|
|
21,286
|
|
Wages and taxes
|
|
|
33,043
|
|
|
|
-
|
|
Stock based compensation
|
|
|
10,000
|
|
|
|
-
|
|
Depreciation
|
|
|
18,093
|
|
|
|
17,725
|
|
Other
|
|
|
72,882
|
|
|
|
48,350
|
|
Total Operating Expenses
|
|
|
455,426
|
|
|
|
315,078
|
|
|
|
|
|
|
|
|
|
|
Loss From Operations
|
|
|
(221,795
|
)
|
|
|
(182,527
|
)
|
|
|
|
|
|
|
|
|
|
Other Expenses (Income)
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(2,801
|
)
|
|
|
492
|
|
Derivative expense
|
|
|
193,079
|
|
|
|
-
|
|
Change in Derivative Liability
|
|
|
(51,179
|
)
|
|
|
-
|
|
Loss on Conversion of Debt
|
|
|
130,642
|
|
|
|
-
|
|
Amortization expense on discount of debt
|
|
|
29,314
|
|
|
|
-
|
|
Total Other Expenses (Income)
|
|
|
299,055
|
|
|
|
492
|
|
|
|
|
|
|
|
|
|
|
Net Loss
|
|
$
|
(520,850
|
)
|
|
$
|
(183,019
|
)
|
|
|
|
|
|
|
|
|
|
Weighted Average Number of Shares Outstanding:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
|
22,773,789
|
|
|
|
53,965,942
|
|
Net Loss per Share:
|
|
|
|
|
|
|
|
|
Basic and Diluted
|
|
$
|
(0.02
|
)
|
|
$
|
(0.00
|
)
|
The accompanying notes are an integral part of these financial statements.
GREENFIELD FARMS FOOD, INC.
|
CONSOLIDATED STATEMENT OF STOCKHOLDERS' DEFICIT
|
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2013
|
|
|
Preferred stock
|
|
Common stock
|
|
|
|
Additional paid-in
|
|
Accumulated
|
|
Total stockholders'
|
|
|
|
Shares
|
|
Par value
|
|
Shares
|
|
Par value
|
|
Warrants
|
|
capital
|
|
deficit
|
|
deficit
|
|
Inception
|
|
|
-
|
|
$
|
-
|
|
|
0
|
|
$
|
-
|
|
$
|
|
|
$
|
0
|
|
$
|
-
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at January 1, 2012
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
|
|
|
|
|
(268,094
|
)
|
|
(268,094
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(5,005
|
)
|
|
(5,005
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss for year ended December 31, 2012
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(183,019
|
)
|
|
(183,019
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2012
|
|
|
|
|
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(456,118
|
)
|
|
(456,118
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Distributions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(31,500
|
)
|
|
(31,500
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liability assumed by member of COHP, LLC
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
575,973
|
|
|
575,973
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of conv Pref C shs & warrants to acquire COHP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
membership interests
|
|
|
1,000
|
|
|
1
|
|
|
|
|
|
|
|
|
507,280
|
|
|
1,079,318
|
|
|
|
|
|
1,586,599
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Conversion of Pref C shs to common stock to accomplish
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
change in control
|
|
|
(1,000
|
)
|
|
(1
|
)
|
|
53,965,942
|
|
|
53,966
|
|
|
|
|
|
|
|
|
|
|
|
53,965
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Recapitalization/Merger
|
|
|
140,623
|
|
|
141
|
|
|
9,498,413
|
|
|
9,498
|
|
|
|
|
|
(1,184,663
|
)
|
|
(894,679
|
)
|
|
(2,069,703
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 2013 common stock issued for services
|
|
|
-
|
|
|
-
|
|
|
500,000
|
|
|
500
|
|
|
|
|
|
9,500
|
|
|
-
|
|
|
10,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October through December 2013, issuance of common
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
stock to convertible noteholders
|
|
|
-
|
|
|
-
|
|
|
81,768,325
|
|
|
81,768
|
|
|
|
|
|
95,845
|
|
|
-
|
|
|
177,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(520,850
|
)
|
|
(520,850
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at December 31, 2013
|
|
|
140,623
|
|
$
|
141
|
|
|
145,732,680
|
|
$
|
145,733
|
|
$
|
507,280
|
|
$
|
-
|
|
$
|
(1,327,174
|
)
|
$
|
(674,020
|
)
|
The accompanying notes are an integral part of these financial statements.
GREENFIELD FARMS FOOD, INC.
