|
·
|
The
Company’s
ability to generate sufficient cash flow to support capital expansion
plans and general operating activities;
|
|
·
|
Decreased
demand for our products resulting from changes in consumer preferences;
|
|
·
|
Competitive
products and pricing pressures and the Company’s ability to gain or
maintain its share of sales in the marketplace;
|
|
·
|
The
introduction of new products;
|
|
·
|
The
Company’s being subject to a broad range of evolving federal, state and
local laws and regulations including those regarding the labeling
and
safety of food products, establishing ingredient designations and
standards of identity for certain foods, environmental protections,
as
well as worker health and safety. Changes in these laws and regulations
could have a material effect on the way in which the Company produces
and
markets its products and could result in increased costs;
|
|
·
|
Changes
in the cost and availability of raw materials and the ability to
maintain
our supply arrangements and relationships and procure timely and/or
adequate production of all or any of the Company’s products;
|
|
·
|
The
Company’s ability to penetrate new markets and maintain or expand existing
markets;
|
|
·
|
Maintaining
existing relationships and expanding the distributor network of the
Company’s products;
|
|
·
|
The
marketing efforts of distributors of the Company’s products, most of whom
also distribute products that are competitive with the Company’s products;
|
|
·
|
Decisions
by distributors, grocery chains, specialty chain stores, club stores
and
other customers to discontinue carrying all or any of the Company’s
products;
|
|
·
|
Decisions
by distributors, grocery chains, specialty chain stores, club stores
and
other customers to discontinue carrying all or any of the Company’s
products that they are carrying at any time;
|
|
·
|
The
availability and cost of capital to finance the Company’s working capital
needs and growth plans;
|
|
·
|
The
Effectiveness of the Company’s advertising, marketing and promotional
programs;
|
|
·
|
Changes
in product category consumption;
|
|
·
|
Economic
and political changes;
|
|
·
|
Consumer
acceptance of new products, including taste test comparisons;
|
|
·
|
Possible
recalls of the Company’s products; and
|
|
·
|
The
Company’s ability to make suitable arrangements for the co-packing of any
of its products.
|
·
|
Reed’s
Ginger Brews
|
·
|
Virgil’s
Root Beer and Cream Sodas
|
·
|
China
Colas
|
·
|
Reed’s
Ginger Juice Brews
|
·
|
Reed’s
Ginger Candies
|
·
|
Reed’s
Ginger Ice Creams
|
Distribution
Channel
|
Direct
sales to large retailers
|
%
|
Our
local direct distribution
|
%
|
Natural,
Gourmet and Mainstream
distributors
|
%
|
Total
|
2003
|
$1,286,365
|
19
|
$90,121
|
1
|
$5,405,290
|
80
|
$6,781,776
|
2004
|
1,983,598
|
22
|
395,601
|
4
|
6,599,166
|
74
|
8,978,365
|
2005
|
1,536,896
|
16
|
751,999
|
8
|
7,181,390
|
76
|
9,470,285
|
Year
|
|
Cases
of
candy
produced
at
new
brewery
|
|
Candy
production
savings
($)
|
|
Cases
of
beverages
produced
at
new
brewery
|
|
Freight
savings
beverages
($)
|
|
Total
savings
($)
|
|||||
2002
|
|
|
0
|
|
$
