As filed with the Securities and Exchange
Commission on September 11, 2012
Registration No. 333-179745
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1/A
Pre-Effective Amendment No. 1
REGISTRATION STATEMENT UNDER THE SECURITIES
ACT OF 1933
STEVIA CORP.
(Exact name of registrant as specified in
its charter)
Nevada
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700
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98-0537233
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(State or jurisdiction of
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(Primary Standard Industrial
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(I.R.S. Employer
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incorporation or organization)
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Classification Code Number)
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Identification No.)
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7117 US 31S
Indianapolis, IN 46227
(888) 250-2566
(Address and telephone number of principal
executive offices and principal place of business)
CSC Services of Nevada, Inc.
2215-B Renaissance Drive
Las Vegas, NV 89119
(702) 740-4244
(Name, address and telephone number
of agent for service)
Copies to:
Mark C. Lee
Saxon Peters
GREENBERG TRAURIG, LLP
1201 K Street, Suite 1100
Sacramento, California 95814
Telephone: (916) 442-1111
Facsimile: (916) 448-1709
Approximate date
of proposed sale to the public:
From time to time after
the effective date of this registration statement.
If any of the securities being registered
on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the
following box.
þ
If this Form is filed to register additional
securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities
Act registration statement number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
If this Form is a post-effective amendment
filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement
number of the earlier effective registration statement for the same offering.
¨
Indicate by check mark whether the
registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the
definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller reporting company
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(Do not check if a smaller reporting company)
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CALCULATION OF REGISTRATION FEE
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Proposed
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Proposed
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Amount
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maximum
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maximum
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Amount of
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Title of each class of
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to be
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offering price
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aggregate
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Registration
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securities to be registered
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Registered
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per share
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offering price
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Fee
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Common Stock
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$
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20,359,466.78
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(1)(2)
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0.337
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(3)
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$
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20,359,466.78
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$
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2,333.19
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Common Stock Underlying Warrants
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$
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683,200.21
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(4)
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0.6405
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(5)
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$
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683,200.21
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$
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78.29
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Total
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$
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21,042,666.99
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$
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21,042,666.99
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$
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2,411.49
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(6)
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(1)
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There are being registered an indeterminate number of shares
of common stock of the Registrant as shall have an aggregate offering
price not to exceed $20,000,000, that we will put (“Put Shares”)
to Southridge Partners II, LP (“Southridge”), pursuant
to an equity purchase agreement (the “Equity Purchase Agreement”)
between Southridge and the Registrant, effective on January 26, 2012. This
amount includes such indeterminate number of shares of common stock
as may from time to time be issued at indeterminate prices, subject
to the aggregate threshold dollar amount registered. In the event of
stock splits, stock dividends, or similar transactions involving the
common stock, the number of common shares registered shall, unless
otherwise expressly provided, automatically be deemed to cover the
additional securities to be offered or issued pursuant to Rule 416
promulgated under the Securities Act of 1933, as amended (the “Securities
Act”). The proposed maximum offering price per share
shall be determined from time to time by the Registrant in connection
with the issuance of any securities under the registration statement.
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(2)
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In addition to the Put Shares, we are registering 1,066,667
shares of common stock issued to certain selling stockholders (the
“Financing Stockholders”) pursuant to a securities purchase
agreement (the “Purchase Shares”).
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(3)
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This offering price has been estimated solely for the purpose
of computing the dollar value of the Purchase Shares and the registration
fee of the Purchase Shares in accordance with Rule 457(c) of the Securities
Act on the basis of the average of the high and low prices of the common
stock of the Company as reported on the Over-the-Counter Bulletin Board
(the “OTCBB”) on September 6, 2012.
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(4)
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Represents the aggregate exercise price of the warrants to purchase
an aggregate of 1,066,667 shares of common stock (the “Warrant
Shares, and together with the Put Shares and the Purchase Shares, the
“Shares”).
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(5)
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This offering price has been estimated solely for the purpose
of computing the dollar value of the Warrant Shares and the registration
fee for the Shares underlying the warrants in accordance with Rule
457(g) of the Securities Act on the basis of the exercise price of
the warrants.
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(6)
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A filing fee in the total
amount of $2,292.00 was previously paid by the registrant in connection
with the filing of a Registration Statement on Form S-1 on February
27, 2012. None of the securities offered pursuant to such registration
statement were sold.
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We hereby amend this registration statement
on such date or dates as may be necessary to delay its effective date until we shall file a further amendment which specifically
states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act
or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant
to said Section 8(a), may determine.
EXPLANATORY
NOTE
This Pre-Effective Amendment No. 1
to the registration statement on Form S-1 of Stevia Corp. filed February 27, 2012, is being filed to include (i) audited
financial statements as of March 31, 2012 and for the Period from April 11, 2011 (inception) through March 31, 2012 and (ii) interim
financial statements as of June 30, 2012 and for the interim period then ended, based upon verbal comments received from the Staff
of the Securities and Exchange Commission (the “SEC”), as well as to expand the filing to include the registration
of 1,066,667 shares of common stock currently outstanding and 1,066,667 shares of common stock issuable upon exercise of warrants
currently outstanding held by certain security holders of the Company.
SUBJECT TO COMPLETION, DATED
September
11, 2012
PROSPECTUS
$21,042,666.99
STEVIA CORP.
Common Stock
This prospectus
relates to the resale of Shares of our common stock, par value $0.001 per share, by the selling security holders (the “Selling
Security Holders”), including (i) the resale of up to an aggregate of $20,000,000 of our common stock, par value $0.001
per share, by Southridge Partners II, LP (“Southridge”), which are Put Shares that we will put to Southridge
pursuant to the Equity Purchase Agreement, (ii) 1,066,667 of Purchase Shares, and (iii) 1,066,667 shares of common stock issuable
upon the exercise of outstanding warrants (the “Warrants”).
The Equity Purchase
Agreement with Southridge provides that Southridge is committed to purchase up to $20,000,000 of our common stock. We may draw
on the facility from time to time, as and when we determine appropriate in accordance with the terms and conditions of the Equity
Purchase Agreement.
Southridge is
an “underwriter” within the meaning of the Securities Act in connection with the resale of our common stock under
the Equity Purchase Agreement. No other underwriter or person has been engaged to facilitate the sale of shares of our common
stock in this offering. This offering will terminate thirty-six (36) months after the effective date of the Equity Purchase Agreement.
Southridge will pay us 93% of the lowest closing bid price of our common stock reported by Bloomberg Finance L.P. in a five consecutive
trading day period commencing with the date a put notice is delivered.
We will not receive any proceeds from
the sale of the shares of common stock offered by the Selling Security Holders. We may receive gross proceeds of up to $683,200.21
if all of the warrants are exercised for cash by the Selling Security Holders. We may receive proceeds from the sale of our Put
Shares under the Equity Purchase Agreement. The proceeds will be used for working capital or general corporate purposes. We will
bear all costs associated with this registration.
Our common
stock is quoted on the OTC Bulletin Board under the symbol “STEV.OB.” The shares of our common stock registered
hereunder are being offered for sale by Selling Security Holders at prices established on the OTC Bulletin Board during the
term of this offering. On September 6, 2012, the closing bid price of our common stock was $0.32 per share.
These prices will fluctuate based on the demand for our common stock.
INVESTING IN
OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. SEE “RISK FACTORS” BEGINNING ON PAGE 2 OF THIS PROSPECTUS.
NEITHER THE SECURITIES
AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS
PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
The information in
this Prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with
the Securities and Exchange Commission becomes effective. This Prospectus is not an offer to sell these securities and we are not
soliciting an offer to buy these securities in any state where the offer or sale is not permitted or would be unlawful prior to
registration or qualification under the securities laws of any such state.
TABLE OF CONTENTS
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Page
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PART I - INFORMATION REQUIRED
IN PROSPECTUS
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PROSPECTUS SUMMARY
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1
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DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
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4
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RISK FACTORS
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5
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RISKS RELATED TO OUR BUSINESS AND INDUSTRY
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5
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RISKS RELATED TO DOING BUSINESS IN VIETNAM AND OTHER DEVELOPING COUNTRIES
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10
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RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES
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11
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USE OF PROCEEDS
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DETERMINATION OF OFFERING PRICE
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SELLING SECURITY HOLDER
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PLAN OF DISTRIBUTION
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15
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DESCRIPTION OF SECURITIES TO BE REGISTERED
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INTERESTS OF NAMED EXPERTS AND COUNSEL
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INFORMATION WITH RESPECT TO THE REGISTRANT
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PROPERTIES
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27
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LEGAL PROCEEDINGS
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MARKET FOR COMMON EQUITY AND RELATED SHAREHOLDER MATTERS
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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
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DIRECTORS AND EXECUTIVE OFFICERS
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31
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EXECUTIVE COMPENSATION
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SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
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CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS AND DIRECTOR
INDEPENDENCE
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DISCLOSURE OF COMMISSION POSITION OF INDEMNIFICATION FOR SECURITIES
ACT LIABILITIES
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WHERE YOU CAN FIND MORE INFORMATION
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FINANCIAL STATEMENTS
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36
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PART II - INFORMATION NOT REQUIRED
IN PROSPECTUS
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OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
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92
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INDEMNIFICATION OF DIRECTORS AND OFFICERS
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92
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RECENT SALES OF UNREGISTERED SECURITIES
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94
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EXHIBIT INDEX
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96
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UNDERTAKINGS
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98
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SIGNATURES
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100
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You should rely only on the information
contained in this Prospectus. We have not authorized anyone to provide you with different information. We are not making an offer
of these securities in any state where the offer is not permitted.
PROSPECTUS SUMMARY
You should read the following summary
together with the more detailed information and the financial statements appearing elsewhere in this Prospectus. This Prospectus
contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those
anticipated in these forward-looking statements as a result of certain factors, including those set forth under “Risk Factors”
and elsewhere in this Prospectus. Unless the context indicates or suggests otherwise, references to “we,”
“our,” “us,” the “Company,” “Stevia” or the “Registrant” refer to
Stevia Corp., a Nevada corporation and its wholly owned subsidiary, Stevia Ventures International Ltd., a British Virgin Islands
company.
Our Business
Stevia Corp. was incorporated on May
21, 2007 in the State of Nevada. Our initial business focus was on development of a software product for tracking employee productivity
and projects. On June 23, 2011, we closed a voluntary share exchange transaction with Stevia Ventures International Ltd., a business
company incorporated in the British Virgin Islands, pursuant to which we acquired certain rights relating to stevia production,
including certain assignable exclusive purchase contracts and an assignable supply agreement related to stevia.
We are a farm management company with
a primary focus on stevia agronomics from plant breeding to good agricultural practices to post-harvest techniques. We plan to
invest in research and development and intellectual property acquisition and provide farm management services to contract growers
and other industry growers integrating our stevia focused research and development and intellectual property acquisitions.
Our focus is on implementing quality agribusiness solutions
to our partners, contract growers and customers to maximize the efficient production and economic development of stevia leaf.
Our management team has expertise in farm management and contract growing in Asia, and experience in international business management.
Our mission is to become a global leader of stevia leaf
growers and to create a competitive advantage by focusing on the full spectrum of agronomic and business inputs and to develop,
secure, or acquire the latest intellectual property that will enable us to consistently produce high per unit volumes of high
quality leaf utilizing environmentally sustainable methods that create a positive social impact.
To achieve these goals we believe we need to develop a suite
of intellectual property relating to stevia production that will enhance the value of our farm management operations as well as
our own stevia production. Through our business arrangements we are exploring the market for commercial applications of stevia
which may be vertically integrated into our services and production.
We believe we can accomplish our mission by becoming the stevia
agribusiness partner of choice for our contract growers and customers, thereby creating global synergies and producing a sustainable
supply of stevia leaf sufficient to support vertical integration of extraction facilities in each country that we operate.
Our target markets are initially Vietnam and Indonesia where
we have contracted with growers and have established our own nurseries and test fields. Although our priority is Asia, our services
are not limited to specific countries and we plan to pursue viable opportunities in other markets.
Corporate Information
Our principal executive offices are located
at 7117 US 31 S., Indianapolis, IN, 46227. Our telephone number is 888-250-2566.
Stock Transfer Agent
Our stock
transfer agent is Securities Transfer Corporation, and is located at 2591 Dallas Parkway, Suite 102, Frisco, Texas 75034. The
agent’s telephone number is 469-633-0101.
The Offering
Issuer
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Stevia Corp.
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Securities Offered for Resale
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Up to an aggregate of $21,042,666.99 of our common stock, including
$20,000,000 of Put Shares, $354,466.78 of Purchase Shares and $683,200.21 of Warrant Shares.
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Common Stock Outstanding Before the Offering
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66,555,635 shares
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Common Stock to be Outstanding After the Offering assuming all of the Securities are
Resold
(1)
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126,969,483 shares
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Use of Proceeds
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We will not receive any proceeds from the sale of the shares of
common stock offered by Selling Security Holders, other than any proceeds we may receive in the event the Warrants are exercised
for cash. However, we will receive proceeds from sale of our common stock under the Equity Purchase Agreement. The
proceeds from the offering will be used for working capital and general corporate purposes. See “Use of Proceeds.”
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Trading
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Our common stock is quoted on the OTC Bulletin Board under the symbol “STEV.OB”
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Risk Factors
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You should carefully consider the information set forth in the
section entitled “Risk Factors” beginning on page 2 of this prospectus in deciding whether or not to invest in
our common stock.
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(1) Calculated based on the
average of the high and low prices of our common stock on September 6, 2012 of $0.337. Includes the shares issuable
upon exercise of the Warrants.
Equity Purchase Agreement
This offering relates to the resale of up to an aggregate
of $20,000,000 in put shares (“Put Shares”) that we may put to Southridge pursuant to the Equity Purchase Agreement. Assuming
the resale of all of the shares being offered in this prospectus at the average of the high and low bid prices of our common stock
on September 6, 2012, would constitute approximately 46.83% of our outstanding common stock.
On January 26, 2012, we entered into the Equity Purchase
Agreement with Southridge pursuant to which, we have the right, for a three-year period, commencing on the date of the Equity
Purchase Agreement (but not before the date which the SEC first declares effective this registration statement) (the “Commitment
Period”), of which this prospectus forms a part, registering the resale of the Put Shares by Southridge, to resell the Put
Shares purchased by Southridge under the Equity Purchase Agreement.
In order to sell shares to Southridge under the Equity Purchase
Agreement, during the Commitment Period, the Company must deliver to Southridge a written put notice on any trading day (the “Put
Date”), setting forth the dollar amount to be invested by Southridge (the “Put Notice”). For each
share of our common stock purchased under the Equity Purchase Agreement, Southridge will pay ninety-three percent (93%) of the
lowest closing bid price (“Closing Price”) of any trading day during the five trading days immediately following the
date on which the Company has deposited an estimated amount of Put Shares to Southridge’s brokerage account in the manner
provided by the Equity Purchase Agreement (the “Valuation Period”). The Company may, at its sole discretion, issue
a Put Notice to Southridge and Southridge will then be irrevocably bound to acquire such shares.
In the event that during a Valuation Period for any Put
Notice, the Closing Price on any trading day falls more than twenty percent (20%) below the average of the five (5) most
recent closing bid prices prior to the Put Date (the “Floor Price”), then for each such trading day we shall be under
no obligation to sell and Southridge’s obligation to fund one-fifth of the put amount for each such trading day shall terminate
and the put amount shall be adjusted accordingly. In the event that during a Valuation Period the Closing Price falls below the
Floor Price for any two (2) trading days, then the balance of each party’s rights and obligations to purchase and sell
the investment amount under such Put Notice shall terminate on such second trading day, and the put amount shall be adjusted to
include only one-fifth (1/5) of the initial put amount for each trading day during the Valuation Period prior to such termination
date that the closing Closing Price equals or exceeds the Floor Price.
If, during any Valuation Period, the Company (i) subdivides
or combines the common stock; (ii) pays a dividend in shares of common stock or makes any other distribution of shares of common
stock; (iii) issues any options or other rights to subscribe for or purchase shares of common stock and the price per share is
less than closing price in effect immediately prior to such issuance; (iv) issues any securities convertible into shares of common
stock and the consideration per share for which shares of common stock may at any time thereafter be issuable pursuant to the
terms of such convertible securities shall be less that the closing price in effect immediately prior to such issuance; (v) issue
shares of common stock otherwise than as provided in the foregoing subsections (i) through (iv) at a price per share less than
the closing price in effect immediately prior to such issuance, or without consideration; or (vi) makes a distribution of its
assets or evidences of its indebtedness to the holders of common stock as a dividend in liquidation or by way of return of capital
or other than as a dividend payable out of earnings or surplus legally available for dividends under applicable law (collectively,
a “Valuation Event”), then a new Valuation Period shall begin on the trading day immediately after the occurrence
of such Valuation Event and end on the fifth trading day thereafter.
We are relying on an exemption from the registration requirements
of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The transaction does involve a private
offering, Southridge is an “accredited investor” and/or qualified institutional buyer and Southridge has access to
information about us and its investment.
Assuming the sale of the entire $20,000,000 in Put Shares being
registered hereunder pursuant to the Equity Purchase Agreement, we will be able to receive $20,000,000 in gross proceeds. Neither
the Equity Purchase Agreement nor any rights or obligations of the parties under the Equity Purchase Agreement may be assigned
by either party to any other person.
There are substantial risks to investors as a result of the
issuance of shares of our common stock under the Equity Purchase Agreement. These risks include dilution of stockholders, significant
decline in our stock price and our inability to draw sufficient funds when needed.
Southridge will periodically purchase our common stock under
the Equity Purchase Agreement and will, in turn, sell such shares to investors in the market at the market price. This
may cause our stock price to decline, which will require us to issue increasing numbers of common shares to Southridge to raise
the same amount of funds, as our stock price declines.
SUMMARY OF FINANCIAL INFORMATION
The following selected financial information is derived from
the Company’s Financial Statements appearing elsewhere in this Prospectus and should be read in conjunction with the
Company’s Financial Statements, including the notes thereto, appearing elsewhere in this Prospectus.
Summary of Statements of Operations
For the Period from April 1, 2012 to June 30, 2012:
Total revenue
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$
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280
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Net loss
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(413,937
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)
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Net loss per common share (basic and diluted)
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$
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(0.01
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)
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Weighted average common shares
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58,354,775
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For the Period from April 11, 2011 (inception) to March
31, 2012:
Total revenue
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$
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1,300
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Net loss
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(2,323,551
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)
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Net loss per common share (basic and diluted)
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$
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(0.05
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)
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Weighted average common shares
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45,093,271
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Statement of Financial Position
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June 30, 2012
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Cash
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$
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17,062
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Prepaid expenses
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16,608
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Total current assets
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33,950
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Total assets
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$
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57,338
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Total current liabilities
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$
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1,167,970
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Stockholders’ deficit
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$
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(1,110,632
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)
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Total liabilities and stockholders’ deficit
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$
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57,338
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March 31,
2012
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Cash
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$
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15,698
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Prepaid expenses
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168,874
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Total current assets
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184,572
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Total assets
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$
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207,122
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Total current liabilities
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$
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997,567
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Stockholders’ deficit
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$
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(790,445
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)
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Total liabilities and stockholders’ deficit
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$
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207,122
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DISCLOSURE REGARDING FORWARD-LOOKING
STATEMENTS
Except for statements of historical
facts, this Prospectus contains forward-looking statements involving risks and uncertainties. The words “anticipate,”
“believe,” “estimate,” “expect,” “future,” “intend,” “plan”
or the negative of these terms and similar expressions or variations thereof are intended to forward looking statements. Such
statements reflect the current view of the Registrant with respect to future events and are subject to risks, uncertainties, assumptions
and other factors (including the risks contained in the section of this regstration statement on Form S-1 entitled “Risk
Factors”) relating to the Registrant’s industry, the Registrant’s operations and results of operations and any
businesses that may be acquired by the Registrant. Should one or more of these risks or uncertainties materialize, or should the
underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected,
intended or planned.
Although the Registrant believes
that the expectations reflected in the forward looking statements are reasonable, the Registrant cannot guarantee future results,
levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United
States, the Registrant does not intend to update any of the forward-looking statements to conform these statements to actual results.
The following discussion should be read in conjunction with the Registrant’s financial statements and the related notes
included in this registration statement on Form S-1.
RISK FACTORS
You should carefully consider the
risks described below together with all of the other information included in our public filings before making an investment decision
with regard to our securities. The statements contained in or incorporated into this registration statement on Form S-1 that are
not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results
to differ materially from those set forth in or implied by forward-looking statements. While the risks described below are the
ones we believe are most important for you to consider, these risks are not the only ones that we face. If any of the
following events described in these risk factors actually occurs, our business, financial condition or results
of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part
of your investment.
RISKS RELATING TO OUR BUSINESS AND INDUSTRY
We are a development stage company with a limited operating
history on which to evaluate our business or base an investment decision.
Our business prospects are difficult to predict because
of our limited operating history, early stage of development and unproven business strategy. We are a development stage company
that has generated nominal revenues. Stevia is still a relatively new product in the sweetener marketplace and it has historically
not been commercially grown in Vietnam or many of our other target locations. Both the continued growth of the stevia market in
general, and our ability to introduce commercial development of stevia to new regions, face numerous risks and uncertainties.
In particular, we have not proven that we can produce stevia in a manner that enables us to be profitable and meet manufacturer
requirements, develop intellectual property to enhance stevia production, develop and maintain relationships with key growers
and strategic partners to extract value from our intellectual property, raise sufficient capital in the public and/or private
markets, or respond effectively to competitive pressures. If we are unable to accomplish these goals, our business is unlikely
to succeed and you should consider our prospects in light of these risks, challenges and uncertainties.
We have insignificant revenues and have incurred losses.
Our auditors have expressed uncertainty as to our ability
to continue as a going concern as of our fiscal year ended March 31, 2012. Furthermore, since inception we have generated nominal
revenues. As of June 30, 2012, we had an accumulated deficit of approximately $2,737,488. We anticipate that our existing cash
and cash equivalents will not be sufficient to fund our longer term business needs and we will need to generate revenue or receive
additional investment in the Company to continue operations. Such financing may not be available in sufficient amounts, or
on terms acceptable to us and may dilute existing shareholders.
If we fail to raise additional capital, our ability to
implement our business model and strategy could be compromised.
We have limited capital resources and operations. To date,
our operations have been funded entirely from the proceeds from debt and equity financings. We expect to require substantial additional
capital in the near future to develop our intellectual property base and to establish the targeted levels of commercial production
of stevia. We may not be able to obtain additional financing on terms acceptable to us, or at all. Even if we obtain financing
for our near term operations, we expect that we will require additional capital beyond the near term. If we are unable to raise
capital when needed, our business, financial condition and results of operations would be materially adversely affected, and we
could be forced to reduce or discontinue our operations.
We face intense competition which could prohibit us from
developing a customer base and generating revenue.
The industries within which we compete, including the sweetener
industry and the fertilizer and feed industries, are highly competitive with companies that have greater capital resources, facilities
and diversity of product lines. Additionally, if demand for stevia continues to grow, we expect many new competitors to enter
the market as there are no significant barriers to stevia production. More established agricultural companies with much greater
financial resources which do not currently compete with us may be able to easily adapt their existing operations to production
of stevia. Due to this competition, there is no assurance that we will not encounter difficulties in obtaining revenues and market
share or in the positioning of our services or that competition in the industry will not lead to reduced prices for the stevia
leaf. Our competitors may also introduce new non-stevia based low-calorie sweeteners or be successful in developing a fermentation-derived
stevia ingredient or other alternative production method which could also increase competition and decrease demand for stevia-based
products.
Inability to protect our proprietary rights could damage
our competitive position.
Our business will be heavily dependent upon the intellectual
property we develop or acquire. Any infringement or misappropriation of our intellectual property could damage its value and limit
our ability to compete. We will rely on patents, copyrights, trademarks, trade secrets, confidentiality provisions and licensing
arrangements to establish and protect our intellectual property. We may have to engage in litigation to protect the rights to
our intellectual property, which could result in significant litigation costs and require a significant amount of our time. In
addition, our ability to enforce and protect our intellectual property rights may be limited in certain countries outside the
United States, which could make it easier for competitors to capture market position in such countries by utilizing technologies
that are similar to those developed or licensed by us.
Competitors may also harm our sales by designing products that
mirror the capabilities of our products or technology without infringing our intellectual property rights. If we do not obtain
sufficient protection for our intellectual property, or if we are unable to effectively enforce our intellectual property rights,
our competitiveness could be impaired, which would limit our growth and future revenue.
A successful claim of infringement against us could result in
a substantial damage award and materially harm our financial condition. Even if a claim against us is unsuccessful, we would likely
have to devote significant time and resources to defending against it.
We may also find it necessary to bring infringement or other
actions against third parties to seek to protect our intellectual property rights. Litigation of this nature, even if successful,
is often expensive and disruptive of a company's management's attention, and in any event may not lead to a successful result relative
to the resources dedicated to any such litigation.
We may be unable to effectively develop an intellectual
property portfolio or may fail to keep pace with advances in technology.
We have a limited operating history in the agriculture industry
and there is no certainty that we will be able to effectively develop a viable portfolio of intellectual property. The success
of our farm management services, which are the core of our business, depends upon our ability to create such intellectual property.
Even if we are able to develop, manufacture and obtain any regulatory
approvals and clearances necessary for our technologies and methods, the success of such services will depend upon market acceptance.
Levels of market acceptance for our services could be affected by several factors, including:
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the availability
of alternative
services from our
competitors;
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the price
and reliability
of the our services
relative to that
of our competitors;
and
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the timing
of our market entry.
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Additionally, our intellectual property must keep pace with
advances by our competitors. Failure to do so could cause our position in the industry to erode rapidly.
Confidentiality agreements with employees and others
may not adequately prevent disclosure of our trade secrets and other proprietary information.
Our success depends upon the skills, knowledge and experience
of our technical personnel, our consultants and advisors as well as our licensors and contractors. Because we operate in a highly
competitive field, we will rely significantly on trade secrets to protect our proprietary technology and processes. However, trade
secrets are difficult to protect. We enter into confidentiality and intellectual property assignment agreements with our corporate
partners, employees, consultants, outside scientific collaborators, developers and other advisors. These agreements generally
require that the receiving party keep confidential and not disclose to third parties confidential information developed by us
during the course of the receiving party's relationship with us. These agreements also generally provide that inventions conceived
by the receiving party in the course of rendering services to us will be our exclusive property. However, these agreements may
be breached and may not effectively assign intellectual property rights to us. Our trade secrets also could be independently discovered
by competitors, in which case we would not be able to prevent use of such trade secrets by our competitors. The enforcement of
a claim alleging that a party illegally obtained and was using our trade secrets could be difficult, expensive and time consuming
and the outcome would be unpredictable. In addition, courts outside the United States may be less willing to protect trade secrets.
The failure to obtain or maintain meaningful trade secret protection could adversely affect our competitive position.
We will produce products for consumption by consumers that
may expose us to litigation based on consumer claims and product liability.
The stevia produced at our farms will be integrated into stevia-based
products which will be consumed by the general public. Additionally, we may manufacture and sell private label stevia-based food
products. Even though we intend to grow and sell products that are safe, we have potential product risk from the consuming public.
We could be party to litigation based on consumer claims, product liability or otherwise that could result in significant liability
for us and adversely affect our financial condition and operations.
If our services do not gain acceptance among stevia growers,
we may not be able to recover the cost of our intellectual property development.
Our business model relies on the assumption that we will
be able to develop methods and protocols, secure valuable plant strains and develop other intellectual property for stevia farming
that will be attractive to both stevia growers and manufacturers. We are spending significant amounts of capital to develop this
intellectual property portfolio. If we are unable to secure such intellectual property or if our methods and protocols do not
gain acceptance among growers or manufacturers, our intellectual property will have limited value. A number of factors may affect
the market acceptance of our products and services, including, among others, the perception by growers of the effectiveness of
our intellectual property, the perception among manufacturers of the quality of stevia produced using our intellectual property,
our ability to fund marketing efforts, and the effectiveness of such marketing efforts. If such products and services do not gain
acceptance by growers and/or manufacturers, we may not be able to fund future operations, including the expansion of our own farming
projects and development and/or acquisition of additional intellectual property, which inability would have a material adverse
effect on our business, financial condition and operating results.
Any failure to adequately establish a network of growers
and manufacturers will impede our growth.
We expect to be substantially dependent on manufacturers to
purchase the stevia produced both at our own farms and at those of our customers. We have entered into a supply agreement with
a manufacturer and two purchase agreements with growers and are in the process of establishing a network of growers to produce
stevia using our methods and protocols. The relationship with this manufacturer and its perception of the stevia produced using
our farm management services will determine its willingness to enter into purchase contracts with us and our customers on attractive
terms. Our ability to secure such contracts will influence our attractiveness to growers who are potentially interested in partnering
with us. Achieving significant growth in revenue will depend, in large part, on our success in establishing this production network.
If we are unable to develop an efficient production network, it will make our growth more difficult and our business could suffer.
If we are unable to deliver a consistent, high quality stevia
leaf at sufficient volumes, our relationship with our manufacturers may suffer and our operating results will be adversely affected.
Manufacturers will expect us to be able to consistently deliver
stevia at sufficient volumes, while meeting their established quality standards. If we are unable to consistently deliver such
volumes either from our own farms, or those of our grower partners, our relationship with these manufacturers could be adversely
affected which could have a negative impact on our operating results.
Changes in consumer preferences or negative publicity or
rumors may reduce demand for our products.
Recent data suggests consumers are adopting stevia as a sweetener
in many products. However, stevia is a relatively new ingredient in consumer products and many consumers are not familiar with
it. Therefore, any negative reports or rumors regarding either the taste or perceived health effects of stevia, whether true or
not, could have a severe impact on the demand for stevia-based products. Manufacturers may decide to rely on alternative sweeteners
which have a more established history with consumers. Primarily operating at the grower level, we will have little opportunity
to influence these perceptions and there can be no assurance that the increased adoption of stevia in consumer food and beverage
products will continue. Additionally, new sweeteners with similar characteristics to stevia may emerge which could be cheaper to
produce or be perceived to have other qualities superior to stevia. Any of these factors could adversely affect our ability to
produce revenues and our business, financial condition and results of operations would suffer.
Failure to effectively manage growth of internal operations
and business may strain our financial resources.
We intend to significantly expand the scope of our farming
operations and our research and development activities in the near term. Our growth rate may place a significant strain on our
financial resources for a number of reasons, including, but not limited to, the following:
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The
need for
continued
development
of our financial
and information
management
systems;
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The
need to
manage strategic
relationships
and agreements
with manufacturers,
growers
and partners;
and
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Difficulties
in hiring
and retaining
skilled
management,
technical
and other
personnel
necessary
to support
and manage
our business.
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Additionally, our strategy envisions a period of rapid growth
that may impose a significant burden on our administrative and operational resources. Our ability to effectively manage growth
will require us to substantially expand the capabilities of our administrative and operational resources and to attract, train,
manage and retain qualified management and other personnel. Our failure to successfully manage growth could result in our sales
not increasing commensurately with capital investments. Our inability to successfully manage growth could materially adversely
affect our business.
Adverse weather conditions, natural disasters, crop disease,
pests and other natural conditions can impose significant costs and losses on our business.
Weather-related events could significantly affect our results
of operations. We do not currently maintain insurance to cover weather-related losses and if we do obtain such insurance it likely
will not cover all weather-related events and, even when an event is covered, our retention or deductible may be significant.
Cooler temperatures in the regions where we operate could negatively affect us, while not affecting our competitors in other regions.
Our crops, and those of our grower partners, could also be
affected by drought, temperature extremes, hurricanes, windstorms and floods. In addition, such crops could be vulnerable to crop
disease and to pests, which may vary in severity and effect, depending on the stage of agricultural production at the time of
infection or infestation, the type of treatment applied and climatic conditions. Unfavorable growing conditions caused by these
factors can reduce both crop size and crop quality. In extreme cases, entire harvests may be lost. These factors may result in
lower production and, in the case of farms we own or manage, increased costs due to expenditures for additional agricultural techniques
or agrichemicals, the repair of infrastructure, and the replanting of damaged or destroyed crops. We may also experience shipping
interruptions, port damage and changes in shipping routes as a result of weather-related disruptions.
Competitors and industry participants may be affected differently
by weather-related events based on the location of their production and supply. If adverse conditions are widespread in the industry,
it may restrict supplies and lead to an increase in prices for stevia leaf, but our typical fixed-price supply contracts may prevent
us from recovering these higher costs.
Our operations and products are regulated in the areas of
food safety and protection of human health and the environment.
Our operations and products are subject to inspections by environmental,
food safety, health and customs authorities and to numerous governmental regulations, including those relating to the use and
disposal of agrichemicals, the documentation of food shipments, the traceability of food products, and labeling of our products
for consumers, all of which involve compliance costs. Changes in regulations or laws may require, operational modifications or
capital improvements at various locations. If violations occur, regulators can impose fines, penalties and other sanctions. The
costs of these modifications and improvements and of any fines or penalties could be substantial. We can be adversely affected
by actions of regulators or if consumers lose confidence in the safety and quality of stevia, even if our products are not implicated.
If we are unable to continually innovate and increase efficiencies,
our ability to attract new customers may be adversely affected.
In the area of innovation, we must be able to develop new
processes, plant strains, and other technologies that appeal to stevia growers. This depends, in part, on the technological
and creative skills of our personnel and on our ability to protect our intellectual property rights. We may not be successful
in the development, introduction, marketing and sourcing of new technologies or innovations, that satisfy customer needs,
achieve market acceptance or generate satisfactory financial returns.
Global economic conditions may adversely affect our industry,
business and result of operations.
Disruptions in the global credit and financial market could
result in diminished liquidity and credit availability, a decline in consumer confidence, a decline in economic growth, an increased
unemployment rate, and uncertainty about economic stability. These economic uncertainties can affect businesses such as ours in
a number of ways, making it difficult to accurately forecast and plan our future business activities. Such conditions can lead
consumers to postpone spending, which can cause manufacturers to cancel, decrease or delay orders with us. We are unable to predict
the likelihood of the occurrence, duration or severity of such disruptions in the credit and financial markets and adverse global
economic conditions and such economic conditions could materially and adversely affect our business and results of operations.
Our business depends substantially on the continuing
efforts of our executive officers and our business may be severely disrupted if we lose their services.
Our future success depends substantially on the continued
services of our executive officers, especially our President and director, Mr. George Blankenbaker. We do not maintain key man
life insurance on any of our executive officers and directors. If one or more of our executive officers are unable or unwilling
to continue in their present positions, we may not be able to replace them readily, if at all. Therefore, our business may be
severely disrupted, and we may incur additional expenses to recruit and retain new officers. In addition, if any of our executives
joins a competitor or forms a competing company, we may lose some of our customers.
Litigation may adversely affect our business, financial
condition and results of operations.
From time to time in the normal course of our business operations,
we may become subject to litigation that may result in liability material to our financial statements as a whole or may negatively
affect our operating results if changes to our business operation are required. The cost to defend such litigation may be significant
and may require a diversion of our resources. There also may be adverse publicity associated with litigation that could negatively
affect customer perception of our business, regardless of whether the allegations are valid or whether we are ultimately found
liable. As a result, litigation may adversely affect our business, financial condition and results of operations.
We may be required to incur significant costs and require
significant management resources to evaluate our internal control over financial reporting as required under Section 404 of the
Sarbanes-Oxley Act, and any failure to comply or any adverse result from such evaluation may have an adverse effect on our stock
price.
As a smaller reporting company as defined in Rule 12b-2
under the Securities Exchange Act of 1934, as amended, we are required to evaluate our internal control over financial reporting
under Section 404 of the Sarbanes-Oxley Act of 2002 (“Section 404”). Section 404 requires us to include an internal
control report with our Annual Report on Form 10-K. This report must include management's assessment of the effectiveness of our
internal control over financial reporting as of the end of the fiscal year. This report must also include disclosure of any material
weaknesses in internal control over financial reporting that we have identified. Failure to comply, or any adverse results from
such evaluation could result in a loss of investor confidence in our financial reports and have an adverse effect on the trading
price of our equity securities. As of June 30, 2012, the management of the Company assessed the effectiveness of the Company's
internal control over financial reporting based on the criteria for effective internal control over financial reporting established
in
Internal Control – Integrated Framework
issued by the Committee of Sponsoring Organizations of the Treadway Commission
(“COSO”) and SEC guidance on conducting such assessments. Management concluded, as of the quarter ended June 30, 2012,
that its internal controls and procedures were not effective to detect the inappropriate application of U.S. GAAP rules. Management
realized there were deficiencies in the design or operation of our internal control that adversely affected our internal controls
which management considers to be material weaknesses including those described below:
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We have
not achieved the
optimal level of
segregation of
duties relative
to key financial
reporting functions.
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We do not
have an audit committee
or an independent
audit committee
financial expert.
While not being
legally obligated
to have an audit
committee or independent
audit committee
financial expert,
it is the management's
view that to have
an audit committee,
comprised of independent
board members,
and an independent
audit committee
financial expert
is an important
entity-level control
over our financial
statements.
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Achieving continued compliance with Section 404 may require
us to incur significant costs and expend significant time and management resources. No assurance can be given that we will be
able to fully comply with Section 404 or that we and our independent registered public accounting firm would be able to conclude
that our internal control over financial reporting is effective at fiscal year end. As a result, investors could lose confidence
in our reported financial information, which could have an adverse effect on the trading price of our securities, as well as subject
us to civil or criminal investigations and penalties. In addition, our independent registered public accounting firm may not agree
with our management's assessment or conclude that our internal control over financial reporting is operating effectively.