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
|
Year ended
|
|
|
Year ended
|
|
|
|
December 31,
|
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Cash Flows from Operating Activities
|
|
|
|
|
|
|
Net loss for the period
|
|
$
|
(520,850
|
)
|
|
$
|
(183,019
|
)
|
Adjustments to Reconcile Net Loss to Net Cash Used in Operating Activities:
|
|
|
|
|
|
|
|
|
Depreciation
|
|
|
18,093
|
|
|
|
17,725
|
|
Amortization of deferred financing costs
|
|
|
3,261
|
|
|
|
-
|
|
Amortization of discount on debt
|
|
|
29,314
|
|
|
|
-
|
|
Change in Derivative Liability
|
|
|
(51,179
|
)
|
|
|
-
|
|
Initial derivative liability expense
|
|
|
193,079
|
|
|
|
-
|
|
Loss on Conversion of Debt
|
|
|
130,642
|
|
|
|
-
|
|
Convertible note issued for services
|
|
|
45,000
|
|
|
|
-
|
|
Stock baesd compensation
|
|
|
10,000
|
|
|
|
-
|
|
Changes in Assets and Liabilities
|
|
|
|
|
|
|
|
|
Decrease in prepaid expense
|
|
|
1,163
|
|
|
|
158
|
|
(Increase) in inventory
|
|
|
(14
|
)
|
|
|
(1,897
|
)
|
(Increase) in credit card receivable
|
|
|
(2,527
|
)
|
|
|
(2,391
|
)
|
Decease in security deposits
|
|
|
2,200
|
|
|
|
-
|
|
Increase in checks written in excess of cash balance
|
|
|
13,555
|
|
|
|
-
|
|
Increase in accounts payable
|
|
|
14,761
|
|
|
|
392
|
|
(Decrease) increase in accrued wages and payroll expenses
|
|
|
(1,953
|
)
|
|
|
20,201
|
|
Increase in accrued interest
|
|
|
1,008
|
|
|
|
-
|
|
Increase in accrued interest – related parties
|
|
|
630
|
|
|
|
-
|
|
Increase in accrued interest – convertible notes payable
|
|
|
(3,728
|
)
|
|
|
-
|
|
Net Cash used in Operating Activities
|
|
|
(117,545
|
)
|
|
|
(148,831
|
)
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities:
|
|
|
|
|
|
|
|
|
Purchase of property and equipment
|
|
|
(22,986
|
)
|
|
|
-
|
|
Payment of security deposit
|
|
|
(5,300
|
)
|
|
|
-
|
|
Cash received in merger
|
|
|
52
|
|
|
|
-
|
|
Net Cash Provided by (Used in) Investing Activities
|
|
|
(28,234
|
)
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities:
|
|
|
|
|
|
|
|
|
Proceeds from notes payable - related parties, net
|
|
|
173,882
|
|
|
|
164,172
|
|
Payments on capital leases
|
|
|
(5,670
|
)
|
|
|
(7,439
|
)
|
Payment of distributions to members
|
|
|
(31,500
|
)
|
|
|
(5,005
|
)
|
Proceeds from convertible notes payable
|
|
|
10,000
|
|
|
|
-
|
|
Net Cash Provided by Financing Activities
|
|
|
146,712
|
|
|
|
151,728
|
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash and Cash Equivalents
|
|
|
933
|
|
|
|
2,897
|
|
Cash and Cash Equivalents – Beginning
|
|
|
4,089
|
|
|
|
1,192
|
|
Cash at End of Period
|
|
$
|
5,022
|
|
|
$
|
4,089
|
|
|
|
|
|
|
|
|
|
|
Supplemental Cash Flow Information:
|
|
|
|
|
|
|
|
|
Cash paid for interest
|
|
$
|
337
|
|
|
$
|
-
|
|
Cash paid for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Non-Cash Investing and Financing Activities:
|
|
|
|
|
|
|
|
|
Accrued interest
|
|
$
|
(6,800
|
)
|
|
$
|
-
|
|
Convertible notes
|
|
$
|
(143,500
|
)
|
|
$
|
-
|
|
Common stock issued for covertible notes and accrued interest
|
|
$
|
46,970
|
|
|
$
|
-
|
|
Accounts payable cancelled in exchange for convertible note
|
|
$
|
9,300
|
|
|
$
|
-
|
|
Convertible notes
|
|
$
|
18,000
|
|
|
$
|
-
|
|
The accompanying notes are an integral part of these financial statements.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 1 – NATURE OF BUSINESS
Greenfield Farms Food, Inc. (“GRAS” or the "Company") was incorporated under the laws of the State of Nevada on June 2, 2008. In October 2013, the Company
entered into an
Asset Purchase Agreement (the “Agreement”) with COHP, LLC (”COHP”) through which the Company acquired certain of the assets and liabilities of COHP including the operations of Carmela’s Pizzeria (“Carmela’s”) through a newly formed wholly-owned subsidiary Carmela’s Pizzeria CO, Inc. Carmela's Pizzeria presently has four Dayton, Ohio area locations offering authentic New York style pizza. Carmela's offers a full service menu for Dine In, Carry out and Delivery as well as pizza buffets in select stores.
The Carmela’s Pizzeria assets and liabilities were acquired in exchange for 1,000 shares of the Company’s Series C Convertible Preferred Stock (“Series C”) that converted on October 31, 2013 into 53,965,942 shares of the Company’s common stock upon the effective date of a 1 for 100 reverse split. In addition, COHP and its assigns received warrants to purchase a total of 53,965,942 shares of the Company’s common stock for a period of five years in the amounts and exercise prices as follows: 17,988,648 at $0.015; 17,988,647 at $0.02; and 17,988,647 at $0.025.
NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements for the year ending December 31, 2013 include the accounts of Carmela’s for the full year and the Company from October 1, 2013 through December 31, 2013. For the year ended December 31, 2012 the consolidated financial statements includes only Carmela’s. All of the intercompany accounts have been eliminated in consolidation. Certain reclassifications to amounts reported in the December 31, 2012 consolidated financial statements have been made to conform to the December 31, 2013 presentation.
The balance sheet as of December 31, 2012 is derived from Carmela’s audited financial statements.
For SEC reporting purposes, Carmela’s is treated as the continuing reporting entity that acquired GRAS. The reports filed after the transaction have been prepared as if Carmela’s (accounting acquirer) were the legal successor to the Company’s reporting obligation as of the date of the acquisition. Therefore, all financial statements filed subsequent to the transaction reflect the historical financial condition, results of operations and cash flows of Carmela’s for all periods prior to the share exchange; and consolidated with the Company from the date of the share Exchange. All share and per share amounts of Carmela’s have been retroactively adjusted to reflect the legal capital structure of the Company pursuant to FASB ASC 805-40-45-1.
COHP, LLC was formed on May 1, 2011, under the laws of the State of Ohio.
The financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America and are presented in US dollars.
Accounting Basis
The Company uses the accrual basis of accounting and accounting principles generally accepted in the United States of America (“GAAP” accounting). The Company has adopted a December 31 fiscal year end.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
Fair Value of Financial Instruments
The estimated fair value of financial instruments has been determined by the Company using available market information and appropriate methodologies; however, considerable judgment is required in interpreting information necessary to develop these estimates. Accordingly, the Company’s estimates of fair values are not necessarily indicative of the amounts that the Company could realize in a current market exchange.
The fair values of cash and cash equivalents, current non-related party accounts receivable, and accounts payable approximate their carrying amounts because of the short maturities of these instruments.
The fair values of notes and advances receivable from non-related parties approximate their net carrying values because of the allowances recorded as well as the short maturities of these instruments.
The fair values of notes and loans payable to non-related parties approximate their carrying values because of the short maturities of these instruments. The fair value of long-term debt to non-related parties approximates carrying values, net of discounts applied, based on market rates currently available to the Company.
Fair value measurements are determined under a three-level hierarchy for fair value measurements that prioritizes the inputs to valuation techniques used to measure fair value, distinguishing between market participant assumptions developed based on market data obtained from sources independent of the reporting entity (“observable inputs”) and the reporting entity’s own assumptions about market participant assumptions developed based on the best information available in the circumstances (“unobservable inputs”).
Fair value is the price that would be received to sell an asset or would be paid to transfer a liability (i.e., the “exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company primarily uses prices and other relevant information generated by market transactions involving identical or comparable assets (“market approach”). The Company also considers the impact of a significant decrease in volume and level of activity for an asset or liability when compared with normal activity to identify transactions that are not orderly.
The highest priority is given to unadjusted quoted prices in active markets for identical assets (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). Securities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
The three hierarchy levels are defined as follows:
Level 1 – Quoted prices in active markets that is unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;
Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly;
Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.
The Company has determined that its derivative liabilities comprised of convertible notes payable fall under Level 2.
Credit risk adjustments are applied to reflect the Company’s own credit risk when valuing all liabilities measured at fair value. The methodology is consistent with that applied in developing counterparty credit risk adjustments, but incorporates the Company’s own credit risk as observed in the credit default swap market.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
Use of Estimates and Assumptions
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 of assets and liabilities and disclosure of contingent assets and liabilities at the date of the balance sheet and reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers highly liquid financial instruments purchased with a maturity of three months or less to be cash equivalents.
Property and Equipment
Property and equipment is stated at historical cost less accumulated depreciation. Depreciation is provided using the straight-line method over the three to five year estimated useful lives of the assets.
Revenue Recognition
The Company records revenue when all of the following have occurred: (1) persuasive evidence of an arrangement exists, (2) the product/service is delivered, (3) the sales price to the customer is fixed or determinable, and (4) collectability of the related customer receivable is reasonably assured. There is no stated right of return for products/services.
Reclassifications
Certain accounts and financial statement captions in the prior periods have been reclassified to conform to the current period financial statements.
Income Taxes
The Company utilizes the asset and liability method of accounting for income taxes. Under the asset and liability method deferred tax assets and liabilities are determined based on the differences between financial reporting basis and the tax basis of the assets and liabilities and are measured using enacted tax rates and laws that will be in effect, when the differences are expected to reverse. An allowance against deferred tax assets is recognized, when it is more likely than not, that such tax benefits will not be realized.
Stock-Based Compensation
Stock-based compensation is accounted for at fair value in accordance with ASC 718. To date, the Company has not adopted a stock option plan and has not granted any stock options. As of December 31, 2013, the Company has not issued any stock-based payments to its employees.
Basic Income (Loss) Per Share
Basic income (loss) per share is calculated by dividing the Company’s net loss applicable to common shareholders by the weighted average number of common shares during the period. Diluted earnings per share is calculated by dividing the Company’s net income available to common shareholders by the diluted weighted average number of shares outstanding during the year. The diluted weighted average number of shares outstanding is the basic weighted number of shares adjusted for any potentially dilutive debt or equity. As of December 31, 2012 and 2013 there were warrants outstanding to purchase 53,965,942 shares of common stock.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
Derivative financial instruments
The Company follows ASC 815-40, Derivatives and Hedging, Contracts in Entity’s own Equity. The Company’s convertible debt has conversion provisions based on a discount of the market price of the Company’s common stock.