|
0
|
|
|
0
|
|
$
|
0
|
|
$
|
0
|
2003
|
|
|
33,514
|
|
$
|
33,514
|
|
|
16,835
|
|
$
|
22,390
|
|
$
|
55,904
|
2004
|
|
|
31,278
|
|
$
|
31,278
|
|
|
113,816
|
|
$
|
151,372
|
|
$
|
182,650
|
2005
|
39,058
|
$
|
39,058
|
229,094
|
$
|
304,688
|
$
|
343,746
|
Payments
Due by
Year
|
|||||||||||||||||||
Contractual
cash obligations
|
Total
|
2006
|
2007
|
2008
|
2009
|
2010
|
|||||||||||||
Lines
of credit
|
$
|
1,445,953
|
$
|
1,445,953
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
$
|
-0-
|
|||||||
Long
-term debt
|
580,794
|
169,381
|
111,321
|
102,654
|
87,348
|
38,090
|
|||||||||||||
Operating
lease obligations
|
94,479
|
58,433
|
20,968
|
10,905
|
4,173
|
-0-
|
|||||||||||||
Total
contractual cash Obligations
|
$
|
5,644,978
|
$
|
1,933,813
|
$
|
1,168,870
|
$
|
1,232,707
|
$
|
884,183
|
$
|
425,405
|
|||||||
ASSETS
|
||||
Cash
|
$
|
27,744
|
||
Inventory
|
1,208,019
|
|||
Trade
accounts receivable, net of allowance for doubtful accounts and
returns
and discounts of $70,000
|
534,906
|
|||
Other
receivables
|
10,563
|
|||
Prepaid
expenses
|
74,279
|
|||
Total
Current Assets
|
1,855,511
|
|||
Property
and equipment, net of accumulated depreciation of $508,136
|
1,885,354
|
OTHER
ASSETS
|
||||
Brand
names
|
800,201
|
|||
Other
intangibles, net of accumulated amortization of $3,723
|
14,891
|
|||
Deferred
stock offering costs
|
356,238
|
|||
Total
Other Assets
|
1,171,330
|
|||
TOTAL
ASSETS
|
$
|
4,912,195
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
||||
CURRENT
LIABILITIES
|
||||
Accounts
payable
|
$
|
1,644,491
|
||
Lines
of credit
|
1,445,953
|
|||
Current
portion of long term debt
|
169,381
|
|||
Accrued
interest
|
136,240
|
|||
Accrued
expenses
|
54,204
|
|||
Total
Current Liabilities
|
3,450,269
|
|||
Loans
payable, related party
|
252,358
|
|||
Long
term debt, less current portion
|
1,060,573
|
|||
Total
Liabilities
|
4,763,200
|
COMMITMENTS AND CONTINGENCIES | ||||
STOCKHOLDERS’
EQUITY
|
||||
Preferred
stock, $10.00 par value, 500,000 shares authorized, 58,940 shares
issued
and outstanding, liquidation preference of $10.00, per
share
|
589,402
|
|||
Common
stock, $.0001 par value, 11,500,000 shares authorized,
5,042,197 shares issued and outstanding
|
503
|
|||
Common
stock to be issued (7,367 shares)
|
29,470
|
|||
Additional
paid in capital
|
2,788,683
|
|||
Accumulated
deficit
|
(3,259,063
|
)
|
||
Total
stockholders’ equity
|
148,995
|
|||
TOTAL
LIABILITIES AND STOCKHOLDERS’ EQUITY
|
$
|
4,912,195
|
Year
Ended
December 31,
|
|||||||
2005
|
2004
|
||||||
SALES
|
$
|
9,470,285
|
$
|
8,978,365
|
|||
COST
OF SALES
|
7,745,499
|
7,103,037
|
|||||
GROSS
PROFIT
|
1,724,786
|
1,875,328
|
|||||
OPERATING
EXPENSES
|
|||||||
Selling
|
1,124,705
|
791,975
|
|||||
General &
Administrative
|
955,764
|
1,074,536
|
|||||
Legal
Fees
|
36,558
|
80,156
|
|||||
Provision
for amounts due from director
|
124,210
|
0
|
|||||
2,241,237 | 1,946,667 | ||||||
LOSS FROM
OPERATIONS
|
(516,451
|
)
|
(71,339
|
)
|
|||
OTHER
EXPENSES
|
|||||||
Interest
Expense
|
(309,504
|
)
|
(255,032
|
)
|
|||
Loss
on extinguishment of debt
|
(—
|
)
|
(153,000
|
)
|
|||
|
(309,504
|
)
|