RISKS RELATED TO DOING BUSINESS IN VIETNAM AND OTHER DEVELOPING
COUNTRIES
Our international operations will be subject to the laws
of the jurisdictions in which we operate.
A significant portion of our initial business operations will
occur in Vietnam. We will be generally subject to laws and regulations applicable to foreign investment in Vietnam. The
Vietnamese legal system is based, at least in part, on written statutes. However, since these laws and regulations
are relatively new and the Vietnamese legal system continues to rapidly evolve, the interpretations of many laws, regulations
and rules are not always uniform and enforcement of these laws, regulations and rules involves uncertainties.
In April 2012, we announced plans to begin field tests in
Indonesia. Similar to Vietnam, the modern Indonesia legal system was formed relatively recently and is continuing to evolve. As
we continue our expansion into Indonesia and other developing countries, we will face similar risks and uncertainties regarding
the legal system as we currently face in Vietnam.
We cannot predict the effect of future developments in the
legal systems of developing countries, including the promulgation of new laws, changes to existing laws or the interpretation
or enforcement thereof, the preemption of local regulations by national laws, or the overturn of local government’s decisions
by the superior government. These uncertainties may limit legal protections available to us.
Our international operations involve the use of foreign
currencies, which subjects us to exchange rate fluctuations and other currency risks.
The revenues and expenses of our international operations
are generally denominated in local currencies, which subjects us to exchange rate fluctuations between such local currencies and
the U.S. dollar. These exchange rate fluctuations will subject us to currency translation risk with respect to the reported
results of our international operations, as well as to other risks sometimes associated with international operations. In
the future, we could experience fluctuations in financial results from our operations outside of the United States, and there
can be no assurance we will be able, contractually or otherwise, to reduce the currency risks associated with our international
operations.
We may be adversely affected by economic and political
conditions in the countries where we operate.
We operate in Vietnam and other countries throughout the
world. Economic and political changes in these countries, such as inflation rates, recession, foreign ownership restrictions,
restrictions on transfer of funds into or out of a country and similar factors may adversely affect results of operations.
While it is our understanding that the economy in Vietnam has
grown significantly in the past 20 years, the growth has been uneven, both geographically and among various economic sectors. The
government of Vietnam has implemented various measures to encourage or control economic growth and guide the allocation of resources. Some
of these measures benefit the overall Vietnamese economy, but may also have a negative effect on us. For example, our
financial condition and results of operations may be adversely affected by government control over capital investments or changes
in tax regulations that are applicable to us.
The Vietnamese economy has been transitioning from a planned
economy to a more market-oriented economy. Although in recent years the Vietnamese government has implemented measures
emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the
establishment of sound corporate governance in business enterprises, a substantial portion of the productive assets in Vietnam
are still owned by the Vietnamese government. The continued control of these assets and other aspects of the national
economy by Vietnam government could materially and adversely affect our business. The Vietnamese government also exercises
significant control over Vietnamese economic growth through the allocation of resources, controlling payment of foreign currency-denominated
obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Efforts
by the Vietnamese government to slow the pace of growth of the Vietnamese economy could negatively affect our business.
Our insurance coverage may be inadequate to cover all
significant risk exposures.
We will be exposed to liabilities that are unique to the
products we provide. While we intend to maintain insurance for certain risks, the amount of our insurance coverage
may not be adequate to cover all claims or liabilities, and we may be forced to bear substantial costs resulting from risks and
uncertainties of our business. It is also not possible to obtain insurance to protect against all operational risks
and liabilities. The failure to obtain adequate insurance coverage on terms favorable to us, or at all, could have
a material adverse effect on our business, financial condition and results of operations. In addition, because the
insurance industry in Vietnam and other developing countries are still in their early stages of development, business interruption
insurance available in such countries relating to our intended services and products offers limited coverage compared to that
offered in many other developed countries. We do not have any business interruption insurance. Any business
disruption or natural disaster could result in substantial costs and diversion of resources.
It will be extremely difficult to acquire jurisdiction
and enforce liabilities against our officers, directors and assets outside the United States.
Substantially all of our assets are currently located outside
of the United States and a significant number of our officers and directors may reside outside of the United States as well. As
a result, it may not be possible for United States investors to enforce their legal rights, to effect service of process upon
our directors or officers or to enforce judgments of United States courts predicated upon civil liabilities and criminal penalties
of our directors and officers under Federal securities laws. Moreover, we have been advised that Vietnam in particular does not
have treaties providing for the reciprocal recognition and enforcement of judgments of courts with the United States. Further,
it is unclear if extradition treaties now in effect between the United States and Vietnam would permit effective enforcement of
criminal penalties of the Federal securities laws.
RISKS RELATED TO AN INVESTMENT IN OUR SECURITIES
The relative lack of public company
experience of our management team may put us at a competitive disadvantage.
Our management team lacks public company
experience and is generally unfamiliar with the requirements of the United States securities laws and U.S. Generally Accepted Accounting
Principles, which could impair our ability to comply with legal and regulatory requirements such as those imposed by Sarbanes-Oxley
Act of 2002. The individuals who now constitute our senior management team have never had responsibility for managing a publicly
traded company. Such responsibilities include complying with federal securities laws and making required disclosures on a timely
basis. Our senior management may not be able to implement programs and policies in an effective and timely manner that adequately
responds to such increased legal, regulatory compliance and reporting requirements. Our failure to comply with all applicable requirements
could lead to the imposition of fines and penalties and distract our management from attending to the growth of our business.
Our stock is categorized as a penny stock. Trading of
our stock may be restricted by the SEC's penny stock regulations which may limit a shareholder's ability to buy and sell our stock.
Our stock is categorized as a “penny stock”.
The SEC has adopted Rule 15g-9 which generally defines “penny stock” to be any equity security that has a market price
(as defined) less than $4.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities
are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons
other than established customers and accredited investors. The penny stock rules require a broker-dealer, prior to a transaction
in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by
the SEC which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer
also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer
and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the
customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given
to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or
with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not
otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may
have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny
stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe
that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
FINRA sales practice requirements may also limit a shareholder's
ability to buy and sell our stock.
In addition to the “penny stock” rules described
above, the Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an
investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that
customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make
reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information.
Under interpretations of these rules, FINRA believes that there is a high probability that speculative low priced securities will
not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that
their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the
market for our shares.
We expect to experience volatility in our stock price,
which could negatively affect shareholders' investments.
Although our common stock is quoted on the OTCBB under the
symbol “STEV”, there is a limited public market for our common stock. No assurance can be given that an
active market will develop or that a stockholder will ever be able to liquidate its shares of common stock without considerable
delay, if at all. Many brokerage firms may not be willing to effect transactions in the securities. Even
if a purchaser finds a broker willing to effect a transaction in these securities, the combination of brokerage commissions, state
transfer taxes, if any, and any other selling costs may exceed the selling price. Furthermore, our stock price may
be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations,
as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations
may adversely affect the market price and liquidity of our common stock.
In the past, securities class action litigation has often
been brought against a company following periods of volatility in the market price of its securities. Due to the volatility
of our common stock price, we may be the target of securities litigation in the future. Securities litigation could result
in substantial costs and divert management’s attention and resources.
Shareholders should also be aware that, according to SEC
Release No. 34-29093, the market for “penny stock”, such as our common stock, has suffered in recent years from patterns
of fraud and abuse. Such patterns include (1) control of the market for the security by one or a few broker-dealers that
are often related to the promoter or issuer; (2) manipulation of prices through prearranged matching of purchases and sales and
false and misleading press releases; (3) boiler room practices involving high-pressure sales tactics and unrealistic price projections
by inexperienced sales persons; (4) excessive and undisclosed bid-ask differential and markups by selling broker-dealers; and
(5) the wholesale dumping of the same securities by promoters and broker-dealers after prices have been manipulated to a desired
level, along with the resulting inevitable collapse of those prices and with consequent investor losses. Our management
is aware of the abuses that have occurred historically in the penny stock market. Although we do not expect to be in a position
to dictate the behavior of the market or of broker-dealers who participate in the market, management will strive within the confines
of practical limitations to prevent the described patterns from being established with respect to our securities. The occurrence
of these patterns or practices could increase the future volatility of our share price.
To date, we have not paid any cash dividends and no cash
dividends will be paid in the foreseeable future.
We do not anticipate paying cash dividends on our common stock
in the foreseeable future and we may not have sufficient funds legally available to pay dividends. Even if the funds are legally
available for distribution, we may nevertheless decide not to pay any dividends. We presently intend to retain all earnings for
our operations.
The elimination of monetary liability against our directors,
officers and employees under Nevada law and the existence of indemnification rights to our directors, officers and employees may
result in substantial expenditures by our company and may discourage lawsuits against our directors, officers and employees.
Our Articles of Incorporation contain a provision permitting
us to eliminate the personal liability of our directors to our company and shareholders for damages for breach of fiduciary duty
as a director or officer to the extent provided by Nevada law. We may also have contractual indemnification obligations under our
employment agreements with our officers. The foregoing indemnification obligations could result in the Company incurring substantial
expenditures to cover the cost of settlement or damage awards against directors and officers, which we may be unable to recoup.
These provisions and resultant costs may also discourage our company from bringing a lawsuit against directors and officers for
breaches of their fiduciary duties, and may similarly discourage the filing of derivative litigation by our shareholders against
our directors and officers even though such actions, if successful, might otherwise benefit our company and shareholders.
Certain restrictions on the extent of puts may have little,
if any, effect on the adverse impact of our issuance of shares in connection with the Equity Purchase Agreement, and as such,
Southridge may sell a large number of shares, resulting in substantial dilution to the value of shares held by existing shareholders.
Southridge has agreed to refrain from holding an amount of
shares which would result in Southridge owning more than 9.99% of the then-outstanding shares of our common stock at any one time. These
restrictions, however, do not prevent Southridge from selling shares of common stock received in connection with a put, and then
receiving additional shares of common stock in connection with a subsequent put. In this way, Southridge could sell
more than 9.99% of the outstanding common stock in a relatively short time frame while never holding more than 9.99% at one time.
Because Southridge will be paying less than the then-prevailing
market price for our common stock, your ownership interest may be diluted and the value of our common stock may decline by exercising
the put right pursuant to the Equity Purchase Agreement.
The common stock to be issued to Southridge pursuant to the
Equity Purchase Agreement will be purchased at an 7% discount to the lowest closing bid price of our common stock reported by
Bloomberg, L.P. during the five consecutive trading day period immediately following the date of our notice to Southridge of our
election to put shares pursuant to the Equity Purchase Agreement. Because the put price is lower than the prevailing market price
of our common stock, to the extent that the put right is exercised, your ownership interest may be diluted. Southridge has a financial
incentive to sell our common stock immediately upon receiving the shares to realize the profit equal to the difference between
the discounted price and the market price. If Southridge sells the shares, the price of our common stock could decrease. If our
stock price decreases, Southridge may have a further incentive to sell the shares of our common stock that it holds. These sales
may have a further adverse impact on our stock price.
The Equity Purchase Agreement’s pricing structure
may result in dilution to our stockholders.
Pursuant to the Equity Purchase Agreement, Southridge committed
to purchase, subject to certain conditions, up to $20,000,000 of our common stock over a three-year period. If we sell shares to
Southridge under the Equity Purchase Agreement , it will have a dilutive effect on the holdings of our current stockholders, and
may result in downward pressure on the price of our common stock. If we draw down amounts under the Equity Purchase Agreement,
we will issue shares to Southridge at a discount. If we draw down amounts under the Equity Purchase Agreement when our share price
is decreasing, we will need to issue more shares to raise the same amount than if our stock price was higher. Issuances in the
face of a declining share price will have an even greater dilutive effect than if our share price were stable or increasing, and
may further decrease our share price.
USE OF PROCEEDS
Selling Security Holders may sell all
of the common stock offered by this Prospectus from time-to-time. We will not receive any proceeds from the sale of those shares
of common stock. We may, however, receive up to $683,200.21 upon the cash exercise of the Warrants and aggregate gross proceeds
of $20,000,000 if all shares of common stock in this offering are sold to Southridge pursuant to the Equity Purchase Agreement.
Any such proceeds we receive will be used for working capital and general corporate matters.
DETERMINATION OF OFFERING PRICE
There currently is a limited public market for our common
stock. Selling Security Holders will determine at what price they may sell the offered shares, and such sales may be made at prevailing
market prices or at privately negotiated prices. See “Plan of Distribution” below for more information.
SELLING SECURITY HOLDER
S
The Put Shares
We agreed to register for resale $20,000,000 of Put Shares that
we will put to Southridge pursuant to the Equity Purchase Agreement. The Equity Purchase Agreement provides that Southridge is
committed to purchase up to $20,000,000 of our common stock. We may draw on the facility from time to time, as and when we determine
appropriate in accordance with the terms and conditions of the Equity Purchase Agreement. We will not receive any proceeds from
the sale of these shares of common stock offered by Southridge. However, we will receive proceeds from the sale of our Put Shares
under the Equity Purchase Agreement. The proceeds will be used for working capital or general corporate purposes.
Southridge is the potential purchaser of our common stock under
the Equity Purchase Agreement. The $20,000,000 of Put Shares offered in this prospectus is based on the Equity Purchase Agreement
between Southridge and us. Southridge may from time to time offer and sell any or all of the Put Shares that are registered under
this prospectus. The put option price is 93% of the lowest Closing Price in the five trading day period immediately following the
Put Date.
We are unable to determine the exact number of shares that will
actually be sold by Southridge according to this prospectus due to:
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•
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the ability of Southridge to determine when and
whether it will sell any of the Put Shares under
this prospectus; and
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•
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the uncertainty as to the number of Put Shares
that will be issued upon exercise of our put options
under the Equity Purchase Agreement.
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The following information contains a description of how Southridge
shall acquire the shares to be sold in this offering. Southridge has not held a position or office, or had any other material relationship
with us, except as follows.
Southridge is a limited partnership organized and existing under
the laws of the state of Delaware. All investment decisions of, and control of, Southridge is held by its general partner Southridge
Advisors, LLC. Stephen M. Hicks is the manager of Southridge Advisors, LLC, and he has voting and investment power over the shares
beneficially owned by Southridge Partners II, LP. To the extent such shares are offered for sale through a Put Notice, Southridge
will acquire all shares being registered in this offering in the financing transactions with us.
Southridge intends to sell up to $20,000,000 of shares of our
common stock pursuant to the Equity Purchase Agreement under this prospectus. On January 26, 2012, the Company and Southridge entered
into the Equity Purchase Agreement pursuant to which we have the opportunity, for a three-year period commencing on the date of
the Equity Purchase Agreement (but not before the date which the SEC first declares effective this registration statement), to
sell shares of our common stock. For each share of our common stock purchased under the Equity Purchase Agreement, Southridge will
pay 93% of the lowest Closing Price during the Valuation Period.
In addition, in the event the Closing Price decreases below
the Floor Price during the Valuation Period, Southridge shall not be allowed to fund one-fifth (1/5) of the put amount on the
Put Notice for each such trading day, and the put amount on the Put Notice shall be adjusted accordingly. In the event that during
a Valuation Period the Closing Price falls below the Floor Price for any two (2) trading days, then the balance of each party’s
rights and obligations to purchase and sell the investment amount under such Put Notice shall terminate on such second trading
day, and the put amount shall be adjusted to include only one-fifth (1/5) of the initial put amount for each trading day during
the Valuation Period prior to such termination date that the closing Closing Price equals or exceeds the Floor Price.
We are relying on an exemption from the registration requirements
of the Securities Act for the private placement of our securities under the Equity Purchase Agreement pursuant to Section 4(2)
of the Securities Act and/or Rule 506 of Regulation D promulgated thereunder. The transaction does not involve a public
offering, Southridge is an “accredited investor” and/or qualified institutional buyer and Southridge has access to
information about us and its investment.
There are substantial risks to investors as a result of the
issuance of shares of our common stock under the Equity Purchase Agreement. These risks include dilution of stockholders and significant
decline in our stock price.
Southridge will periodically purchase shares of our common stock
under the Equity Purchase Agreement and will in turn, sell such shares to investors in the market at the prevailing market price.
This may cause our stock price to decline, which will require us to issue increasing numbers of shares to Southridge to raise the
same amount of funds, as our stock price declines.
Southridge is an “underwriter” within the meaning
of the Securities Act.
The Purchase Shares and Warrant Shares
On August 1, 2012, we entered into a Securities Purchase
Agreement (the “Securities Purchase Agreement”) with certain accredited investors (the “Financing Stockholders”)
to raise $500,000 in a private placement financing (the “Offering”). On August 6, 2012, after the satisfaction of
certain closing conditions, the Offering closed and we issued to the Purchasers: (i) an aggregate of 1,066,667 shares of our common
stock at a price per share of $0.46875 (the “Purchase Shares”) and (ii) warrants to purchase an equal number of shares
of our common stock at an exercise price of $0.6405 with a term of 5 years (the “Warrants”), for aggregate gross proceeds
of $500,000. The Purchase Shares and Warrants were issued pursuant to an exemption from registration afforded by Section 4(2)
and Regulation D (Rule 506) under the Securities Act of 1933, as amended and corresponding provisions of state securities laws.
The Selling Security Holders Table
The following table sets forth the names of the Selling
Security Holders, the number of shares of common stock beneficially owned by each Selling Security Holder as of the date hereof
and the number of shares of common stock being offered by each Selling Security Holder. The shares being offered hereby
are being registered to permit public secondary trading, and the Selling Security Holders may offer all or part of the shares
for resale from time to time. However, the Selling Security Holders are under no obligation to sell all or any portion of such
shares nor are the Selling Security Holders obligated to sell any shares immediately upon effectiveness of this prospectus. All
information with respect to share ownership has been furnished by the Selling Security Holders. The “Amount Beneficially
Owned After Offering” column assumes the sale of all shares offered.
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Shares
Beneficially
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Amount
Beneficially
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Percent
Beneficially
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Owned Prior To
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Shares to
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Owned After
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Owned
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Name
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Offering
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be Offered
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Offering
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After Offering
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Southridge Partners II, LP (1)
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35,000
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59,347,181
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(4)
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35,000
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Less than 1
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%
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Anson Investments Master Fund LP(2)
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1,706,666
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1,706,666
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(5)
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0
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0
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%
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Cranshire Capital Master Fund, Ltd. (3)
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426,668
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426,668
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(6)
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0
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0
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%
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(1)
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Southridge Partners II, LP is a limited partnership organized
and exiting under the laws of the state of Delaware. Southridge Advisors,
LLC is the general partner of Southridge and has voting and investment
power over the shares beneficially owned by Southridge Partners II,
LP. Stephen M. Hicks is the manager of Southridge Advisors, LLC, and
he has voting and investment power over the shares beneficially owned
by Southridge Partners II, LP.
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(2)
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Moez Kassam has voting and dispositive control over the shares
beneficially owned by Anson Investments Master Fund LP.
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(3)
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Cranshire Capital Advisors, LLC (“CCA”) is the
investment manager of Cranshire Capital Master Fund, Ltd. (“Cranshire
Master Fund”) and has voting control and investment discretion
over securities held by Cranshire Master Fund. Mitchell P. Kopin (“Mr.
Kopin”), the president, the sole member and the sole member
of the Board of Managers of CCA, has voting control over CCA. As a
result, each of Mr. Kopin and CCA may be deemed to have beneficial
ownership (as determined under Section 13(d) of the Securities Exchange
Act of 1934, as amended) of the securities held by Cranshire Master
Fund.
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(4)
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Calculated based on the average of the high and low prices
of our common stock on September 6, 2012 of $0.337. This number assumes
we sell the entire $20,000,000 worth of shares being offered pursuant
to this Prospectus. This amount also assumes that Southridge purchases
the maximum amount of registrable Put Shares in this registration
statement.
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(5)
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Includes 853,333 shares of our common stock and 853,333 shares
underlying warrants to purchase our common stock.
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(6)
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Includes 213,334 shares of our common stock and 213,334 shares
underlying warrants to purchase our common stock.
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All expenses incurred with respect to the registration of
the common stock will be borne by us, but we will not be obligated to pay any underwriting fees, discounts, commission or other
expenses incurred by the Selling Security Holders in connection with the sale of the Purchase Shares.
Neither the Selling Security Holders nor any of their associates
or affiliates has held any position, office, or other material relationship with us in the past three years.
PLAN OF DISTRIBUTION
This prospectus relates to the resale of Shares of our common
stock, par value $0.001 per share, by the Selling Security Holders, including (i) the resale of up to an aggregate of $20,000,000
of our common stock, par value $0.001 per share, by Southridge, which are Put Shares that we will put to Southridge pursuant
to the Equity Purchase Agreement, (ii) 1,066,667 of Purchase Shares, and (iii) 1,066,667 shares of common stock issuable upon
the exercise of outstanding Warrants.
The Selling Security Holders and any of their respective
pledges, donees, assignees and other successors-in-interest may, from time to time, sell any or all of their shares of our common
stock on any stock exchange, market or trading facility on which the shares are traded or in private transactions. The
Selling Security Holders may use any one or more of the following methods when selling shares:
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ordinary brokerage transactions and transactions
in which the broker-dealer solicits purchasers;
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block trades in which the broker-dealer will attempt
to sell the shares as agent, but may position and resell
a portion of the block as principal to facilitate the transaction;
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purchases by a broker-dealer as principal and resale
by the broker-dealer for its account;
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an exchange distribution in accordance with the rules
of the applicable exchange;
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privately negotiated transactions;
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broker-dealers may agree with a Selling Security
Holder to sell a specified number of such shares at a stipulated
price per share;
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·
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through the writing of options on the shares;
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·
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a combination of any such methods of sale; and
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·
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any other method permitted pursuant to applicable
law.
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According to the terms of the Equity Purchase Agreement, neither
Southridge nor any affiliate of Southridge acting on its behalf or pursuant to any understanding with it will execute any short
sales during the term of this offering.
The Selling Security Holders or their respective pledgees,
donees, transferees or other successors in interest, may also sell the shares directly to market makers acting as principals and/or
broker-dealers acting as agents for themselves or their customers. Such broker-dealers may receive compensation in
the form of discounts, concessions or commissions from the Selling Security Holders and/or the purchasers of shares for whom such
broker-dealers may act as agents or to whom they sell as principal or both, which compensation as to a particular broker-dealer
might be in excess of customary commissions. Market makers and block purchasers purchasing the shares will do so for their own
account and at their own risk. It is possible that the Selling Security Holders will attempt to sell shares of common
stock in block transactions to market makers or other purchasers at a price per share which may be below the then market price. The
Selling Security Holders cannot assure that all or any of the shares offered in this prospectus will be issued to, or sold by,
the Selling Security Holders. In addition, the Selling Security Holders and any brokers, dealers or agents, upon effecting
the sale of any of the shares offered in this prospectus are “underwriters” as that term is defined under the Securities
Act or the Exchange Act, or the rules and regulations under such acts. In such event, any commissions received by such
broker-dealers or agents and any profit on the resale of the shares purchased by them may be deemed to be underwriting commissions
or discounts under the Securities Act.
Discounts, concessions, commissions and similar selling
expenses, if any, attributable to the sale of shares will be borne by a Selling Security Holder. The Selling Security Holders
may agree to indemnify any agent, dealer or broker-dealer that participates in transactions involving sales of the shares if liabilities
are imposed on that person under the Securities Act.
The Selling Security Holders may from time to time pledge
or grant a security interest in some or all of the shares of common stock owned by them, and, if they default in the performance
of their secured obligations, the pledgees or secured parties may offer and sell the shares of common stock from time to time
under this prospectus after we have filed an amendment to this prospectus under Rule 424(b)(3) or any other applicable provision
of the Securities Act amending the list of Selling Security Holders to include the pledgee, transferee or other successors in
interest as Selling Security Holder under this prospectus.
The Selling Security Holders also may transfer the shares
of common stock in other circumstances, in which case the transferees, pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus and may sell the shares of common stock from time to time under this prospectus
after we have filed an amendment to this prospectus under Rule 424(b)(3) or other applicable provision of the Securities Act amending
the list of Selling Security Holders to include the pledgee, transferee or other successors in interest as a Selling Security
Holder under this prospectus.
We are required to pay all fees and expenses incident to
the registration of the shares of common stock. Otherwise, all discounts, commissions or fees incurred in connection
with the sale of our common stock offered hereby will be paid by the Selling Security Holders.
The Selling Security Holders acquired or will acquire the
securities offered hereby in the ordinary course of business and have advised us that they have not entered into any agreements,
understandings or arrangements with any underwriters or broker-dealers regarding the sale of their shares of common stock, nor
is there an underwriter or coordinating broker acting in connection with a proposed sale of shares of common stock by any Selling
Security Holder. We will file a supplement to this prospectus if a Selling Security Holder enters into a material arrangement
with a broker-dealer for sale of common stock being registered. If the Selling Security Holders use this prospectus
for any sale of the shares of common stock, it will be subject to the prospectus delivery requirements of the Securities Act.
Pursuant to a requirement by the Financial Industry Regulatory
Authority, or FINRA, the maximum commission or discount to be received by any FINRA member or independent broker/dealer may not
be greater than eight percent (8%) of the gross proceeds received by us for the sale of any securities being registered pursuant
to SEC Rule 415 under the Securities Act.
The anti-manipulation rules of Regulation M under the Exchange
Act, may apply to sales of our common stock and activities of the Selling Security Holders. The Selling Security Holders
will act independently of us in making decisions with respect to the timing, manner and size of each sale.
Southridge is an “underwriter” within the meaning
of the Securities Act in connection with the sale of our common stock under the Equity Purchase Agreement. For each share of common
stock purchased under the Equity Purchase Agreement, Southridge will pay 93% of the lowest closing bid price of our common stock
during the Valuation Period.
We will pay all expenses incident to the registration, offering
and sale of the shares of our common stock to the public hereunder other than commissions, fees and discounts of underwriters,
brokers, dealers and agents. If any of these other expenses exists, we expect Southridge to pay these expenses. We
have agreed to indemnify Southridge and its controlling persons against certain liabilities, including liabilities under the Securities
Act. We estimate that the expenses of the offering to be borne by us will be approximately $40,000. We will not receive
any proceeds from the resale of any of the shares of our common stock by Southridge. We may, however, receive proceeds
from the sale of our common stock under the Equity Purchase Agreement.
DESCRIPTION OF SECURITIES TO BE REGISTERED
General
The following summary includes a description of material provisions
of our capital stock.
Authorized and Outstanding Securities
The Company is authorized to issue 100,000,000 shares of
common stock, par value $0.001 per share. As of August 29, 2012, there were issued and outstanding 66,555,635
shares of our common stock.
Common Stock
The holders of our common stock are entitled to one vote for
each share on all matters to be voted on by the shareholders. Holders of common stock do not have cumulative voting rights. Holders
of common stock are entitled to share ratably in dividends, if any, as may be declared from time to time by the board of directors
in its discretion from funds legally available therefore. In the event of a liquidation, dissolution or winding up of the Company,
the holders of common stock are entitled to share pro rata all assets remaining after payment in full of all liabilities. All of
the outstanding shares of common stock are fully paid and non-assessable. Holders of common stock have no preemptive rights to
purchase the Company’s common stock. There are no conversion or redemption rights or sinking fund provisions with respect
to the common stock.
Dividends
Dividends, if any, will be contingent upon our revenues and
earnings, if any, capital requirements and financial conditions. The payment of dividends, if any, will be within the discretion
of our board of directors. We intend to retain earnings, if any, for use in its business operations and accordingly, the board
of directors does not anticipate declaring any dividends in the foreseeable future.
Registration Rights
Southridge
Registration Rights
In accordance
with the Registration Rights Agreement (“Rights Agreement”) entered into with Southridge, Southridge is entitled to
certain rights with respect to the registration of the shares of common stock issued in connection with the Equity Purchase Agreement
(the “Registrable Securities”).
Within ninety
(90) days after the effective date of the Rights Agreement, we are obligated to file a registration statement with respect to the
Registrable Securities. Upon becoming effective, such registration statement shall remain effective at all times until the earliest
of (i) the date that is three months after the completetion of the last sale of common shares under the Equity Purchase Agreement,
(ii) the date when Southridge may sell all Registrable Securities under Rule 144 without volume limitations, or (iii) the date
Southridge no longer owns any of the Registrable Securities. We must also use all commercially reasonable efforts to registerand/or
qualify the Registrable Securities under such other securities or blue sky laws of such jurisdictions as Southridge may reasonably
request and in which significant volumes of shares of our common stock are traded.
We will pay all
reasonable expenses incurred in connection with the registrations described above. However, we will not be responsible for any
broker or similar concessions or any legal fees or other costs of Southridge.
Financing
Stockholder Registration Rights
In accordance
with the Registration Rights Agreement (the “Financing Rights Agreement”) entered into with the Financing Stockholders,
the Financing Stockholders are entitled to certain rights with respect to this registration statement and with respect to future
securities.
Within thirty
(30) days following the effective date of the Financing Rights Agreement, we are obligated to file a registration statement with
respect to the shares of common stock held by the Financing Stockholders and the common stock issuable upon exercise of the Warrants
held by the Financing Stockholders. We must use commercially reasonable best efforts to keep such registration statement continuously
effective until all registrable securities covered by such registration statement (i) have been sold, thereunder or pursuant to
Rule 144, or (ii) may be sold without volume or manner-of-sale restrictions pursuant to Rule 144, as determined by the counsel
to the Company pursuant to a written opinion letter to such effect.
All fees and
expenses incident to the performance of or compliance with, the Financing Rights Agreement by the Company shall be borne by the
Company
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this prospectus as having prepared
or certified any part of this prospectus or having given an opinion upon the validity of the securities being registered or upon
other legal matters in connection with the registration or offering of the common stock was employed on a contingency basis, or
had, or is to receive, in connection with the offering, a substantial interest, direct or indirect, in the registrant or any of
its parents or subsidiaries. Nor was any such person connected with the registrant or any of its parents or subsidiaries as a promoter,
managing or principal underwriter, voting trustee, director, officer, or employee.
The financial statements included in this prospectus and in
the registration statement have been audited by Li & Company, PC, and are included in reliance upon such report given upon
the authority of said firm as experts in auditing and accounting.
The validity of the issuance of the common stock hereby will
be passed upon for us by Greenberg Traurig, LLP.
INFORMATION WITH RESPECT TO THE REGISTRANT
Background
We are a farm management company with a focus on stevia
agronomics from plant breeding to good agricultural practices to post-harvest techniques and commercial applications. We provide
farm management services to contract growers and other industry growers integrating our stevia focused research and development
and intellectual property acquisitions.
We were incorporated on May 21, 2007 in the State of Nevada
under the name Interpro Management Corp. On March 4, 2011, we changed our name to Stevia Corp. and effectuated a 35 for 1 forward
stock split of all of our issued and outstanding shares of common stock. Our initial business focus was on development of a software
product for tracking employee productivity and projects.
On June 23, 2011, we closed a voluntary share exchange transaction
(the “Share Exchange Transaction”) with Stevia Ventures International Ltd., a business company incorporated in the
British Virgin Islands, pursuant to which we acquired certain rights relating to stevia production, including certain exclusive
purchase contracts and a supply agreement related to stevia. In connection with the Share Exchange Transaction, on June 23, 2011,
Mohanad Shurrab, a shareholder of the Company, surrendered 33,000,000 shares of the Company’s common stock to the Company
for cancellation.
On March 19, 2012, we formed a wholly-owned subsidiary,
Stevia Asia Limited, a company incorporated under the companies ordinance of Hong Kong (“Stevia Asia”) that will allow
the Company to expand its China operations. Hero Tact Limited, a wholly-owned subsidiary of Stevia Asia, was incorporated under
the companies ordinance of Hong Kong.
On July 5, 2012, Stevia Asia entered into a Cooperative
Agreement with Technew Technology Limited (“Technew Technology”), a company incorporated under the companies ordinance
of Hong Kong, and Zhang Jia, a Chinese citizen (together with Technew Technology, the “Partners”) pursuant to which
Stevia Asia and Partners have agreed to engage in a joint venture to be owned 70% by Stevia Asia and 30% by Technew Technology,
through the entity Stevia Technew Limited.
The following diagram
illustrates our corporate structure:
Overview
Our focus is on implementing quality agribusiness solutions
to our partners, contract growers and customers to maximize the efficient production and economic development of stevia leaf.
Our management team has expertise in farm management and contract growing in Asia, and experience in international business management.
Our mission is to become a global leader of stevia leaf
growers and to create a competitive advantage by focusing on the full spectrum of agronomic and business inputs and to develop,
secure, or acquire the latest intellectual property that will enable us to consistently produce high per unit volumes of high
quality leaf utilizing environmentally sustainable methods that create a positive social impact.
To achieve these goals we believe we need to develop a suite
of intellectual property relating to stevia production that will enhance the value of our farm management operations as well as
our own stevia production. Through our business partnerships we are exploring the market for commercial applications of stevia
which may be vertically integrated into our services and production.
We believe we can accomplish our mission by becoming the stevia
agribusiness partner of choice for our contract growers and customers, thereby creating global synergies and producing a sustainable
supply of stevia leaf sufficient to support vertical integration of extraction facilities in each country that we operate.
Our target markets are initially Vietnam and Indonesia where
we have contracted with growers and have established our own nurseries and test fields. Although our priority is Asia, our services
are not limited to specific countries and we plan to pursue viable opportunities in other markets.
The Industry and Our Opportunity
Stevia as a Food Additive
We believe that health issues created by the modern diet
are causing consumers to look for more natural products and simpler ingredient lines on the foods and beverages they purchase
and causing governments to put pressure on the food industry to offer products with reduced calories.
In evaluating potential sweetener alternatives, manufacturers
focus on taste, pricing, and a sustainable and scalable supply. Stevia fulfills these four criteria and has the added advantage
of contributing no calories to food and beverage with a near zero glycemic index, making it safe for diabetics. Additionally,
stevia has the benefit of having excellent application synergies with sugar and corn as well as cost advantages that can offset
sugar and corn sweetener input costs. In addition the new blending approaches being used to combine stevia with sugar and corn
sweetener to produce reduced calorie products completely overcomes any negative taste profiles.
Originating from Paraguay, stevia leaf has been valued for centuries
because of its sweetening properties and has been used as an approved sweetener in Japan and Korea for decades. Extracts from stevia
contain a mixture of different molecules that vary depending upon climate and growing conditions and it was historically impossible
to come up with clear and consistent specifications of the product needed to make it a reliable ingredient. This issue was only
overcome in recent years by identifying the steviol glycoside molecules with the best taste profiles and by developing innovative
and unique process technologies to separate and purify stevia extract to pharmaceutical levels of purity on a reliable and consistent
basis: and, importantly, to do so in commercially viable volumes.
In 2008, Rebaudioside A, a steviol glycoside, was granted
GRAS (Generally Recognized as Safe) status by the U.S. Food and Drug Administration following applications by Cargill and Merisant.
Since then, approval by legislators across the world has opened the door to new formulations and reformulations of foods and beverages
with zero or reduced calorie content. In 2009, stevia was incorporated into leading soft drinks brands manufactured by Coca-Cola
and PepsiCo and has since been incorporated into many categories of food and beverages.
The stevia industry is segmented into three main business
processes: i) extraction and purification, ii) product formulation, applications and marketing, and iii) plant breeding and farming.
A significant portion of the cost of refined stevia is a
result of the leaf cost and we believe there remains considerable opportunity to build value in the supply chain by focusing on
stevia agronomics. The stevia genus includes more than 100 species and each species contains unique sweet compounds. However,
only two of these species contain steviol glycosides and of these two the variety with the sweetest compounds is stevia rebaudiana
bertoni. There is relatively little technical knowledge of this species and almost all commercial growing of stevia has occurred
in China because of the traditional Japanese and Korean markets. Now with the global market demand for high TSG (total steviol
glycoside) and high Reb-A (Rebaudioside A) producing plants, there is an increased demand for agronomic and farm management expertise
to establish new plantations and rapidly scale leaf production.
The primary competitors within this market segment include:
PureCircle, which has extensive operations in China as well as subsidiaries in South America (Paraguay) and Africa (Kenya); Stevia
One, an independent grower established in Peru, who is adopting the plantation model and is targeting approximately 1,000 Ha under
cultivation; S&W Seed Company, who signed a supply agreement with PureCircle in July of 2010 to grow stevia in North America
under its subsidiary, Stevia California; and GLG Life Tech Corporation, a China-centric company which has chosen to continue to
focus on building and expanding its supply chain within China.
Stevia as a Commercial Product
In March 2012, we announced that we had begun testing certain
proprietary formulations which incorporate stevia extracts for the purpose of fertilizer and feed applications. These proprietary
formulations include aquaculture feed for shrimp, feed for livestock, granular fertilizers and foliar spray, each of which holds
the potential to open new revenue opportunities to us. Commercial trials of these formulations are on-going and initial stevia
harvests using the formulations are anticipated for the third quarter of 2012.
Feed additives provide an important value add market to
vertically integrate downstream within our core competency. Consumer awareness has brought about a rise in demand of healthy and
safe animal derived food. A complete ban on antibiotics usage as growth promoters was instituted in the European Union in 2006
and the United States in 2009. This has created a demand for safe natural feed additives that improve the growth rate and health
of animals.
This opens up an additional market for stevia extracts and
also provides a market for the complete plant including the leaf and stem. While the overall feed additive market is dominated
by large companies such as C.P. Group, no major company has established a line of stevia feed additives to date.
We have begun testing our feed additives in China where
such use has already received governmental approval. We expect similar approval for Vietnam during the current calendar year.