The Company had derivative liabilities resulting from the issuance of convertible debt, which were measured at fair value on a recurring basis using an option pricing model. Consequently, the Company has adjusted the fair value of the derivative liabilities at December 31, 2013 and recorded a loss related to the change in the value of the derivative liability of $25,166 in the statement of operations that were attributable to the change in unrealized gains or losses relating to the derivative liabilities still held at the reporting date for the year ended December 31, 2013.
Dividends
The Company has not adopted any policy regarding payment of dividends. No dividends have been paid during any of the periods shown.
Advertising Costs
The Company’s policy regarding advertising is to expense advertising when incurred. The Company incurred advertising expense of $49,323 and $31,423 during the years ended December 31, 2013 and 2012, respectively.
Impairment of Long-Lived Assets
The Company continually monitors events and changes in circumstances that could indicate carrying amounts of long-lived assets may not be recoverable. When such events or changes in circumstances are present, the Company assesses the recoverability of long-lived assets by determining whether the carrying value of such assets will be recovered through undiscounted expected future cash flows. If the total of the future cash flows is less than the carrying amount of those assets, the Company recognizes an impairment loss based on the excess of the carrying amount over the fair value of the assets. Assets to be disposed of are reported at the lower of the carrying amount or the fair value less costs to sell.
Recent Accounting Pronouncements
In July 2013, the FASB issued ASU 2013-11, Income Taxes (Topic 740): “
Presentation of Unrecognized Tax Benefit When a Net Operating Loss Carryforward, A Similar Tax Loss, or a Tax Credit Carryforward Exists (A Consensus the FASB Emerging Issues Task Force)
”. ASU 2013-11 provides guidance on financial statement presentation of unrecognized tax benefit when a net operating loss carryforward, a similar tax loss, or a tax credit carryforward exists. The FASB’s objective in issuing this ASU is to eliminate diversity in practice resulting from a lack of guidance on this topic in current US GAAP. This ASU applies to all entities with unrecognized tax benefits that also have tax loss or tax credit carryforwards in the same tax jurisdiction as of the reporting date. This amendment is effective for public entities for fiscal years beginning after December 15, 2013 and interim periods within those years. We do not expect the adoption of this standard to have a material impact on the Company’s consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the “SEC”) did not or are not believed by management to have a material impact on our present or future consolidated financial statements.
NOTE 3 – INVENTORIES
Inventories consist of food and beverages, and are stated at the lower of cost, or market.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 4 – PROPERTY AND EQUIPMENT
Property and equipment is recorded at cost and consisted of the following at December 31:
|
|
2013
|
|
|
2012
|
|
Carmela’s Equipment
|
|
$
|
144,108
|
|
|
$
|
120,179
|
|
GRAS Equipment
|
|
|
4,282
|
|
|
|
-
|
|
Less: Accumulated depreciation
|
|
|
(72,806)
|
|
|
|
(51,294)
|
|
Property and equipment, net
|
|
$
|
75,584
|
|
|
$
|
68,885
|
|
Depreciation expense was $18,093 and $17,725 for the periods ended December 31, 2013 and 2012.
NOTE 5 – NOTE PAYABLE
In October 2013, COHP assumed a promissory note issued by GRAS for $50,000 as part of the recapitalization. The note is secured by the Company’s common stock, bears 8% interest, and was due on January 26, 2012. The note is currently in default. Total interest expense was $1,000 for the year ended December 31, 2013.
NOTE 6 – NOTES PAYABLE – RELATED PARTIES
Entities controlled by the members have loaned monies to COHP for working capital purposes. The loans are non-interest bearing and have no specific terms of repayment. A related party loan from KB Air is secured by all the assets of the Company.
The activity for the years ended December 31, 2013 and 2012 is as follows:
|
|
December 31,
|
|
|
|
2013
|
|
|
2012
|
|
Beginning balance
|
|
$
|
471,578
|
|
|
$
|
307,406
|
|
Advances, net
|
|
|
173,882
|
|
|
|
164,172
|
|
Notes assumed in recapitalization
|
|
|
31,200
|
|
|
|
-
|
|
Assumed by member of COHP
|
|
|
(575,973
|
)
|
|
|
-
|
|
|
|
$
|
100,687
|
|
|
$
|
471,578
|
|
NOTE 7 – CONVERTIBLE NOTES PAYABLE
Effective with the Share Exchange at October 1, 2013, the outstanding convertible debt of GRAS was assumed by Carmela’s, the accounting acquirer, incorporating the following notes and transactions:
On June 15, 2012 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $83,500 with an interest rate of 8% per annum that is due on March 9, 2013. The note is convertible by the holder after 180 days at 35% of the lowest trading price in the sixty trading days before the conversion. During the quarter ended December 31, 2013 Asher Enterprises issued notices of conversion to convert $20,600 on the June 2012 note for 39,603,024 shares at a price of $0.0005 per share. The remaining balance of the note at December 31, 2013 was $6,350. An $87,148 loss on the conversion of the shares was recorded as the note was in default and a derivative liability was no longer recorded at the time of conversions.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
On August 12, 2012 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $20,000 with an interest rate of 8% per annum due on August 3, 2013. The note is convertible by the holder after 180 days at 35% of the lowest trading price in the thirty trading days before the conversion.