(408,032
|
)
|
|||
|
|||||||
NET
LOSS
|
(825,955
|
)
|
(479,371
|
)
|
|||
Preferred
Stock Dividend
|
(29,470
|
)
|
—
|
||||
Net
Loss Attributable to Common Stockholders
|
$
|
(855,425
|
)
|
$
|
(479,371
|
)
|
|
|
|||||||
NET
LOSS PER SHARE AVAILABLE TO COMMON STOCKHOLDERS — BASIC
AND DILUTED
|
$
|
(0.18
|
)
|
$
|
(0.10
|
)
|
|
|
|||||||
WEIGHTED
AVERAGE SHARES OUTSTANDING,
Basic
and Fully Diluted
|
4,885,151
|
4,726,091
|
Common
Stock
|
Preferred
Stock
|
||||||||||||||||||||||||
Shares
|
Amount
|
Common
Stock to be Issued
|
Additional
Paid
In
Capital
|
Shares
|
Amount
|
Accumulated
Deficit
|
Total
|
||||||||||||||||||
Balance,
January 1, 2004
|
4,726,091
|
$ |
472
|
$ |
—
|
$ |
2,429,824
|
—
|
$ |
—
|
$ |
(1,723,627
|
)
|
$ |
706,669
|
||||||||||
Issuance
of preferred stock
|
—
|
—
|
—
|
—
|
33,440
|
334,400
|
—
|
334,400
|
|||||||||||||||||
Conversion
of debt to preferred stock
|
—
|
—
|
—
|
—
|
25,500
|
255,002
|
—
|
255,002
|
|||||||||||||||||
Recognition
of beneficial conversion feature on issuance of preferred stock
|
—
|
—
|
—
|
353,640
|
—
|
—
|
(200,640
|
)
|
153,000
|
||||||||||||||||
Net
loss for year ended 2004
|
—
|
—
|
—
|
—
|
—
|
—
|
(479,371
|
)
|
(479,371
|
)
|
|||||||||||||||
Balance,
December 31, 2004
|
4,726,091
|
472
|
—
|
2,783,464
|
58,940
|
589,402
|
(2,403,638
|
)
|
969,700
|
||||||||||||||||
Exercise
of warrants
|
262,500
|
26
|
5,224
|
—
|
—
|
—
|
5,250
|
||||||||||||||||||
Preferred
Stock Dividend
|
—
|
—
|
29,470
|
—
|
—
|
(29,470
|
)
|
— | |||||||||||||||||
Common
stock issued for cash
|
53,606
|
5
|
— |
196,570
|
— | — | — |
196,575
|
|||||||||||||||||
Deferred
stock offering costs charged to additional paid in capital
|
— | — | — |
(196,575
|
)
|
— | — | — |
(196,575
|
)
|
|||||||||||||||
Net
loss for year ended December 31, 2005
|
—
|
—
|
—
|
—
|
—
|
—
|
(825,955
|
)
|
(825,955
|
)
|
|||||||||||||||
Balance
December 31, 2005
|
5,042,197
|
$
|
503
|
$
|
29,470
|
$
|
2,788,683
|
58,940
|
$
|
589,402
|
$
|
(3,259,063
|
)
|
$
|
148,995
|
Year
Ended
December 31 ,
|
|||||||
2005
|
2004
|
||||||
CASH
FLOWS FROM OPERATING ACTIVITIES
|
|||||||
Net
Loss
|
$
|
(825,955
|
)
|
$
|
(479,371
|
)
|
|
Adjustments
to reconcile net loss to net cash used in operating activities:
|
|||||||
Depreciation
and amortization
|
118,517
|
97,329
|
|||||
Loss
on extinguishment of debt
|
— |
153,000
|
|||||
Provision for amounts due from director | 124,210 | — | |||||
(Increase)
decrease in operating assets and increase (decrease) in operating
liabilities:
|
|||||||
Accounts
receivable
|
262,708
|
(231,557
|
)
|
||||
Inventory
|
93,006
|
(3,665
|
)
|
||||
Prepaid
expenses
|
(68,627
|
)
|
11,730
|
||||
Other
receivables
|
(7,400
|
)
|
7,589
|
|
|||
Accounts
payable
|
232,367
|
233,447
|
|||||
Accrued
expenses
|
2,655
|
(9,755
|
)
|
||||
Accrued
interest
|
25,909
|
45,233
|
|
||||
Net
cash used in operating activities
|
(42,610
|
)
|
(176,020
|
)
|
|||
CASH
FLOWS FROM INVESTING ACTIVITIES:
|
|||||||
Purchase
of property and equipment
|
(181,654
|
)
|
(204,147
|
)
|
|||
Due
from director
|
(33,013
|
)
|
(44,040
|
)
|
|||
Net
cash used in investing activities
|
(214,667
|