We have begun initial trials to confirm the economics and
validate the effectiveness of stevia fertilizers and foliar sprays.
Products and Services
Growth Cycle -
The stevia plant is a perennial
but the growing cycle varies greatly depending on the particular strain and location. Stevia is sensitive to frost and in
China where most stevia is grown today, it is common to only have one or two harvests. Closer to the equator it is possible
to harvest year round with some dormancy during the winter months. It is also possible to manipulate the harvest cycle and
in developing countries where manual labor is the preferred method, a short cycle of as little as 45 to 60 days between harvests
is preferred. However, in more developed countries where mechanization is the focus, a longer growing cycle is preferred
and cycles of more than 120 days have been achieved.
Yield -
Expected annual dry leaf yields of
plant varieties commonly sourced from China is three to six tons per Ha. Field trial data indicates that six tons or
more per hectare (Ha) can be achieved working with elite strains. We are focused on securing such strains and adapting them to
local growing environments. By continuing to build our inventory of elite strains and refine our farm management practices
and technologies, we plan to improve yield and plant performance and exploit the economic value of our intellectual
property.
Harvest -
Stevia is a very labor intensive
plant and traditionally has been harvested by hand. As larger commercial operations have begun to focus on stevia, a considerable
amount of research is being put into the mechanization of planting, harvesting and leaf removal. While we will need to maximize
mechanization in the United States to be economical, in many Asian locations there is both an abundance of low cost
labor and an expectation that stevia will provide an economic stimulus and employ many of the farmers
in poor rural areas. So the adoption of mechanization will need to consider both economic and social factors.
Location -
Currently over 80% of stevia is
grown in China and almost all of the high Reb-A variety stevia leaf is being produced in China. China is the center of commercial
stevia growing for historical reasons due to its proximity to Japan and Korea, which have historically been the major markets
for stevia. There is an effort to diversify away from China for high Reb-A production now that high Reb-A leaf production is in
global demand. Due to its climate, China is likely not the most geographically optimal location to grow stevia, as stevia is sensitive
to frost and China typically produces only one or two crops per year, requiring leaf processors to purchase and store sufficient
leaf for an entire year of production.
Diversifying the supply chain of stevia leaf would provide
several advantages:
|
·
|
Incorporating
Southern Hemisphere
production provides
two major growing
seasons;
|
|
·
|
Incorporation
Equatorial production
provides for year
round production;
|
|
·
|
Enables
better control
of leaf quality
where major propagation
of stevia varieties
is controlled;
|
|
·
|
Provides
protection against
country-specific
political, regulatory,
disease, and natural
disaster risk;
and
|
|
·
|
Provides
operations closer
to end markets.
|
Infrastructure is
a major criteria for field site selection and can be especially challenging in developing countries. A viable site must
have the proper weather and soil that is suitable for plant growth as well as being in a location that satisfies logistical business
considerations, such as being easily accessible and in close proximity to a capable labor pool. Access to water can often be
a challenge and greatly limits the areas where an irrigation model can be applied. Vietnam has excellent
road infrastructure and our fields are easily accessible by passenger car or lorry and most potential growing areas
are located within hours of a major port city. Indonesia has an abundance of low cost labor and land available for acquisition
that is suitable for new varieties of stevia that we are breeding and/or acquiring to grow in the equatorial zone.
Land Use -
Based on current land ownership
in Vietnam, we will need to rely on both contract farming and plantation models. In Indonesia, we will be able to acquire vast
tracts of land and will prioritize farming models based purely on the economics and preferred levels of capital risk exposure.
We are conducting field trials under both methods to determine the preferred model.
Labor and Research and Development -
Stevia
is a labor intensive plant and it is also a very technical plant requiring a high degree of knowledge and/or expertise to
manage it properly. This is especially true of the newer high Reb-A varieties. Although the stevia plant
naturally produces Reb-A, it does not require a high concentration to survive in its natural environment. The high Reb-A
varieties are newly developed and there is very limited experience and knowledge in the world about the proper techniques to care
for these plants. Therefore, our initial funding will be largely used to secure elite plant varieties, culling the current planted
varieties, developing state of the art propagation techniques, conducting field trials, documenting local operating procedures
and developing post-harvest techniques.
Financial
- The value of the stevia leaf fluctuates
based on supply and demand and the quality of the leaf. Wide seasonal variances on the open market are common
and make long-term planning difficult. By entering into long-term supply contracts with leaf buyers we will be able
to plan our growth and commit to large plantations and contract growers. In addition, buyers of leaf pay a substantial
premium for high quality leaf. This places strong economic value on our intellectual property, including our elite stevia
strains, and our farm management solutions.
Current contracted selling price for leaf that meets the minimum
standards is set at a fixed price. Leaf exceeding the minimum standards will receive a premium for which the benchmarks and price
tiers will be reviewed each year based on comparative market leaf quality and supply and demand.
Historically, leaf that produced 13% TSG and 70% Reb-A was
purchased at a premium. Elite strains can potentially deliver TSG well above 12% and Reb-A above 80% providing significant economic
advantage. Minimum standards require a TSG of 12% or more, Reb-A to be at least 60% of TSG, maximum of 5% impurities and a maximum
moisture content of 10%.
Our Key Contracts and Relationships
Growers Synergy
Effective November 1, 2011, we engaged Growers Synergy Pte
Ltd, a regional farm management services provider (“Growers Synergy”), to provide farm management operations and back-office
and regional logistical support for our Vietnam and Indonesia operations for a period of two years. In addition, Growers Synergy
will enter into an agreement to purchase from us all the non-stevia crops produced at the farms for which they are providing management
services.
We believe that the relationship with Growers Synergy will provide
us with a strategic advantage and potential synergistic partnership by providing us with guaranteed off-take agreements for agriculture
crops other than stevia, which will be produced as part of inter-cropping practices to maintain optimal soil conditions for stevia
farming. Growers Synergy will work with us and our technology partners to combine the agronomy protocol with the farming models.
Models and their related protocols will be commercially field tested during the first two years working with the provincial and
national programs and establishing 100 Ha of field trials.
A local farm management service, such as Growers Synergy
is critical to assist us in training local teams with the documented protocol sufficient to scale to 1,000 Ha to create a turnkey
project. Our goal, after two years, is to be vested with fully documented protocols, local teams of trained staff capable of supporting
the scale up to 1,000 Ha and farmers communities that are capable of growing stevia. To help us achieve this Growers Synergy will
provide the necessary resources and assign staff to fill certain managerial and support staff positions.
Tech-New Bio-Technology
In March 2012, we entered into both a Supply Agreement and
Cooperative Agreement with Guangzhou Health China Technology Development Company Limited, operating under the trade name Tech-New
Bio-Technology (“TechNew”). TechNew is a developer and manufacturer of hi-tech biotechnology products which offers
a series of specialized ecological fertilizers, microbiological preparations and management systems for the agriculture and aquaculture
industry as well as technologies for the extraction and refinement of high purity stevia. Under the terms of the Supply Agreement,
we are able to sell dry stevia plant product exclusively to TechNew including all leaf and stem. Under the terms of the Cooperative
Agreement, we agreed to explore potential technology partnerships with TechNew, with the intent to formalize a joint venture to
pursue promising technologies and businesses. These include the inclusion of stevia extracts in its current product formulations
for use in agriculture and aquaculture applications including fertilizers and feed.
Through our cooperative agreement with TechNew, we will
also explore a potential relationship to integrate extraction and refining technology to produce high purity Reb-A and other steviol
glycosides for the consumer market. We believe that vertically integrating our technologies for both commercial and consumer products
may provide advantages of a diversified market, but we do not intend to
enter the consumer market with a finished product. We believe
that our core competency is farm management and developing technologies for production and post harvest processes and that the
consumer market is extremely competitive.
TechNew Technology Limited
On July 5, 2012, our wholly-owned subsidiary, Stevia Asia
entered into a Cooperative Agreement with Technew Technology Limited (“Technew Technology”), a company incorporated
under the companies ordinance of Hong Kong, and Zhang Jia, a Chinese citizen (together with Technew Technology, the “Partners”)
pursuant to which Stevia Asia and Partners have agreed to engage in a joint venture to be owned 70% by Stevia Asia and 30% by
Technew Technology (the “Joint Venture”), through the entity Stevia Technew Limited. The Joint Venture will allow
us to further explore potential stevia commercial applications, which we would integrate into our farm management services and
our own stevia production.
Independent Grower Relationships
We plan to develop a network of partner growers who we can
market our production methods and technologies to and who will also help supply us with the stevia product necessary to fulfill
our supply obligations. To date we have entered into initial purchase agreements with several companies.
Our Farm Management Services and Intellectual Property
Our objective is to provide a full spectrum of farm management
services to manage our contract farms, service industry growers and provide for optimal stevia and intercrop production. To achieve
this objective, our focus is on intellectual property development including identifying optimal cultivar varieties for intended
growing sites, developing and testing a propagation protocol, developing cultivation technology including an intercropping system
and regional adaptability test, and developing post-harvest and refinery processes.
We are also developing local SOP (standard operating procedures)
manuals specific to each growing location and plant variety, which will document the proper use of all inputs including a proprietary
crop production system that we believe is more efficient and cost effective than traditional methods. We believe this customized
operating manual will result in advanced propagation and growing techniques that can improve the quality and efficiency of the
stevia plants.
We are also developing a wide portfolio of highly efficient
and environmentally friendly crop nutrition products. These products are performance minerals, plant phyto-chemicals, functional
nutrients and microbial formulations. All products are derived from natural sources and can be used as sustainable agriculture
solutions and/or for organic farming.
Currently, we believe we may be the only company that delivers
the full spectrum of agricultural consulting and solutions for stevia growers, including:
TechNew Suite of Products -
through our technology
partner, TechNew, we have access to TechNew’s portfolio of technologies for the extraction and refinement of high purity
stevia, as well as their formulas for using stevia extract in feed and fertilizer applications. We have also entered into a joint
venture with Technew Technology to further explore potential stevia commercial applications, which we would integrate into our
farm management services and our own stevia production.
Elite Germplasm -
high performance mother
stock suitable for varied regions and environment.
Advanced Propagation Techniques
-
methods
that are efficient, more cost effective, and produce a higher quality plant.
Micro Suspension Products
-
a range
of fertilizers produced using a licensed proprietary micro suspension technology.
Our Competitive Advantage
We believe our intellectual property suite and our ability to
serve as a one-stop agribusiness solution will provide us with a competitive advantage against our competitors.
Our intellectual property, particularly our fertilizers and
other input products used in our protocols, have the potential to create a dedicated customer base because the protocols once implemented
on a farm call for continual use of our fertilizers and other products as a mandatory crop input. This long-term customer relationship
can enable us to create a substantial barrier to entry to potential new competitors, while at the same time providing networking
benefits that could further propagate our business.
Additionally, our developing relationship with TechNew has
the potential to make us an attractive partner to growers who are looking for a guaranteed market for their stevia and our supply
relationship with TechNew will allow us to commit to purchase the entire plant material harvested including the stem which increases
total crop yield, productivity and income.
Market Trends and Segments
Within the market of stevia as a food additive, the trend
has been towards the continued launch of new stevia-sugar blended products. Two industry leaders, PureCircle and GLG Life Tech,
have partnered with major sugar manufacturers in the U.S. (Imperial Sugar), Denmark (NordZucker), France (Tereos), Great Britain
(British Sugar), and Australia (Sugar Australia) to market blended reduced calorie products. SteviaCane is a steviasucrose retail
product being marketed by Natural Sweet Ventures, a joint venture between PureCircle and Imperial Sugar.
With respect to the use of stevia extracts in commercial
applications such as fertilizers and feed applications, the trend is towards the usage of more natural inputs because of consumer
awareness of farming practices and how that impacts the quality of the end food products that they consume.
Our Properties
Our primary focus is on providing farm management services
to our contract growers. We have acquired two grower supply contracts and three nursery fields in Vietnam. More than twenty fields
have been established in five provinces in the northern half of Vietnam with a total propagation approaching 100 Ha.
The provincial locations include Hanoi, Bac Giang, Hai Duong,
Hoa Binh and Nghe An.
On December 14, 2011 we entered into a land lease agreement
with Stevia Ventures Corporation, one of our Suppliers, and Vinh Phuc Province People’s Committee Tam Dao Agriculture &
Industry Co., Ltd (“Vinh Phuc”) whereby Stevia Ventures Corporation leased 10 Ha of land over 5 years and we have
begun to develop a research facility that will also serve as a propagation center for farms located in the surrounding provinces
and particularly those serving the provincial and national sponsored projects.
To better service multiple farms located across the many provinces
stretching from north central Vietnam to the Chinese border, we will utilize the greenhouse facilities of our local grower partners
in a decentralized model that more efficiently addresses the logistical challenges presented by the contract farming model. It
is assumed that the commercial fields will be scaled by stem cutting and we will receive reimbursement for the cost of seedlings
one month after delivery.
In addition to our Vietnam operations, in April 2012, we
announced plans to begin a 2 Ha initial field trial in Indonesia which will utilize our intercropping model.
Regulation
Stevia extracts may be used in a wide variety of consumer
products including soft drinks, vegetable products, tabletop sweeteners, confectioneries, fruit products and processed seafood
products, in a wide range of countries, including almost all major markets, and as a dietary supplement in others. Clinical
studies have supported the safety and stability of stevia’s various high purity compounds used in food and beverages. There
is no known health threat and this is increasing consumer confidence in stevia as a sugar substitute.
Cargill and Merisant each submitted applications to the
United Stated Food and Drug Administration (FDA) in 1998 for GRAS approval. On December 17, 2008 the stevia extract, Rebaudioside
A (Reb-A), received GRAS approval.
In December 2008, Australia and New Zealand approved highly
purified forms of stevia extracts as safe for use in food and beverages. Previously, such extracts had only been permitted for
use as a dietary supplement in these countries.
Stevia extracts have been sanctioned by the Ministry of Health
of China to be used as a food additive, and are listed in the Sanitation Standard of Food Additives.
In July 2010 the FDA issued GRAS clearance for PureCircle’s
high purity SG95 stevia product which opened up opportunities for many more applications as well as more cost effective solutions.
In November 2011, the European Union cleared stevia for
use as a food additive in its twenty seven member states.
Further regulatory clearances were secured for Reb-A in
Switzerland confirming the growing regulatory support for high purity stevia. Presently in Canada stevia extracts are permitted
for use only as a dietary supplement.
International Laws
A significant portion of our initial business operations
will occur in Vietnam. We will be generally subject to laws and regulations applicable to foreign investment in Vietnam. Similarly,
as we expand into Indonesia and other markets, we will be subject to the laws and regulations of such jurisdictions. The Vietnam
legal system is based, at least in part, on written statutes. However, since these laws and regulations are relatively
new and the Vietnamese legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not
always uniform and enforcement of these laws, regulations and rules involves uncertainties. Similar to Vietnam, the
modern Indonesia legal system was formed relatively recently and is continuing to evolve.
Country
|
|
Type of Approval
|
|
|
|
North America
|
|
|
USA
|
|
Food additive
|
Canada
|
|
Dietary supplement
|
Mexico
|
|
Food additive
|
Latin America
|
|
|
Argentina
|
|
Food additive
|
Brazil
|
|
Food additive
|
Chile
|
|
Food additive
|
Colombia
|
|
Food additive
|
Ecuador
|
|
Food additive
|
Paraguay
|
|
Food additive
|
Peru
|
|
Food additive
|
Uruguay
|
|
Food additive
|
Venezuela
|
|
Food additive
|
Asia Pacific
|
|
|
Australia
|
|
Food additive
|
Brunei
|
|
Food additive
|
China
|
|
Food additive
|
Hong Kong
|
|
Food additive
|
Indonesia
|
|
Food additive
|
Japan
|
|
Food additive
|
Malaysia
|
|
Food additive
|
New Zealand
|
|
Food additive
|
Singapore
|
|
Food additive
|
South Korea
|
|
Food additive
|
Taiwan
|
|
Food additive
|
Thailand
|
|
Food additive
|
Vietnam
|
|
Dietary supplement
|
Europe
|
|
|
Austria
|
|
Food additive
|
Belgium
|
|
Food additive
|
Bulgaria
|
|
Food additive
|
Cyprus
|
|
Food additive
|
Czech Republic
|
|
Food additive
|
Denmark
|
|
Food additive
|
Estonia
|
|
Food additive
|
Finland
|
|
Food additive
|
France
|
|
Food additive
|
Germany
|
|
Food additive
|
Hungary
|
|
Food additive
|
Ireland
|
|
Food additive
|
Italy
|
|
Food additive
|
Latvia
|
|
Food additive
|
Lithuania
|
|
Food additive
|
Luxembourg
|
|
Food additive
|
Malta
|
|
Food additive
|
The Netherlands
|
|
Food additive
|
Poland
|
|
Food additive
|
Portugal
|
|
Food additive
|
Romania
|
|
Food additive
|
Slovakia
|
|
Food additive
|
Slovenia
|
|
Food additive
|
Spain
|
|
Food additive
|
Sweden
|
|
Food additive
|
Switzerland
|
|
Food additive
|
Russia
|
|
Food additive
|
United Kingdom
|
|
Food additive
|
We cannot predict the effect of future developments in the
legal systems of developing countries, including the promulgation of new laws, changes to existing laws or the interpretation
or enforcement thereof, the preemption of local regulations by national laws, or the overturn of local government’s decisions
by the superior government. These uncertainties may limit legal protections available to us.
Marketing
We believe it is important to educate the local governments
and farmer communities on the merits of stevia becoming a new commercial crop and its potential as a new economic stimulus for
rural farmers. Our President, Mr. George Blankenbaker, and our local partner have been conducting talks and training sessions
for more than three years in Vietnam and have fostered local support at many levels. To support the farmer’s transition
to stevia farming and provide an opportunity to showcase the stevia opportunity to farmers’ communities, the Vietnam government
has provided financial support at both the provincial and national level to plant 20 Ha and 50 Ha respectively, both of which
are expected to be completed in 2012. The fields are small plots located in several villages and will serve as demonstration fields
and stepping stones to gain wide support from growers in several villages.
We have entered into formal cooperative agreements with
several local institutes, including the National Institute of Medicinal Materials in Hanoi and the Agricultural Science Institute
of Northern Central Vietnam. These agreements provide local technical assistance for our grower partners and also provide additional
credibility when our grower partners present the stevia opportunity to the local farmers’ communities.
We are also in contact with non-governmental organizations
(NGO) that are seeking programs to bring to the communities that they serve which are generally located in poor rural areas in
need of economically sound projects. If the stevia model proves to be viable for these locations, the NGOs have indicated that
they will be interested in introducing and funding stevia farming programs. However, many of these poor rural areas are located
in areas of poor soil quality, that lack adequate access to water or that suffer from other environmental constraints which limit
the opportunities for this approach.
We also hope to generate many local testimonials from our
field trials and the farmers in Vietnam are very fluid and willing to adopt new crops if the new crops are proven to be more economically
viable than their current crops.
In connection with commercial opportunities for stevia derived
products, we intend to develop a mark that can be applied to a buyer’s brand which would signify premium quality stevia-derived
products.
Product Alternatives
As a full service stevia farm management service provider we
will face competition from both non-stevia sweetener products and from other service providers within the stevia industry.
Food Additive Product Alternatives
-
We believe stevia is the leader among natural zero calorie sweeteners at this time and it takes years to develop
and bring to market new sweeteners of which few end up possessing all the qualities needed to be adopted mainstream. At this time
we are not aware of any proven and viable alternative which possesses all of the positive qualities of stevia. As discussed above,
the other sweeteners currently on the market lack many of the qualities that make stevia attractive to consumers and manufacturers,
including the zero calorie/near zero glycemic index combination.
Because stevia as a food additive is an emerging industry
and few companies had previously done extensive research on growing high Reb-A producing stevia prior to its approval in December
of 2008, there are few companies that posses a comprehensive knowledge of stevia. As a result, and because the market is growing
so rapidly, we believe that an influx of competitors in the near term will not affect the industry significantly
Therefore, we believe that the most likely threat to stevia
growers will come from alternative “natural” methods to produce stevia extracts that obviate the need to farm stevia,
such as fermentation-derived stevia.
A fermentation-derived stevia ingredient would still meet
the requirements to be classified as a “natural” ingredient and when done at volume could potentially be produced
more economically than the farming method without impurities.
Major known companies that are progressing down this track include
Evolva Holding SA of Switzerland who has acquired San Francisco based Abunda Nutrition, Inc., and Blue California of Rancho Santa
Margarita, California.
There are four areas on which we will focus to reduce the
risk and/or impact of alternative methods of stevia ingredient production.
|
1.
|
Increase farming efficiencies
.
The more efficient and scaled farming becomes, the higher the
economic hurdle will be for other methods of production. We believe
that our intellectual property and continued research and development
activities will allow our farms and those of our customers to
increase efficiencies, decrease cost of production and produce
better quality leaf.
|
|
2.
|
Intellectual Property Protections.
We have a strong focus on developing protectable intellectual
property which we believe should create barriers to entry and
protect our methodologies. Additionally, where applicable we will
continue to consider the acquisition of potentially synergistic
intellectual property.
|
|
3.
|
Crop Diversification.
Our
farm management infrastructure and the majority of our intellectual
property is applicable to other high-value crops providing us
with the flexibility to diversify our crops and the customer base
for our farm management solutions.
|
|
4.
|
Product Diversification
.
We will explore additional markets and uses for stevia and seek
to acquire technology to diversify its applications.
|
Commercial Product Alternatives
Small regional companies in Japan, China, and South Korea
have been producing commercial stevia products for several years, focusing on their local markets. We believe with the awareness
of stevia on a global scale, this will provide an opportunity to develop a large commercial market. Once the market reaches critical
mass, large companies such as CP Group will likely enter the market.
We intend to protect our market by positioning ourselves
as both the primary provider of raw extract to companies such as CP Group, as well as establishing our own vertical markets utilizing
our farm management core competency to contract farm using our commercial stevia products.
Employees
George Blankenbaker, our President
and a director, is our sole employee.
Our relationship with our farm management
partner, Growers Synergy, currently provides the staffing necessary to operate our farms and our technology partner, TechNew,
provides the staffing for our technical operations.
We chose to outsource the operations management during our
development phase to minimize expenses and provide a team of qualified experienced staff to lead us through the development phase
until we are ready to commercialize. As we begin commercialization and revenue generation, we intend to begin to hire full time
staff.
PROPERTIES
Our
international corporate office is located at 14 Chin Bee Road, Singapore 619824. We also maintain an office in Vietnam at No.
602, CC2A, Thanh Ha ‘s building, Bac Linh Dam, Hoang Mai district, Hanoi, Vietnam and in Hong Kong, at 19/F Kam Chung Comm
Bldg 19-21, Hennessy Rd, Hong Kong and in the United States, at 7117 US 31 South, Indianapolis, IN 46227.
We have also begun development of a research facility on
10 Ha of land leased by Stevia Ventures Corporation and have prepaid the first year lease payment of $30,000 and the six month
lease payment of $15,000 as security deposit.
LEGAL PROCEEDINGS
None.
MARKET FOR COMMON EQUITY AND RELATED
SHAREHOLDER MATTERS
Market Information
Our common stock is quoted on the Over the Counter Bulletin
Board under the symbol STEV. The closing bid price for our stock as of September 6, 2012 was $0.33.
The following is the range of high and low bid prices for
our common stock for the periods indicated. The quotations reflect inter-dealer prices, without retail mark-up, mark-down or commissions
and may not represent actual transactions.
Interim Period From June 1, 2012 to August 30, 2012
|
|
High
|
|
|
Low
|
|
First Quarter (June 30, 2012)
|
|
$
|
1.69
|
|
|
$
|
.75
|
|
Second Quarter (July 1, 2012 to August 30, 2012)
|
|
$
|
.83
|
|
|
$
|
.30
|
|
Fiscal Year Ended March 31, 2012
|
|
High
|
|
|
Low
|
|
First Quarter (June 30, 2011)
|
|
$
|
1.60
|
|
|
$
|
.25
|
|
Second Quarter (September 30, 2011)
|
|
$
|
1.00
|
|
|
$
|
.85
|
|
Third Quarter (December 31, 2011)
|
|
$
|
1.05
|
|
|
$
|
.56
|
|
Fourth Quarter (March 31, 2012)
|
|
$
|
2.75
|
|
|
$
|
.667
|
|
Fiscal Year Ended March 31, 2011
|
|
High
|
|
|
Low
|
|
First Quarter (June 30, 2010)
|
|
$
|
.005714
|
|
|
$
|
.005714
|
|
Second Quarter (September 30, 2010)
|
|
$
|
.009143
|
|
|
$
|
.009143
|
|
Third Quarter (December 31, 2010)
|
|
$
|
.010286
|
|
|
$
|
.010286
|
|
Fourth Quarter (March 31, 2011)
|
|
$
|
.012571
|
|
|
$
|
.012571
|
|
Stockholders
As of August 29, 2012, there were 66,555,635 shares of common
stock issued and outstanding held by sixteen (16) stockholders of record (including street name holders).
Dividends
We have not paid dividends to date and do not anticipate paying
any dividends in the foreseeable future. Our Board of Directors intends to follow a policy of retaining earnings, if any, to finance
our growth. The declaration and payment of dividends in the future will be determined by our Board of Directors in light of conditions
then existing, including our earnings, financial condition, capital requirements and other factors.
MANAGEMENT’S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis
of the results of operations and financial condition for the period from inception (April 11, 2011) to March 30, 2012, and the
three months ended June 30, 2012, should be read in conjunction with the financial statements and related notes and the other
financial information that are included elsewhere in this Prospectus. This discussion includes forward-looking statements based
upon current expectations that involve risks and uncertainties, such as our plans, objectives, expectations and intentions. Actual
results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result
of a number of factors, including those set forth under the Risk Factors, Cautionary Notice Regarding Forward-Looking Statements
and Business sections in this registration statement on Form S-1. We use words such as “anticipate,” “estimate,”
“plan,” “project,” “continuing,” “ongoing,” “expect,” “believe,”
“intend,” “may,” “will,” “should,” “could,” and similar expressions
to identify forward-looking statements.
The following discussion should be read in conjunction with
our consolidated financial statements and notes thereto included elsewhere in this Registration Statement on Form S-1. Forward
looking statements are statements not based on historical information and which relate to future operations, strategies, financial
results or other developments. Forward-looking statements are based upon estimates, forecasts, and assumptions that are inherently
subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control
and many of which, with respect to future business decisions, are subject to change. These uncertainties and contingencies can
affect actual results and could cause actual results to differ materially from those expressed in any forward-looking statements
made by us, or on our behalf. We disclaim any obligation to update forward-looking statements.
Overview
We were incorporated on May 21, 2007
in the State of Nevada under the name Interpro Management Corp. On March 4, 2011, we changed our name to Stevia Corp. and effectuated
a 35 for 1 forward stock split of all of our issued and outstanding shares of common stock.
We are a development stage company
that has yet to generate significant revenue. We plan to generate revenues by (i) providing farm management services, which will
provide plant breeding, agricultural protocols, post-harvest techniques and other services to stevia growers, (ii) the sale of
agriculture inputs such as fertilizer to stevia growers, (iii) the sale of stevia and intercrops grown on our own farmed property
and (iv) the sale of products derived from the stevia plant.
During the past fiscal year, we have
begun our first commercial trials of stevia production in Vietnam. In connection with such production we have entered into supply
agreements for the off-take of the stevia we produce and entered into an agreement with Growers Synergy Pte Ltd to assist in the
management of our Vietnam day-to-day operations. We have also begun to explore commercial applications of stevia derived products
and have developed and acquired certain proprietary technology relating to stevia development which we can integrate into our
own stevia production and our farm management services. In connection with our intellectual property development efforts we have
engaged TechNew Technology Limited (“TechNew), as our technology partner in Vietnam and on July 5, 2012 we entered into
a Cooperative Agreement (the “Cooperative Agreement”) through our subsidiary Stevia Asia Limited (“Stevia Asia”),
with Technew and Zhang Ji, a Chinese citizen (together with Technew, the “Partners”) pursuant to which Stevia Asia
and Partners have agreed to engage in a joint venture to develop certain intellectual property related to stevia development,
such joint venture to be owned 70% by Stevia Asia and 30% by Technew (the “Joint Venture”). Pursuant to the Cooperative
Agreement Stevia Asia has agreed to contribute $200,000 per month, up to a total of $2,000,000 in financing, subject to the performance
of the Joint Venture and Stevia Asia's financial capabilities.
We have also continued to establish
research and production relationships with local institutions and companies in Vietnam. In April, 2012 we announced plans to begin
field trials in Indonesia.
Results of Operations
Our operations to-date have primarily consisted of securing
purchase and supply contracts and office space and developing relationships with potential partners. We have earned nominal revenues
since inception.
Our auditors have issued a going concern opinion. This means
that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional
capital.
The following discussion of the financial
condition, results of operations, cash flows, and changes in our financial position should be read in conjunction with our audited
consolidated financial statements and notes included in our Annual Report on Form 10-K for the fiscal year ended March 31, 2012,
filed June 29, 2012. Such financial statements have been prepared in conformity with U.S. GAAP and are stated in United States
dollars.
Comparison of Three Month Periods Ended June 30, 2012
With the Period from Inception April 11, 2011) to June 30, 2011
For the three month periods ended June 30, 2012 we incurred
a net loss of $413,937, compared to a net loss of $13,842 for the period from inception (April 11, 2011) to June 30, 2011. The
increase was largely attributed to increases in management fees, director and professional fees and research and development expenses.
General and administration expenses and professional fees
for the three month period ended June 30, 2012 amounted to $44,713 and $116,728 respectively, compared to $100 and $13,071 during
the period from inception (April 11, 2011) to June 30, 2011. Directors' fees for the three month period ended June 30, 2012 were
$93,750 compared to $0 during the period from inception (April 11, 2011) to June 30, 2011. Research and development cost for the
three month period ended June 30, 2012 were $78,984 compared to $0 during the period from inception (April 11, 2011) to June 30,
2011.
Results of Operations for the Period from Inception (April
11, 2011) to March 31, 2012
For the period from inception (April 11, 2011) to March
31, 2012, we incurred a net loss of $2,323,551.
General and administration expenses for such period, amounted
to $113,742. Salary and compensation expenses were $750,000 and professional fees were $255,959. Directors' fees and research
and development cost were $187,500 and $206,191, respectively.
Liquidity and Capital Resources
As at June 30, 2012 we have $17,062
in cash. As at June 30, 2012 we have $33,950 in current assets, and $1,167,970 in current liabilities. Our net working capital
deficiency as at June 30, 2012 was $1,134,020.
During the three month period ended
June 30, 2012, we used cash of $199,413 in operating activities and $1,323 in investing activities, respectively. During the three
month period ended June 30, 2012, we funded our operations from the proceeds of private sales of equity and/or convertible notes.
During the three month period ended June 30, 2012, we raised $200,000 through the issuance of convertible promissory notes and
$2,100 through advances from our President, or $202,100 net cash provided by financing activities.
Subsequent to the three month period
ended June 30, 2012, on August 1, 2012, we entered into a Securities Purchase Agreement with certain accredited investors (the
“Financing Stockholders”) to raise $500,000 in a private placement financing (the “Offering”). On August
6, 2012, after the satisfaction of certain closing conditions, the Offering closed and the Company issued to the Financing Stockholders:
(i) an aggregate of 1,066,667
shares of the Company's common stock at a price per share of $0.46875 and (ii) warrants to
purchase an equal number of shares of the Company's common stock at an exercise price of $0.6405 with a term of five (5) years,
for gross proceeds of $500,000. Garden State Securities, Inc. (“GSS”) served as the placement agent for such equity
financing. Per the engagement agreement signed between GSS and the Company on June 18, 2012, in consideration for services rendered
as the placement agent, the Company agreed to: (i) pay GSS cash commissions equal to $40,000, or 8.0% of the gross proceeds received
in the equity financing, and (ii) issue to GSS or its designee, a warrant to purchase up to 85,333 shares of the Company's common
stock representing 8% of the Shares sold in the Offering) with an exercise price of $0.6405 per share and a term of five (5) years.
In July, 2012 outstanding convertible
promissory notes in the principal amount of $500,000 were converted into an aggregate of 634,193 shares of our common stock.
We are currently seeking further financing
and we believe that will provide sufficient working capital to fund our operations for at least the next six months. Changes in
our operating plans, increased expenses, acquisitions, or other events, may cause us to seek additional equity or debt financing
in the future.
Our current cash requirements are significant
due to the planned development and expansion of our business. The successful implementation of our business plan is dependent
upon our ability to develop valuable intellectual property relating to stevia cultivation through our research programs, as well
as our ability to develop and manage our own stevia production operations. These planned research and agricultural development
activities require significant cash expenditures. We do not expect to generate the necessary cash from our operations during the
next 6 to 12 months to carry out these business objectives. As such, in order to fund our operations during the next 6 to 12 months,
we anticipate that we will have to raise additional capital through debt and/or equity financings, which may result in substantial
dilution to our existing stockholders. There are no assurances that we will be able to raise the required working capital on terms
favorable, or that such working capital will be available on any terms when needed. In addition, the terms of the Securities Purchase
Agreement contain certain restrictions on our ability to engage in financing transactions. Specifically, the Securities Purchase
Agreement prohibits us from engaging in any issuance of Common Stock for a period of 90 days after the effective date of the Securities
Purchase Agreement, and for a period of two years thereafter, contains additional restrictions on certain types of financing transactions.
The Securities Purchase Agreement contains carveouts to such financing restrictions for certain exempted transactions including
(i) issuances pursuant to a stock option plan, (ii) securities issued upon the conversion of outstanding securities, (iii) securities
issued pursuant to acquisitions or other strategic transactions, (iv) up to $500,000 in stock and warrants on the same terms as
set forth in the Securities Purchase Agreement, and (v) securities issued pursuant to the Southridge Equity Purchase Agreement.
The terms of the Equity Purchase Agreement with Southridge also contain a prohibition on us entering into any equity line of credit
with terms substantially comparable to the Equity Purchase Agreement for a period of 36 months following the date of such Equity
Purchase Agreement, without Southridge’s consent.
Off-Balance Sheet Arrangements
We have not entered into any other financial
guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative
contracts that are indexed to our shares and classified as shareholder’s equity or that are not reflected in our consolidated
financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated
entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated
entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development
services with us.
Critical Accounting Estimates
The preparation of financial statements
in conformity with generally accepted accounting principles of the United States (GAAP) requires management to make estimates
and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues and expenses during the year. The more significant
areas requiring the use of estimates include asset impairment, stock-based compensation, and future income tax amounts. Management
bases its estimates on historical experience and on other assumptions considered to be reasonable under the circumstances. However,
actual results may differ from the estimates.
The discussion and analysis of our
financial condition and results of operations are based upon our financial statements, which have been prepared in accordance
with GAAP. We believe certain critical accounting policies affect our more significant judgments and estimates used in the preparation
of the financial statements. A description of our critical accounting policies is set forth in our Annual Report on Form 10-K
for the fiscal year ended March 31, 2012, filed on June 29, 2012. As of, and for the three months ended June 30, 2012, there have
been no material changes or updates to our critical accounting policies.
DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the names and ages of our current
directors and executive officers, the principal offices and positions held by each person:
Person
|
|
Age
|
|
Position
|
George Blankenbaker
|
|
47
|
|
Director, President, Secretary and Treasurer
|
Dr. Pablo Erat
|
|
41
|
|
Director
|
Rodney L. Cook
|
|
59
|
|
Director
|
The information below with respect to our directors includes
such director's experience, qualifications, attributes, and skills that led us to the conclusion that they should serve as a director.
George Blankenbaker - President, Secretary, Treasurer and
Director
Mr. Blankenbaker became our President, Secretary, Treasurer
and Director in June, 2011. Since November 2008, Mr. Blankenbaker has been leading the development of high Reb-A stevia farming
in Vietnam. Mr. Blankenbaker was raised on a farm and became involved in large scale commercial agriculture in 2002 when he began
working with the Agri-Food Veterinary Authority of Singapore (AVA) to provide strategically important food supplies to Singapore
and has extensive experience managing agriculture projects in South East Asia. Mr. Blankenbaker received a Bachelors of Science
in Business Finance from Indiana University in 1988, where he also studied Asian Political Science. Mr. Blankenbaker's recent
activities and experience in Vietnam have laid the groundwork for the Company's current business strategy, and his in-depth knowledge
of such matters are invaluable to our board of directors.
Dr. Pablo Erat - Director
Dr. Erat was elected to our board of directors on October 4,
2011. Since January 2009, Dr. Erat has served as CEO of Pal & Partners AG, a Swiss-based group domiciled in Zug with offices
in Zurich and Mumbai and with a focus on the Indian agriculture industry. Prior to joining Pal & Partners AG, in 2008 Dr.
Erat served as a consultant to corporations and start-up companies in various industries to assist in the development and implementation
of innovative strategies. In April 2001, he co-founded Executive Insight, a strategy consulting firm and in January 2003, he co-founded
DocsLogic, a company specialized on the development of knowledge applications, where he remained through 2007. Dr. Erat is also
Assistant Professor at the ETH Zurich and regularly delivers speeches and workshops on strategic management principles for educational
and business communities. Dr. Erat received a Doctorate from the University of St. Gallen in Switzerland in June 2003. Dr. Erat's
extensive knowledge and experience working for and advising early stage companies as well as his experience in the agriculture
industry will be extremely relevant to the board.