On April 15, 2013 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $53,000 with an interest rate of 8% per annum due on October 30, 2013. The note is convertible by the holder after 180 days at 40% of the lowest trading price in the thirty trading days before the conversion.
On April 15, 2013 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $15,500 with an interest rate of 8% per annum due on November 15, 2013. The note is convertible by the holder after 180 days at 40% of the lowest trading price in the thirty trading days before the conversion.
On May 14, 2013 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $32,500 with an interest rate of 8% per annum due on February 13, 2014. The note is convertible by the holder after 180 days at 45% of the lowest trading price in the thirty trading days before the conversion.
On June 24, 2013 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $7,500 with an interest rate of 8% per annum due on March 19, 2014. The note is convertible by the holder 180 days at 45% of the lowest trading price in the thirty trading days before the conversion.
On September 19, 2013 the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $32,500 with an interest rate of 8% per annum due on June 12, 2014. The note is convertible by the holder after 180 days at 45% of the lowest trading price in the thirty trading days before the conversion. This note was not yet convertible as of December 31, 2013.
On August 21, 2012, the Company issued a convertible promissory note in the amount of $1,500. The note is unsecured, due on demand and bears interest at 8% per annum. The note is convertible into shares of common stock at the market price. During the nine month period ended September 30, 2013 an additional $20,900 was loaned and $5,664 was repaid on these notes. In addition, $4,000 of these notes were converted to 4,000 shares of our Series B preferred stock
As of October 1, 2013 there was a total of $12,736 due to an unaffiliated Trust in convertible notes payable that were convertible at market price of the Company’s common stock at the date of conversion. During the quarter ended December 31, 2013, the conversion terms were amended on these notes making them convertible at 45% of the lowest trading price in the thirty trading days before the conversion creating a derivative liability. During that same period, 6,604 in principal on these notes were converted to 13,340,909 shares of common stock at a price of $0.0005. The remaining balance of the note after the conversions was $6,133. A $14,013 decrease in the derivative liability on these notes was recorded for the converted shares.
At October 1, 2013, an $18,000 unsecured demand promissory note with an interest rate of 8% convertible to common stock at market was outstanding. In October 2013, the conversion terms of this note was changed making it convertible at 45% of the lowest trading price in the thirty trading days before the conversion, creating a derivative liability. The entire principal balance of this note was outstanding at December 31, 2013.
At October 1, 2013, the Company had an outstanding convertible promissory note to CareBourn Capital in the principal amount of $6,000 with an interest rate of 8% per annum due on December 19, 2013. The note is convertible by the holder at any time at 35% of the average of the three lowest trading prices in the ten trading days before the conversion. During the quarter ended December 31, 2013, CareBourn Capital converted $3,990 on this note for 7,976,868 shares at a price of $0.0005 per share. The remaining balance of the note after the conversions was $2,010. A $45,495 loss on the conversion of the shares was recorded as the note was in default and a derivative liability was no longer recorded at the time of conversions.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
At October 1, 2013, the Company had an outstanding a convertible promissory note to CareBourn Capital in the principal amount of $15,000 with an interest rate of 8% per annum due on November 3, 2013. This note is convertible by the holder at any time at 50% of the average of the three lowest trading prices in the ten trading days before the conversion. During the quarter ended December 31, 2013, CareBourn Capital converted the $15,000 balance on this note along with $777 in accrued interest for 20,847,524 shares at a price of $0.0008 per share. A $16,500 decrease in the derivative liability on these notes was recorded upon the conversion of shares.
On October 1, 2013, the Company issued a convertible promissory note to Cresthill Associates in the principal amount of $9,300 with an interest rate of 8% per annum due on June 1, 2014 upon the conversion of $9,300 in accounts payable to Cresthill. This note is convertible by the holder at any time at 45% of the lowest trading price in the ninety trading days before the conversion beginning six months from the issuance date.
On October 29, 2013, the Company issued a convertible promissory note to Cresthill Associates in the principal amount of $25,000 with an interest rate of 8% per annum due on October 29, 2014 in payment of a $25,000 fee for work performed to complete the acquisition of the assets of Carmela’s Pizzeria. This note is convertible by the holder at any time at 45% of the lowest trading price in the ninety trading days before the conversion beginning six months from the issue date.
On November 10, 2013, the Company issued a convertible promissory note to Asher Enterprises in the principal amount of $22,500 with an interest rate of 8% per annum due on August 27, 2014. The note is convertible by the holder after 180 days at 45% of the lowest trading price in the thirty trading days before the conversion.
On December 9, 2013, the Company issued a convertible promissory note to CareBourn Capital in the principal amount of $5,000 with an interest rate of 8% per annum due on June 9, 2014. This note is convertible by the holder at any time at 50% of the average of the three lowest trading prices in the ten trading days before the conversion.