)
|
(248,187
|
)
|
|||
CASH
FLOWS FROM FINANCING ACTIVITIES:
|
|||||||
Deferred
offering costs
|
(332,858
|
)
|
(219,955
|
)
|
|||
Principal
payments on debt
|
(263,815
|
) |
(208,852
|
)
|
|||
Proceeds
from issuance of common stock
|
196,575
|
—
|
|||||
Proceeds
received from issuance of preferred stock
|
—
|
334,400
|
|||||
Proceeds
from borrowings on debt
|
295,900 |
208,464
|
|||||
Net
borrowings on lines of credit
|
367,731
|
339,708
|
|||||
Payments
on debt to related parties
|
(21,000
|
)
|
—
|
||||
Net
cash provided by financing activities
|
242,533
|
453,765
|
|||||
NET
INCREASE (DECREASE) IN CASH
|
(14,744
|
)
|
29,558
|
||||
CASH —
Beginning of year
|
42,488
|
12,930
|
|||||
CASH —
End of year
|
$
|
27,744
|
$
|
42,488
|
|||
Supplemental
Disclosures of Cash Flow Information
|
|||||||
Cash
paid during the period for:
|
|||||||
Interest
|
$
|
283,595
|
$
|
227,669
|
|||
Taxes
|
$
|
—
|
$
|
—
|
|||
|
|||||||
Noncash
Investing and Financing Activities
|
|||||||
|
|||||||
Notes
payable converted to preferred stock
|
$
|
—
|
$
|
224,000
|
|||
Accrued
interest converted to preferred stock
|
|
—
|
|
31,002
|
|||
Beneficial
conversion feature
|
|
—
|
|
353,640
|
|||
Common
Stock issued in settlement of accrued interest on related party
debt upon exercise
of warrants
|
|
5,250
|
|
—
|
|||
Common
Stock to be issued in settlement of preferred stock dividend
(7,367 shares)
|
|
29,470
|
|
—
|
|||
Conversion
of a line of credit to a term loan
|
|
50,000 |
|
—
|
Property
and Equipment Type
|
|
Years
of Depreciation
|
|
|
|
|
|
Building
|
|
|
39
years
|
Machinery
and equipment
|
|
|
7-12
years
|
Computer
|
|
|
3-5
years
|
Automobile
|
|
|
5
years
|
Office
equipment
|
|
|
7
years
|
Net
loss as reported
|
$
|
(825,955
|
)
|
|
Stock
based compensation
|
(530,955
|
)
|
||
Pro
forma loss
|
$
|
(1,356,910
|
)
|
|
Primary
and fully diluted loss per share, as reported
|
$
|
(0.18
|
)
|
|
Proforma
fully and diluted loss per share
|
$
|
(0.28
|
)
|
|
|
|||
Warrants
|
613,241
|
|||
Convertible
notes
|
133,954
|
|||
Preferred
Stock
|
235,760
|
|||
Options
|
291,000
|
|||
Total
|
1,273,955
|
Raw
Materials
|
$
|
678,343
|
||
Finished
Goods
|
529,676
|
|||
$
|
1,208,019
|
Land
|
$
|
409,546
|
||
Building
|
915,932
|
|||
Vehicles
|
223,867
|
|||
Machinery
and equipment
|
734,886
|
|||
Office
equipment
|
109,259
|
|||
|
2,393,490
|
|||
Accumulated
depreciation
|
(508,136
|
)
|
||
|
$
|
1,885,354
|
Asset
|
Gross
Amount
|
Accumulated
Amortization
|
Current
Year
Amortization
|
Useful
Life
|
|||||||||
Building
Loan Fees
|
$
|
18,614
|
$
|
3,723
|
$
|
745
|
300
months
|
Year |
Amount
|
|||
2006
|
$
|
745
|
||
2007
|
745
|
|||
2008
|
745
|
|||
2009
|
745
|
|||
2010
|
745
|
Note
payable to SBA in the original amount of $748,000 with interest
at the
Wall Street Journal prime rate plus 1% per annum, adjusted monthly
with no
cap or floor. The combined monthly principal and interest payments
are $5,851, subject to annual adjustments. The interest rate
in effect at
December 31, 2005 was 8%. The note is secured by land and building
and guaranteed by the majority stockholder. The note matures
November
2025.