Rodney L. Cook - Director
Mr. Cook was elected to the board of directors on October 6,
2011. Mr. Cook has an extensive background in agribusiness and is a practicing horticulturist with twenty years experience in
grower education, technology transfer from university to field, research and project development. In 2009, he founded Ag-View
Consulting, a horticulture and market development consulting firm, where he remained until 2011. From 2008 to 2009, Mr. Cook has
served as Chief Executive Officer and President of Naturipe Foods, LLC a multinational partnership of fruit growers. Prior to
joining Naturipe, Mr. Cook was with Producer Marketing Company from 1995 to 2008, where he served as Chief Executive Officer and
President. Producer Maketing was a grower owned corporation marketing blueberries for a group of growers. Mr. Cook received a
Masters of Science, with Honor, in Horticulture from Michigan State University and a Bachelors of Science, with Honor, in Resource
Development from Michigan State University. Mr. Cook's experience in the agriculture industry will provide critical experience
and perspective to the Company's board of directors.
Involvement In Certain Legal Proceedings
No director, executive officer, significant employee or control
person of the Company has been involved in any legal proceeding listed in Item 401(f) of Regulation S-K in the past 10 years.
Term of Office
Our directors are appointed for a one-year term to hold office
until the next annual general meeting of our shareholders or until removed from office in accordance with our bylaws. Our officers
are appointed by our Board of Directors and hold office until removed by the Board, absent an employment agreement.
EXECUTIVE COMPENSATION
Executive Compensation
The summary compensation table below shows certain compensation
information for services rendered in all capacities to us by our principal executive officer and principal financial officer and
by each other executive officer whose total annual salary and bonus exceeded $100,000 during the fiscal periods ended March 31,
2011 and March 31, 2012. Other than as set forth below, no executive officer’s total annual compensation exceeded
$100,000 during our last fiscal period.
Summary Compensation Table
Name and Principal Position (a)
|
|
Year
(b)
|
|
|
Salary
($)
(c)
|
|
|
Bonus
($)
(d)
|
|
|
Stock
Awards
($)
(e)
|
|
|
Option
Awards
($)
(f)
|
|
|
Non
Equity
Incentive
Plan
Compensation
($)
(g)
|
|
|
Non-qualified
Deferred
Compensation
Earnings
($)
(h)
|
|
|
All Other
Compensation
($)
(i)
|
|
|
Total
($)
(j)
|
|
George Blankenbaker
|
|
|
2012
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
750,000
|
|
|
$
|
750,000
|
|
President,
Secretary, Treasurer, Director (Principal Executive Officer and Principal Financial Officer)
|
|
|
2011
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
|
$
|
0
|
|
On June 23, 2011, as a result of the Share Exchange Agreement,
the sole shareholder of Stevia Ventures International Ltd. (“Stevia Ventures”) received 12,000,000 shares of our common
stock in exchange for 100% of the issued and outstanding common stock of Stevia Ventures. Mr. Blankenbaker, our President and
director, was the sole shareholder and officer of Stevia Ventures. Accordingly, he was a recipient of 12,000,000 shares of our
common stock issued in connection with the Share Exchange Transaction, 6,000,000 of which were to be held in escrow pending the
achievement by the Company of certain business milestones (the “Escrow Shares”). On December 23, 2011, 3,000,000 of
the 6,000,000 Escrow Shares were earned and released to Mr. Blankenbaker upon achievement of certain business objectives by the
Company. Those shares were valued at $0.25 per share or $750,000 on the date of release and recorded as compensation.
Other than as set forth above, none of our executive officers
received, nor do we have any arrangements to pay out, any bonus, stock awards, option awards, non-equity incentive plan compensation,
or non-qualified deferred compensation.
Director Compensation
On October 14, 2011 we issued 1,500,000
shares to each of Rodney L. Cook and Pablo Erat, as newly appointed members of our Board of Directors, as compensation for future
services. These shares shall vest with respect to 750,000 shares of restricted stock for each director on each of the first two
anniversaries of the date of grant, subject to the director’s continuous service to the Company. These shares were valued
at $0.25 per share, or an aggregate of $750,000, on the date of grant and are being amortized over the vesting period of two (2)
years or $93,750 per quarter.
We recorded $187,500 in directors’
fees for the period from April 11, 2011 (inception) through March 31, 2012.
We have no standard arrangement to
compensate directors for their services in their capacity as directors. Except as set forth above, directors are not paid for
meetings attended. All travel and lodging expenses associated with corporate matters are reimbursed by us, if and when incurred.
Employment Agreements
None of our executive officers currently have employment agreements
with us and the manner and amount of compensation for the above-referenced new officer and director has not yet been determined.
Potential Payments Upon Termination or Change-in-Control
We currently have no employment agreements with any of our
executive officers, nor any compensatory plans or arrangements resulting from the resignation, retirement or any other termination
of any of our executive officers, from a change-in-control, or from a change in any executive officer’s responsibilities
following a change-in-control. As a result, we have omitted this table.
Compensation Committee Interlocks and Insider Participation
No interlocking relationship exists between our Board of Directors
and the Board of Directors or compensation committee of any other company, nor has any interlocking relationship existed in the
past.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth certain information as of
August 29, 2012 with respect to the beneficial ownership of our common stock for (i) each director and officer, (ii) all of our
directors and officers as a group, and (iii) each person known to us to own beneficially 5% or more of the outstanding shares
of our common stock. To our knowledge, except as indicated in any footnotes to this table or pursuant to applicable community
property laws, the persons named in the table have sole voting and investment power with respect to the shares of common stock
indicated.
Name and Address of Beneficial
Owner (1)
|
|
Amount and Nature of
Beneficial Ownership
|
|
|
Percentage of Class
(2)
|
|
George Blankenbaker
|
|
|
12,000,000
|
|
|
|
18.03
|
%
|
President, Secretary, Treasurer,
|
|
|
|
|
|
|
|
|
and Director
|
|
|
|
|
|
|
|
|
6451 Buck Creek Pkwy
|
|
|
|
|
|
|
|
|
Indianapolis, IN 46227
|
|
|
|
|
|
|
|
|
Rodney L Cook
|
|
|
1,500,000
|
|
|
|
2.25
|
%
|
Director
|
|
|
|
|
|
|
|
|
1720 Medallion Loop NW
|
|
|
|
|
|
|
|
|
Olympia, WA 98502
|
|
|
|
|
|
|
|
|
Pablo Erat
|
|
|
1,500,000
|
|
|
|
2.25
|
%
|
Director
|
|
|
|
|
|
|
|
|
Ludretikonerstrasse 53
|
|
|
|
|
|
|
|
|
880 Thalwil
|
|
|
|
|
|
|
|
|
Switzerland
|
|
|
|
|
|
|
|
|
All Officers and Directors as a Group
|
|
|
15,000,000
|
|
|
|
22.54
|
%
|
(1) Beneficial ownership has been determined in accordance
with Rule 13d-3 under the Exchange Act. Pursuant to the rules of the SEC, shares of common stock which an individual or group
has a right to acquire within 60 days pursuant to the exercise of options or warrants are deemed to be outstanding for the purpose
of computing the percentage ownership of such individual or group, but are not deemed to be beneficially owned and outstanding
for the purpose of computing the percentage ownership of any other person shown in the table.
(2) Based on 66,555,635 shares of our common stock outstanding
as of August 29, 2012.
CERTAIN RELATIONSHIPS AND RELATED PARTY
TRANSACTIONS
AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Party Transactions
Effective November 1, 2011, the Company
engaged Growers Synergy Pte Ltd. (“Growers Synergy”) to provide farm management consulting services on a month-to-month
basis. Growers Synergy is owned and controlled by George Blankenbaker, the president, director and stockholder of the Company.
During the fiscal year ended March 31, 2012, the Growers Synergy received $180,000 for consulting services rendered to the Company.
Minimum payments due from the Company to Growers Synergy during the fiscal years ending March 31, 2013 and March 31, 2014 are
$240,000 and $140,000 respectively.
On July 5, 2012, the Company issued 500,000 shares of its
common stock (the “Growers Synergy Shares”) to Growers Synergy as consideration for services rendered by Growers Synergy
to the Company.
On June 23, 2011, as a result of the Share Exchange Agreement,
the sole shareholder of Stevia Ventures International Ltd. (“Stevia Ventures”) received 12,000,000 shares of our common
stock in exchange for 100% of the issued and outstanding common stock of Stevia Ventures. Mr. Blankenbaker, our President and
director, was the sole shareholder and officer of Stevia Ventures. Accordingly, he was a recipient of 12,000,000 shares of our
common stock issued in connection with the Share Exchange Transaction, 6,000,000 of which were to be held in escrow pending the
achievement by the Company of certain business milestones (the “Escrow Shares”). On December 23, 2011, 3,000,000 of
the 6,000,000 Escrow Shares were earned and released to Mr. Blankenbaker upon achievement of certain business objectives by the
Company. Those shares were valued at $0.25 per share or $750,000 on the date of release and recorded as compensation.
Review, Approval or Ratification of Transactions with
Related Persons
Although we have adopted a Code of Ethics, we still rely
on our Board to review related party transactions on an ongoing basis to prevent conflicts of interest. Our Board reviews a transaction
in light of the affiliations of the director, officer or employee and the affiliation’s of such person’s immediate
family. Transactions are presented to our Board for approval before they are entered into or, if this is not possible, for ratification
after the transaction has occurred. If our Board finds that a conflict of interest exists, then it will determine the appropriate
remedial action, if any. Our Board approves or ratifies a transaction if it determines that the transaction is consistent with
the best interests of the Company.
Director Independence
During the year ended March 31, 2012, we had two independent
directors on our Board, Dr. Erat and Mr. Cook. Mr. Blankenbaker is not independent. We evaluate independence by the standards
for director independence established by applicable laws, rules, and listing standards including, without limitation, the standards
for independent directors established by The New York Stock Exchange, Inc., the NASDAQ National Market, and the SEC.
Subject to some exceptions, these standards generally provide
that a director will not be independent if (a) the director is, or in the past three years has been, an employee of ours; (b)
a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (c) the
director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation
from us other than for service as a director (or for a family member, as a non-executive employee); (d) the director or a member
of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent
public accountants, or has worked for such firm in any capacity on our audit; (e) the director or a member of the director’s
immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive
officers serves on the compensation committee; or (f) the director or a member of the director’s immediate family is an
executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period
during the past three years, exceeds the greater of $1,000,000 or 2% of that other company’s consolidated gross revenues.
DISCLOSURE OF COMMISSION POSITION OF
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Sections 78.7502 and 78.751 of the
Nevada Revised Statutes authorizes a court to award, or a corporation’s board of directors to grant indemnity to directors
and officers in terms sufficiently broad to permit indemnification, including reimbursement of expenses incurred, under certain
circumstances for liabilities arising under the Securities Act of 1933, as amended. In addition, the registrant’s
Bylaws provide that the registrant has the authority to indemnify the registrant’s directors and officers and may indemnify
the registrant’s employees and agents (other than officers and directors) against liabilities to the fullest extent permitted
by Nevada law. The registrant is also empowered under the registrant’s Bylaws to purchase insurance on behalf of any person
whom the registrant is required or permitted to indemnify.
Insofar as indemnification for liabilities
arising under the Securities Act may be permitted to directors, officers or persons controlling us pursuant to the foregoing provisions,
or otherwise, we have been advised that in the opinion of the SEC, such indemnification is against public policy as expressed in
the Securities Act and is therefore unenforceable.
WHERE YOU CAN FIND MORE INFORMATION
We have filed a registration statement
on Form S-1, together with all amendments and exhibits, with the SEC. This Prospectus, which forms a part of that registration
statement, does not contain all information included in the registration statement. Certain information is omitted and you should
refer to the registration statement and its exhibits. With respect to references made in this Prospectus to any of our contracts
or other documents, the references are not necessarily complete and you should refer to the exhibits attached to the registration
statement for copies of the actual contracts or documents. You may read and copy any document that we file at the Commission’s
Public Reference Room at 100 F Street, N.E., Washington, D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information
on the operation of the public reference rooms. Our filings and the registration statement can also be reviewed by accessing the
SEC’s website at http://www.sec.gov.
FINANCIAL STATEMENTS
Our interim consolidated financial
statements as of and for the three months ended June 30, 2012 and audited financial statements for the period from April 11, 2011
(inception) to March 31, 2012 are included herewith.
Stevia Corp.
Index to the Consolidated Financial
Statements
Contents
|
|
Page(s)
|
|
|
|
Consolidated Balance Sheets at June 30, 2012 (Unaudited) and March 31, 2012
|
|
37
|
|
|
|
Consolidated Statements of Operations for the Three Months Ended June 30, 2012, for the
Period from April 11, 2011 (Inception) through June 30, 2011 and for the Period from April 11, 2011 (Inception) through June
30, 2012 (Unaudited)
|
|
38
|
|
|
|
Consolidated Statement of Stockholders' Equity (Deficit) for the Period from April 11,
2011 (Inception) through June 30, 2012 (Unaudited)
|
|
39
|
|
|
|
Consolidated Statements of Cash Flows for the Three Months Ended June 30, 2012, for the
Period from April 11, 2011 (Inception) through June 30, 2011 and for the Period from April 11, 2011 (Inception) through June
30, 2012 (Unaudited)
|
|
40
|
|
|
|
Notes to the Consolidated Financial Statements (Unaudited)
|
|
41
|
|
|
|
Report of Independent Registered Public Accounting Firm
|
|
64
|
|
|
|
Consolidated Balance Sheet at March 31, 2012
|
|
65
|
|
|
|
Consolidated Statement of Operation for the Period from April 11, 2011 (Inception) through
March 31, 2012
|
|
66
|
|
|
|
Consolidated Statement of Stockholders' Equity (Deficit) for the Period from April 11,
2011 (Inception) through March 31, 2012
|
|
67
|
|
|
|
Consolidated Statement of Cash Flows for the Period from April 11, 2011 (Inception) through
March 31, 2012
|
|
68
|
|
|
|
Notes to the Consolidated Financial Statements
|
|
69
|
Stevia Corp.
(A Development Stage Company)
Consolidated Balance Sheets
|
|
June 30, 2012
|
|
|
March 31, 2012
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
Cash
|
|
$
|
17,062
|
|
|
$
|
15,698
|
|
Accounts receivable
|
|
|
280
|
|
|
|
—
|
|
Prepaid expenses
|
|
|
16,608
|
|
|
|
168,874
|
|
Total current assets
|
|
|
33,950
|
|
|
|
184,572
|
|
|
|
|
|
|
|
|
|
|
Property and equipment
|
|
|
4,359
|
|
|
|
3,036
|
|
Accumulated depreciation
|
|
|
(218
|
)
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
4,141
|
|
|
|
3,036
|
|
|
|
|
|
|
|
|
|
|
Website development costs
|
|
|
|
|
|
|
|
|
Website development costs
|
|
|
5,315
|
|
|
|
5,315
|
|
Accumulated amortization
|
|
|
(1,068
|
)
|
|
|
(801
|
)
|
Website development costs, net
|
|
|
4,247
|
|
|
|
4,514
|
|
|
|
|
|
|
|
|
|
|
Security Deposit
|
|
|
|
|
|
|
|
|
Security deposit
|
|
|
15,000
|
|
|
|
15,000
|
|
Security deposit
|
|
|
15,000
|
|
|
|
15,000
|
|
|
|
|
|
|
|
|
|
|
Total assets
|
|
$
|
57,338
|
|
|
$
|
207,122
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable
|
|
$
|
190,713
|
|
|
$
|
237,288
|
|
Accounts payable - President and CEO
|
|
|
20,220
|
|
|
|
20,220
|
|
Accrued expenses
|
|
|
8,840
|
|
|
|
5,400
|
|
Accrued interest
|
|
|
26,959
|
|
|
|
15,521
|
|
Advances from president and significant stockholder
|
|
|
21,238
|
|
|
|
19,138
|
|
Convertible notes payable
|
|
|
900,000
|
|
|
|
700,000
|
|
Total current liabilities
|
|
|
1,167,970
|
|
|
|
997,567
|
|
|
|
|
|
|
|
|
|
|
Stockholders' deficit:
|
|
|
|
|
|
|
|
|
Common stock at $0.001 par value: 100,000,000 shares
authorized, 58,354,775 shares issued and outstanding
|
|
|
58,355
|
|
|
|
58,355
|
|
Additional paid-in capital
|
|
|
1,568,501
|
|
|
|
1,474,751
|
|
Deficit accumulated during the development stage
|
|
|
(2,737,488
|
)
|
|
|
(2,323,551
|
)
|
Total stockholders' deficit
|
|
|
(1,110,632
|
)
|
|
|
(790,445
|
)
|
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
57,338
|
|
|
$
|
207,122
|
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statements of Operations
|
|
For the Period from
|
|
|
For the Period from
|
|
|
|
|
|
|
For the
|
|
|
April 11, 2011
|
|
|
April 11, 2011
|
|
|
|
Three Months
|
|
|
(inception)
|
|
|
(inception)
|
|
|
|
Ended
|
|
|
through
|
|
|
through
|
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
June 30, 2012
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
Revenues earned during the development stage
|
|
$
|
280
|
|
|
$
|
—
|
|
|
$
|
1,580
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services during the development stage
|
|
|
|
|
|
|
|
|
|
|
|
|
Farm expenses
|
|
|
7,500
|
|
|
|
—
|
|
|
|
538,746
|
|
Farm management services - related party
|
|
|
60,000
|
|
|
|
—
|
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total cost of services during
the development stage
|
|
|
67,500
|
|
|
|
—
|
|
|
|
780,326
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross profit (loss)
|
|
|
(67,220
|
)
|
|
|
—
|
|
|
|
(777,166
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
Directors' fees
|
|
|
93,750
|
|
|
|
—
|
|
|
|
281,250
|
|
Professional fees
|
|
|
116,728
|
|
|
|
13,071
|
|
|
|
372,687
|
|
Research and development
|
|
|
78,984
|
|
|
|
—
|
|
|
|
285,175
|
|
Salary and compensation - officer
|
|
|
—
|
|
|
|
—
|
|
|
|
750,000
|
|
General and administrative expenses
|
|
|
44,713
|
|
|
|
100
|
|
|
|
158,455
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total operating expenses
|
|
|
334,175
|
|
|
|
13,171
|
|
|
|
1,847,567
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss from operations
|
|
|
(401,395
|
)
|
|
|
(13,171
|
)
|
|
|
(2,624,733
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
Financing cost
|
|
|
—
|
|
|
|
—
|
|
|
|
70,500
|
|
Foreign currency transaction gain (loss)
|
|
|
1,101
|
|
|
|
—
|
|
|
|
1,101
|
|
Interest expense
|
|
|
11,441
|
|
|
|
671
|
|
|
|
41,198
|
|
Interest income
|
|
|
—
|
|
|
|
—
|
|
|
|
(44
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total other (income) expense
|
|
|
12,542
|
|
|
|
671
|
|
|
|
112,755
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income tax provision
|
|
|
(413,937
|
)
|
|
|
(13,842
|
)
|
|
|
(2,737,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax provision
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(413,937
|
)
|
|
$
|
(13,842
|
)
|
|
$
|
(2,737,488
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss per common share - Basic and diluted:
|
|
$
|
(0.01
|
)
|
|
$
|
(0.00
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average common shares - basic and diluted
|
|
|
58,354,775
|
|
|
|
55,800,000
|
|
|
|
|
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders'
Equity (Deficit)
For the Period from April 11, 2011 (Inception)
through June 30, 2012
|
|
|
|
|
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
Common Stock,
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
$0.001 Par Value
|
|
|
Additional
|
|
|
during the
|
|
|
Stockholders'
|
|
|
|
Number
|
|
|
|
|
|
paid-in
|
|
|
Development
|
|
|
Equity
|
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 11, 2011 (inception)
|
|
|
6,000,000
|
|
|
$
|
6,000
|
|
|
$
|
(5,900
|
)
|
|
$
|
—
|
|
|
$
|
100
|
|
Common shares deemed issued in reverse acquisition
|
|
|
79,800,000
|
|
|
|
79,800
|
|
|
|
(198,088
|
)
|
|
|
|
|
|
|
(118,288
|
)
|
Common shares cancelled in reverse acquisition
|
|
|
(33,000,000
|
)
|
|
|
(33,000
|
)
|
|
|
33,000
|
|
|
|
|
|
|
|
—
|
|
Common shares issued for cash at $0.25 per share on October 4, 2011
|
|
|
400,000
|
|
|
|
400
|
|
|
|
99,600
|
|
|
|
|
|
|
|
100,000
|
|
Common shares issued for notes conversion at $0.25
per share on October 4, 2011
|
|
|
1,400,000
|
|
|
|
1,400
|
|
|
|
348,600
|
|
|
|
|
|
|
|
350,000
|
|
Common shares issued for conversion of accrued interest
at $0.25 per share on October 4, 2011
|
|
|
74,850
|
|
|
|
75
|
|
|
|
18,638
|
|
|
|
|
|
|
|
18,713
|
|
Common shares cancelled by significant stockholder
on October 4, 2011
|
|
|
(3,000,000
|
)
|
|
|
(3,000
|
)
|
|
|
3,000
|
|
|
|
|
|
|
|
—
|
|
Common shares issued for future director services
on October 4, 2011
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
747,000
|
|
|
|
|
|
|
|
750,000
|
|
Common shares issued for future director services
on October 4, 2011
|
|
|
|
|
|
|
|
|
|
|
(750,000
|
)
|
|
|
|
|
|
|
(750,000
|
)
|
Common shares issued for future director services
on October 4, 2011 earned during the period
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
|
|
|
|
187,500
|
|
Make good shares released to officer for achieving
the first milestone on December 23, 2011
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
747,000
|
|
|
|
|
|
|
|
750,000
|
|
Common shares issued for notes conversion at $0.25
per share on January 18, 2012
|
|
|
600,000
|
|
|
|
600
|
|
|
|
149,400
|
|
|
|
|
|
|
|
150,000
|
|
Common shares issued for conversion of accrued interest
at $0.25 per share on January 18, 2012
|
|
|
17,425
|
|
|
|
17
|
|
|
|
4,339
|
|
|
|
|
|
|
|
4,356
|
|
Common shares issued for financing services upon
agreement at $1.50 per share on January 26, 2012
|
|
|
35,000
|
|
|
|
35
|
|
|
|
52,465
|
|
|
|
|
|
|
|
52,500
|
|
Common shares issued for consulting services at
$1.39 per share on March 31, 2012
|
|
|
27,500
|
|
|
|
28
|
|
|
|
38,197
|
|
|
|
|
|
|
|
38,225
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,323,551
|
)
|
|
|
(2,323,551
|
)
|
Balance, March 31, 2012
|
|
|
58,354,775
|
|
|
|
58,355
|
|
|
|
1,474,751
|
|
|
|
(2,323,551
|
)
|
|
|
(790,445
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for future director services
on October 4, 2011 earned during the period
|
|
|
|
|
|
|
|
|
|
|
93,750
|
|
|
|
|
|
|
|
93,750
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(413,937
|
)
|
|
|
(413,937
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, June 30, 2012
|
|
|
58,354,775
|
|
|
$
|
58,355
|
|
|
$
|
1,568,501
|
|
|
$
|
(2,737,488
|
)
|
|
$
|
(1,110,632
|
)
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statements of Cash Flows
|
|
|
|
|
For the Period from
|
|
|
For the Period from
|
|
|
|
For the
|
|
|
April 11, 2011
|
|
|
April 11, 2011
|
|
|
|
Three Months
|
|
|
(inception)
|
|
|
(inception)
|
|
|
|
Ended
|
|
|
through
|
|
|
through
|
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
June 30, 2012
|
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
|
(Unaudited)
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$
|
(413,937
|
)
|
|
$
|
(13,842
|
)
|
|
$
|
(2,737,488
|
)
|
Adjustments to reconcile net loss to net cash used
in operating activities
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense
|
|
|
218
|
|
|
|
—
|
|
|
|
218
|
|
Amortization expense
|
|
|
267
|
|
|
|
—
|
|
|
|
1,068
|
|
Common shares issued for compensation
|
|
|
—
|
|
|
|
—
|
|
|
|
750,000
|
|
Common shares issued for director services earned
during the period
|
|
|
93,750
|
|
|
|
—
|
|
|
|
281,250
|
|
Common shares issued for outside services
|
|
|
—
|
|
|
|
—
|
|
|
|
90,725
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(280
|
)
|
|
|
—
|
|
|
|
(280
|
)
|
Prepaid expenses
|
|
|
152,266
|
|
|
|
—
|
|
|
|
(16,608
|
)
|
Security deposit
|
|
|
—
|
|
|
|
—
|
|
|
|
(15,000
|
)
|
Accounts payable
|
|
|
(46,575
|
)
|
|
|
9,926
|
|
|
|
94,955
|
|
Accounts payable - related parties
|
|
|
—
|
|
|
|
—
|
|
|
|
20,220
|
|
Accrued expenses
|
|
|
3,440
|
|
|
|
(5,690
|
)
|
|
|
2,150
|
|
Accrued interest
|
|
|
11,438
|
|
|
|
9,506
|
|
|
|
50,027
|
|
Net cash used in operating
activities
|
|
|
(199,413
|
)
|
|
|
(100
|
)
|
|
|
(1,478,763
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(1,323
|
)
|
|
|
—
|
|
|
|
(4,359
|
)
|
Website development costs
|
|
|
—
|
|
|
|
—
|
|
|
|
(5,315
|
)
|
Cash received from reverse
acquisition
|
|
|
—
|
|
|
|
3,198
|
|
|
|
3,199
|
|
Net cash provided by (used
in) investing activities
|
|
|
(1,323
|
)
|
|
|
3,198
|
|
|
|
(6,475
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Advances from president and stockholder
|
|
|
2,100
|
|
|
|
—
|
|
|
|
2,300
|
|
Proceeds from issuance of convertible notes
|
|
|
200,000
|
|
|
|
350,000
|
|
|
|
1,400,000
|
|
Proceeds from sale of common
stock
|
|
|
—
|
|
|
|
—
|
|
|
|
100,000
|
|
Net cash provided by financing
activities
|
|
|
202,100
|
|
|
|
350,000
|
|
|
|
1,502,300
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net change in cash
|
|
|
1,364
|
|
|
|
353,098
|
|
|
|
17,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at beginning of period
|
|
|
15,698
|
|
|
|
—
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
17,062
|
|
|
$
|
353,098
|
|
|
$
|
17,062
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Supplemental disclosure of cash flows information:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Income tax paid
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash investing and financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
Issuance of common stock
for conversion of convertible notes
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
500,000
|
|
Issuance of common stock
for conversion of accrued note interest
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
23,068
|
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
June 30, 2012 and 2011
Notes to the Consolidated Financial Statements
(Unaudited)
NOTE 1 - ORGANIZATION AND OPERATIONS
STEVIA CORP. (FORMERLY INTERPRO MANAGEMENT
CORP.)
Interpro Management
Corp ("Interpro") was incorporated under the laws of the State of Nevada on May 21, 2007. Interpro focused on developing
and offering web based software that was designed to be an online project management tool used to enhance an organization's efficiency
through planning and monitoring the daily operations of a business. The Company discontinued its web-based software business upon
the acquisition of Stevia Ventures International Ltd. on June 23, 2011.
On March 4, 2011, Interpro
amended its Articles of Incorporation, and changed its name to Stevia Corp. ("Stevia" or the "Company") and
effectuated a 35 for 1 (1:35) forward stock split of all of its issued and outstanding shares of common stock (the "Stock
Split").
All shares and per
share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.
STEVIA VENTURES INTERNATIONAL LTD.
Stevia Ventures International
Ltd. ("Ventures") was incorporated on April 11, 2011 under the laws of the Territory of the British Virgin Islands ("BVI").
Ventures owns certain rights relating to stevia production, including certain assignable exclusive purchase contracts and an assignable
supply agreement related to stevia.
ACQUISITION OF STEVIA VENTURES INTERNATIONAL
LTD. RECOGNIZED AS A REVERSE ACQUISITION
On June 23, 2011 (the
"Closing Date"), the Company closed a voluntary share exchange transaction with Stevia Ventures International Ltd. ("Ventures")
pursuant to a Share Exchange Agreement (the "Share Exchange Agreement") by and among the Company, Ventures and George
Blankenbaker, the stockholder of Ventures (the "Ventures Stockholder").
Immediately prior
to the Share Exchange Transaction on June 23, 2011, the Company had 79,800,000 common shares issued and outstanding. Simultaneously
with the Closing of the Share Exchange Agreement, on the Closing Date, Mohanad Shurrab, a shareholder and, as of the Closing Date,
the Company's former Director, President, Treasurer and Secretary, surrendered 33,000,000 shares of the Company's common stock
to the Company for cancellation.
As a result of
the Share Exchange Agreement, the Company issued 12,000,000 common shares for the acquisition of 100% of the issued and outstanding
shares of Ventures. Of the 12,000,000 common shares issued 6,000,000 shares are being held in escrow pending the achievement by
the Company of certain post-Closing business milestones (the "Milestones"), pursuant to the terms of the Make Good Escrow
Agreement, between the Company, Greenberg Traurig, LLP, as escrow agent and the Ventures' Stockholder (the "Escrow Agreement").
Even though the shares issued only represented approximately 20.4% of the issued and outstanding common stock immediately after
the consummation of the Share Exchange Agreement the stockholder of Ventures completely took over and controlled the board of
directors and management of the Company upon acquisition.
As a result of
the change in control to the then Ventures Stockholder, for financial statement reporting purposes, the merger between the Company
and Ventures has been treated as a reverse acquisition with Ventures deemed the accounting acquirer and the Company deemed the
accounting acquiree under the purchase method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards
Codification. The reverse merger is deemed a capital transaction and the net assets of Ventures (the accounting acquirer) are
carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination. The
acquisition process utilizes the capital structure of the Company and the assets and liabilities of Ventures which are recorded
at historical cost. The equity of the Company is the historical equity of Ventures retroactively restated to reflect the number
of shares issued by the Company in the transaction.
FORMATION OF STEVIA ASIA LIMITED
On March 19, 2012,
the Company formed Stevia Asia Limited ("Stevia Asia") under the laws of the Hong Kong Special Administrative Region
("HK SAR") of the People's Republic of China ("PRC"), a wholly-owned subsidiary. Stevia Asia is currently
inactive.
FORMATION OF STEVIA TECHNEW LIMITED
(FORMERLY HERO TACT LIMITED)
On April 28, 2012,
Stevia Asia formed Hero Tact Limited, a wholly-owned subsidiary, under the laws of HK SAR, which subsequently changed its name
to Stevia Technew Limited ("Stevia Technew"). Stevia Technew is intended to facilitate a joint venture relationship
with the Company's technology partner, Guangzhou Health China Technology Development Company Limited, operating under the trade
name Tech-New Bio-Technology ("TechNew") and its affiliates Technew Technology Limited.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PRESENTATION - UNAUDITED INTERIM
FINANCIAL INFORMATION
The accompanying
unaudited interim financial statements and related notes have been prepared in accordance with accounting principles generally
accepted in the United States of America ("U.S. GAAP") for interim financial information, and with the rules and regulations
of the United States Securities and Exchange Commission ("SEC") to Form 10-Q and Article 8 of Regulation S-X. Accordingly,
they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited
interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion
of management, necessary to a fair statement of the results for the interim periods presented. Interim results are not necessarily
indicative of the results for the full fiscal year. These financial statements should be read in conjunction with the financial
statements of the Company for the period from April 11, 2011 (inception) through March 31, 2012 and notes thereto contained in
the Company's Current Report on Form 10-K as filed with the SEC on June 29, 2012.
PRINCIPLES OF CONSOLIDATION
The consolidated
financial statements include all accounts of the Company as of June 30, 2012 and for the period from June 23, 2011 (date of acquisition)
through June 30, 2012; Stevia Ventures International Ltd. as of June 30, 2012 and for the period from April 11, 2011 (inception)
through June 30, 2012; Stevia Asia Limited as of June 30, 2012 and for the period from March 19, 2012 (inception) through June
30, 2012; and Stevia Technew Limited as of June 30, 2012 and for the period from May 9, 2012 (inception) through June 30, 2012
as follows:
|
|
Jurisdiction or
|
|
|
Attributable
|
|
Entity
|
|
Place of Incorporation
|
|
|
Interest
|
|
Stevia Ventures International Ltd.
|
|
BVI
|
|
|
|
100
|
%
|
Stevia Asia Limited
|
|
Hong Kong SAR
|
|
|
|
100
|
%
|
Stevia Technew Limited
|
|
Hong Kong SAR
|
|
|
|
100
|
%
|
All inter-company balances
and transactions have been eliminated.
DEVELOPMENT STAGE COMPANY
The Company is a development
stage company as defined by section 915-10-20 of the Financial Accounting Standards Board ("FASB") Accounting Standards
Codification. Although the Company has recognized some nominal amount of revenues since inception, the Company is still devoting
substantially all of its efforts on establishing the business and, therefore, still qualifies as a development stage company. All
losses accumulated since inception have been considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation of
financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period.
The Company's significant
estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and impairment of
long-lived assets, including the values assigned to and the estimated useful lives of website development costs; interest rate;
revenue recognized or recognizable; sales returns and allowances; foreign currency exchange rate; income tax rate, income tax provision,
deferred tax assets and valuation allowance of deferred tax assets; and the assumption that the Company will continue as a going
concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact that there are uncertainties
attached to those estimates or assumptions, and certain estimates or assumptions are difficult to measure or value.
Management bases
its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources.
Management regularly
evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in facts
and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those estimates
are adjusted accordingly.
Actual results could
differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph 820-10-35-37") to measure the fair value
of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about fair
value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting principles
generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements. To increase
consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes a fair value
hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels. The three
(3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
|
Level 1
|
Quoted market prices available in active markets for identical assets or liabilities as of the
reporting date.
|
|
Level 2
|
Pricing inputs other than quoted prices in active markets included in Level 1, which are either
directly or indirectly observable as of the reporting date.
|
|
Level 3
|
Pricing inputs that are generally observable inputs and not corroborated by market data.
|
Financial assets are
considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar techniques
and at least one significant model assumption or input is unobservable.
The fair value hierarchy
gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the lowest priority
to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than one level described
above, the categorization is based on the lowest level input that is significant to the fair value measurement of the instrument.
The carrying amounts of the Company's financial
assets and liabilities, such as cash, accounts receivable, prepaid expenses, accounts payable and accrued expenses, approximate
their fair values because of the short maturity of these instruments.
The Company's convertible
notes payable approximates the fair value of such instrument based upon management's best estimate of interest rates that would
be available to the Company for similar financial arrangements at June 30, 2012 and March 31, 2012.
Transactions involving
related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party
transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations
can be substantiated.
It is not, however,
practical to determine the fair value of advances from president and significant stockholder, if any, due to their related party
nature.
CARRYING VALUE, RECOVERABILITY AND
IMPAIRMENT OF LONG-LIVED ASSETS
The Company has
adopted paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company's long-lived
assets, which include property and equipment, website development costs, and security deposit are reviewed for impairment whenever
events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.
The Company assesses
the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related
long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts.
Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset's expected future discounted cash flows or market value, if readily determinable. If long-lived assets
are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated,
the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers
the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance
or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner
or use of assets or in the Company's overall strategy with respect to the manner or use of the acquired assets or changes in the
Company's overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures;
(v) a significant decline in the Company's stock price for a sustained period of time; and (vi) regulatory changes. The Company
evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such
events.
The key assumptions
used in management's estimates of projected cash flow deal largely with forecasts of sales levels and gross margins. These forecasts
are typically based on historical trends and take into account recent developments as well as management's plans and intentions.
Other factors, such as increased competition or a decrease in the desirability of the Company's products or services, could lead
to lower projected sales levels, which would adversely impact cash flows. A significant change in cash flows in the future could
result in an impairment of long lived assets.
The impairment
charges, if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income
(loss).
FISCAL YEAR END
The Company elected
March 31 as its fiscal year ending date.
CASH EQUIVALENTS
The Company considers
all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
PROPERTY AND EQUIPMENT
Property and equipment
is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged to
operations as incurred. Depreciation of furniture and fixture is computed by the straight-line method (after taking into account
their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of
property and equipment, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected
in the statements of operations.
WEBSITE DEVELOPMENT COSTS
Website development
costs are stated at cost less accumulated amortization. The cost of the website development is amortized on a straight-line basis
over its estimated useful life of five (5) years. Upon becoming fully amortized, the related cost and accumulated amortization
are removed from the accounts.
RELATED PARTIES
The Company follows
subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section
850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities
would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to
be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing
trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company;
f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial statements
shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances, and
other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature
of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts
were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary
to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for
each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and d. mounts due from or to related parties as of the date of each balance sheet
presented and, if not otherwise apparent, the terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows
subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist
as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only
be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such
assessment inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are
pending against the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits
of any legal proceedings or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be
sought therein.
If the assessment
of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates
that a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated,
then the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would
be disclosed.
Loss contingencies considered remote
are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed. Management does not
believe, based upon information available at this time, that these matters will have a material adverse effect on the Company's
consolidated financial position, results of operations or cash flows. However, there is no assurance that such matters will not
materially and adversely affect the Company's business, financial position, and results of operations or cash flows.
REVENUE RECOGNITION
The Company follows
paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when
it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following
criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been
rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
RESEARCH AND DEVELOPMENT
The Company follows
paragraph 730-10-25-1 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No.