In December 2013, the Company issued two convertible promissory notes to Gulfstream 1998 Trust in the aggregate principal amount of $5,000 with an interest rate of 8% per annum due on demand. These notes are convertible by the holder at any time at 45% of the lowest trading price in the ninety trading days before the conversion.
Total interest expense on these notes was $5,316 for the year ended December 31, 2013.
A summary of debentures payable as of December 31, 2013 is as follows:
Face Value
|
|
Balances
10/1/13
|
|
|
Issuance of new convertible notes
|
|
|
Amortization of discount on convertible
Notes
|
|
|
Debenture conversions three months ended 12/31/13
|
|
|
Balances
12/31/13
|
|
Assumed notes
|
|
$
|
239,687
|
|
|
|
-
|
|
|
|
-
|
|
|
$
|
(46,193
|
)
|
|
$
|
193,494
|
|
2013 Notes
|
|
|
-
|
|
|
|
66,800
|
|
|
|
-
|
|
|
|
-
|
|
|
|
66,800
|
|
Note discount
|
|
$
|
(4,000
|
)
|
|
|
(80,737
|
)
|
|
$
|
29,314
|
|
|
|
-
|
|
|
|
(55,423
|
)
|
Total
|
|
$
|
235,687
|
|
|
$
|
(13,937
|
)
|
|
$
|
29,314
|
|
|
$
|
(46,193
|
)
|
|
$
|
204,871
|
|
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 8 – DERIVATIVE LIABILITY
The Company has determined that the conversion features of certain of its convertible notes represent an embedded derivative since the notes are convertible into a variable number of shares upon conversion. Accordingly, they are not considered to be conventional debt under EITF 00-19 and the embedded conversion feature must be bifurcated from the debt host and accounted for as a derivative liability. The fair value of this derivative instrument has been recorded as a liability on the balance sheet with the corresponding amount recorded as a discount to the notes. Such discount will be accreted from the commencing date of conversion period to the maturity date of the notes. The change in the fair value of the derivative liability will be recorded in other income or expenses in the statement of operations at the end of each period, with the offset to the derivative liability on the balance sheet.
The beneficial conversion feature included in notes resulted in initial debt discounts of $193,500 and an initial loss on the valuation of the derivative liabilities of $168,950 based on the initial fair value of the derivative liabilities of $362,450. The fair value of the embedded derivative liabilities were calculated at the conversion commencement dates utilizing the following assumptions:
Note convertible date
|
|
10/27/13
|
|
|
10/28/13
|
|
|
11/10/13
|
|
|
12/9/13
|
|
|
12/21/13
|
|
|
12/23/13
|
|
|
12/27/13
|
|
Note amount
|
|
$
|
12,737
|
|
|
$
|
18,000
|
|
|
$
|
32,500
|
|
|
$
|
5,000
|
|
|
$
|
7,500
|
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Stock price at convertible date
|
|
$
|
.0005
|
|
|
$
|
.0045
|
|
|
$
|
.0023
|
|
|
$
|
.0006
|
|
|
$
|
.00045
|
|
|
$
|
.0005
|
|
|
$
|
.00048
|
|
Expected life (years)
|
|
|
.5
|
|
|
|
.44
|
|
|
|
0.23
|
|
|
|
.5
|
|
|
|
.24
|
|
|
|
.75
|
|
|
|
.75
|
|
Risk free interest rate
|
|
|
.10
|
%
|
|
|
.10
|
%
|
|
|
.08
|
%
|
|
|
.10
|
%
|
|
|
.07
|
%
|
|
|
.10
|
%
|
|
|
.10
|
%
|
Volatility
|
|
|
295.0
|
%
|
|
|
276.59
|
%
|
|
|
285.8
|
%
|
|
|
259.7
|
%
|
|
|
410.1
|
%
|
|
|
319.1
|
%
|
|
|
319.1
|
%
|
Initial derivative value
|
|
$
|
27,027
|
|
|
$
|
107,083
|
|
|
$
|
50,016
|
|
|
$
|
9,204
|
|
|
$
|
50,040
|
|
|
$
|
17,783
|
|
|
$
|
12,663
|
|
At December 31, 2013, the following notes remained convertible and not fully converted or in default. All convertible notes in default were no longer valued for the derivative liability and a loss on the conversion of stock will be recorded at the time of any future conversion.