|
$
|
674,582
|
||
Notes
payable, unsecured, with interest at 10% per annum. Principal and
accrued interest are payable in full at the end of the note term.
Theses
notes were issued with warrants, exercisable at issuance. The
warrants
have an exercise price of $3 and a term of 5 years. Principal and any
unpaid interest are due in June 2006.
|
50,000
|
|||
Building
improvement loan with a maximum draw of $168,000. The interest
rate is at
the Wall Street Journal prime rate plus 1%, adjusted monthly
with no cap
or floor. The combined monthly principal and interest payments
are $1,186;
subject to annual adjustments. The rate in effect at December 31,
2005 was 8% per annum. The note is secured by land and building
and
guaranteed by the majority stockholder and matures
November 2025.
|
142,119
|
Notes
payable, due on demand, unsecured, with interest at 10% per annum.
The
note is convertible to common stock at 60% of the initial public
offering
price or 100% of a private offering price.
|
9,000
|
|||
Note
payable to a bank, unsecured, interest rate is prime plus 3.25%.
The
interest rate in effect December 31, 2005 was10.5% . The note
matures in
December 2009.
|
50,000
|
|||
Notes
payable to GMAC, secured by automobiles, payable in monthly installments
of $758 including interest at 0.0%, with maturity in 2008.
|
18,204
|
|||
Notes
payable to Chrysler Financial Corp., secured by automobiles,
payable in
monthly installments of $658, including interest at 1.9% per
annum, with
maturity in 2008.
|
21,151
|
|||
Equipment
line of credit up to a maximum of $150,000, secured by certain
plant
equipment. Payable in ratable monthly installments of principal and
applicable interest. This loan bears interest at prime plus 2.75% per
annum. The
interest rate in effect at December 31, 2005 was 10.00%. This loan
matures in May 2009.
|
93,900
|
|||
Installment
loan secured by certain plant equipment. Payable in monthly installments
of $3,167 plus interest. This loan bears interest at prime plus
2.75% per
annum. The
interest rate in effect at December 31, 2005 was 10.00%. This loan
matures in June 2010.