2 "ACCOUNTING FOR RESEARCH AND DEVELOPMENT COSTS") and paragraph 730-20-25-11 of the FASB Accounting Standards Codification
(formerly Statement of Financial Accounting Standards No. 68 "RESEARCH AND DEVELOPMENT ARRANGEMENTS") for research and
development costs. Research and development costs are charged to expense as incurred. Research and development costs consist primarily
of remuneration for research and development staff, depreciation and maintenance expenses of research and development equipment,
material and testing costs for research and development as well as research and development arrangements with unrelated third
party research and development institutions. The research and development arrangements usually involve specific research and development
projects. Often times, the Company makes non-refundable advances upon signing of these arrangements. The Company adopted paragraph
730-20-25-13 and 730-20-35-1 of the FASB Accounting Standards Codification (formerly Emerging Issues Task Force Issue No. 07-3
"ACCOUNTING FOR NONREFUNDABLE ADVANCE PAYMENTS FOR GOODS OR SERVICES TO BE USED IN FUTURE RESEARCH AND DEVELOPMENT ACTIVITIES")
for those non-refundable advances. Non-refundable advance payments for goods or services that will be used or rendered for future
research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods
are delivered or the related services are performed. The management continues to evaluate whether the Company expect the goods
to be delivered or services to be rendered. If the management does not expect the goods to be delivered or services to be rendered,
the capitalized advance payment are charged to expense.
STOCK-BASED COMPENSATION FOR OBTAINING
EMPLOYEE SERVICES
The Company accounts
for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the
recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards
Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods
or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of
the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement
date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete
or the date on which it is probable that performance will occur. If shares of the Company are thinly traded the use of share prices
established in the Company's most recent private placement memorandum (PPM"), or weekly or monthly price observations would
generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a
larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value
of each option award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions
for inputs are as follows:
|
*
|
Expected term of share options and
similar instruments: The expected life of options and similar instruments
represents the period of time the option and/or warrant are expected
to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the
FASB Accounting Standards Codification the expected term of share options
and similar instruments represents the period of time the options and
similar instruments are expected to be outstanding taking into consideration
of the contractual term of the instruments and employees' expected exercise
and post-vesting employment termination behavior into the fair value
(or calculated value) of the instruments. Pursuant to paragraph 718-50-S99-1,
it may be appropriate to use the SIMPLIFIED METHOD, if (i) A company
does not have sufficient historical exercise data to provide a reasonable
basis upon which to estimate expected term due to the limited period
of time its equity shares have been publicly traded; (ii) A company significantly
changes the terms of its share option grants or the types of employees
that receive share option grants such that its historical exercise data
may no longer provide a reasonable basis upon which to estimate expected
term; or (iii) A company has or expects to have significant structural
changes in its business such that its historical exercise data may no
longer provide a reasonable basis upon which to estimate expected term.
The Company uses the simplified method to calculate expected term of
share options and similar instruments as the company does not have sufficient
historical exercise data to provide a reasonable basis upon which to
estimate expected term.
|
|
*
|
Expected volatility of the entity's
shares and the method used to estimate it. Pursuant to ASC Paragraph
718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses the
calculated value method shall disclose the reasons why it is not practicable
for the Company to estimate the expected volatility of its share price,
the appropriate industry sector index that it has selected, the reasons
for selecting that particular index, and how it has calculated historical
volatility using that index. The Company uses the average historical
volatility of the comparable companies over the expected contractual
life of the share options or similar instruments as its expected volatility.
If shares of a company are thinly traded the use of weekly or monthly
price observations would generally be more appropriate than the use of
daily price observations as the volatility calculation using daily observations
for such shares could be artificially inflated due to a larger spread
between the bid and asked quotes and lack of consistent trading in the
market.
|
|
*
|
Expected annual rate of quarterly
dividends. An entity that uses a method that employs different dividend
rates during the contractual term shall disclose the range of expected
dividends used and the weighted-average expected dividends. The expected
dividend yield is based on the Company's current dividend yield as the
best estimate of projected dividend yield for periods within the expected
term of the share options and similar instruments.
|
|
*
|
Risk-free rate(s). An entity that
uses a method that employs different risk-free rates shall disclose the
range of risk-free rates used. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant for periods
within the expected term of the share options and similar instruments.
|
The Company's policy
is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis
over the requisite service period for the entire award.
EQUITY INSTRUMENTS ISSUED TO PARTIES
OTHER THAN EMPLOYEES FOR ACQUIRING GOODS OR SERVICES
The Company accounts
for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Subtopic 505-50
of the FASB Accounting Standards Codification ("Subtopic 505-50").
Pursuant to ASC
Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever
is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier
of the date on which the performance is complete or the date on which it is probable that performance will occur. If shares of
the Company are thinly traded the use of share prices established in the Company's most recent private placement memorandum (PPM"),
or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares
could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value
of option or warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges
of assumptions for inputs are as follows:
|
*
|
Expected term of share options and
similar instruments: Pursuant to Paragraph 718-10-50-2 of the FASB Accounting
Standards Codification the expected term of share options and similar
instruments represents the period of time the options and similar instruments
are expected to be outstanding taking into consideration of the contractual
term of the instruments and holder's expected exercise behavior into
the fair value (or calculated value) of the instruments. The Company
uses historical data to estimate holder's expected exercise behavior.
If the Company is a newly formed corporation or shares of the Company
are thinly traded the contractual term of the share options and similar
instruments is used as the expected term of share options and similar
instruments as the Company does not have sufficient historical exercise
data to provide a reasonable basis upon which to estimate expected term.
|
|
*
|
Expected volatility of the entity's
shares and the method used to estimate it. An entity that uses a method
that employs different volatilities during the contractual term shall
disclose the range of expected volatilities used and the weighted-average
expected volatility. A thinly-traded or nonpublic entity that uses the
calculated value method shall disclose the reasons why it is not practicable
for the Company to estimate the expected volatility of its share price,
the appropriate industry sector index that it has selected, the reasons
for selecting that particular index, and how it has calculated historical
volatility using that index. The Company uses the average historical
volatility of the comparable companies over the expected contractual
life of the share options or similar instruments as its expected volatility.
If shares of a company are thinly traded the use of weekly or monthly
price observations would generally be more appropriate than the use of
daily price observations as the volatility calculation using daily observations
for such shares could be artificially inflated due to a larger spread
between the bid and asked quotes and lack of consistent trading in the
market.
|
|
*
|
Expected annual rate of quarterly
dividends. An entity that uses a method that employs different dividend
rates during the contractual term shall disclose the range of expected
dividends used and the weighted-average expected dividends. The expected
dividend yield is based on the Company's current dividend yield as the
best estimate of projected dividend yield for periods within the expected
contractual life of the option and similar instruments.
|
|
*
|
Risk-free rate(s). An entity that
uses a method that employs different risk-free rates shall disclose the
range of risk-free rates used. The risk-free interest rate is based on
the U.S. Treasury yield curve in effect at the time of grant for periods
within the contractual life of the option and similar instruments.
|
Pursuant to Paragraphs
505-50-25-8, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an
agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then,
because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date
has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is
entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized
as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to
ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return
for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement
for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such
an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof)
of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in
which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides
guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.
Pursuant to Paragraphs
505-50-25-8 and 505-50-25-9,an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee
only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves
specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same
manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with,
or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that
the counterparty has the right to exercise expires unexercised.
Pursuant to ASC
paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity
instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that
is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement
date and no entry should be recorded.
INCOME TAX PROVISION
The Company accounts
for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not
that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income and comprehensive income
(loss) in the period that includes the enactment date.
The Company adopted
section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.
Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that
has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance
on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased
disclosures.
The estimated future
tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated
balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred
tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes
judgments as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates
of tax liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.
In management's opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction
varies from estimates, additional allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did
not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions
of Section 740-10-25 for the interim period ended June 30, 2012 or for the period from April 11, 2011 (Inception) through June
30, 2011.
LIMITATION ON UTILIZATION OF NOLS DUE
TO CHANGE IN CONTROL
Pursuant to the
Internal Revenue Code Section 382 ("Section 382"), certain ownership changes may subject the NOL's to annual limitations
which could reduce or defer the NOL. Section 382 imposes limitations on a corporation's ability to utilize NOLs if it experiences
an "ownership change." In general terms, an ownership change may result from transactions increasing the ownership of
certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. In the event of
an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying
the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation
may be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset future taxable
income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause
such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss)
per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss)
per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average
number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
The following table
shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation
for the interim period ended June 30, 2012 and for the period from April 11, 2011 (inception) through June 30, 2011 as they were
anti-dilutive:
Potentially Outstanding Dilutive
|
|
Common Shares
|
|
|
|
|
|
|
For the Period
|
|
|
|
For the Interim
|
|
|
from April 11, 2011
|
|
|
|
Period Ended
|
|
|
(inception) through
|
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Make Good Escrow Agreement shares issued and held with the
escrow agent in connection with the Share Exchange Agreement consummated on June 23, 2011 pending the achievement by the Company
of certain post-Closing business milestones(the "Milestones").
|
|
|
3,000,000
|
|
|
|
6,000,000
|
|
Total potentially outstanding dilutive common shares
|
|
|
3,000,000
|
|
|
|
6,000,000
|
|
CASH FLOWS REPORTING
The Company adopted
paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and
uses the indirect or reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25 of the FASB Accounting
Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals
of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating
cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current
exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported
as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides
information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph
830-230-45-1 of the FASB Accounting Standards Codification.
SUBSEQUENT EVENTS
The Company follows
the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company
will evaluate subsequent events through the date when the financial statements are issued. Pursuant to ASU 2010-09 of the FASB
Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely
distributed to users, such as through filing them on EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-05
In June 2011, the
FASB issued the FASB Accounting Standards Update No. 2011-05 "COMPREHENSIVE INCOME" ("ASU 2011-05"), which
was the result of a joint project with the IASB and amends the guidance in ASC 220, COMPREHENSIVE INCOME, by eliminating the option
to present components of other comprehensive income (OCI) in the statement of stockholders' equity. Instead, the new guidance
now gives entities the option to present all non-owner changes in stockholders' equity either as a single continuous statement
of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive
income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present
all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.
The amendments
in this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within
those years, beginning after December 15, 2011.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-08
In September 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-08 "INTANGIBLES—GOODWILL AND OTHER: TESTING GOODWILL
FOR IMPAIRMENT" ("ASU 2011-08"). This Update is to simplify how public and nonpublic entities test goodwill for
impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required
to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value
is less than its carrying amount.
The guidance is
effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-10
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-10 "PROPERTY, PLANT AND EQUIPMENT: DERECOGNITION OF IN SUBSTANCE
REAL ESTATE-A SCOPE CLARIFICATION" ("ASU 2011-09"). This Update is to resolve the diversity in practice as to how
financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling financial
interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse
debt of the subsidiaries.
The amended guidance
is effective for annual reporting periods ending after June 15, 2012 for public entities. Early adoption is permitted.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-11
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-11 "BALANCE SHEET: DISCLOSURES ABOUT OFFSETTING ASSETS AND
LIABILITIES" ("ASU 2011-11"). This Update requires an entity to disclose information about offsetting and related
arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.
The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on
the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.
The amended guidance
is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-12
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-12 "COMPREHENSIVE INCOME: DEFERRAL OF THE EFFECTIVE DATE FOR
AMENDMENTS TO THE PRESENTATION OF RECLASSIFICATIONS OF ITEMS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME IN ACCOUNTING STANDARDS
UPDATE NO. 2011-05" ("ASU 2011-12"). This Update is a deferral of the effective date pertaining to reclassification
adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits
of those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time
required to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary
to reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were
in place before the issuance of Update 2011-05.
All other requirements
in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single
continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements
for fiscal years, and interim periods within those years, beginning after December 15, 2011.
OTHER RECENTLY ISSUED, BUT NOT YET
EFFECTIVE ACCOUNTING PRONOUNCEMENTS
Management does
not believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material
effect on the accompanying financial statements.
NOTE 3 - GOING CONCERN
The accompanying
consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in
the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage at June
30, 2012, a net loss and net cash used in operating activities for the interim period then ended. These factors raise substantial
doubt about the Company's ability to continue as a going concern.
While the Company
is attempting to commence operations and generate sufficient revenues, the Company's cash position may not be sufficient enough
to support the Company's daily operations. Management intends to raise additional funds by way of a public or private offering.
Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues
provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy
to commence operations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances
to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement
its business plan and generate sufficient revenues.
The consolidated
financial statements do not include any adjustments related to the recoverability and classification of recorded asset amounts
or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 - PREPAID EXPENSES
Prepaid expenses
at June 30, 2012 and March 31, 2012, consisted of the following:
|
|
June 30, 2012
|
|
|
March 31, 2012
|
|
Prepaid research and development
|
|
$
|
1,615
|
|
|
$
|
128,445
|
|
Prepaid rent
|
|
|
14,384
|
|
|
|
21,250
|
|
Retainer
|
|
|
—
|
|
|
|
15,000
|
|
Other
|
|
|
609
|
|
|
|
4,179
|
|
|
|
$
|
16,608
|
|
|
$
|
168,874
|
|
NOTE 5 - PROPERTY AND EQUIPMENT
Property and equipment,
stated at cost, less accumulated depreciation at June 30, 2012 and March 31, 2012 consisted of the following:
|
|
|
Estimated
|
|
|
|
|
|
|
|
|
|
|
Useful
|
|
|
|
|
|
|
|
|
|
|
Life (Years)
|
|
|
June 30, 2012
|
|
|
March 31, 2012
|
|
Property and equipment
|
|
|
5
|
|
|
$
|
4,359
|
|
|
$
|
3,036
|
|
|
|
|
|
|
|
|
4,359
|
|
|
|
3,036
|
|
Less accumulated depreciation
|
|
|
|
|
|
|
(218
|
)
|
|
|
—
|
|
|
|
|
|
|
|
$
|
4,141
|
|
|
$
|
3,036
|
|
DEPRECIATION EXPENSE
The Company acquired
furniture and fixture near the end of February 2012 and started to depreciate as of April 1, 2012. Additional equipment was purchased
and depreciated during the interim period ended June 30, 2012. Depreciation expense for the interim period ended June 30, 2012
was $218.
NOTE 6 - WEBSITE DEVELOPMENT COSTS
Website development
costs, stated at cost, less accumulated amortization at June 30, 2012 and March 31, 2012, consisted of the following:
|
|
June 30, 2012
|
|
|
March 31, 2012
|
|
Website development costs
|
|
$
|
5,315
|
|
|
$
|
5,315
|
|
Accumulated amortization
|
|
|
(1,068
|
)
|
|
|
(801
|
)
|
|
|
$
|
4,247
|
|
|
$
|
4,514
|
|
AMORTIZATION EXPENSE
Amortization expense
was $267 and $0 for the interim period ended June 30, 2012 and for the period from April 11, 2011 (inception) through June 30,
2011.
NOTE 7 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties
with whom the Company had transactions are:
Related Parties
|
|
Relationship
|
|
|
|
George Blankenbaker
|
|
President and significant stockholder of the Company
|
|
|
|
Leverage Investments LLC
|
|
An entity owned and controlled by the president and significant stockholder of the Company
|
|
|
|
Growers Synergy Pte Ltd.
|
|
An entity owned and controlled by the president and significant stockholder of the Company
|
ADVANCES FROM STOCKHOLDER
From time to time,
stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest
bearing and due on demand.
LEASE OF CERTAIN OFFICE SPACE FROM
LEVERAGE INVESTMENTS, LLC
The Company leases
certain office space with Leverage Investments, LLC for $500 per month on a month-to-month basis since July 1, 2011. For the interim
period ended June 30, 2012, the Company recorded $1,500 in rent expenses due Leverage Investment LLC.
CONSULTING SERVICES, MANAGEMENT AND
OFF-TAKE AGREEMENT WITH GROWERS SYNERGY PTE LTD.
Prior to November
1, 2011, the Company engaged Growers Synergy Pte Ltd. to provide farm management consulting services on a month-to-month basis,
at $20,000 per month as of July 1, 2011.
On November 1,
2011, the Company entered into a Management and Off-Take Agreement (the "Agreement") with Growers Synergy Pte Ltd. ("GSPL"),
a Singapore corporation owned and controlled by the president and major stockholder of the Company. Under the terms of the Agreement,
the Company will engage GSPL to supervise the Company's farm management operations, recommend quality farm management programs
for stevia cultivation, assist in the hiring of employees and provide training to help the Company meet its commercialization
targets, develop successful models to propagate future agribusiness services, and provide back-office and regional logistical
support for the development of proprietary stevia farm systems in Vietnam, Indonesia and potentially other countries. GSPL will
provide services for a term of two (2) years from the date of signing, at $20,000 per month. The Agreement may be terminated by
the Company upon 30 day notice. In connection with the Agreement, the parties agreed to enter into an off-take agreement whereby
GSPL agreed to purchase all of the non-stevia crops produced at the Company's GSPL supervised farms.
Consulting services
provided by Growers Synergy Pte Ltd. is as follows:
|
|
|
|
|
For the Period
|
|
|
|
For the Interim
|
|
|
from April 11, 2011
|
|
|
|
Period Ended
|
|
|
(inception) through
|
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
|
|
|
|
|
|
Consulting services received and consulting fees booked
|
|
$
|
60,000
|
|
|
$
|
—
|
|
|
|
$
|
60,000
|
|
|
$
|
—
|
|
Future minimum payments required under
this agreement at June 30, 2012 were as follows:
Fiscal Year Ending March 31:
|
|
|
|
2013 (remainder of the fiscal year)
|
|
$
|
180,000
|
|
2014
|
|
|
140,000
|
|
|
|
$
|
320,000
|
|
NOTE 8 - CONVERTIBLE NOTES PAYABLE
On February 14,
2011, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance. On October 4, 2011, the note holder converted the entire principal of $250,000 and accrued interest through
the date of conversion of $15,890.41 to 1,000,000 and 63,561 shares of the Company's common stock at $0.25 per share, respectively.
On June 23, 2011,
the Company issued a convertible note in the amount of $100,000 with interest at 10% per annum due one (1) year from the date
of issuance. On October 4, 2011, the note holder converted the entire principal of $100,000 and accrued interest through the date
of conversion of $2,821.92 to 400,000 and 11,288 shares of the Company's common stock at $0.25 per share.
On October 4, 2011,
the Company issued a convertible note in the amount of $150,000 with interest at 10% per annum due one (1) year from the date
of issuance. On January 18, 2012, the note holder converted the entire principal of $150,000 and accrued interest through the
date of conversion of $4,356 to 617,425 shares of the Company's common stock at $0.25 per share.
On November 16,
2011, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance. The note may be converted into common shares of the Company should the Company complete a private placement
with gross proceeds of at least $100,000. The conversion price shall be the same as the private placement price on a per share
basis.
On January 16,
2012, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance.
On March 7, 2012,
the Company issued a convertible note in the amount of $200,000 with interest at 10% per annum due one (1) year from the date
of issuance.
On May 30, 2012,
the Company issued a convertible note in the amount of $200,000 with interest at 10% per annum due one (1) year from the date
of issuance.
Convertible notes
payable at June 30, 2012 and March 31, 2012 consisted of the following:
|
|
June 30, 2012
|
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
On November 16, 2011, the Company issued a convertible note in the amount of
$250,000 with interest at 10% per annum due one (1) year from the date of issuance. The note may be converted into common
shares of the Company should the Company complete a private placement with gross proceeds of at least $100,000. The conversion
price shall be the same as the private placement price on a per share basis
|
|
$
|
250,000
|
|
|
$
|
250,000
|
|
|
|
|
|
|
|
|
|
|
On January 16, 2012, the Company issued a convertible note in the amount of $250,000 with
interest at 10% per annum due one (1) year from the date of issuance
|
|
|
250,000
|
|
|
|
250,000
|
|
|
|
|
|
|
|
|
|
|
On March 7, 2012, the Company issued a convertible note in the amount of $200,000 with
interest at 10% per annum due one (1) year from the date of issuance.
|
|
|
200,000
|
|
|
|
200,000
|
|
|
|
|
|
|
|
|
|
|
On May 30, 2012, the Company issued a convertible note in the amount
of $200,000 with interest at 10% per annum due one (1) year from the date of issuance.
|
|
|
200,000
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
900,000
|
|
|
$
|
700,000
|
|
NOTE 9 - STOCKHOLDERS' DEFICIT
SHARES AUTHORIZED
Upon formation
the total number of shares of common stock which the Company is authorized to issue is One Hundred Million (100,000,000) shares,
par value $0.001 per share.
COMMON STOCK
REVERSE ACQUISITION TRANSACTION
Immediately prior
to the Share Exchange Transaction on June 23, 2011, the Company had 79,800,000 common shares issued and outstanding. Simultaneously
with the Closing of the Share Exchange Agreement, on the Closing Date, Mohanad Shurrab, a shareholder and, as of the Closing Date,
the Company's former Director, President, Treasurer and Secretary, surrendered 33,000,000 shares of the Company's common stock
to the Company for cancellation.
As a result of
the Share Exchange Agreement, the Company issued 12,000,000 common shares for the acquisition of 100% of the issued and outstanding
shares of Stevia Ventures International Ltd. Of the 12,000,000 common shares issued in connection with the Share Exchange Agreement,
6,000,000 of such shares are being held in escrow ("Escrow Shares") pending the achievement by the Company of certain
post-Closing business milestones (the "Milestones"), pursuant to the terms of the Make Good Escrow Agreement, between
the Company, Greenberg Traurig, LLP, as escrow agent and the Ventures' Stockholder (the "Escrow Agreement").
MAKE GOOD AGREEMENT SHARES
(I) DURATION OF ESCROW AGREEMENT
The Make Good Escrow Agreement
shall terminate on the sooner of (i) the distribution of all the escrow shares, or (ii) December 31, 2013.
(II) DISBURSEMENT OF MAKE
GOOD SHARES
Upon achievement of any Milestone
on or before the date associated with such Milestone on Exhibit A, the Company shall promptly provide written notice to the Escrow
Agent and the Selling Shareholder of such achievement (each a "COMPLETION NOTICE"). Upon the passage of any Milestone
date set forth on Exhibit A for which the Company has not achieved the associated Milestone, the Company shall promptly provide
written notice to the Escrow Agent and the Selling Shareholder of such failure to achieve the milestone (each a "NONCOMPLETION
NOTICE").
(III) EXHIBIT A - SCHEDULE
OF MILESTONES
|
|
Milestones
|
|
Completion
Date
|
|
Number of
Escrow Shares
|
|
|
|
|
|
|
|
I.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
Enter into exclusive international license agreement for all Agro Genesis intellectual
property and products as it applies to stevia
|
|
|
|
|
(2)
|
|
Enter into cooperative agreements to work with Vietnam Institutes (a) Medical Plant Institute
in Hanoi; (b) Agricultural Science Institute of Northern Central Vietnam
|
|
|
|
3,000,000
shares only
if and when
|
(3)
|
|
Enter into farm management agreements with local growers including the Provincial and National
projects;
|
|
Within 180
days of the
|
|
ALL four (4)
milestones
|
(4)
|
|
Take over management of three existing nurseries
|
|
Closing Date
|
|
reached
|
|
|
|
|
|
|
|
II.
|
|
Achieve 100 Ha field trials and first test shipment of dry leaf
|
|
Within two (2) years of the Closing Date
|
|
1,500,000
shares
|
|
|
|
|
|
|
|
III.
|
|
Test shipment of dry leaf to achieve minimum specs for contracted base price (currently
$2.00 per kilogram)
|
|
Within two (2) years of the Closing Date
|
|
1,500,000
shares
|
On December 23, 2011, 3,000,000 out
of the 6,000,000 Escrow Shares have been earned and released to Ventures stockholder upon achievement of the First Milestone within
180 days of June 23, 2011, the Closing Date associated with the First Milestone. Those shares were valued at $0.25 per share or
$750,000 on the date of release and recorded as compensation.
COMMON SHARES SURRENDERED FOR CANCELLATION
On October 4, 2011,
a significant stockholder of the Company, Mohanad Shurrab, surrendered another 3,000,000 shares of the Company's common stock
to the Company for cancellation. The Company recorded this transaction by debiting common stock at par of $3,000 and crediting
additional paid-in capital of the same.
COMMON SHARES ISSUED FOR CASH
On October 4, 2011
the Company sold 400,000 shares of its common stock to one investor at $0.25 per share or $100,000.
COMMON SHARES ISSUED FOR OBTAINING
EMPLOYEE AND DIRECTOR SERVICES
On October 14,
2011 the Company issued 1,500,000 shares each to two (2) newly appointed members of the board of directors or 3,000,000 shares
of its common stock in aggregate as compensation for future services. These shares shall vest with respect to 750,000 shares of
restricted stock on each of the first two anniversaries of the date of grant, subject to the director's continuous service to
the Company as directors. These shares were valued at $0.25 per share or $750,000 on the date of grant and are being amortized
over the vesting period of two (2) years or $93,750 per quarter. The Company recorded $187,500 in directors' fees for the period
from April 11, 2011 (inception) through March 31, 2012. The Company recorded $93,750 in directors' fees for the interim period
ended June 30, 2012.
COMMON SHARES ISSUED TO PARTIES OTHER
THAN EMPLOYEES FOR ACQUIRING GOODS OR SERVICES
EQUITY PURCHASE AGREEMENT AND RELATED
REGISTRATION RIGHTS AGREEMENT
(I) EQUITY PURCHASE AGREEMENT
On January 26,
2012, the Company entered into an equity purchase agreement ("Equity Purchase Agreement") with Southridge Partners II,
LP, a Delaware limited partnership (The "Investor"). Upon the terms and subject to the conditions contained in the agreement,
the Company shall issue and sell to the Investor, and the Investor shall purchase, up to Twenty Million Dollars ($20,000,000)
of its common stock, par value $0.001 per share.
At any time and
from time to time during the Commitment Period, the period commencing on the effective date, and ending on the earlier of (i)
the date on which investor shall have purchased put shares pursuant to this agreement for an aggregate purchase price of the maximum
commitment amount, or (ii) the date occurring thirty six (36) months from the date of commencement of the commitment period. the
Company may exercise a put by the delivery of a put notice, the number of put shares that investor shall purchase pursuant to
such put shall be determined by dividing the investment amount specified in the put notice by the purchase price with respect
to such put notice. However, that the investment amount identified in the applicable put notice shall not be greater than the
maximum put amount and, when taken together with any prior put notices, shall not exceed the maximum commitment The purchase price
shall mean 93% of the market price on such date on which the purchase price is calculated in accordance with the terms and conditions
of this Agreement.
(II) REGISTRATION RIGHTS AGREEMENT
In connection with
the Equity Purchase Agreement, on January 26, 2012, the Company entered into a registration rights agreement ("Registration
Rights Agreement") with Southridge Partners II, LP, a Delaware limited partnership (the "Investor"). To induce
the investor to execute and deliver the equity purchase agreement which the Company has agreed to issue and sell to the investor
shares (the "put shares") of its common stock, par value $0.001 per share (the "common stock") from time to
time for an aggregate investment price of up to twenty million dollars ($20,000,000) (the "registrable securities"),
the company has agreed to provide certain registration rights under the securities act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, "securities act"), and applicable state securities
laws with respect to the registrable securities.
(III) COMMON SHARES ISSUED UPON SIGNING
As a condition
for the execution of this agreement by the investor, the company issued to the investor 35,000 shares of restricted common stock
(the "restricted shares") upon the signing of this agreement. The restricted shares shall have no registration rights.
These shares were valued at $1.50 per share or $52,500 on the date of issuance and recorded as financing cost.
MARKETING SERVICE AGREEMENT - EMPIRE
RELATIONS GROUP, INC.
On March 14, 2012
the Company entered into a consulting agreement (the "Consulting Agreement") with Empire Relations Group, Inc. ("Empire").
(I) SCOPE OF SERVICES
Under the terms
of the Consulting Agreement, the Company engaged Empire to introduce interested investors to the Company, advise the Company on
available financing options, provide periodic updates on the stevia sector and provide insights and strategies for the Company
to undertake.
(II) TERM
The term of this
agreement were consummated from the date hereof, and automatically terminated on May 30, 20 12.
(III) COMPENSATION
For the term of
this agreement, the consultant shall be paid an upfront, non-refundable, non-cancellable retainer fee of 27,500 restricted shares.
For the purposes of this agreement, these shares shall be considered to be fully earned by March 31, 2012. These shares were valued
at $1.39 per share or $38,225 on March 31, 2012, the date when they were earned.
NOTE 10 - RESEARCH AND DEVELOPMENT
AGRIBUSINESS DEVELOPMENT AGREEMENT
- AGRO GENESIS PTE LTD.
ENTRY INTO AGRIBUSINESS DEVELOPMENT
AGREEMENT
On July 16, 2011,
the Company entered into an Agribusiness Development Agreement (the "Agribusiness Development Agreement") with Agro
Genesis Pte Ltd. ("AGPL"), a corporation organized under the laws of the Republic of Singapore expiring two (2) years
from the date of signing.
Under the terms
of the Agreement, the Company engaged AGPL to be the Company's technology provider consultant for stevia propagation and cultivation
in Vietnam, and potentially other countries for a period of two (2) years. AGPL will be tasked with developing stevia propagation
and cultivation technology in Vietnam, recommend quality agronomic programs for stevia cultivation, harvest and post harvest,
alert findings on stevia propagation and cultivation that may impact profitability and develop a successful model in Vietnam that
can be replicated elsewhere (the "Project"). The Project will be on-site at stevia fields in Vietnam and will have a
term of at least two (2) years. For its services, AGPL could receive a fee of up to 275,000 Singapore dollars, plus related expenses
estimated at $274,000 as specified in Appendix A to the Agribusiness Development Agreement. Additionally, the Company will be
AGPL's exclusive distributor for AGPL's g'farm system (a novel crop production system) for stevia growing resulting from the Project.
AGPL will receive a commission of no less than 2% of the price paid for crops other than stevia, from cropping systems that utilize
the g'farm system resulting from the Project. All technology-related patents resulting from the Project will be jointly owned
by AGPL and the Company, with the Company holding a right of first offer for the use and distribution rights to registered patents
resulting from the Project.
ADDENDUM TO AGRIBUSINESS DEVELOPMENT
AGREEMENT
On August 26, 2011,
in accordance with Appendix A , 3(a), the Company and AGPL have mutually agreed to add to the current Project budget $100,000
per annum for one, on-site resident AGPL expert for 2 (two) years effective September 1, 2011, or $200,000 in aggregate for the
term of the contract as specified in Appendix C. In-country accommodation for the resident expert will be born separately by the
Company and is excluded from the above amount. The expert, Dr. Cho, Young-Cheol, Director, Life Sciences has been appointed and
commenced on September 1, 2011.
TERMINATION OF AGRIBUSINESS DEVELOPMENT
AGREEMENT
On March 31, 2012,
the Company and AGPL mutually agreed to terminate the Agribusiness Development Agreement, effective immediately.
LEASE OF AGRICULTURAL LAND
On December 14,
2011, the Company and Stevia Ventures Corporation ("Stevia Ventures") entered into a Land Lease Agreement with Vinh
Phuc Province People's Committee Tam Dao Agriculture & Industry Co., Ltd. pursuant to which Stevia Ventures has leased l0
hectares of land (the "Leased Property") for a term expiring five (5) years from the date of signing.
The Company has
begun development of a research facility on the Leased Property and has prepaid (i) the first year lease payment of $30,000 and
(ii) the six month lease payment of $15,000 as security deposit, or $45,000 in aggregate upon signing of the agreement.
Future minimum
payments required under this agreement at June 30, 2012 were as follows:
Fiscal Year Ending March 31:
|
|
|
|
|
|
|
|
2013
|
|
$
|
30,000
|
|
2014
|
|
|
30,000
|
|
2015
|
|
|
30,000
|
|
2016
|
|
|
30,000
|
|
|
|
$
|
120,000
|
|
SUPPLY AND COOPERATIVE AGREEMENT -
GUANGZHOU HEALTH TECHNOLOGY DEVELOPMENT COMPANY LIMITED
ENTRY INTO SUPPLY AGREEMENT
On February 21,
2012, the Company entered into a Supply Agreement (the "Supply Agreement") with Guangzhou Health China Technology Development
Company Limited, a foreign-invested limited liability company incorporated in the People's Republic of China (the "Guangzhou
Health").
Under the terms
of the Supply Agreement, the Company will sell dry stevia plant materials, including stems and leaves ("Product") exclusively
to Guangzhou Health. For the first two years of the agreement, Guangzhou Health will purchase all Product produced by the Company.
Starting with the third year of the agreement, the Company and Guangzhou Health will review and agree on the quantity of Product
to be supplied in the forthcoming year, and Guangzhou Health will be obliged to purchase up to 130 percent of that amount. The
specifications and price of Product will also be revised annually according to the mutual agreement of the parties. The term of
the Supply Agreement is five years with an option to renew for an additional four years.
ENTRY INTO COOPERATIVE AGREEMENT
On February 21,
2012, the Company also entered into Cooperative Agreement (the "Cooperative Agreement") with Guangzhou Health Technology
Development Company Limited.
Under the terms
of the Cooperative Agreement, the parties agree to explore potential technology partnerships with the intent of formalizing a
joint venture to pursue the most promising technologies and businesses. The parties also agree to conduct trials to test the efficacy
of certain technologies as applied specifically to the Company's business model as well as the marketability of harvests produced
utilizing such technologies. Guangzhou Health will share all available information of its business structure and technologies
with the Company, subject to the confidentiality provisions of the Cooperative Agreement. Guangzhou Health will also permit the
Company to enter its premises and grow-out sites for purposes of inspection and will, as reasonably requested by the Company,
supply without cost, random samples of products and harvests for testing.
NOTE 11 - COMMITMENTS AND CONTINGENCIES
SUPPLY AGREEMENT - BETWEEN STEVIA VENTURES
INTERNATIONAL LTD. AND ASIA STEVIA INVESTMENT DEVELOPMENT COMPANY LTD.
On April 12, 2011,
Stevia Ventures International Ltd, the subsidiary of the Company entered into a Supply Agreement (the "Supply Agreement")
with Asia Stevia Investment Development Company Ltd ("ASID"), a foreign-invested limited liability company incorporated
in Vietnam.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged ASID to plant the Stevia Seedlings and supply the Products only to the Company to the exclusion
of other customers and the Company is desirous to purchase the same, on the terms and conditions as set out in this Agreement
produce Products and the Company purchase the Products from ASID.
(II) TERM
This Agreement
shall come into force on the Effective Date and, subject to earlier termination pursuant to certain clauses specified in the Agreement,
shall continue in force for a period of three (3) years ("Term") and thereafter automatically renew on its anniversary
each year for an additional period of one (1) year ("Extended Term").
(III) PURCHASE PRICE
ASID and the Company
shall review and agree on or before September 30th of each Year on the quantity of the Products to be supplied by the Supplier
to the Company in the forthcoming year and ASID shall provide the Company with prior written notice at any time during the year
following the revision if it has reason to believe that it would be unable to fulfill its forecast volumes under this clause.
SUPPLY AGREEMENT - BETWEEN STEVIA VENTURES
INTERNATIONAL LTD. AND STEVIA VENTURES CORPORATION
On April 12, 2011,
Stevia Ventures International Ltd, the subsidiary of the Company also entered into a Supply Agreement (the "Supply Agreement")
with Stevia Ventures Corporation ("SVC"), a foreign-invested limited liability company incorporated in Vietnam.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged SVC to plant the Stevia Seedlings and supply the Products only to the Company to the exclusion
of other customers and the Company is desirous to purchase the same, on the terms and conditions as set out in this Agreement
produce Products and the Company purchase the Products from SVC.
(II) TERM
This Agreement
shall come into force on the Effective Date and, subject to earlier termination pursuant to certain clauses specified in the Agreement,
shall continue in force for a period of three (3) years ("Term") and thereafter automatically renew on its anniversary
each year for an additional period of one (1) year ("Extended Term").
(III) PURCHASE PRICE
SVC and the Company
shall review and agree on or before September 30th of each Year on the quantity of the Products to be supplied by the Supplier
to the Company in the forthcoming year and SVC shall provide the Company with prior written notice at any time during the year
following the revision if it has reason to believe that it would be unable to fulfill its forecast volumes under this clause.
CONSULTING AGREEMENT - DORIAN BANKS
ENTRY INTO CONSULTING AGREEMENT
On July 1, 2011
the Company entered into a consulting agreement (the "Consulting Agreement") with Dorian Banks ("Banks").
(I) SCOPE OF SERVICES
Under the terms
of the Consulting Agreement, the Company engaged the Consultant to provide advice in general business development, strategy, assistance
with new business and land acquisition, introductions, and assistance with Public Relations ("PR") and Investor Relations
("IR").
(II) TERM
The term of this
Agreement shall be six (6) months, commencing on July 1, 2011 and continue until December 31, 2011. This Agreement may be terminated
by either the Company or the Consultant at any time prior to the end of the Consulting Period by giving thirty (30) days written
notice of termination. Such notice may be given at any time for any reason, with or without cause. The Company will pay Consultant
for all Service performed by Consultant through the date of termination.
(III) COMPENSATION
The Company shall
pay the Consultant a fee of $3,000 per month.
EXTENSION OF THE CONSULTING AGREEMENT
On December 30,
2011, the Consulting Agreement was extended with the same terms and conditions to December 31, 2012.
SUMMARY OF THE CONSULTING FEES
For the interim
period ended June 30, 2012 and for the period from April 11, 2011 (inception) through June 30, 2011, The Company recorded $9,000
and $0 in consulting fees under the Consulting Agreement, respectively.