The fair value of the embedded derivative liabilities on the remaining convertible notes was calculated at December 31, 2013 utilizing the following assumptions:
Note convertible date
|
|
10/27/13
|
|
|
10/28/13
|
|
|
11/10/13
|
|
|
12/9/13
|
|
|
12/21/13
|
|
|
12/23/13
|
|
|
12/27/13
|
|
Note amount
|
|
$
|
6,133
|
|
|
$
|
18,000
|
|
|
$
|
32,500
|
|
|
$
|
5,000
|
|
|
$
|
7,500
|
|
|
$
|
2,500
|
|
|
$
|
2,500
|
|
Stock price at convertible date
|
|
$
|
.00048
|
|
|
$
|
.0048
|
|
|
$
|
.0023
|
|
|
$
|
.00065
|
|
|
$
|
.00045
|
|
|
$
|
.00053
|
|
|
$
|
.00048
|
|
Expected life (years)
|
|
|
.32
|
|
|
|
.26
|
|
|
|
0.09
|
|
|
|
.44
|
|
|
|
.24
|
|
|
|
.73
|
|
|
|
.73
|
|
Risk free interest rate
|
|
|
.09
|
%
|
|
|
.09
|
%
|
|
|
.07
|
%
|
|
|
.09
|
%
|
|
|
.07
|
%
|
|
|
.09
|
%
|
|
|
.09
|
%
|
Volatility
|
|
|
351.6
|
%
|
|
|
397.8
|
%
|
|
|
463.4
|
%
|
|
|
329.7
|
%
|
|
|
426.8
|
%
|
|
|
361.6
|
%
|
|
|
361.6
|
%
|
12/31/13 derivative value
|
|
$
|
20,962
|
|
|
$
|
61,473
|
|
|
$
|
111,209
|
|
|
$
|
12,416
|
|
|
$
|
27,314
|
|
|
$
|
8,438
|
|
|
$
|
9,325
|
|
NOTE 9 – CAPITAL STOCK
Common Stock
The Company has authorized 950,000,000 common shares with a par value of $0.001 per share.
On October 31, 2013, the Company effected a 1 for 100 reverse split of its common stock whereby the 949,839,719 pre-split shares of common stock outstanding became 9,498,413 shares post-split. There was no change in authorized shares of the Company.
All share information presented in these financial statements and accompanying footnotes has been presented showing the historical changes in stockholders’ deficit of Carmela’s, the accounting acquirer in the Share Exchange, and including that of the Company with the Share Exchange as of October 31, 2013.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
2013 Common Stock Issuances
In October 2013, we issued 53,965,942 shares of common stock to the members of COHP, LLC upon the conversion of 1,000 shares of our Series C preferred stock. These shares were valued at $1,079,319 or $0.02 per share, the market value of the shares on the date of issuance.
In October 2013, we issued 500,000 shares of common stock to a consultant for services valued at $10,000, or $0.02 per share, the market value of the shares on the date of issuance.
During the year ended December 31, 2013, the Company issued 81,768,325 shares of common stock upon conversion of $65,771 in convertible notes and interest payable representing a value of $0.0008 per share.
Preferred Stock
The Company has authorized 50,000,000 shares of preferred stock par value $0.001.
The Company authorized 100,000 Series A preferred shares and issued 96,623 Series A shares. The Series A shares have immediate voting rights equivalent to 7,000 shares of common stock for each Series A share and may be converted after a minimum one-year hold at the same rate. This gives effective control of the Company to the holders of the Series A preferred shares. The terms called for no conversion or Series A shares coming into the market from these sources until March 28, 2012 at the earliest. As of December 31, 2013 no conversion has taken place.
On July 15, 2013, the board of directors of the Company authorized the creation of the Series B Convertible Preferred Stock, which consists of up to 100,000 shares of preferred stock with par value of $0.001 per share and a stated value of $1.00 per share. A total of 44,000 shares of Series B Preferred Stock were issued on the conversion of debt payable by the Company, including $40,000 to the Company's then Chief Financial Officer, Henry Fong. The Series B Convertible Preferred is convertible to common stock at 100% of the stated value divided by 45% of the lowest trading price of the Company's common stock for the 90 trading days immediately preceding the Conversion Date. The Series B Preferred Stock has voting rights on an as if converted basis on the date of any vote to come before the Company's shareholders.
On October 24, 2013 the Company filed a Certificate of Designation for its Series C Convertible Preferred Stock which consisted of 1,000 authorized shares with a par value of $0.001 per share. The 1,000 shares were issued to the members of COHP, LLC in connection with the acquisition of the Carmela’s Pizzeria assets. The Series C shares were convertible, on a pro-rata basis, into that number of fully paid and non-assessable shares of Corporation’s common stock on terms that would equal 67% of the total issued and outstanding shares of the Corporation's common stock on a fully-diluted basis (the “Conversion Shares”) immediately upon approval by the Corporation’s stockholders and effectiveness of an increase in the number of authorized shares of Common Stock sufficient to issue the Conversion Shares, which occurred on October 31, 2013. Accordingly, the Series C preferred was converted into 53,965,942 shares of the Company’s common stock on October 31, 2013.