|
170,998
|
|||
Total
|
1,229,954
|
|||
Less
current portion
|
169,381
|
|||
|
$
|
1,060,573
|
|
||||
2006
|
$ | 169,381 | ||
2007
|
111,321 | |||
2008
|
102,654 | |||
2009
|
87,348 | |||
2010
|
38,090 | |||
Thereafter
|
721,160 | |||
Total
|
$ | 1,229,954 |
Options
|
Weighted
Average
Exercise
Price
|
||||||
Balance
January 1, 2004
|
72,500
|
$
|
3.21
|
||||
Options
granted in 2004
|
—
|
N/A
|
|||||
Options
exercised in 2004
|
—
|
--
|
|||||
Balance
December 31, 2004
|
72,500
|
$
|
3.21
|
||||
Options
granted in 2005
|
218,500
|
$
|
4.00
|
||||
Options
exercised in 2005
|
---
|
--
|
|||||
Balance
December 31, 2005
|
291,000
|
$
|
3.80
|
Exercise
Price
Range
|
|
Weighted
Average
Remaining
Number
|
Weighted
Average
Remaining
Contractual Life
|
|
Weighted
Average
Exercise
Price
|
||||
$2.00
|
|
|
37,500
|
|
|
44
months
|
|
$
|
2.00
|
$3.00
|
|
|
17,500
|
|
|
42
months
|
|
|
3.00
|
$4.00
|
218,500
|
60
months
|
|
4.00
|
|||||
$6.00
|
|
|
17,500
|
|
|
42
months
|
|
|
6.00
|
|
|||||||||
Total
options
|
|
|
291,000
|
|
|
56
months
|
|
|
3.80
|
|
|
|
|
|
|
|
|||
Exercise
Price
Range
|
|
Weighted
Average
Remaining
Number
|
|
Weighted
Average
Remaining
Contractual Life
|
|
Weighted
Average
Exercise
Price
|
|||
$2.00
|
|
|
119,876
|
|
|
42
months
|
|
$
|
2.00
|
$3.00
|
|
|
493,365
|
|
|
42
months
|
|
$
|
3.00
|
Total
warrants
|
|
|
613,241
|
|
|
|
|
Deferred
income tax asset:
|
|
|||
Net
operating loss carry forward
|
$
|
1,061,000
|
||
Valuation
allowance
|
(1,061,000
|
)
|
||
Net
deferred income tax asset
|
$
|
—
|
|
Year
Ended
|
||||||
|
December
31,
|
||||||
|
2005
|
2004
|
|||||
Tax
expense at the U.S. statutory income tax
|
(34.00
|
)%
|
(34.00
|
)%
|
|||
Increase
in the valuation allowance
|
34.00
|
%
|
34.00
|
%
|
|||
Effective
tax rate
|
—
|
—
|
|
|
|||
Year
Ending
|
|
|||
December
31,
|
|
|||
2006
|
$
|
58,433
|
||
2007
|
20,968
|
|||
2008
|
10,905
|
|||
2009
|
4,173
|
|||
Total
|
$
|
94,479
|
Name
|
|
Age
|
|
Position
|
Christopher
J. Reed
|
|
46
|
|
President,
Chief Executive Officer, Chief Financial Officer and Chairman of
the Board
|
Eric
Scheffer
|
|
37
|
|
Vice
President and National Sales Manager - Natural Foods
|
Robert
T. Reed, Jr.
|
|
49
|
|
Vice
President and National Sales Manager - Mainstream
|
Robert
Lyon
|
|
55
|
|
Vice
President Sales - Special Projects
|
Judy
Holloway Reed
|
|
45
|
|
Secretary
and Director
|
Mark
Harris
|
|
48
|
|
Independent
Director
|
Dr.
D.S.J. Muffoletto, N.D.