FINANCING CONSULTING AGREEMENT - DAVID
CLIFTON
ENTRY INTO FINANCIAL CONSULTING AGREEMENT
On July 1, 2011
the Company entered into a consulting agreement (the "Consulting Agreement") with David Clifton ( "Clifton").
(I) SCOPE OF SERVICES
Under the terms
of the Consulting Agreement, the Company engaged Clifton to introduce interested investors to the Company, advise the Company
on available financing options and provide periodic updates on the stevia sector and provide insights and strategies for the Company
to undertake.
(II) TERM
The term of this
Agreement shall be six (6) months, commencing on July 1, 2011 and continuing until December 31, 2011. This Agreement may be terminated
by either the Company or Clifton at any time prior to the end of the consulting period by giving thirty (30) days written notice
of termination. Such notice may be given at any time for any reason, with or without cause. The Company will pay Clifton for all
service performed by him through the date of termination. On December 31, 2011, the financial consulting agreement expired.
(III) COMPENSATION
The Company shall
pay Clifton a fee of $3,000 per month.
SUMMARY OF THE CONSULTING FEES
The financial consulting
agreement expired on December 31, 2011. For the period from April 11, 2011 (inception) through June 30, 2011, The Company recorded
no financing cost under this Financing Consulting Agreement.
ENTRY INTO ENGAGEMENT AGREEMENT - GARDEN
STATE SECURITIES INC.
On June 18, 2012,
the Company entered into an engagement agreement (the "Agreement") with Garden State Securities Inc. ("GSS")
with respect to the engagement of GSS to act as a selling/placement agent for the Company.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged GSS to review the business and operations of the Company and its historical and projected
financial condition, advise the Company of "best efforts" Private Placement offering of debt or equity securities to
fulfill the Company's business plan, and contacts for the Company possible financing sources.
(II) TERM
GSS shall act as
the Company's exclusive placement agent for the period of the later of; (i) 60 days from the execution of the term sheet; or (ii)
the final termination date of the securities financing (the "Exclusive Period"). GSS shall act as the Company's non-exclusive
placement agent after the Exclusive Period until terminated.
(III) COMPENSATION
The Company agrees
to pay to GSS at each full or incremental closing of any equity financing, convertible debt financing, debt conversion or any
instrument convertible into the Company's common stock (the "Securities Financing") during the Exclusive Period; (i)
a cash transaction fee in the amount of 8% of the amount received by the Company under the Securities Financing; and (ii) warrants
(the "Warrants") with "piggy back" registration rights, equal to 8% of the stock issued in the Securities
Financing at an exercise price equal to the investor's warrant exercise price of the Securities Financing or the price of the
Securities Financing if no warrants are issued to investors. The Company will also pay, at closing, the expense of GSS's legal
counsel pursuant to the Securities Financing and/or Shelf equal to $25,000 for Securities Financing and/or Shelf resulting in
equal to or greater than $500,000 of gross proceeds to the Company, and $18,000 for a Securities Financing and/or Shelf resulting
in less than $500,000 of gross proceeds to the Company. In addition, the Company shall cause, at its cost and expense, the "Blue
sky filing" and Form D in due and proper form and substance and in a timely manner.
NOTE 12 - CONCENTRATIONS AND CREDIT
RISK
VENDORS AND ACCOUNTS PAYABLE CONCENTRATIONS
Vendor purchase
concentrations for the interim period ended June 30, 2012 and for the period from April 11, 2011 (inception) through June 30,
2011 and accounts payable concentration at June 30, 2012 and March 31, 2012 are as follows:
|
|
Net Purchases
|
|
|
Accounts Payable at
|
|
|
|
|
|
|
For the Period from
|
|
|
|
|
|
|
|
|
|
|
|
|
April 11, 2011
|
|
|
|
|
|
|
|
|
|
For the Interim
|
|
|
(inception)
|
|
|
|
|
|
|
|
|
|
Period Ended
|
|
|
through
|
|
|
|
|
|
|
|
|
|
June 30, 2012
|
|
|
June 30, 2012
|
|
|
June 30, 2011
|
|
|
March 31, 2012
|
|
Asia Stevia Investment Development Limited
|
|
|
0.9
|
%
|
|
|
—
|
%
|
|
|
0.5
|
%
|
|
|
—
|
%
|
Growers Synergy Pte. Ltd. - related party
|
|
|
50.4
|
%
|
|
|
—
|
%
|
|
|
43.3
|
%
|
|
|
16.4
|
%
|
Stevia Ventures Corporation
|
|
|
8.6
|
%
|
|
|
—
|
%
|
|
|
—
|
%
|
|
|
54.1
|
%
|
|
|
|
58.9
|
%
|
|
|
—
|
%
|
|
|
43.3
|
%
|
|
|
70.5
|
%
|
CREDIT RISK
Financial instruments
that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.
As of June 30,
2012, substantially all of the Company's cash and cash equivalents were held by major financial institutions, and the balance
at certain accounts exceeded the maximum amount insured by the Federal Deposits Insurance Corporation ("FDIC"). However,
the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant
risks on such accounts.
NOTE 13 - SUBSEQUENT EVENTS
The Company has
evaluated all events that occurred after the balance sheet date through the date when the financial statements were issued to
determine if they must be reported. The Management of the Company determined that there were certain reportable subsequent events
to be disclosed as follows:
ENTRY INTO COOPERATIVE AGREEMENT
On July 5, 2012,
Stevia Asia Limited ("Stevia Asia"), a wholly-owned subsidiary of the Company entered into a Cooperative Agreement (the
"Cooperative Agreement") with Technew Technology Limited ("Technew"), a company incorporated under the companies
ordinance of Hong Kong, and Zhang Jia, a Chinese citizen (together with Technew, the "Partners") pursuant to which Stevia
Asia and Partners have agreed to engage in a joint venture to be owned 70% by Stevia Asia and 30% by Technew (the "Joint
Venture"). The Partners will be responsible for managing the Joint Venture and Stevia Asia has agreed to contribute $200,000
per month, up to a total of $2,000,000 in financing, subject to the performance of the Joint Venture and Stevia Asia's financial
capabilities.
The Cooperative
Agreement shall automatically terminate upon either Stevia Asia or Technew ceasing to be a shareholder in the Joint Venture, or
may be terminated by either Stevia Asia or Technew upon a material breach by the other party which is not cured within 30 days
of notice of such breach.
ISSUANCE OF COMMON SHARES IN CONNECTION
WITH ENTRY INTO TECHNOLOGY AGREEMENT
On July 5, 2012,
the Company entered into a Technology Acquisition Agreement (the "Technology Agreement") with Technew Technology Limited
("Technew"), pursuant to which the Company acquired the rights to certain technology from Technew in exchange for 3,000,000
shares of the Company's common stock.
ISSUANCE OF COMMON SHARES TO A RELATED
PARTY
On July 5, 2012,
the Company issued 500,000 shares of its common shares to Growers Synergy Pte Ltd., a corporation organized under the laws of
Singapore and owned and controlled by George Blankenbaker, the president, director and a stockholder of the Company ("Growers
Synergy"), as consideration for services rendered by Growers Synergy to the Company.
ISSUANCE OF COMMON SHARES IN CONNECTION
WITH CONVERTIBLE NOTES CONVERSION
On November 16,
2011, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance. On July 6, 2012, the note holder converted the entire principal of $250,000 and accrued interest through the
date of conversion of $15,959 to 319,607 shares of the Company's common stock at $0.83 per share
On January 16,
2012, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance. On July 6, 2012, the note holder converted the entire principal of $250,000 and accrued interest through the
date of conversion of $11,781 to 314,586 shares of the Company's common stock at $0.83 per share.
ISSUANCE OF COMMON SHARES IN CONNECTION
WITH ENTRY INTO SECURITIES PURCHASE AGREEMENT
On August 1, 2012,
the Company entered into a Securities Purchase Agreement (the "SPA") with certain accredited investors (the "Purchasers")
to raise $500,000 in a private placement financing. On August 6, 2012, after the satisfaction of certain closing conditions, the
Offering closed and the Company issued to the Purchasers: (i) an aggregate of 1,066,667 shares of the Company's common stock at
a price per share of $0.46875 (the "Shares") and (ii) warrants to purchase an equal number of shares of the Company's
common stock at an exercise price of $0.6405 with a term of five (5) years (the "Warrants"), for gross proceeds of $500,000.
The Company intends to use the net proceeds from this offering to advance the Company's ability to execute its growth strategy
and to aid in the commercial development of the recently announced launch of the Company's majority-owned subsidiary, Stevia Technew
Limited.
ENTRY INTO REGISTRATION RIGHTS AGREEMENT
In connection with
the equity financing on August 1, 2012, the Company also entered into a registration rights agreement with the Purchasers (the
"rights agreement"). The Rights Agreement requires the Company to file a registration statement (the "registration
statement") with the Securities and Exchange Commission (the "SEC") within thirty (30) days of the Company's entrance
into the rights agreement (the "filing date") for the resale by the Purchasers of all of the Shares and all of the shares
of common stock issuable upon exercise of the Warrants (the "registrable securities").
The registration
statement must be declared effective by the SEC within one hundred and twenty (120) days of the closing date of the Offering (the
"effectiveness date") subject to certain adjustments. If the registration statement is not filed prior to the filing
date, the Company will be required to pay certain liquidated damages, not to exceed in the aggregate 6% of the purchase price
paid by the Purchasers pursuant to the SPA.
ISSUANCE OF WARRANTS TO THE PLACEMENT
AGENT AS COMPENSATION PER THE ENGAGEMENT AGREEMENT ON JUNE 18, 2012
Garden State Securities,
Inc. (the "GSS") served as the placement agent of the Company for the equity financing on August 1, 2012. Per the engagement
agreement signed between GSS and the Company on June 18, 2012, in consideration for services rendered as the placement agent,
the Company agreed to: (i) pay GSS cash commissions equal to $40,000, or 8.0% of the gross proceeds received in the equity financing,
and (ii) issue to GSS or its designee, a warrant to purchase up to 85,333 shares of the Company's common stock representing 8%
of the Shares sold in the Offering) with an exercise price of $0.6405 per share and a term of five (5) years (the "agent
warrants"). The agent warrants also provide for the same registration rights and obligations as set forth in the Rights Agreement
with respect to the Warrants and Warrant Shares.
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Stevia Corp.
(A Development Stage Company)
Indianapolis, Indiana
We have audited
the accompanying consolidated balance sheet of Stevia Corp., a development stage company, (the "Company") as of March
31, 2012, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows for the period
from April 11, 2011 (inception) through March 31, 2012. 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 the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the consolidated 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 purposes 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 amount and disclosures in the consolidated 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 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 the
Company as of March 31, 2012, and the related consolidated statements of operations, stockholders' equity (deficit) and cash flows
for the period from April 11, 2011 (inception) through March 31, 2012 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, which contemplates
continuity of operations, realization of assets, and liquidation of liabilities in the normal course of business. As discussed
in Note 3 to the consolidated financial statements, the Company had a deficit accumulated during the development stage at March
31, 2012 and a net loss and net cash used in operating activities for the period from April 11, 2011 (inception) through March
31, 2012. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans
in regards to these 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/ Li & Company, PC
|
|
Li & Company, PC
|
|
Skillman, New Jersey
|
|
June 29, 2012
|
|
Stevia Corp.
(A Development Stage Company)
Consolidated Balance Sheet
|
|
March 31, 2012
|
|
ASSETS
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash
|
|
$
|
15,698
|
|
Prepaid expenses
|
|
|
168,874
|
|
Total current assets
|
|
|
184,572
|
|
Furniture and fixture
|
|
|
|
|
Furniture and fixture
|
|
|
3,036
|
|
Accumulated depreciation
|
|
|
—
|
|
Furniture and fixture, net
|
|
|
3,036
|
|
|
|
|
|
|
Website development costs
|
|
|
|
|
Website development costs
|
|
|
5,315
|
|
Accumulated amortization
|
|
|
(801
|
)
|
Website development costs, net
|
|
|
4,514
|
|
Security Deposit
|
|
|
|
|
Security deposit
|
|
|
15,000
|
|
Security deposit
|
|
|
15,000
|
|
|
|
|
|
|
Total assets
|
|
$
|
207,122
|
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
237,288
|
|
Accounts payable - President and CEO
|
|
|
20,220
|
|
Accrued expenses
|
|
|
5,400
|
|
Accrued interest
|
|
|
15,521
|
|
Advances from president and significant stockholder
|
|
|
19,138
|
|
Convertible notes payable
|
|
|
700,000
|
|
Total current liabilities
|
|
|
997,567
|
|
Stockholders' deficit:
|
|
|
|
|
Common stock at $0.001 par value: 100,000,000 shares
authorized, 58,354,775 shares issued and outstanding
|
|
|
58,355
|
|
Additional paid-in capital
|
|
|
1,474,751
|
|
Deficit accumulated during
the development stage
|
|
|
(2,323,551
|
)
|
Total stockholders' deficit
|
|
|
(790,445
|
)
|
|
|
|
|
|
Total liabilities and stockholders' deficit
|
|
$
|
207,122
|
|
See accompanying notes to the consolidated
financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statements of Operations
|
|
For the Period from
|
|
|
|
April 11, 2011
|
|
|
|
(inception)
|
|
|
|
through
|
|
|
|
March 31, 2012
|
|
|
|
|
|
Revenues eaarned during the development stage
|
|
$
|
1,300
|
|
|
|
|
|
|
Cost of services during the development stage
|
|
|
|
|
Farm expenses
|
|
|
531,246
|
|
Farm management services - related party
|
|
|
180,000
|
|
Total cost of services during the development stage
|
|
|
711,246
|
|
|
|
|
|
|
Gross profit (loss)
|
|
|
(709,946
|
)
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
Directors' fees
|
|
|
187,500
|
|
Professional fees
|
|
|
255,959
|
|
Research and development
|
|
|
206,191
|
|
Salary and compensation - officer
|
|
|
750,000
|
|
General and administrative expenses
|
|
|
113,742
|
|
Total operating expenses
|
|
|
1,513,392
|
|
|
|
|
|
|
Loss from operations
|
|
|
(2,223,338
|
)
|
|
|
|
|
|
Other (income) expense:
|
|
|
|
|
Financing cost
|
|
|
70,500
|
|
Interest expense
|
|
|
29,757
|
|
Interest income
|
|
|
(44
|
)
|
Total other (income) expense
|
|
|
100,213
|
|
|
|
|
|
|
Loss before income taxes
|
|
|
(2,323,551
|
)
|
|
|
|
|
|
Income tax provision
|
|
|
—
|
|
|
|
|
|
|
Net loss
|
|
$
|
(2,323,551
|
)
|
|
|
|
|
|
Net loss per common share
|
|
|
|
|
- Basic and diluted:
|
|
$
|
(0.05
|
)
|
|
|
|
|
|
Weighted average common shares
|
|
|
|
|
- basic and diluted
|
|
|
45,093,271
|
|
See accompanying notes to the consolidated
financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Stockholders'
Equity (Deficit)
For the Period from April 11, 2011 (Inception)
through March 31, 2012
|
|
Common Stock,
|
|
|
|
|
|
Deficit
|
|
|
|
|
|
|
$0.001 Par Value
|
|
|
|
|
|
Accumulated
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
Additional
|
|
|
during the
|
|
|
Stockholders'
|
|
|
|
Number
|
|
|
|
|
|
paid-in
|
|
|
Development
|
|
|
Equity
|
|
|
|
of Shares
|
|
|
Amount
|
|
|
Capital
|
|
|
Stage
|
|
|
(Deficit)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, April 11, 2011 (inception)
|
|
|
6,000,000
|
|
|
$
|
6,000
|
|
|
$
|
(5,900
|
)
|
|
$
|
—
|
|
|
$
|
100
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares deemed issued in reverse acquisition
|
|
|
79,800,000
|
|
|
|
79,800
|
|
|
|
(198,088
|
)
|
|
|
|
|
|
|
(118,288
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares cancelled in reverse acquisition
|
|
|
(33,000,000
|
)
|
|
|
(33,000
|
)
|
|
|
33,000
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for cash at $0.25 per share on October 4, 2011
|
|
|
400,000
|
|
|
|
400
|
|
|
|
99,600
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for notes conversion at $0.25
per share on October 4, 2011
|
|
|
1,400,000
|
|
|
|
1,400
|
|
|
|
348,600
|
|
|
|
|
|
|
|
350,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for conversion of accrued interest
at $0.25 per share on October 4, 2011
|
|
|
74,850
|
|
|
|
75
|
|
|
|
18,638
|
|
|
|
|
|
|
|
18,713
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares cancelled by significant stockholder
on October 4, 2011
|
|
|
(3,000,000
|
)
|
|
|
(3,000
|
)
|
|
|
3,000
|
|
|
|
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for future director services
on October 4, 2011
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
747,000
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for future director services
on October 4, 2011
|
|
|
|
|
|
|
|
|
|
|
(750,000
|
)
|
|
|
|
|
|
|
(750,000
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of director services earned during
the period
|
|
|
|
|
|
|
|
|
|
|
187,500
|
|
|
|
|
|
|
|
187,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Make good shares released to officer for achieving
the first milestone on December 23, 2011
|
|
|
3,000,000
|
|
|
|
3,000
|
|
|
|
747,000
|
|
|
|
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for notes conversion at $0.25
per share on January 18, 2012
|
|
|
600,000
|
|
|
|
600
|
|
|
|
149,400
|
|
|
|
|
|
|
|
150,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for conversion of accrued interest
at $0.25 per share on January 18, 2012
|
|
|
17,425
|
|
|
|
17
|
|
|
|
4,339
|
|
|
|
|
|
|
|
4,356
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for financing services upon
agreement at $1.50 per share on January 26, 2012
|
|
|
35,000
|
|
|
|
35
|
|
|
|
52,465
|
|
|
|
|
|
|
|
52,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common shares issued for consulting services at
$1.39 per share on March 31, 2012
|
|
|
27,500
|
|
|
|
28
|
|
|
|
38,197
|
|
|
|
|
|
|
|
38,225
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(2,323,551
|
)
|
|
|
(2,323,551
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, March 31, 2012
|
|
|
58,354,775
|
|
|
$
|
58,355
|
|
|
$
|
1,474,751
|
|
|
$
|
(2,323,551
|
)
|
|
$
|
(790,445
|
)
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
Consolidated Statement of Cash Flows
|
|
For the Period from
|
|
|
|
April 11, 2011
|
|
|
|
(inception)
|
|
|
|
through
|
|
|
|
March 31, 2012
|
|
Cash flows from operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(2,323,551
|
)
|
Adjustments to reconcile net loss to net cash used
in operating activities
|
|
|
|
|
Amortization expense
|
|
|
801
|
|
Common shares issued for compensation
|
|
|
750,000
|
|
Common shares issued for director services earned during the period
|
|
|
187,500
|
|
Common shares issued for outside services
|
|
|
90,725
|
|
Changes in operating assets and liabilities:
|
|
|
|
|
Prepaid expenses
|
|
|
(168,874
|
)
|
Security deposit
|
|
|
(15,000
|
)
|
Accounts payable
|
|
|
141,530
|
|
Accounts payable - related parties
|
|
|
20,220
|
|
Accrued expenses
|
|
|
(1,290
|
)
|
Accrued interest
|
|
|
38,589
|
|
Net cash used in operating activities
|
|
|
(1,279,350
|
)
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property, plant and equipment
|
|
|
(3,036
|
)
|
Website development costs
|
|
|
(5,315
|
)
|
Cash received from reverse acquisition
|
|
|
3,199
|
|
Net cash used in investing activities
|
|
|
(5,152
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Advances from president and stockholder
|
|
|
200
|
|
Proceeds from issuance of convertible notes
|
|
|
1,200,000
|
|
Proceeds from sale of common stock
|
|
|
100,000
|
|
Net cash provided by financing activities
|
|
|
1,300,200
|
|
|
|
|
|
|
Net change in cash
|
|
|
15,698
|
|
Cash at beginning of period
|
|
|
—
|
|
|
|
|
|
|
Cash at end of period
|
|
$
|
15,698
|
|
Supplemental disclosure of cash flows information:
|
|
|
|
|
Interest paid
|
|
$
|
—
|
|
Income tax paid
|
|
$
|
—
|
|
Non-cash investing and financing activities:
|
|
|
|
|
Issuance of common stock for conversion of convertible
notes
|
|
$
|
500,000
|
|
Issuance of common stock for conversion of accrued
note interest
|
|
$
|
23,068
|
|
See accompanying notes to the consolidated financial statements.
Stevia Corp.
(A Development Stage Company)
March 31, 2012
Notes to the Consolidated Financial
Statements
NOTE 1 - ORGANIZATION AND OPERATIONS
STEVIA CORP. (FORMERLY INTERPRO MANAGEMENT CORP.)
Interpro Management
Corp ("Interpro") was incorporated under the laws of the State of Nevada on May 21, 2007. Interpro focused on developing
and offering web based software that was designed to be an online project management tool used to enhance an organization's efficiency
through planning and monitoring the daily operations of a business. The Company discontinued its web-based software business upon
the acquisition of Stevia Ventures International Ltd. on June 23, 2011.
On March 4, 2011,
Interpro amended its Articles of Incorporation, and changed its name to Stevia Corp. ("Stevia" or the "Company")
and effectuated a 35 for 1 (1:35) forward stock split of all of its issued and outstanding shares of common stock (the "Stock
Split").
All shares and
per share amounts in the consolidated financial statements have been adjusted to give retroactive effect to the Stock Split.
STEVIA VENTURES INTERNATIONAL LTD.
Stevia Ventures
International Ltd. ("Ventures") was incorporated on April 11, 2011 under the laws of the Territory of the British Virgin
Islands ("BVI"). Ventures owns certain rights relating to stevia production, including certain assignable exclusive
purchase contracts and an assignable supply agreement related to stevia.
ACQUISITION OF STEVIA VENTURES INTERNATIONAL
LTD. RECOGNIZED AS A REVERSE ACQUISITION
On June 23, 2011
(the "Closing Date"), the Company closed a voluntary share exchange transaction with Stevia Ventures International Ltd.
("Ventures") pursuant to a Share Exchange Agreement (the "Share Exchange Agreement") by and among the Company,
Ventures and George Blankenbaker, the stockholder of Ventures (the "Ventures Stockholder").
Immediately prior
to the Share Exchange Transaction on June 23, 2011, the Company had 79,800,000 common shares issued and outstanding. Simultaneously
with the Closing of the Share Exchange Agreement, on the Closing Date, Mohanad Shurrab, a shareholder and, as of the Closing Date,
the Company's former Director, President, Treasurer and Secretary, surrendered 33,000,000 shares of the Company's common stock
to the Company for cancellation.
As a result of
the Share Exchange Agreement, the Company issued 12,000,000 common shares for the acquisition of 100% of the issued and outstanding
shares of Ventures. Of the 12,000,000 common shares issued 6,000,000 shares are being held in escrow pending the achievement by
the Company of certain post-Closing business milestones (the "Milestones"), pursuant to the terms of the Make Good Escrow
Agreement, between the Company, Greenberg Traurig, LLP, as escrow agent and the Ventures' Stockholder (the "Escrow Agreement").
Even though the shares issued only represented approximately 20.4% of the issued and outstanding common stock immediately after
the consummation of the Share Exchange Agreement the stockholder of Ventures completely took over and controlled the board of
directors and management of the Company upon acquisition.
As a result of
the change in control to the then Ventures Stockholder, for financial statement reporting purposes, the merger between the Company
and Ventures has been treated as a reverse acquisition with Ventures deemed the accounting acquirer and the Company deemed the
accounting acquiree under the purchase method of accounting in accordance with section 805-10-55 of the FASB Accounting Standards
Codification. The reverse merger is deemed a capital transaction and the net assets of Ventures (the accounting acquirer) are
carried forward to the Company (the legal acquirer and the reporting entity) at their carrying value before the combination. The
acquisition process utilizes the capital structure of the Company and the assets and liabilities of Ventures which are recorded
at historical cost. The equity of the Company is the historical equity of Ventures retroactively restated to reflect the number
of shares issued by the Company in the transaction.
FORMATION OF STEVIA ASIA LIMITED
On March 19, 2012,
the Company formed Stevia Asia Limited ("Stevia Asia") under the laws of the Hong Kong Special Administrative Region
("HK SAR") of the People's Republic of China ("PRC"), a wholly-owned subsidiary. Stevia Asia is currently
inactive.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
BASIS OF PRESENTATION
The Company's
consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United
States of America ("U.S. GAAP").
PRINCIPLES OF CONSOLIDATION
The consolidated
financial statements include all accounts of the Company as of March 31, 2012 and for the period from June 23, 2011 (date of acquisition)
through March 31, 2012; Stevia Ventures International Ltd. as of March 31, 2012 and for the period from April 11, 2011 (inception)
through March 31, 2012; and Stevia Asia Limited as of March 31, 2012 and for the period from March 19, 2012 (inception) through
March 31, 2012 as follows:
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Jurisdiction or
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Attributable
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Entity
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Place of Incorporation
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Interest
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Stevia Ventures International Ltd.
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BVI
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100
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%
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Stevia Asia Limited
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Hong Kong SAR
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100
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%
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All inter-company
balances and transactions have been eliminated.
DEVELOPMENT STAGE COMPANY
The Company is
a development stage company as defined by section 915-10-20 of the Financial Accounting Standards Board ("FASB") Accounting
Standards Codification. Although the Company has recognized some nominal amount of revenues since inception, the Company is still
devoting substantially all of its efforts on establishing the business and, therefore, still qualifies as a development stage
company. All losses accumulated since inception have been considered as part of the Company's development stage activities.
USE OF ESTIMATES AND ASSUMPTIONS
The preparation
of financial statements in conformity with accounting principles generally accepted in the United States of America requires management
to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets
and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting
period.
The Company's
significant estimates and assumptions include the fair value of financial instruments; the carrying value, recoverability and
impairment of long-lived assets, including the values assigned to and the estimated useful lives of website development costs;
interest rate; revenue recognized or recognizable; sales returns and allowances; foreign currency exchange rate; income tax rate,
income tax provision, deferred tax assets and valuation allowance of deferred tax assets; and the assumption that the Company
will continue as a going concern. Those significant accounting estimates or assumptions bear the risk of change due to the fact
that there are uncertainties attached to those estimates or assumptions, and certain estimates or assumptions are difficult to
measure or value.
Management bases
its estimates on historical experience and on various assumptions that are believed to be reasonable in relation to the financial
statements taken as a whole under the circumstances, the results of which form the basis for making judgments about the carrying
values of assets and liabilities that are not readily apparent from other sources.
Management regularly
evaluates the key factors and assumptions used to develop the estimates utilizing currently available information, changes in
facts and circumstances, historical experience and reasonable assumptions. After such evaluations, if deemed appropriate, those
estimates are adjusted accordingly. Actual results could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
The Company follows
paragraph 820-10-35-37 of the FASB Accounting Standards Codification ("Paragraph 820-10-35-37") to measure the fair
value of its financial instruments and paragraph 825-10-50-10 of the FASB Accounting Standards Codification for disclosures about
fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in accounting
principles generally accepted in the United States of America (U.S. GAAP), and expands disclosures about fair value measurements.
To increase consistency and comparability in fair value measurements and related disclosures, Paragraph 820-10-35-37 establishes
a fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three (3) broad levels.
The three (3) levels of fair value hierarchy defined by Paragraph 820-10-35-37 are described below:
Level 1
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Quoted market prices available in active markets for identical assets or liabilities
as of the reporting date.
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Level 2
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Pricing inputs other than quoted prices in active markets included in Level 1, which are
either directly or indirectly observable as of the reporting date.
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Level 3
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Pricing inputs that are generally observable inputs and not corroborated by market data.
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Financial assets
are considered Level 3 when their fair values are determined using pricing models, discounted cash flow methodologies or similar
techniques and at least one significant model assumption or input is unobservable.
The fair value
hierarchy gives the highest priority to quoted prices (unadjusted) in active markets for identical assets or liabilities and the
lowest priority to unobservable inputs. If the inputs used to measure the financial assets and liabilities fall within more than
one level described above, the categorization is based on the lowest level input that is significant to the fair value measurement
of the instrument.
The carrying amounts
of the Company's financial assets and liabilities, such as cash, prepaid expenses, accounts payable and accrued expenses, approximate
their fair values because of the short maturity of these instruments.
The Company's
convertible notes payable approximates the fair value of such instrument based upon management's best estimate of interest rates
that would be available to the Company for similar financial arrangements at March 31, 2012.
Transactions involving
related parties cannot be presumed to be carried out on an arm's-length basis, as the requisite conditions of competitive, free-market
dealings may not exist. Representations about transactions with related parties, if made, shall not imply that the related party
transactions were consummated on terms equivalent to those that prevail in arm's-length transactions unless such representations
can be substantiated.
It is not, however,
practical to determine the fair value of advances from stockholders due to their related party nature.
CARRYING VALUE, RECOVERABILITY AND IMPAIRMENT OF LONG-LIVED
ASSETS
The Company has adopted
paragraph 360-10-35-17 of the FASB Accounting Standards Codification for its long-lived assets. The Company's long-lived assets,
which include website development costs, are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable.
The Company assesses
the recoverability of its long-lived assets by comparing the projected undiscounted net cash flows associated with the related
long-lived asset or group of long-lived assets over their remaining estimated useful lives against their respective carrying amounts.
Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets. Fair value is generally
determined using the asset's expected future discounted cash flows or market value, if readily determinable. If long-lived assets
are determined to be recoverable, but the newly determined remaining estimated useful lives are shorter than originally estimated,
the net book values of the long-lived assets are depreciated over the newly determined remaining estimated useful lives.
The Company considers
the following to be some examples of important indicators that may trigger an impairment review: (i) significant under-performance
or losses of assets relative to expected historical or projected future operating results; (ii) significant changes in the manner
or use of assets or in the Company's overall strategy with respect to the manner or use of the acquired assets or changes in the
Company's overall business strategy; (iii) significant negative industry or economic trends; (iv) increased competitive pressures;
(v) a significant decline in the Company's stock price for a sustained period of time; and (vi) regulatory changes. The Company
evaluates acquired assets for potential impairment indicators at least annually and more frequently upon the occurrence of such
events.
The key assumptions
used in management's estimates of projected cash flow deal largely with forecasts of sales levels and gross margins. These forecasts
are typically based on historical trends and take into account recent developments as well as management's plans and intentions.
Other factors, such as increased competition or a decrease in the desirability of the Company's products or services, could lead
to lower projected sales levels, which would adversely impact cash flows. A significant change in cash flows in the future could
result in an impairment of long lived assets.
The impairment charges,
if any, is included in operating expenses in the accompanying consolidated statements of income and comprehensive income (loss).
FISCAL YEAR END
The Company elected
March 31 as its fiscal year ending date.
CASH EQUIVALENTS
The Company considers
all highly liquid investments with maturities of three months or less at the time of purchase to be cash equivalents.
FURNITURE AND FIXTURE
Furniture and
fixture is recorded at cost. Expenditures for major additions and betterments are capitalized. Maintenance and repairs are charged
to operations as incurred. Depreciation of furniture and fixture is computed by the straight-line method (after taking into account
their respective estimated residual values) over the assets estimated useful life of five (5) years. Upon sale or retirement of
furniture and fixture, the related cost and accumulated depreciation are removed from the accounts and any gain or loss is reflected
in the statements of operations.
WEBSITE DEVELOPMENT COSTS
Website development
costs are stated at cost less accumulated amortization. The cost of the website development is amortized on a straight-line basis
over its estimated useful life of five (5) years. Upon becoming fully amortized, the related cost and accumulated amortization
are removed from the accounts.
RELATED PARTIES
The Company follows
subtopic 850-10 of the FASB Accounting Standards Codification for the identification of related parties and disclosure of related
party transactions.
Pursuant to Section
850-10-20 the related parties include a. affiliates of the Company; b. entities for which investments in their equity securities
would be required, absent the election of the fair value option under the Fair Value Option Subsection of Section 825-10-15, to
be accounted for by the equity method by the investing entity; c. trusts for the benefit of employees, such as pension and profit-sharing
trusts that are managed by or under the trusteeship of management; d. principal owners of the Company; e. management of the Company;
f. other parties with which the Company may deal if one party controls or can significantly influence the management or operating
policies of the other to an extent that one of the transacting parties might be prevented from fully pursuing its own separate
interests; and g. other parties that can significantly influence the management or operating policies of the transacting parties
or that have an ownership interest in one of the transacting parties and can significantly influence the other to an extent that
one or more of the transacting parties might be prevented from fully pursuing its own separate interests.
The financial
statements shall include disclosures of material related party transactions, other than compensation arrangements, expense allowances,
and other similar items in the ordinary course of business. However, disclosure of transactions that are eliminated in the preparation
of consolidated or combined financial statements is not required in those statements. The disclosures shall include: a. the nature
of the relationship(s) involved; b. a description of the transactions, including transactions to which no amounts or nominal amounts
were ascribed, for each of the periods for which income statements are presented, and such other information deemed necessary
to an understanding of the effects of the transactions on the financial statements; c. the dollar amounts of transactions for
each of the periods for which income statements are presented and the effects of any change in the method of establishing the
terms from that used in the preceding period; and d. mounts due from or to related parties as of the date of each balance sheet
presented and, if not otherwise apparent, the terms and manner of settlement.
COMMITMENT AND CONTINGENCIES
The Company follows
subtopic 450-20 of the FASB Accounting Standards Codification to report accounting for contingencies. Certain conditions may exist
as of the date the consolidated financial statements are issued, which may result in a loss to the Company but which will only
be resolved when one or more future events occur or fail to occur. The Company assesses such contingent liabilities, and such assessment
inherently involves an exercise of judgment. In assessing loss contingencies related to legal proceedings that are pending against
the Company or unasserted claims that may result in such proceedings, the Company evaluates the perceived merits of any legal proceedings
or unasserted claims as well as the perceived merits of the amount of relief sought or expected to be sought therein.
If the assessment
of a contingency indicates that it is probable that a material loss has been incurred and the amount of the liability can be estimated,
then the estimated liability would be accrued in the Company's consolidated financial statements. If the assessment indicates that
a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then
the nature of the contingent liability, and an estimate of the range of possible losses, if determinable and material, would be
disclosed.
Loss contingencies
considered remote are generally not disclosed unless they involve guarantees, in which case the guarantees would be disclosed.
Management does not believe, based upon information available at this time, that these matters will have a material adverse effect
on the Company's consolidated financial position, results of operations or cash flows. However, there is no assurance that such
matters will not materially and adversely affect the Company's business, financial position, and results of operations or cash
flows.
REVENUE RECOGNITION
The Company follows
paragraph 605-10-S99-1 of the FASB Accounting Standards Codification for revenue recognition. The Company recognizes revenue when
it is realized or realizable and earned. The Company considers revenue realized or realizable and earned when all of the following
criteria are met: (i) persuasive evidence of an arrangement exists, (ii) the product has been shipped or the services have been
rendered to the customer, (iii) the sales price is fixed or determinable, and (iv) collectability is reasonably assured.
RESEARCH AND DEVELOPMENT
The Company follows
paragraph 730-10-25-1 of the FASB Accounting Standards Codification (formerly Statement of Financial Accounting Standards No. 2
"ACCOUNTING FOR RESEARCH AND DEVELOPMENT COSTS") and paragraph 730-20-25-11 of the FASB Accounting Standards Codification
(formerly Statement of Financial Accounting Standards No. 68 "RESEARCH AND DEVELOPMENT ARRANGEMENTS") for research and
development costs. Research and development costs are charged to expense as incurred. Research and development costs consist primarily
of remuneration for research and development staff, depreciation and maintenance expenses of research and development equipment,
material and testing costs for research and development as well as research and development arrangements with unrelated third party
research and development institutions. The research and development arrangements usually involve specific research and development
projects. Often times, the Company makes non-refundable advances upon signing of these arrangements. The Company adopted paragraph
730-20-25-13 and 730-20-35-1 of the FASB Accounting Standards Codification (formerly Emerging Issues Task Force Issue No. 07-3
"ACCOUNTING FOR NONREFUNDABLE ADVANCE PAYMENTS FOR GOODS OR SERVICES TO BE USED IN FUTURE RESEARCH AND DEVELOPMENT ACTIVITIES")
for those non-refundable advances. Non-refundable advance payments for goods or services that will be used or rendered for future
research and development activities are deferred and capitalized. Such amounts are recognized as an expense as the related goods
are delivered or the related services are performed. The management continues to evaluate whether the Company expect the goods
to be delivered or services to be rendered. If the management does not expect the goods to be delivered or services to be rendered,
the capitalized advance payment are charged to expense.