Warrants
In connection with the acquisition of the assets of Carmela’s Pizzeria, COHP, LLC and its assigns received warrants to purchase a total of 53,965,942 shares of the Company’s common stock for a period of five years in the amounts and exercise prices as follows: 17,988,648 at $0.015; 17,988,647 at $0.02; and 17,988,647 at $0.025. These warrants were valued utilizing the Black-Scholes pricing model for a total fair market value at issuance of $507,280.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
A summary of the activity of the Company’s outstanding warrants at December 31, 2012 and December 31, 2013 is as follows:
|
|
Warrants
|
|
|
Weighted-average exercise price
|
|
|
Weighted-average grant date fair value
|
|
Outstanding and exercisable at December 31, 2012
|
|
|
-
|
|
|
$
|
-
|
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
53,965,942
|
|
|
|
0.0183
|
|
|
|
0.0094
|
|
Expired/Cancelled
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
Exercised
|
|
|
-
|
|
|
|
-
|
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding and exercisable at December 31, 2013
|
|
|
53,965,942
|
|
|
$
|
0.0183
|
|
|
$
|
0.0094
|
|
The following table sets forth the exercise price range, number of shares, weighted average exercise price and remaining contractual lives of the warrants by groups as of December 31, 2013:
Exercise price range
|
|
|
Number of options outstanding
|
|
|
Weighted-average exercise price
|
|
Weighted-average remaining life
|
|
|
|
|
|
|
|
|
|
$
|
0.01
|
|
|
|
17,988,648
|
|
|
|
0.01
|
|
4.8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.02
|
|
|
|
17,988,647
|
|
|
|
0.02
|
|
4.8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
0.025
|
|
|
|
17,988,647
|
|
|
|
0.025
|
|
4.8 years
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,964,942
|
|
|
$
|
0.0183
|
|
4.8 years
|
NOTE 10 – COMMITMENTS
The Company leases its restaurant facilities under certain leases with varied expiration dates. Certain leases provide for the payment of taxes and operating costs, such as insurance and maintenance in addition to the base rental payments.
Aggregate minimum annual rental payments under the non-cancelable operating leases are as follows:
Year ended December 31, 2014
|
|
$
|
64,500
|
|
2015
|
|
|
61,500
|
|
2016
|
|
|
60,800
|
|
2017
|
|
|
35,250
|
|
Total
|
|
$
|
222,050
|
|
Rent expense was $64,895 and $72,096 for the year ended December 31, 2013 and 2012.
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 11 – RELATED PARTY TRANSACTIONS
As more fully disclosed in Note 5 – Notes Payable Related Parties, certain officers, directors and stockholders have loaned the Company funds from time-to-time. Information regarding these loans can be found in Note 6.
NOTE 12 – GOING CONCERN
The financial statements have been prepared on a going concern basis which assumes the Company will be able to realize its assets and discharge its liabilities in the normal course of business for the foreseeable future. The Company has not yet realized significant revenues from operations, recognized a significant loss in 2013 and is in need of working capital in order to grow its operations. This raises substantial doubt about the Company’s ability to continue as a going concern. The ability to continue as a going concern is dependent upon the Company generating profitable operations in the future and/or to obtain the necessary financing to meet its obligations and repay its liabilities arising from normal business operations when they come due. Management intends to finance operating costs over the next twelve months with loans from directors and or private placements of common stock and by obtaining extended payment terms from certain vendors.
NOTE 13 – INCOME TAXES
As of December 31, 2013 and 2012 the Company had net operating loss carry-forwards of approximately $1,030,515 and $700,012, respectively, which will expire beginning in 2031. This represents the historical net operating loss carry-forwards of the Company for 2012; and the Company for the fiscal year ended December 31, 2013 along with and Carmela’s for the period from October 1, 2013 through December 31, 2013, as reverse merger accounting does not affect accounting issues related to taxation. A valuation allowance has been provided for the deferred tax asset as it is uncertain whether the Company will have future taxable income. A reconciliation of the benefit for income taxes with amounts determined by applying the statutory federal income rate of (34%) to the loss before income taxes is as follows:
|
|
2013
|
|
|
2012
|
|
Net Operating Loss
|
|
$
|
(873,025)
|
|
|
$
|
(535,290)
|
|
Benefit for income taxes computed using the statutory rate of 34%
|
|
|
296,828
|
|
|
|
182,000
|
|
Permanent Differences
|
|
|
(184,457)
|
|
|
|
(66,139)
|
|
Change in valuation allowance
|
|
|
(112,371)
|
|
|
|
(115,861)
|
|
Provision for income taxes
|
|
$
|
-
|
|
|
$
|
-
|
|
Significant components of the Company's deferred tax liabilities and assets at December 31, 2013 and 2012 are as follows:
|
|
2013
|
|
|
2012
|
|
Total deferred tax assets
|
|
$
|
350,375
|
|
|
$
|
238,004
|
|
Valuation allowance
|
|
|
(350,375)
|
|
|
|
(238,004)
|
|
|
|
$
|
-
|
|
|
$
|
-
|
|
GREENFIELD FARMS FOOD, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2013
NOTE 14 – SUBSEQUENT EVENTS
During the quarter ended March 31, 2014, a total of 442,228,187 shares of common stock were issued upon the conversion of $183,994 in principal and interest due on certain of the Company’s convertible promissory notes. This represents an average conversion price of $0.0004 per share. In addition, the Company issued new convertible promissory notes totaling $122,600 in face value. These notes are convertible at 45%-50% of the market price of the Company’s common stock, bear interest at 8% per annum, and are due six to nine months from issuance.
In February of 2014 the Company closed its smaller concept location in Centerville, Ohio as its lease expired.
In accordance with ASC 855-10,
the Company has analyzed its operations subsequent to December 31, 2013 to the date these financial statements were issued, and has determined that it does not have any material subsequent events to disclose in these financial statements other than those disclosed above.