|
|
50
|
|
Independent
Director
|
Michael
Fischman
|
|
49
|
|
Independent
Director
|
|
Annual
Compensation
|
|||||||||||||||
|
Salary
|
Salary
|
Salary
|
Bonus
|
||||||||||||
Name
and Principal Position
|
2005
|
2004
|
2003
|
2002-2003
|
||||||||||||
Christopher
J. Reed, President, CEO and CFO
|
$
|
150,000
|
$
|
150,000
|
$
|
150,000
|
----
|
|||||||||
Judy
Holloway Reed, Secretary,
Dir
of Office Operations (part-time)
|
12,000
|
12,000
|
N/A
|
----
|
||||||||||||
Robert
T. Reed, Jr.,
Vice
President and National Sales Manager-Mainstream
|
50,000
|
50,000
|
N/A
|
----
|
||||||||||||
Eric
Scheffer,
Vice
president and national Sales Manager-Natural Foods
|
60,000
|
60,000
|
60,000
|
----
|
Name
and Address
of
Beneficial Owner
|
|
Number
of Shares Owned
|
|
%
Owned (1)
|
||
5%
Stockholders
|
|
|
|
|
||
Joseph
Grace
1900
West Nickerson Street
Suite
116, PMB 158
Seattle,
WA 98119
|
|
|
500,000
|
|
|
9.9
|
Robert
T Reed, Sr. 6430
Kinglet
Way
Carlsbad,
CA 92009
|
|
|
262,500
|
|
|
5.2
|
|
|
|
|
|
|
|
Directors
and Executive Officers (2)
|
|
|
|
|
||
Christopher
J. Reed (3)
|
|
|
3,200,000
|
|
|
63.5
|
Robert
T. Reed, Jr. (4)
|
|
|
327,500
|
|
|
6.5
|
Eric
Scheffer
|
|
|
500
|
|
|
*
|
|
|
|
|
|
|
|
Mark
Harris (5)
|
|
|
4,000
|
|
|
*
|
Dr.
Daniel S.J. Muffoletto, N.D.
|
|
|
0
|
|
|
0
|
Michael
Fischman
|
|
|
0
|
|
|
0
|
All
directors and executive officers as a group (6 persons)
|
|
|
3,532,000
|
|
|
70.0
|
(1)
|
Percentage
of ownership for each holder is calculated on 5,042,197 shares
of common
stock outstanding on December 31, 2005. Beneficial ownership is
determined
in accordance with the rules of the SEC and generally includes
shares over
which the holder has voting or investment power, subject to community
property laws. Shares of common stock subject to options or warrants
that
are currently exercisable or exercisable within 60 days are
considered to be beneficially owned by the person holding the options
or
warrants for computing that person’s percentage, but are not treated as
outstanding for computing the percentage of any other person.
|
|
|
(2)
|
The
address for all of our directors and officers is: 13000 South Spring
Street, Los Angeles, California 90061.
|
|
|
(3)
|
Christopher
J. Reed and Judy Holloway Reed are husband and wife. The same number
of
shares is shown for each of them as they may each be deemed to be
the
beneficial owner of all of such shares.
|
|
|
(4)
|
Consists
of (i) 267,500 shares of common stock and
(ii) 15,000 shares of Series A preferred stock, which can
be converted at any time into 60,000 shares of common stock.
|
|
|
(5)
|
Consists
of 1,000 shares of Series A preferred stock, which can be converted
at any time into 4,000 shares of common stock.
|
|
Class
of stock
|
#
of shares
|
Price/share
|
$
invested
|
Date
of issue
|
|||||||||
Common
|
187,500
|
0.27
|
$
|
50,000
|
1991
|
||||||||
Common
|
50,000
|
0.75
|
$
|
37,500
|
1993
|
||||||||
Common
|
10,000
|
1.50
|
$
|
15,000
|
1996
|
||||||||
Common(*)
|
20,000
|
1.00
|
$
|
20,000
|
2001
|
||||||||
Preferred
|
15,000
|
10.00
|
$
|
150,000
|
2004
|
||||||||
Total
|
$
|
272,500
|
Name
|
Title
|
Date
|
/s/
CHRISTOPHER J. REED
Christopher J. Reed
|
Chief
Executive Officer, President, Chief Financial Officer, and Chairman
of the
Board
(Principal
Executive Officer, Principal Financial Officer, and Principal Accounting
Officer)
|
April
17, 2006
|
/s/
JUDY HOLLOWAY REED
Judy Holloway Reed
|
Director
|
April
17, 2006
|
/s/
MARK HARRIS
Mark Harris
|
Independent
Director
|
April
17, 2006
|
/s/
DR. DANIEL S.J. MUFFOLETTO, N.D.
Dr. Daniel S.J. Muffoletto
|
Independent
Director
|
April
17, 2006
|
/s/
MICHAEL FISCHMAN
Michael Fischman
|
Independent
Director
|
April
17, 2006
|