STOCK-BASED COMPENSATION FOR OBTAINING EMPLOYEE SERVICES
The Company accounts
for its stock based compensation in which the Company obtains employee services in share-based payment transactions under the
recognition and measurement principles of the fair value recognition provisions of section 718-10-30 of the FASB Accounting Standards
Codification. Pursuant to paragraph 718-10-30-6 of the FASB Accounting Standards Codification, all transactions in which goods
or services are the consideration received for the issuance of equity instruments are accounted for based on the fair value of
the consideration received or the fair value of the equity instrument issued, whichever is more reliably measurable. The measurement
date used to determine the fair value of the equity instrument issued is the earlier of the date on which the performance is complete
or the date on which it is probable that performance will occur. If shares of the Company are thinly traded the use of share prices
established in the Company's most recent private placement memorandum (PPM"), or weekly or monthly price observations would
generally be more appropriate than the use of daily price observations as such shares could be artificially inflated due to a
larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value of each option award is estimated on the date
of grant using a Black-Scholes option-pricing valuation model. The ranges of assumptions for inputs are as follows:
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Expected term of share options and
similar instruments: The expected life of options and similar instruments
represents the period of time the option and/or warrant are expected
to be outstanding. Pursuant to Paragraph 718-10-50-2(f)(2)(i) of the
FASB Accounting Standards Codification the expected term of share options
and similar instruments represents the period of time the options and
similar instruments are expected to be outstanding taking into consideration
of the contractual term of the instruments and employees' expected exercise
and post-vesting employment termination behavior into the fair value
(or calculated value) of the instruments. Pursuant to paragraph 718-50-S99-1,
it may be appropriate to use the SIMPLIFIED METHOD, if (i) A company
does not have sufficient historical exercise data to provide a reasonable
basis upon which to estimate expected term due to the limited period
of time its equity shares have been publicly traded; (ii) A company
significantly changes the terms of its share option grants or the types
of employees that receive share option grants such that its historical
exercise data may no longer provide a reasonable basis upon which to
estimate expected term; or (iii) A company has or expects to have significant
structural changes in its business such that its historical exercise
data may no longer provide a reasonable basis upon which to estimate
expected term. The Company uses the simplified method to calculate expected
term of share options and similar instruments as the company does not
have sufficient historical exercise data to provide a reasonable basis
upon which to estimate expected term.
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Expected volatility of the entity's
shares and the method used to estimate it. Pursuant to ASC Paragraph
718-10-50-2(f)(2)(ii) a thinly-traded or nonpublic entity that uses
the calculated value method shall disclose the reasons why it is not
practicable for the Company to estimate the expected volatility of its
share price, the appropriate industry sector index that it has selected,
the reasons for selecting that particular index, and how it has calculated
historical volatility using that index. The Company uses the average
historical volatility of the comparable companies over the expected
contractual life of the share options or similar instruments as its
expected volatility. If shares of a company are thinly traded the use
of weekly or monthly price observations would generally be more appropriate
than the use of daily price observations as the volatility calculation
using daily observations for such shares could be artificially inflated
due to a larger spread between the bid and asked quotes and lack of
consistent trading in the market.
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Expected annual rate of quarterly
dividends. An entity that uses a method that employs different dividend
rates during the contractual term shall disclose the range of expected
dividends used and the weighted-average expected dividends. The expected
dividend yield is based on the Company's current dividend yield as the
best estimate of projected dividend yield for periods within the expected
term of the share options and similar instruments.
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Risk-free rate(s). An entity that
uses a method that employs different risk-free rates shall disclose
the range of risk-free rates used. The risk-free interest rate is based
on the U.S. Treasury yield curve in effect at the time of grant for
periods within the expected term of the share options and similar instruments.
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The Company's policy
is to recognize compensation cost for awards with only service conditions and a graded vesting schedule on a straight-line basis
over the requisite service period for the entire award.
EQUITY INSTRUMENTS ISSUED TO PARTIES OTHER THAN EMPLOYEES FOR
ACQUIRING GOODS OR SERVICES
The Company accounts
for equity instruments issued to parties other than employees for acquiring goods or services under guidance of Subtopic 505-50
of the FASB Accounting Standards Codification ("Subtopic 505-50").
Pursuant to ASC
Section 505-50-30, all transactions in which goods or services are the consideration received for the issuance of equity instruments
are accounted for based on the fair value of the consideration received or the fair value of the equity instrument issued, whichever
is more reliably measurable. The measurement date used to determine the fair value of the equity instrument issued is the earlier
of the date on which the performance is complete or the date on which it is probable that performance will occur. If shares of
the Company are thinly traded the use of share prices established in the Company's most recent private placement memorandum (PPM"),
or weekly or monthly price observations would generally be more appropriate than the use of daily price observations as such shares
could be artificially inflated due to a larger spread between the bid and asked quotes and lack of consistent trading in the market.
The fair value
of option or warrant award is estimated on the date of grant using a Black-Scholes option-pricing valuation model. The ranges
of assumptions for inputs are as follows:
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Expected term of share options and
similar instruments: Pursuant to Paragraph 718-10-50-2 of the FASB Accounting
Standards Codification the expected term of share options and similar
instruments represents the period of time the options and similar instruments
are expected to be outstanding taking into consideration of the contractual
term of the instruments and holder's expected exercise behavior into
the fair value (or calculated value) of the instruments. The Company
uses historical data to estimate holder's expected exercise behavior.
If the Company is a newly formed corporation or shares of the Company
are thinly traded the contractual term of the share options and similar
instruments is used as the expected term of share options and similar
instruments as the Company does not have sufficient historical exercise
data to provide a reasonable basis upon which to estimate expected term.
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Expected
volatility of the entity's
shares and the method used
to estimate it. An entity
that uses a method that employs
different volatilities during
the contractual term shall
disclose the range of expected
volatilities used and the
weighted-average expected
volatility. A thinly-traded
or nonpublic entity that uses
the calculated value method
shall disclose the reasons
why it is not practicable
for the Company to estimate
the expected volatility of
its share price, the appropriate
industry sector index that
it has selected, the reasons
for selecting that particular
index, and how it has calculated
historical volatility using
that index. The Company uses
the average historical volatility
of the comparable companies
over the expected contractual
life of the share options
or similar instruments as
its expected volatility. If
shares of a company are thinly
traded the use of weekly or
monthly price observations
would generally be more appropriate
than the use of daily price
observations as the volatility
calculation using daily observations
for such shares could be artificially
inflated due to a larger spread
between the bid and asked
quotes and lack of consistent
trading in the market.
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Expected
annual rate of quarterly dividends.
An entity that uses a method
that employs different dividend
rates during the contractual
term shall disclose the range
of expected dividends used
and the weighted-average expected
dividends. The expected dividend
yield is based on the Company's
current dividend yield as
the best estimate of projected
dividend yield for periods
within the expected contractual
life of the option and similar
instruments.
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Risk-free
rate(s). An entity that uses
a method that employs different
risk-free rates shall disclose
the range of risk-free rates
used. The risk-free interest
rate is based on the U.S.
Treasury yield curve in effect
at the time of grant for periods
within the contractual life
of the option and similar
instruments.
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Pursuant to Paragraphs
505-50-25-8, if fully vested, non-forfeitable equity instruments are issued at the date the grantor and grantee enter into an
agreement for goods or services (no specific performance is required by the grantee to retain those equity instruments), then,
because of the elimination of any obligation on the part of the counterparty to earn the equity instruments, a measurement date
has been reached. A grantor shall recognize the equity instruments when they are issued (in most cases, when the agreement is
entered into). Whether the corresponding cost is an immediate expense or a prepaid asset (or whether the debit should be characterized
as contra-equity under the requirements of paragraph 505-50-45-1) depends on the specific facts and circumstances. Pursuant to
ASC paragraph 505-50-45-1, a grantor may conclude that an asset (other than a note or a receivable) has been received in return
for fully vested, non-forfeitable equity instruments that are issued at the date the grantor and grantee enter into an agreement
for goods or services (and no specific performance is required by the grantee in order to retain those equity instruments). Such
an asset shall not be displayed as contra-equity by the grantor of the equity instruments. The transferability (or lack thereof)
of the equity instruments shall not affect the balance sheet display of the asset. This guidance is limited to transactions in
which equity instruments are transferred to other than employees in exchange for goods or services. Section 505-50-30 provides
guidance on the determination of the measurement date for transactions that are within the scope of this Subtopic.
Pursuant to Paragraphs
505-50-25-8 and 505-50-25-9,an entity may grant fully vested, non-forfeitable equity instruments that are exercisable by the grantee
only after a specified period of time if the terms of the agreement provide for earlier exercisability if the grantee achieves
specified performance conditions. Any measured cost of the transaction shall be recognized in the same period(s) and in the same
manner as if the entity had paid cash for the goods or services or used cash rebates as a sales discount instead of paying with,
or using, the equity instruments. A recognized asset, expense, or sales discount shall not be reversed if a stock option that
the counterparty has the right to exercise expires unexercised.
Pursuant to ASC
paragraph 505-50-30-S99-1, if the Company receives a right to receive future services in exchange for unvested, forfeitable equity
instruments, those equity instruments are treated as unissued for accounting purposes until the future services are received (that
is, the instruments are not considered issued until they vest). Consequently, there would be no recognition at the measurement
date and no entry should be recorded.
INCOME TAX PROVISION
The Company accounts
for income taxes under Section 740-10-30 of the FASB Accounting Standards Codification, which requires recognition of deferred
tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements
or tax returns. Under this method, deferred tax assets and liabilities are based on the differences between the financial statement
and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to
reverse. Deferred tax assets are reduced by a valuation allowance to the extent management concludes it is more likely than not
that the assets will not be realized. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply
to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred
tax assets and liabilities of a change in tax rates is recognized in the consolidated statements of income and comprehensive income
(loss) in the period that includes the enactment date.
The Company adopted
section 740-10-25 of the FASB Accounting Standards Codification ("Section 740-10-25"). Section 740-10-25 addresses the
determination of whether tax benefits claimed or expected to be claimed on a tax return should be recorded in the financial statements.
Under Section 740-10-25, the Company may recognize the tax benefit from an uncertain tax position only if it is more likely than
not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position.
The tax benefits recognized in the financial statements from such a position should be measured based on the largest benefit that
has a greater than fifty (50) percent likelihood of being realized upon ultimate settlement. Section 740-10-25 also provides guidance
on de-recognition, classification, interest and penalties on income taxes, accounting in interim periods and requires increased
disclosures.
The estimated future
tax effects of temporary differences between the tax basis of assets and liabilities are reported in the accompanying consolidated
balance sheets, as well as tax credit carry-backs and carry-forwards. The Company periodically reviews the recoverability of deferred
tax assets recorded on its consolidated balance sheets and provides valuation allowances as management deems necessary.
Management makes judgments
as to the interpretation of the tax laws that might be challenged upon an audit and cause changes to previous estimates of tax
liability. In addition, the Company operates within multiple taxing jurisdictions and is subject to audit in these jurisdictions.
In management's opinion, adequate provisions for income taxes have been made for all years. If actual taxable income by tax jurisdiction
varies from estimates, additional allowances or reversals of reserves may be necessary.
UNCERTAIN TAX POSITIONS
The Company did
not take any uncertain tax positions and had no adjustments to its income tax liabilities or benefits pursuant to the provisions
of Section 740-10-25 for the period from April 11, 2011 (Inception) through March 31, 2012.
LIMITATION ON UTILIZATION OF NOLS DUE TO CHANGE IN CONTROL
Pursuant to the Internal
Revenue Code Section 382 ("Section 382"), certain ownership changes may subject the NOL's to annual limitations which
could reduce or defer the NOL. Section 382 imposes limitations on a corporation's ability to utilize NOLs if it experiences an
"ownership change." In general terms, an ownership change may result from transactions increasing the ownership of certain
stockholders in the stock of a corporation by more than 50 percentage points over a three-year period. In the event of an ownership
change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined by multiplying the value
of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused annual limitation may
be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset future taxable income
could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect and could cause such
NOLs to expire unused, reducing or eliminating the benefit of such NOLs.
NET INCOME (LOSS) PER COMMON SHARE
Net income (loss)
per common share is computed pursuant to section 260-10-45 of the FASB Accounting Standards Codification. Basic net income (loss)
per common share is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding
during the period. Diluted net income (loss) per common share is computed by dividing net income (loss) by the weighted average
number of shares of common stock and potentially outstanding shares of common stock during the period to reflect the potential
dilution that could occur from common shares issuable through contingent shares issuance arrangement, stock options or warrants.
The following
table shows the potentially outstanding dilutive common shares excluded from the diluted net income (loss) per common share calculation
for the period from April 11, 2011 (inception) through March 31, 2012 as they were anti-dilutive:
|
|
Potentially Outstanding
|
|
|
|
Dilutive Common Shares
|
|
|
|
For the
|
|
|
|
Period from
|
|
|
|
April 11, 2011
|
|
|
|
(inception)
|
|
|
|
through
|
|
|
|
March 31, 2012
|
|
The remainder
of the Make Good Escrow Agreement shares issued and held with the escrow agent in connection with the Share Exchange Agreement
consummated on June 23, 2011 pending the achievement by the Company of certain post-Closing business milestones (the "Milestones").
|
|
|
3,000,000
|
|
|
|
|
|
|
Total potentially outstanding
dilutive common shares
|
|
|
3,000,000
|
|
CASH FLOWS REPORTING
The Company adopted
paragraph 230-10-45-24 of the FASB Accounting Standards Codification for cash flows reporting, classifies cash receipts and payments
according to whether they stem from operating, investing, or financing activities and provides definitions of each category, and
uses the indirect or reconciliation method ("Indirect method") as defined by paragraph 230-10-45-25 of the FASB Accounting
Standards Codification to report net cash flow from operating activities by adjusting net income to reconcile it to net cash flow
from operating activities by removing the effects of (a) all deferrals of past operating cash receipts and payments and all accruals
of expected future operating cash receipts and payments and (b) all items that are included in net income that do not affect operating
cash receipts and payments. The Company reports the reporting currency equivalent of foreign currency cash flows, using the current
exchange rate at the time of the cash flows and the effect of exchange rate changes on cash held in foreign currencies is reported
as a separate item in the reconciliation of beginning and ending balances of cash and cash equivalents and separately provides
information about investing and financing activities not resulting in cash receipts or payments in the period pursuant to paragraph
830-230-45-1 of the FASB Accounting Standards Codification.
SUBSEQUENT EVENTS
The Company follows
the guidance in Section 855-10-50 of the FASB Accounting Standards Codification for the disclosure of subsequent events. The Company
will evaluate subsequent events through the date when the financial statements are issued. Pursuant to ASU 2010-09 of the FASB
Accounting Standards Codification, the Company as an SEC filer considers its financial statements issued when they are widely distributed
to users, such as through filing them on EDGAR.
RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-05
In June 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-05 "COMPREHENSIVE INCOME" ("ASU 2011-05"), which
was the result of a joint project with the IASB and amends the guidance in ASC 220, COMPREHENSIVE INCOME, by eliminating the option
to present components of other comprehensive income (OCI) in the statement of stockholders' equity. Instead, the new guidance
now gives entities the option to present all non-owner changes in stockholders' equity either as a single continuous statement
of comprehensive income or as two separate but consecutive statements. Regardless of whether an entity chooses to present comprehensive
income in a single continuous statement or in two separate but consecutive statements, the amendments require entities to present
all reclassification adjustments from OCI to net income on the face of the statement of comprehensive income.
The amendments in
this Update should be applied retrospectively and are effective for public entity for fiscal years, and interim periods within
those years, beginning after December 15, 2011.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-08
In September 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-08 "INTANGIBLES—GOODWILL AND OTHER: TESTING GOODWILL
FOR IMPAIRMENT" ("ASU 2011-08"). This Update is to simplify how public and nonpublic entities test goodwill for
impairment. The amendments permit an entity to first assess qualitative factors to determine whether it is more likely than not
that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to
perform the two-step goodwill impairment test described in Topic 350. Under the amendments in this Update, an entity is not required
to calculate the fair value of a reporting unit unless the entity determines that it is more likely than not that its fair value
is less than its carrying amount.
The guidance is
effective for interim and annual periods beginning on or after December 15, 2011. Early adoption is permitted.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-10
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-10 "PROPERTY, PLANT AND EQUIPMENT: DERECOGNITION OF IN SUBSTANCE
REAL ESTATE-A SCOPE CLARIFICATION" ("ASU 2011-09"). This Update is to resolve the diversity in practice as to how
financial statements have been reflecting circumstances when parent company reporting entities cease to have controlling financial
interests in subsidiaries that are in substance real estate, where the situation arises as a result of default on nonrecourse
debt of the subsidiaries.
The amended guidance
is effective for annual reporting periods ending after June 15, 2012 for public entities. Early adoption is permitted.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-11
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-11 "BALANCE SHEET: DISCLOSURES ABOUT OFFSETTING ASSETS AND
LIABILITIES" ("ASU 2011-11"). This Update requires an entity to disclose information about offsetting and related
arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position.
The objective of this disclosure is to facilitate comparison between those entities that prepare their financial statements on
the basis of U.S. GAAP and those entities that prepare their financial statements on the basis of IFRS.
The amended guidance
is effective for annual reporting periods beginning on or after January 1, 2013, and interim periods within those annual periods.
FASB ACCOUNTING STANDARDS UPDATE NO.
2011-12
In December 2011,
the FASB issued the FASB Accounting Standards Update No. 2011-12 "COMPREHENSIVE INCOME: DEFERRAL OF THE EFFECTIVE DATE FOR
AMENDMENTS TO THE PRESENTATION OF RECLASSIFICATIONS OF ITEMS OUT OF ACCUMULATED OTHER COMPREHENSIVE INCOME IN ACCOUNTING STANDARDS
UPDATE NO. 2011-05" ("ASU 2011-12"). This Update is a deferral of the effective date pertaining to reclassification
adjustments out of accumulated other comprehensive income in ASU 2011-05. FASB is to going to reassess the costs and benefits
of those provisions in ASU 2011-05 related to reclassifications out of accumulated other comprehensive income. Due to the time
required to properly make such a reassessment and to evaluate alternative presentation formats, the FASB decided that it is necessary
to reinstate the requirements for the presentation of reclassifications out of accumulated other comprehensive income that were
in place before the issuance of Update 2011-05.
All other requirements
in Update 2011-05 are not affected by this Update, including the requirement to report comprehensive income either in a single
continuous financial statement or in two separate but consecutive financial statements. Public entities should apply these requirements
for fiscal years, and interim periods within those years, beginning after December 15, 2011.
OTHER RECENTLY ISSUED, BUT NOT YET
EFFECTIVE ACCOUNTING PRONOUNCEMENTS
Management does not
believe that any other recently issued, but not yet effective accounting pronouncements, if adopted, would have a material effect
on the accompanying financial statements.
NOTE 3 - GOING CONCERN
The accompanying consolidated
financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity
of operations, realization of assets, and liquidation of liabilities in the normal course of business.
As reflected in
the accompanying consolidated financial statements, the Company had a deficit accumulated during the development stage at March
31, 2012, a net loss and net cash used in operating activities for the period from April 11, 2011 (inception) through March 31,
2012. These factors raise substantial doubt about the Company's ability to continue as a going concern.
While the Company
is attempting to commence operations and generate sufficient revenues, the Company's cash position may not be sufficient enough
to support the Company's daily operations. Management intends to raise additional funds by way of a public or private offering.
Management believes that the actions presently being taken to further implement its business plan and generate sufficient revenues
provide the opportunity for the Company to continue as a going concern. While the Company believes in the viability of its strategy
to commence operations and generate sufficient revenues and in its ability to raise additional funds, there can be no assurances
to that effect. The ability of the Company to continue as a going concern is dependent upon the Company's ability to further implement
its business plan and generate sufficient revenues.
The consolidated financial
statements do not include any adjustments related to the recoverability and classification of recorded asset amounts or the amounts
and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
NOTE 4 - PREPAID EXPENSES
Prepaid expenses
at March 31, 2012, consisted of the following:
|
|
March 31, 2012
|
|
|
|
|
|
Prepaid research and development
|
|
$
|
128,445
|
|
Prepaid rent
|
|
|
21,250
|
|
Retainer
|
|
|
15,000
|
|
Other
|
|
|
4,179
|
|
|
|
$
|
168,874
|
|
NOTE 5 - FURNITURE AND FIXTURE
Furniture and
fixture, stated at cost, less accumulated depreciation at March 31, 2012 consisted of the following:
|
|
Estimated
|
|
|
|
|
|
|
Useful Life
|
|
|
|
|
|
|
(Years)
|
|
|
March 31, 2012
|
|
Furniture and fixture
|
|
|
5
|
|
|
$
|
3,036
|
|
|
|
|
|
|
|
|
3,036
|
|
Less accumulated depreciation
|
|
|
|
|
|
|
(-
|
)
|
|
|
|
|
|
|
$
|
3,036
|
|
DEPRECIATION EXPENSE
The Company acquired
furniture and fixture near the end of February 2012 and started to depreciate as of April 1, 2012.
NOTE 6 - WEBSITE DEVELOPMENT COSTS
Website development
costs, stated at cost, less accumulated amortization at March 31, 2012, consisted of the following:
|
|
March 31, 2012
|
|
|
|
|
|
Website development costs
|
|
$
|
5,315
|
|
Accumulated amortization
|
|
|
(801
|
)
|
|
|
$
|
4,514
|
|
AMORTIZATION EXPENSE
Amortization expense was $801 for the
period from April 11, 2011 (inception) through March 31, 2012.
NOTE 7 - RELATED PARTY TRANSACTIONS
RELATED PARTIES
Related parties with
whom the Company had transactions are:
Related Parties
|
|
Relationship
|
|
|
|
George Blankenbaker
|
|
President and significant stockholder of the Company
|
|
|
|
Leverage Investments LLC
|
|
An entity owned and controlled by the president and significant stockholder of the Company
|
|
|
|
Growers Synergy Pte Ltd.
|
|
An entity owned and controlled by the president and significant stockholder of the Company
|
ADVANCES FROM STOCKHOLDER
From time to time,
stockholders of the Company advance funds to the Company for working capital purpose. Those advances are unsecured, non-interest
bearing and due on demand.
LEASE OF CERTAIN OFFICE SPACE FROM LEVERAGE
INVESTMENTS, LLC
The Company leases
certain office space with Leverage Investments, LLC for $500 per month on a month-to-month basis since July 1, 2011. For the period
from April 11, 2011 (inception) through March 31, 2012, the Company recorded $9,200 in rent expenses due Leverage Investment LLC.
CONSULTING SERVICES, MANAGEMENT AND
OFF-TAKE AGREEMENT WITH GROWERS SYNERGY PTE LTD.
Prior to November
1, 2011, the Company engaged Growers Synergy Pte Ltd. to provide farm management consulting services on a month-to-month basis,
at $20,000 per month as of July 1, 2011.
On November 1,
2011, the Company entered into a Management and Off-Take Agreement (the "Agreement") with Growers Synergy Pte Ltd. ("GSPL"),
a Singapore corporation owned and controlled by the president and major stockholder of the Company. Under the terms of the Agreement,
the Company will engage GSPL to supervise the Company's farm management operations, recommend quality farm management programs
for stevia cultivation, assist in the hiring of employees and provide training to help the Company meet its commercialization
targets, develop successful models to propagate future agribusiness services, and provide back-office and regional logistical
support for the development of proprietary stevia farm systems in Vietnam, Indonesia and potentially other countries. GSPL will
provide services for a term of two (2) years from the date of signing, at $20,000 per month. The Agreement may be terminated by
the Company upon 30 day notice. In connection with the Agreement, the parties agreed to enter into an off-take agreement whereby
GSPL agreed to purchase all of the non-stevia crops produced at the Company's GSPL supervised farms.
Consulting services
provided by Growers Synergy Pte Ltd. for the period from April 11, 2011 (inception) through March 31, 2012 is as follows:
|
|
March 31, 2012
|
|
|
|
|
|
Consulting services received and consulting fees booked
|
|
$
|
180,000
|
|
|
|
$
|
180,000
|
|
Future minimum payments required under
this agreement at March 31, 2012 were as follows:
Fiscal Year Ending March 31:
|
|
|
|
|
2013
|
|
$
|
240,000
|
|
2014
|
|
|
140,000
|
|
|
|
$
|
380,000
|
|
NOTE 8 - CONVERTIBLE NOTES PAYABLE
On February 14, 2011,
the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the date of
issuance. On October 4, 2011, the note holder converted the entire principal of $250,000 and accrued interest through the date
of conversion of $15,890.41 to 1,000,000 and 63,561 shares of the Company's common stock at $0.25 per share, respectively.
On June 23, 2011,
the Company issued a convertible note in the amount of $100,000 with interest at 10% per annum due one (1) year from the date of
issuance. On October 4, 2011, the note holder converted the entire principal of $100,000 and accrued interest through the date
of conversion of $2,821.92 to 400,000 and 11,288 shares of the Company's common stock at $0.25 per share.
On October 4, 2011,
the Company issued a convertible note in the amount of $150,000 with interest at 10% per annum due one (1) year from the date of
issuance. On January 18, 2012, the note holder converted the entire principal of $150,000 and accrued interest through the date
of conversion of $4,356 to 617,425 shares of the Company's common stock at $0.25 per share.
On November 16, 2011,
the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the date of
issuance. The note may be converted into common shares of the Company should the Company complete a private placement with gross
proceeds of at least $100,000. The conversion price shall be the same as the private placement price on a per share basis.
On January 16,
2012, the Company issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the
date of issuance.
On March 7, 2012,
the Company issued a convertible note in the amount of $200,000 with interest at 10% per annum due one (1) year from the date
of issuance.
Convertible notes
payable at March 31, 2012 consisted of the following:
|
|
March 31, 2012
|
|
|
|
|
|
On November 16, 2011, the Company
issued a convertible note in the amount of $250,000 with interest at 10% per annum due one (1) year from the date of issuance.
The note may be converted into common shares of the Company should the Company complete a private placement with gross proceeds
of at least $100,000. The conversion price shall be the same as the private placement price on a per share basis
|
|
$
|
250,000
|
|
|
|
|
|
|
On January 16, 2012, the Company issued a convertible
note in the amount of $250,000 with interest at 10% per annum due one (1) year from the date of issuance
|
|
|
250,000
|
|
|
|
|
|
|
On March 7, 2012, the Company
issued a convertible note in the amount of $200,000 with interest at 10% per annum due one (1) year from the date of issuance.
|
|
|
200,000
|
|
|
|
$
|
700,000
|
|
NOTE 9 - STOCKHOLDERS' DEFICIT
SHARES AUTHORIZED
Upon formation
the total number of shares of common stock which the Company is authorized to issue is One Hundred Million (100,000,000) shares,
par value $0.001 per share.
COMMON STOCK
REVERSE ACQUISITION TRANSACTION
Immediately prior
to the Share Exchange Transaction on June 23, 2011, the Company had 79,800,000 common shares issued and outstanding. Simultaneously
with the Closing of the Share Exchange Agreement, on the Closing Date, Mohanad Shurrab, a shareholder and, as of the Closing Date,
the Company's former Director, President, Treasurer and Secretary, surrendered 33,000,000 shares of the Company's common stock
to the Company for cancellation.
As a result of
the Share Exchange Agreement, the Company issued 12,000,000 common shares for the acquisition of 100% of the issued and outstanding
shares of Stevia Ventures International Ltd. Of the 12,000,000 common shares issued in connection with the Share Exchange Agreement,
6,000,000 of such shares are being held in escrow ("Escrow Shares") pending the achievement by the Company of certain
post-Closing business milestones (the "Milestones"), pursuant to the terms of the Make Good Escrow Agreement, between
the Company, Greenberg Traurig, LLP, as escrow agent and the Ventures' Stockholder (the "Escrow Agreement").
MAKE GOOD AGREEMENT SHARES
|
(I)
|
DURATION OF ESCROW AGREEMENT
|
The Make Good Escrow Agreement
shall terminate on the sooner of (i) the distribution of all the escrow shares, or (ii) December 31, 2013.
|
(II)
|
DISBURSEMENT OF MAKE GOOD SHARES
|
Upon achievement of any Milestone
on or before the date associated with such Milestone on Exhibit A, the Company shall promptly provide written notice to the Escrow
Agent and the Selling Shareholder of such achievement (each a "COMPLETION NOTICE"). Upon the passage of any Milestone
date set forth on Exhibit A for which the Company has not achieved the associated Milestone, the Company shall promptly provide
written notice to the Escrow Agent and the Selling Shareholder of such failure to achieve the milestone (each a "NONCOMPLETION
NOTICE").
|
(III)
|
EXHIBIT A - SCHEDULE OF MILESTONES
|
|
Milestones
|
|
Completion
Date
|
|
Number of
Escrow Shares
|
|
|
|
|
|
|
I.
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Enter into exclusive international license agreement for all Agro
Genesis intellectual property and products as it applies to stevia
|
|
|
|
|
(2)
|
Enter into cooperative agreements to work with Vietnam Institutes
(a) Medical Plant Institute in Hanoi; (b) Agricultural Science Institute of Northern Central Vietnam
|
|
|
|
3,000,000
shares only
if and when
|
(3)
|
Enter into farm management agreements with local growers including
the Provincial and National projects;
|
|
Within 180
days of the
|
|
ALL four (4)
milestones
|
(4)
|
Take over management of three existing nurseries
|
|
Closing Date
|
|
reached
|
|
|
|
|
|
|
II.
|
Achieve 100 Ha field trials and first test shipment of dry leaf
|
|
Within two (2)
years of the
Closing Date
|
|
1,500,000 shares
|
|
|
|
|
|
|
III.
|
Test shipment of dry leaf to achieve minimum specs for contracted
base price (currently $2.00 per kilogram)
|
|
Within two (2)
years of the
Closing Date
|
|
1,500,000 shares
|
On
December 23, 2011, 3,000,000 out of the 6,000,000 Escrow Shares have been earned and released to Ventures stockholder upon achievement
of the First Milestone within 180 days of June 23, 2011, the Closing Date associated with the First Milestone. Those shares were
valued at $0.25 per share or $750,000 on the date of release and recorded as compensation.
COMMON SHARES SURRENDERED FOR CANCELLATION
On October 4,
2011, a significant stockholder of the Company, Mohanad Shurrab, surrendered another 3,000,000 shares of the Company's common
stock to the Company for cancellation. The Company recorded this transaction by debiting common stock at par of $3,000 and crediting
additional paid-in capital of the same.
COMMON SHARES ISSUED FOR CASH
On October 4,
2011 the Company sold 400,000 shares of its common stock to one investor at $0.25 per share or $100,000.
COMMON SHARES ISSUED FOR OBTAINING EMPLOYEE AND DIRECTOR
SERVICES
On October 14,
2011 the Company issued 1,500,000 shares each to two (2) newly appointed members of the board of directors or 3,000,000 shares
of its common stock in aggregate as compensation for future services. These shares shall vest with respect to 750,000 shares of
restricted stock on each of the first two anniversaries of the date of grant, subject to the director's continuous service to
the Company as directors. These shares were valued at $0.25 per share or $750,000 on the date of grant and are being amortized
over the vesting period of two (2) years or $93,750 per quarter. The Company recorded $187,500 in directors' fees for the period
from April 11, 2011 (inception) through March 31, 2012.
COMMON SHARES ISSUED TO PARTIES OTHER THAN EMPLOYEES FOR
ACQUIRING GOODS OR SERVICES
EQUITY PURCHASE AGREEMENT AND RELATED REGISTRATION RIGHTS
AGREEMENT
(I) EQUITY PURCHASE AGREEMENT
On January 26,
2012, the Company entered into an equity purchase agreement ("Equity Purchase Agreement") with Southridge Partners II,
LP, a Delaware limited partnership (The "Investor"). Upon the terms and subject to the conditions contained in the agreement,
the Company shall issue and sell to the Investor, and the Investor shall purchase, up to Twenty Million Dollars ($20,000,000)
of its common stock, par value $0.001 per share.
At any time and
from time to time during the Commitment Period, the period commencing on the effective date, and ending on the earlier of (i)
the date on which investor shall have purchased put shares pursuant to this agreement for an aggregate purchase price of the maximum
commitment amount, or (ii) the date occurring thirty six (36) months from the date of commencement of the commitment period. the
Company may exercise a put by the delivery of a put notice, the number of put shares that investor shall purchase pursuant to
such put shall be determined by dividing the investment amount specified in the put notice by the purchase price with respect
to such put notice. However, that the investment amount identified in the applicable put notice shall not be greater than the
maximum put amount and, when taken together with any prior put notices, shall not exceed the maximum commitment The purchase price
shall mean 93% of the market price on such date on which the purchase price is calculated in accordance with the terms and conditions
of this Agreement.
(II) REGISTRATION RIGHTS AGREEMENT
In connection
with the Equity Purchase Agreement, on January 26, 2012, the Company entered into a registration rights agreement ("Registration
Rights Agreement") with Southridge Partners II, LP, a Delaware limited partnership (the "Investor"). To induce
the investor to execute and deliver the equity purchase agreement which the Company has agreed to issue and sell to the investor
shares (the "put shares") of its common stock, par value $0.001 per share (the "common stock") from time to
time for an aggregate investment price of up to twenty million dollars ($20,000,000) (the "registrable securities"),
the company has agreed to provide certain registration rights under the securities act of 1933, as amended, and the rules and
regulations thereunder, or any similar successor statute (collectively, "securities act"), and applicable state securities
laws with respect to the registrable securities.
(III) COMMON SHARES ISSUED UPON SIGNING
As a condition
for the execution of this agreement by the investor, the company issued to the investor 35,000 shares of restricted common stock
(the "restricted shares") upon the signing of this agreement. The restricted shares shall have no registration rights.
These shares were valued at $1.50 per share or $52,500 on the date of issuance and recorded as financing cost.
MARKETING SERVICE AGREEMENT - EMPIRE RELATIONS GROUP INC.
On March 14, 2012
the Company entered into a consulting agreement (the "Consulting Agreement") with Empire Relations Group, Inc. ("Empire").
(I) SCOPE OF SERVICES
Under the terms
of the Consulting Agreement, the Company engaged Empire to introduce interested investors to the Company, advise the Company on
available financing options, provide periodic updates on the stevia sector and provide insights and strategies for the Company
to undertake.
(II) TERM
The term of this
agreement shall be consummated from the date hereof, and shall automatically terminate unless otherwise agreed upon in writing
by both parties on May 30, 20 12.
(III) COMPENSATION
For the term of
this agreement, the consultant shall be paid an upfront, non-refundable, non-cancellable retainer fee of 27,500 restricted shares.
For the purposes of this agreement, these shares shall be considered to be fully earned by March 31, 2012. These shares were valued
at $1.39 per share or $38,225 on March 31, 2012, the date when they were earned.
NOTE 10 - RESEARCH AND DEVELOPMENT
AGRIBUSINESS DEVELOPMENT AGREEMENT - AGRO
GENESIS PTE LTD.
ENTRY INTO AGRIBUSINESS DEVELOPMENT
AGREEMENT
On July 16, 2011,
the Company entered into an Agribusiness Development Agreement (the "Agribusiness Development Agreement") with Agro Genesis
Pte Ltd. ("AGPL"), a corporation organized under the laws of the Republic of Singapore expiring two (2) years from the
date of signing.
Under the terms of
the Agreement, the Company engaged AGPL to be the Company's technology provider consultant for stevia propagation and cultivation
in Vietnam, and potentially other countries for a period of two (2) years. AGPL will be tasked with developing stevia propagation
and cultivation technology in Vietnam, recommend quality agronomic programs for stevia cultivation, harvest and post harvest, alert
findings on stevia propagation and cultivation that may impact profitability and develop a successful model in Vietnam that can
be replicated elsewhere (the "Project"). The Project will be on-site at stevia fields in Vietnam and will have a term
of at least two (2) years. For its services, AGPL could receive a fee of up to 275,000 Singapore dollars, plus related expenses
estimated at $274,000 as specified in Appendix A to the Agribusiness Development Agreement. Additionally, the Company will be AGPL's
exclusive distributor for AGPL's g'farm system (a novel crop production system) for stevia growing resulting from the Project.
AGPL will receive a commission of no less than 2% of the price paid for crops other than stevia, from cropping systems that utilize
the g'farm system resulting from the Project. All technology-related patents resulting from the Project will be jointly owned by
AGPL and the Company, with the Company holding a right of first offer for the use and distribution rights to registered patents
resulting from the Project.
ADDENDUM TO AGRIBUSINESS DEVELOPMENT
AGREEMENT
On August 26, 2011,
in accordance with Appendix A , 3(a), the Company and AGPL have mutually agreed to add to the current Project budget $100,000 per
annum for one, on-site resident AGPL expert for 2 (two) years effective September 1, 2011, or $200,000 in aggregate for the term
of the contract as specified in Appendix C. In-country accommodation for the resident expert will be born separately by the Company
and is excluded from the above amount. The expert, Dr. Cho, Young-Cheol, Director, Life Sciences has been appointed and commenced
on September 1, 2011.
TERMINATION OF AGRIBUSINESS DEVELOPMENT
AGREEMENT
On March 31, 2012,
the Company and AGPL mutually agreed to terminate the Agribusiness Development Agreement, effective immediately.
LEASE OF AGRICULTURAL LAND
On December 14, 2011,
the Company and Stevia Ventures Corporation ("Stevia Ventures") entered into a Land Lease Agreement with Vinh Phuc Province
People's Committee Tam Dao Agriculture & Industry Co., Ltd. pursuant to which Stevia Ventures has leased l0 hectares of land
(the "Leased Property") for a term expiring five (5) years from the date of signing.
The Company has begun
development of a research facility on the Leased Property and has prepaid (i) the first year lease payment of $30,000 and (ii)
the six month lease payment of $15,000 as security deposit, or $45,000 in aggregate upon signing of the agreement.
Future minimum
payments required under this agreement at March 31, 2012 were as follows:
Fiscal Year Ending March 31:
|
|
|
|
|
2013
|
|
$
|
30,000
|
|
2014
|
|
|
30,000
|
|
2015
|
|
|
30,000
|
|
2016
|
|
|
30,000
|
|
|
|
$
|
120,000
|
|
SUPPLY AND COOPERATIVE AGREEMENT - GUANGZHOU HEALTH TECHNOLOGY
DEVELOPMENT COMPANY LIMITED
ENTRY INTO SUPPLY AGREEMENT
On February 21,
2012, the Company entered into a Supply Agreement (the "Supply Agreement") with Guangzhou Health China Technology Development
Company Limited, a foreign-invested limited liability company incorporated in the People's Republic of China (the "Guangzhou
Health").
Under the terms
of the Supply Agreement, the Company will sell dry stevia plant materials, including stems and leaves ("Product") exclusively
to Guangzhou Health. For the first two years of the agreement, Guangzhou Health will purchase all Product produced by the Company.
Starting with the third year of the agreement, the Company and Guangzhou Health will review and agree on the quantity of Product
to be supplied in the forthcoming year, and Guangzhou Health will be obliged to purchase up to 130 percent of that amount. The
specifications and price of Product will also be revised annually according to the mutual agreement of the parties. The term of
the Supply Agreement is five years with an option to renew for an additional four years.
ENTRY INTO COOPERATIVE AGREEMENT
On February 21,
2012, the Company also entered into Cooperative Agreement (the "Cooperative Agreement") with Guangzhou Health Technology
Development Company Limited.
Under the terms
of the Cooperative Agreement, the parties agree to explore potential technology partnerships with the intent of formalizing a
joint venture to pursue the most promising technologies and businesses. The parties also agree to conduct trials to test the efficacy
of certain technologies as applied specifically to the Company's business model as well as the marketability of harvests produced
utilizing such technologies. Guangzhou Health will share all available information of its business structure and technologies
with the Company, subject to the confidentiality provisions of the Cooperative Agreement. Guangzhou Health will also permit the
Company to enter its premises and grow-out sites for purposes of inspection and will, as reasonably requested by the Company,
supply without cost, random samples of products and harvests for testing.
NOTE 11 - INCOME TAX PROVISION
DEFERRED TAX ASSETS
At March 31, 2012,
the Company has available for federal income tax purposes net operating loss ("NOL") carry-forwards of $2,323,551 that
may be used to offset future taxable income through the fiscal year ending March 31, 2032. No tax benefit has been reported with
respect to these net operating loss carry-forwards in the accompanying financial statements since the Company believes that the
realization of its net deferred tax asset of approximately $790,007 was not considered more likely than not and accordingly, the
potential tax benefits of the net loss carry-forwards are fully offset by the full valuation allowance.
Deferred tax assets
consist primarily of the tax effect of NOL carry-forwards. The Company has provided a full valuation allowance on the deferred
tax assets because of the uncertainty regarding its realizability. The valuation allowance increased approximately $790,007 for
the period from April 11, 2011 (inception) through March 31, 2012.
Components of
deferred tax assets as of March 31, 2012 are as follows:
|
|
March 31, 2012
|
|
Net deferred tax assets - Non-current:
|
|
|
|
|
Expected income tax benefit from NOL carry-forwards
|
|
$
|
790,007
|
|
Less valuation allowance
|
|
|
(790,007
|
)
|
Deferred tax assets, net of valuation allowance
|
|
$
|
—
|
|
LIMITATION ON UTILIZATION OF NOLS DUE TO CHANGE IN CONTROL
The Company had
ownership changes as defined by the Internal Revenue Code Section 382 ("Section 382"), which may subject the NOL's to
annual limitations which could reduce or defer the NOL. Section 382 imposes limitations on a corporation's ability to utilize
NOLs if it experiences an "ownership change." In general terms, an ownership change may result from transactions increasing
the ownership of certain stockholders in the stock of a corporation by more than 50 percentage points over a three-year period.
In the event of an ownership change, utilization of the NOLs would be subject to an annual limitation under Section 382 determined
by multiplying the value of its stock at the time of the ownership change by the applicable long-term tax-exempt rate. Any unused
annual limitation may be carried over to later years. The imposition of this limitation on its ability to use the NOLs to offset
future taxable income could cause the Company to pay U.S. federal income taxes earlier than if such limitation were not in effect
and could cause such NOLs to expire unused, reducing or eliminating the benefit of such NOLs.
INCOME TAX PROVISION IN THE CONSOLIDATED STATEMENT OF OPERATIONS
A reconciliation
of the federal statutory income tax rate and the effective income tax rate as a percentage of income before income taxes is as
follows:
|
|
For the
|
|
|
|
Period from
|
|
|
|
April 11, 2011
|
|
|
|
(inception)
|
|
|
|
through
|
|
|
|
March 31, 2012
|
|
|
|
|
|
Federal statutory income tax rate
|
|
|
34.0
|
%
|
Change in valuation allowance
on net operating loss carry-forwards
|
|
|
(34.0
|
)
|
Effective income tax rate
|
|
|
0.0
|
%
|
NOTE 12 - COMMITMENTS AND CONTINGENCIES
SUPPLY AGREEMENT - BETWEEN STEVIA VENTURES
INTERNATIONAL LTD. AND ASIA STEVIA INVESTMENT DEVELOPMENT COMPANY LTD.
On April 12, 2011,
Stevia Ventures International Ltd, the subsidiary of the Company entered into a Supply Agreement (the "Supply Agreement")
with Asia Stevia Investment Development Company Ltd ("ASID"), a foreign-invested limited liability company incorporated
in Vietnam.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged ASID to plant the Stevia Seedlings and supply the Products only to the Company to the exclusion
of other customers and the Company is desirous to purchase the same, on the terms and conditions as set out in this Agreement
produce Products and the Company purchase the Products from ASID.
(II) TERM
This Agreement
shall come into force on the Effective Date and, subject to earlier termination pursuant to certain clauses specified in the Agreement,
shall continue in force for a period of three (3) years ("Term") and thereafter automatically renew on its anniversary
each year for an additional period of one (1) year ("Extended Term").
(III) PURCHASE PRICE
ASID and the Company
shall review and agree on or before 30th September of each Year on the quantity of the Products to be supplied by the Supplier
to the Company in the forthcoming year and ASID shall provide the Company with prior written notice at any time during the year
following the revision if it has reason to believe that it would be unable to fulfill its forecast volumes under this clause.
SUPPLY AGREEMENT - BETWEEN STEVIA VENTURES
INTERNATIONAL LTD. AND STEVIA VENTURES CORPORATION
On April 12, 2011,
Stevia Ventures International Ltd, the subsidiary of the Company also entered into a Supply Agreement (the "Supply Agreement")
with Stevia Ventures Corporation ("SVC"), a foreign-invested limited liability company incorporated in Vietnam.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged SVC to plant the Stevia Seedlings and supply the Products only to the Company to the exclusion
of other customers and the Company is desirous to purchase the same, on the terms and conditions as set out in this Agreement
produce Products and the Company purchase the Products from SVC.
(II) TERM
This Agreement
shall come into force on the Effective Date and, subject to earlier termination pursuant to certain clauses specified in the Agreement,
shall continue in force for a period of three (3) years ("Term") and thereafter automatically renew on its anniversary
each year for an additional period of one (1) year ("Extended Term").
(III) PURCHASE PRICE
SVC and the Company
shall review and agree on or before 30th September of each Year on the quantity of the Products to be supplied by the Supplier
to the Company in the forthcoming year and SVC shall provide the Company with prior written notice at any time during the year
following the revision if it has reason to believe that it would be unable to fulfill its forecast volumes under this clause.
CONSULTING AGREEMENT - DORIAN BANKS
ENTRY INTO CONSULTING AGREEMENT
On July 1, 2011 the
Company entered into a consulting agreement (the "Consulting Agreement") with Dorian Banks ("Banks").
(I) SCOPE OF SERVICES
Under the terms of
the Consulting Agreement, the Company engaged the Consultant to provide advice in general business development, strategy, assistance
with new business and land acquisition, introductions, and assistance with Public Relations ("PR") and Investor Relations
("IR").
(II) TERM
The term of this
Agreement shall be six (6) months, commencing on July 1, 2011 and continue until December 31, 2011. This Agreement may be terminated
by either the Company or the Consultant at any time prior to the end of the Consulting Period by giving thirty (30) days written
notice of termination. Such notice may be given at any time for any reason, with or without cause. The Company will pay Consultant
for all Service performed by Consultant through the date of termination.
(III) COMPENSATION
The Company shall
pay the Consultant a fee of $3,000.00 per month.
EXTENSION OF THE CONSULTING AGREEMENT
On December 30, 2011,
the Consulting Agreement was extended with the same terms and conditions to December 31, 2012.
SUMMARY OF THE CONSULTING FEES
For the period
from April 11, 2011 (inception) through March 31, 2012, The Company recorded $27,000 in consulting fees under the Consulting Agreement.
FINANCING CONSULTING AGREEMENT - DAVID
CLIFTON
ENTRY INTO FINANCIAL CONSULTING AGREEMENT
On July 1, 2011 the
Company entered into a consulting agreement (the "Consulting Agreement") with David Clifton ( "Clifton").
(I) SCOPE OF SERVICES
Under the terms of
the Consulting Agreement, the Company engaged Clifton to introduce interested investors to the Company, advise the Company on available
financing options and provide periodic updates on the stevia sector and provide insights and strategies for the Company to undertake.
(II) TERM
The term of this Agreement
shall be six (6) months, commencing on July 1, 2011 and continuing until December 31, 2011. This Agreement may be terminated by
either the Company or Clifton at any time prior to the end of the consulting period by giving thirty (30) days written notice of
termination. Such notice may be given at any time for any reason, with or without cause. The Company will pay Clifton for all service
performed by him through the date of termination.
(III) COMPENSATION
The Company shall
pay Clifton a fee of $3,000.00 per month.
SUMMARY OF THE CONSULTING FEES
For the period
from April 11, 2011 (inception) through March 31, 2012, The Company recorded $18,000 in financing cost under this Financing Consulting
Agreement.
NOTE 12 - CONCENTRATIONS AND CREDIT
RISK
VENDORS AND ACCOUNTS PAYABLE CONCENTRATIONS
Vendor purchase
concentrations for the period ended March 31, 2012 and accounts payable concentration at March 31, 2012 are as follows:
|
|
Net Purchases
|
|
|
|
|
|
|
for the
|
|
|
|
|
|
|
Period from
|
|
|
|
|
|
|
April 11, 2011
|
|
|
|
|
|
|
(inception)
|
|
|
Accounts
|
|
|
|
through
|
|
|
Payable at
|
|
|
|
March 31, 2012
|
|
|
March 31, 2012
|
|
|
|
|
|
|
|
|
Asia Stevia Investment Development Limited
|
|
|
38.0
|
%
|
|
|
—
|
%
|
Growers Synergy Pte. Ltd. - related party
|
|
|
13.5
|
%
|
|
|
16.4
|
%
|
Stevia Ventures Corporation
|
|
|
14.4
|
%
|
|
|
54.1
|
%
|
|
|
|
65.9
|
%
|
|
|
70.5
|
%
|
CREDIT RISK
Financial instruments
that potentially subject the Company to significant concentration of credit risk consist primarily of cash and cash equivalents.
As of March 31,
2012, substantially all of the Company's cash and cash equivalents were held by major financial institutions, and the balance
at certain accounts exceeded the maximum amount insured by the Federal Deposits Insurance Corporation ("FDIC"). However,
the Company has not experienced losses on these accounts and management believes that the Company is not exposed to significant
risks on such accounts.
NOTE 14 - SUBSEQUENT EVENTS
The Company has evaluated
all events that occurred after the balance sheet date through the date when the financial statements were issued to determine if
they must be reported. The Management of the Company determined that there were certain reportable subsequent events to be disclosed
as follows:
FORMATION OF STEVIA TECHNEW LIMITED
On April 28, 2012,
Hero Tact Limited, a wholly-owned subsidiary of Stevia Asia which was incorporated under the laws of Hong Kong, changed its name
to Stevia Technew Limited ("Stevia Technew"). Stevia Technew is intended to facilitate a joint venture relationship
with the Company's technology partner, Guangzhou Health China Technology Development Company Limited, operating under the trade
name Tech-New Bio-Technology ("TechNew") and its affiliates Technew Technology Limited.
ISSUANCE OF CONVERTIBLE NOTE
On May 30, 2012,
the Company issued a convertible note in the amount of $200,000 with interest at 10% per annum due one (1) year from the date
of issuance.
ENTRY INTO ENGAGEMENT AGREEMENT - GARDEN
STATE SECURITIES INC.
On June 18, 2012,
the Company entered into an engagement agreement (the "Agreement") with Garden State Securities Inc ("GSS")
respect to the engagement of GSS to act as a selling/placement agent for the Company.
(I) SCOPE OF SERVICES
Under the terms
of the Agreement, the Company engaged GSS to review the business and operation of the Company and its historical and projected
financial condition, advise Company of "best efforts" Private Placement offering of debt or equity securities to fulfill
the Company's business plan, and contact for the Company possible financing sources.
(II) TERM
GSS shall act
as the Company's exclusive placement agent the later of; (i) 60 days from the execution of the term sheet; or (ii) the final termination
date of the securities financing (the "Exclusive Period"). GSS shall act as the Company's non-exclusive placement agent
after the Exclusive Period until terminated.
(III) COMPENSATION
The Company agrees
to pay to GSS at each full or incremental closing of any equity financing, convertible debt financing, debt conversion or any
instrument convertible into the Company's common stock (the "Securities Financing") during the Exclusive Period; (i)
a cash transaction fee in the amount of 8% of the amount received by the Company under the Securities Financing; and (ii) warrants
(the "Warrants") with "piggy back" registration rights, equal to 8% of the stock issued in the Securities
Financing at an exercise price equal to the investor's warrant exercise price of the Securities Financing or the price of the
Securities Financing if no warrants are issued to investors. The Company will also pay, at closing, the expense of GSS's legal
counsel pursuant to the Securities Financing and/or Shelf equal to $25,000 for Securities Financing and/or Shelf resulting in
equal to or greater than $500,000 of gross proceeds to the Company, and $18,000 for a Securities Financing and/or Shelf resulting
in less than $500,000 of gross proceeds to the Company. In addition, the Company shall cause, at its cost and expense, the "Blue
sky filing" and Form D in due and proper form and substance and in a timely manner.
PART II - INFORMATION NOT REQUIRED IN
PROSPECTUS
|
Item 13.
|
Other
Expenses of Issuance and Distribution
|
The following table sets forth the costs
and expenses payable by us in connection with the issuance and distribution of the securities being registered hereunder. No expenses
will be borne by Selling Security Holder. All of the amounts shown are estimates, except for the SEC registration fee.
SEC registration fee
|
|
$
|
2,411.49
|
|
Accounting fees and expenses
|
|
$
|
6,000.00
|
|
Legal fees and expenses
|
|
$
|
40,000.00
|
|
Total
|
|
$
|
48,411.49
|
|
|
Item 14.
|
Indemnification
of Directors and Officers
|
Nevada Law
Section 78.7502 of the Nevada Revised Statutes
permits a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or
is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:
|
(a)
|
is not liable pursuant to Nevada
Revised Statute 78.138, or
|
|
(b)
|
acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any
criminal action or proceeding, had no reasonable cause to believe
his conduct was unlawful.
|
In addition, Section 78.7502 permits a
corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was
a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including
amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or
settlement of the action or suit if he:
|
(a)
|
is not liable pursuant to Nevada
Revised Statute 78.138; or
|
|
(b)
|
acted in good faith and in a
manner which he reasonably believed to be in or not opposed to
the best interests of the corporation.
|
To the extent that a director, officer,
employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding
referred to above, or in defense of any claim, issue or matter, the corporation is required to indemnify him against expenses,
including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.
Section 78.751 of the Nevada Revised Statutes provides that
such indemnification may also include payment by the Company of expenses incurred in defending a civil or criminal action or proceeding
in advance of the final disposition of such action or proceeding upon receipt of an undertaking by the person indemnified to repay
such payment if he shall be ultimately found not to be entitled to indemnification under Section 78.751. Indemnification may be
provided even though the person to be indemnified is no longer a director, officer, employee or agent of the Company or such other
entities.
Section 78.752 of the Nevada Revised Statutes
allows a corporation to purchase and maintain insurance or make other financial arrangements on behalf of any person who is or
was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise for any liability asserted
against him and liability and expenses incurred by him in his capacity as a director, officer, employee or agent, or arising out
of his status as such, whether or not the corporation has the authority to indemnify him against such liability and expenses.
Other financial arrangements made by the
corporation pursuant to Section 78.752 may include the following:
|
(a)
|
the creation of a trust fund;
|
|
(b)
|
the establishment of a program
of self-insurance;
|
|
(c)
|
the securing of its obligation
of indemnification by granting a security interest or other lien
on any assets of the corporation; and
|
|
(d)
|
the establishment of a letter
of credit, guaranty or surety
|
No financial arrangement made pursuant
to Section 78.752 may provide protection for a person adjudged by a court of competent jurisdiction, after exhaustion of all appeals,
to be liable for intentional misconduct, fraud or a knowing violation of law, except with respect to the advancement of expenses
or indemnification ordered by a court.
Any discretionary indemnification pursuant
to NRS 78.7502, unless ordered by a court or advanced pursuant to an undertaking to repay the amount if it is determined by a court
that the indemnified party is not entitled to be indemnified by the corporation, may be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances.
The determination must be made:
|
(b)
|
by the board of directors by
majority vote of a quorum consisting of directors who were not
parties to the action, suit or proceeding;
|
|
(c)
|
if a majority vote of a quorum
consisting of directors who were not parties to the action, suit
or proceeding so orders, by independent legal counsel in a written
opinion, or
|
|
(d)
|
if a quorum consisting of directors
who were not parties to the action, suit or proceeding cannot be
obtained, by independent legal counsel in a written opinion.
|
Charter Provisions and Other Arrangements
of the Registrant
Pursuant to the provisions of Nevada Revised
Statutes, the Registrant has adopted the following indemnification provisions in its Bylaws for its directors and officers:
The Company shall indemnify, to the
maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the
right of the Company, by reason of the fact that such person is or was a director, officer, employee, or agent of the Company,
or is or was serving at the request of the Company as a director, officer, employee, or agent of another company, partnership,
joint venture, trust, or other enterprise, against expenses, including attorneys’ fees, judgments, fines, and amounts paid
in settlement actually and reasonably incurred by such person in connection with such action, suit, or proceeding if such person
acted in good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the
Company, and, with respect to any criminal action or proceeding, had no reasonable cause to believe such person’s conduct
was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon
a plea of
no lo contendere
or its equivalent, shall not, of itself, create a presumption that the person did not act in
good faith and in a manner which such person reasonably believed to be in or not opposed to the best interests of the Company,
and that, with respect to any criminal action or proceeding, such person had reasonable cause to believe that his conduct was
unlawful.
The Company shall indemnify, to the
maximum extent permitted by the law, any person who was or is a party or is threatened to be made a party to any threatened, pending
or completed action or suit by or in the right of the Company to procure a judgment in its favor by reason of the fact that such
person is or was a director, officer, employee, or agent of the Company, or is or was serving at the request of the Company as
a director, officer, employee or agent of another company, partnership, joint venture, trust, or other enterprise against expenses,
including attorneys’ fees, actually and reasonably incurred by such person in connection with the defense or settlement
of such action or suit if such person acted in good faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Company, but no indemnification shall be made in respect of any claim, issue or matter as
to which such person has been adjudged to be liable for negligence or misconduct in the performance of such person’s duty
to the Company unless and only to the extent that the court in which such action or suit was brought determines upon application
that, despite the adjudication of liability but in view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses as the court deems proper.
To the extent that a director, officer,
employee or agent of the Company has been successful on the merits or otherwise in defense of any action, suit or proceeding referred
to in the prior two paragraphs, or in defense of any claim, issue or matter therein, such person shall be indemnified by the Company
against expenses, including attorneys’ fees, actually and reasonably incurred by such person in connection with such defense. Any
indemnification under the prior two paragraphs, unless ordered by a court, shall be made by the Company only as authorized in
the specific case upon a determination that indemnification of the director, officer, employee or agent is proper in the circumstances
because such person has met the applicable standard of conduct set forth in the prior two paragraphs. Such determination
shall be made:
|
(ii)
|
by the board of directors by
majority vote of a quorum consisting of directors who were not
parties to such act, suit or proceeding;
|
|
(iii)
|
if such a quorum of disinterested
directors so orders, by independent legal counsel in a written
opinion; or
|
|
(iv)
|
if such a quorum of disinterested
directors cannot be obtained, by independent legal counsel in
a written opinion.
|
Expenses incurred in defending a civil
or criminal action, suit or proceeding may be paid by the Company in advance of the final disposition of such action, suit or proceeding
as authorized by the board of directors unless it is ultimately determined that such director, officer, employee or agent is not
entitled to be indemnified by the Company as authorized in the Bylaws or as provided by law.
The indemnification provided by the Bylaws:
|
(i)
|
does not exclude any other rights
to which a person seeking indemnification may be entitled under
any bylaw, agreement, vote of stockholders, or disinterested directors
or otherwise, both as to action in such person’s official
capacity and as to action in another capacity while holding such
office; and
|
|
(ii)
|
shall continue as to a person
who has ceased to be a director, officer, employee or agent and
shall inure to the benefit of the heirs, executors, and administrators
of such a person.
|
The Company may purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee or agent of the Company, or is or as serving at the request
of the Company as a director, officer, employee, or agent of another company, partnership, joint venture, trust, or other enterprise
against any liability asserted against such person and incurred by such person in any such capacity, or arising out of such person’s
status as such, whether or not the Company would have the power to indemnify such person against such liability under the provisions
of the Bylaws.
|
Item 15.
|
Recent
Sales of Unregistered Securities
|
Promissory Notes
On February 14, 2011 we issued a convertible
promissory note in the principal amount of $250,000 to Vantage Associates SA (“Vantage”) and on June 23, 2011, we
issued an additional convertible promissory note to Vantage in the principal amount of $100,000 (the “Original Notes”).
The Original Notes were convertible into shares of the Company's common stock upon the closing by the Company of an equity financing
yielding aggregate gross proceeds of at least $100,000. The Original Notes convert at the price per share of the securities issued
in such financing. The Original Notes were issued in reliance upon exemption from registration under the Securities Act pursuant
to Regulation S thereof.
Share Exchange Transaction
In connection with the Share Exchange
Transaction, on June 23, 2011 we issued a total of 12,000,000 shares of our common stock in exchange for 100% of the issued and
outstanding common stock of BVI. The common stock was issued in reliance upon exemption from registration under the Securities
Act pursuant to Rule 506 of Regulation D thereof, and comparable exemptions under state securities laws. The common stock was
issued to “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act, based upon representations
made by such investor.
Sale of Common Stock and Additional
Promissory Notes
On October 6, 2011, we raised $100,000
through the sale of 400,000 shares of our common stock at a price of $0.25 per share (the “October Shares”).
On October 6, 2011, we raised $150,000
from the proceeds of a convertible note (the “October Note”). The October Note was based upon the Company's standard
form of promissory note, accrues interest at the rate of ten percent per annum, simple interest and the principal balance of the
October Note and any accrued interest thereon is convertible into our common stock at a $0.25 per share
conversion price.
On November 16, 2011, we raised $250,000
from the proceeds of a convertible note (the “November Note”). The November Note was based upon the Company's standard
form of promissory note, accrues interest at the rate of ten percent per annum, simple interest and the principal balance of the
November Note and any accrued interest thereon is convertible into our common stock at the lower of (a) the price per share at
which shares of capital stock are sold in our next equity financing, or (b) the closing price of our securities if traded on a
securities exchange, or if actively traded over-the-counter, the average closing bid price for the securities, in each case over
the thirty (30) day period prior to the date of conversion; provided however, that if no active trading market for the securities
exists at the time of the conversion, such conversion price shall be the fair market value of a share of our common stock as determined
in good faith by our board of directors.
On January 16, 2012, March 7, 2012
and May 30, 2012, we raised $250,000, $200,000 and $200,000 respectively from the proceeds of convertible notes (the “Subsequent
Notes” and together with the October Note and November Note, the “Notes”). The Subsequent Notes were based upon
the Company's standard form of promissory note, accrue interest at the rate of ten percent per annum, simple interest and the
principal balance of the Subsequent Notes and any accrued interest thereon is convertible into our common stock at the lower of
(a) the price per share at which shares of capital stock are sold in our next equity financing, or (b) the closing price of our
securities if traded on a securities exchange, or if actively traded over-the-counter, the average closing bid price for the securities,
in each case over the thirty (30) day period prior to the date of conversion; provided however, that if no active trading market
for the securities exists at the time of the conversion, such conversion price shall be the fair market value of a share of our
common stock as determined in good faith by our board of directors.
On January 26, 2012, we entered into an Equity Purchase
Agreement (the “Southridge Agreement”) with Southridge Partners II, LP, a Delaware limited partnership (“Southridge”).
Upon execution of the Southridge Agreement, we issued 35,000 shares of our common stock to Southridge as a commitment fee (the
“Southridge Shares”).
On March 19, 2012, we issued 27,500 shares of our common
stock to Empire Relations Group (“Empire”) as consideration for consulting services rendered by Empire to the Company
(the “Empire Shares”).
On July 5, 2012, we entered into a Technology Acquisition
Agreement (the “Technology Agreement”) with Technew, pursuant to which we acquired the rights to certain technology
from Technew in exchange for 3,000,000 shares of our common stock (the “Technew Shares”).
On July 5, 2012, we issued 500,000 shares of our common
stock (the “Growers Synergy Shares”) to Growers Synergy Pte Ltd., a corporation organized under the laws of Singapore
and owned and controlled by George Blankenbaker, our president, director and stockholder (“Growers Synergy”), as consideration
for services rendered by Growers Synergy to the Company.
The issuance of the October Shares,
the Notes, the Technew Shares and the Growers Synergy Shares were conducted in reliance upon Regulation S of the Securities Act
of 1933, as amended and the rules and regulations promulgated thereunder (the “Securities Act”), to investors who
are “accredited investors,” as such term is defined in Rule 501(a) under the Securities Act, in offshore transactions
(as defined in Rule 902 under Regulation S of the Securities Act), based upon representations made by such investors.
The issuance of the Southridge Shares and the Empire Shares
were conducted in reliance upon Regulation D of the Securities Act to investors who are “accredited investors,” as
such term is defined in Rule 501(a) under the Securities Act, based upon representations made by such investors.
2012 Financing
On August 6, 2012, we raised $500,000 in a private placement
financing (the “Offering”) through the sale of (i) an aggregate of 1,066,667 shares of common stock at a price per
share of $0.46875 and (ii) warrants to purchase an equal number of shares of the Company's common stock at an exercise price of
$0.6405 with a term of 5 years (the “Financing Securities”). The Company intends to use the net proceeds from this
offering to advance the Company's ability to execute its growth strategy and to aid in the commercial development of the recently
announced launch of the Company's majority-owned subsidiary, Stevia Technew Limited.
Garden State Securities, Inc. (the “Placement Agent”)
served as the placement agent of the Company for the Offering. In consideration for services rendered as the Placement Agent,
the Company agreed to: (i) pay to the Placement Agent cash commissions equal to $40,000, or 8.0% of the gross proceeds received
in the Offering, and (ii) issue to the Placement Agent, or its designee, a Warrant to purchase up to 85,333 shares of the Company's
common stock (representing 8% of the Shares sold in the Offering) with an exercise price of$0.6405 per share and a term of 5 years
(the “GSS Securities”).
The issuance of the Financing Securities and the GSS Securities
were conducted in reliance upon Regulation D of the Securities Act to investors who are “accredited investors,” as
such term is defined in Rule 501(a) under the Securities Act, based upon representations made by such investors.
The following exhibits are included as part of this registration
statement by reference:
Number
|
Description
|
|
|
2.1
|
Share Exchange Agreement, dated June 23, 2011 (incorporated by reference to Exhibit 2.1 of the Registrant’s Current
Report on Form 8-K filed on June 29, 2011)
|
|
|
3.1
|
Articles of Incorporation of the Registrant, dated May 18, 2007, including all amendments to date (Incorporated
by reference to the Form S-1 filed on July 16, 2008 and the Current Report on Form 8-K filed March 9, 2011)
|
|
|
3.2
|
Amended and Restated Bylaws of the Registrant, as amended, dated March 18, 2011 (incorporated by reference to Exhibit
3.2 of the Registrant’s Current Report on Form 8-K filed on March 22, 2011)
|
|
|
4.1
|
Specimen Common Stock Certificate (incorporated by reference to Exhibit 4.1 of the Registrant’s Registration Statement
on Form S-1 filed on July 16, 2008)
|
|
|
5.1
|
Opinion of Greenberg Traurig, LLP*
|
|
|
10.1
|
Supply Agreement with Asia Stevia Investment Development Company Ltd, dated April 12, 2011 (incorporated by reference
to the registrant’s Form 8-K filed on June 29, 2011)
|
|
|
10.2
|
Supply Agreement with Stevia Ventures Corporation, dated April 12, 2011 (incorporated by reference to the registrant’s
Form 8-K filed on June 29, 2011)
|
|
|
10.3
|
Convertible Promissory Note, with Vantage Associates SA, dated February 14, 2011 (incorporated by reference to the registrant’s
Form 8-K filed on June 29, 2011)
|
|
|
10.4
|
Convertible Promissory Note, with Vantage Associates SA, dated June 23, 2011 (incorporated by reference to the registrant’s
Form 8-K filed on June 29, 2011)
|
|
|
10.5
|
Form of Convertible Promissory Note (incorporated by reference to the registrant’s Form 10-Q filed on November 21,
2011)
|
|
|
10.6
|
Stock Purchase Agreement (incorporated by reference to the registrant’s Form 10-Q filed on November 21, 2011)
|
|
|
10.7
|
Management and Off-Take Agreement with Growers Synergy Pte Ltd., effective November 1, 2011 (incorporated by reference
to the registrant’s Form 8-K filed on October 31, 2011)
|
|
|
10.8
|
Equity Purchase Agreement with Southridge Partners II, LP, dated January 26, 2012 (incorporated by reference to the registrant’s
Form 8-K filed on January 30, 2012)
|
|
|
10.9
|
Registration Rights Agreement with Southridge Partners II, LP, dated January 26, 2012 (incorporated by reference to the
registrant’s Form 8-K filed on January 30, 2012)
|
10.10
|
The Minutes for Land Transferring Agreement for New Crop Plants Variety, dated December 14, 2011 (incorporated
by reference to the registrant’s Form 10-Q filed on February 17, 2012)
|
|
|
10.11
|
Supply Agreement with Guangzhou Health China Technology Development Company Limited, dated February 21, 2012 (incorporated
by reference to the registrant’s Form 8-K filed on February 27, 2012)
|
|
|
10.12
|
Cooperative Agreement (incorporated by reference to the registrant’s Current Report on Form 8-K filed on July
11, 2012)
|
|
|
10.13
|
Technology Acquisition Agreement (incorporated by reference to the registrant’s Current Report on Form 8-K filed
on July 11, 2012)
|
|
|
10.14
|
Securities Purchase Agreement (incorporated by reference to the Current Report on Form 8-K filed on August 7, 2012)
|
|
|
10.15
|
Registration Rights Agreement (incorporated by reference to the Current Report on Form 8-K filed on August 7, 2012)
|
|
|
10.16
|
Form of Warrant (incorporated by reference to the Current Report on Form 8-K filed on August 7, 2012)
|
|
|
21
|
List of Subsidiaries*
|
|
|
23.1
|
Consent of Li & Company, PC*
|
|
|
23.2
|
Consent of Greenberg Traurig, LLP (filed as part of Exhibit 5.1)*
|
|
|
24
|
Power of Attorney (incorporated by reference to the Registration Statement on Form S-1 filed on February 27, 2012).
|
|
|
101
|
Interactive Data File*
|
*Filed Herewith
The undersigned registrant hereby undertakes
to:
1. To file, during
any period in which offers or sales are being made, a post-effective amendment to this registration statement:
i. To include any
prospectus required by section 10(a)(3) of the Securities Act of 1933;
ii. To reflect in
the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective
amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total
dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the
estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b)
(§ 230.424 of this chapter) if, in the aggregate, the changes in volume and price represent no more than 20% change in the
maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration
statement.
iii. To include any
material information with respect to the plan of distribution not previously disclosed in the registration statement or any material
change to such information in the registration statement;
Provided, however, that:
(A) Paragraphs (a)(1)(i)
and (a)(1)(ii) of this section do not apply if the registration statement is on Form S-8 (§ 239.16b of this chapter), and
the information required to be included in a post-effective amendment by those paragraphs is contained in reports filed with or
furnished to the Commission by the registrant pursuant to section 13 or section 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m or 78o(d)) that are incorporated by reference in the registration statement; and
(B) Paragraphs (a)(1)(i),
(a)(1)(ii) and (a)(1)(iii) of this section do not apply if the registration statement is on Form S-3 (§ 239.13 of this chapter)
or Form F-3 (§ 239.33 of this chapter) and the information required to be included in a post-effective amendment by those
paragraphs is contained in reports filed with or furnished to the Commission by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the registration statement, or is contained
in a form of prospectus filed pursuant to Rule 424(b) (§ 230.424(b) of this chapter) that is part of the registration statement.
(C) Provided further,
however, that paragraphs (a)(1)(i) and (a)(1)(ii) do not apply if the registration statement is for an offering of asset-backed
securities on Form S-1 (§ 239.11 of this chapter) or Form S-3 (§ 239.13 of this chapter), and the information required
to be included in a post-effective amendment is provided pursuant to Item 1100(c) of Regulation AB (§ 229.1100(c)).
2. That, for the
purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
3. To remove from
registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination
of the offering.
4. If the registrant
is a foreign private issuer, to file a post-effective amendment to the registration statement to include any financial statements
required by “Item 8.A. of Form 20–F (17 CFR 249.220f)” at the start of any delayed offering or throughout a
continuous offering. Financial statements and information otherwise required by Section 10(a)(3) of the Act need not be furnished,
provided that the registrant includes in the prospectus, by means of a post-effective amendment, financial statements required
pursuant to this paragraph (a)(4) and other information necessary to ensure that all other information in the prospectus is at
least as current as the date of those financial statements. Notwithstanding the foregoing, with respect to registration statements
on Form F–3 (§239.33 of this chapter), a post-effective amendment need not be filed to include financial statements
and information required by Section 10(a)(3) of the Act or §210.3–19 of this chapter if such financial statements and
information are contained in periodic reports filed with or furnished to the Commission by the registrant pursuant to section
13 or section 15(d) of the Securities Exchange Act of 1934 that are incorporated by reference in the Form F–3.
5. That, for the
purpose of determining liability under the Securities Act of 1933 to any purchaser:
i. If the registrant
is relying on Rule 430B (§230.430B of this chapter):
(A) Each
prospectus filed by the registrant pursuant to Rule 424(b)(3) (§230.424(b)(3) of this chapter) shall be deemed to be part
of the registration statement as of the date the filed prospectus was deemed part of and included in the registration statement;
and
(B) Each
prospectus required to be filed pursuant to Rule 424(b)(2), (b)(5), or (b)(7) (§230.424(b)(2), (b)(5), or (b)(7) of this
chapter) as part of a registration statement in reliance on Rule 430B relating to an offering made pursuant to Rule 415(a)(1)(i),
(vii), or (x) (§230.415(a)(1)(i), (vii), or (x) of this chapter) for the purpose of providing the information required by
section 10(a) of the Securities Act of 1933 shall be deemed to be part of and included in the registration statement as of the
earlier of the date such form of prospectus is first used after effectiveness or the date of the first contract of sale of securities
in the offering described in the prospectus. As provided in Rule 430B, for liability purposes of the issuer and any person that
is at that date an underwriter, such date shall be deemed to be a new effective date of the registration statement relating to
the securities in the registration statement to which that prospectus relates, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof. Provided, however, that no statement made in a registration statement
or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference
into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of
contract of sale prior to such effective date, supersede or modify any statement that was made in the registration statement or
prospectus that was part of the registration statement or made in any such document immediately prior to such effective date;
or
ii. If the registrant
is subject to Rule 430C (§230.430C of this chapter), each prospectus filed pursuant to Rule 424(b) as part of a registration
statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in
reliance on Rule 430A (§230.430A of this chapter), shall be deemed to be part of and included in the registration statement
as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or
prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into
the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract
of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that
was part of the registration statement or made in any such document immediately prior to such date of first use.
6. That, for the
purpose of determining liability of the registrant under the Securities Act of 1933 to any purchaser in the initial distribution
of the securities:
The undersigned registrant
undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless
of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser
by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered
to offer or sell such securities to such purchaser:
i. Any preliminary
prospectus or prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 (§230.424
of this chapter);
ii. Any free writing
prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned
registrant;
iii. The portion of
any other free writing prospectus relating to the offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
iv. Any other communication
that is an offer in the offering made by the undersigned registrant to the purchaser.
SIGNATURES
Pursuant to the requirements
of the Securities Act of 1933, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized in the City of Indianapolis, State of Indiana, on September 11, 2012
|
STEVIA CORP.
|
|
a Nevada corporation
|
|
|
Dated: September 11, 2012
|
/s/ George Blankenbaker
|
|
By: George Blankenbaker
|
|
Its: President, Secretary, Treasurer and Director
|
|
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
|
Pursuant to the requirements
of the Securities Act of 1933, this registration statement has been signed by the following persons in the capacities and on the
dates indicated:
Dated: September 11, 2012
|
/s/ George Blankenbaker
|
|
George Blankenbaker
|
|
President, Secretary, Treasurer and Director (Principal Executive Officer, Principal Financial Officer and Principal Accounting
Officer)
|
|
|
Dated: September 11, 2012
|
/s/ Pablo Erat*
|
|
Pablo Erat
|
|
Director
|
|
|
Dated: September 11, 2012
|
/s/ Rodney L. Cook*
|
|
Rodney L. Cook
|
|
Director
|
*/s/ George Blankenbaker
|
|
George Blankenbaker, Attorney-in-Fact
|
|
|
|
Dated: September 11, 2012
|
|
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