FORM 10-KSB
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
MARK ONE
[X] ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE FISCAL YEAR ENDED NOVEMBER 30, 2005
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO _______________
COMMISSION FILE NUMBER 0-29439
DELAWARE 33312
------------------------ ----------------------------------
(STATE OF INCORPORATION) (ZIP CODE)
2983 Ravenswood Rd.
Ft. Lauderdale, Florida 33312 (ADDRESS OF PRINCIPAL
EXECUTIVE OFFICES)
(877) 667-9377 22-3617931
------------------------------ ---------------------------------------
(Registrant's telephone number) (I.R.S. Employer Identification Number)
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Securities registered under Section 12(b) of the Exchange Act: NONE
Securities registered under Section 12(g) of the Exchange Act:
COMMON STOCK, at $.001 PAR VALUE PER SHARE
Check whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
] Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B not contained in this form, and no disclosure will be contained, to the best of the registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB. [X]
The issuer's revenues for the most recent fiscal year ended November 30, 2005 were $0.
The aggregate market value of the issuer's voting and non-voting common equity held by non-affiliates computed by reference to the average bid and ask price ($0.12) of such common equity as of March 30, 2005, was approximately $592,002.
As of March 30, 2005 the issuer had 7,077,795 shares of common stock, $.001 par value per share outstanding held by approximately 89 stockholders.
Documents Incorporated by Reference: NONE
Transitional Small Business Disclosure Format: Yes [ ] No [X]
TWISTEE TREAT CORPORATION
FORM 10-KSB
YEAR ENDED NOVEMBER 30, 2005
INDEX
Part I
Item 1. Description of Business..............................................2
Item 1A. Risk Factors.........................................................4
Item 2. Description of Property..............................................6
Item 3. Legal Proceedings....................................................6
Item 4. Submission of Matters to a Vote of Security Holders..................6
Part II
Item 5. Market for Common Equity and Related Stockholder Matters....7
Item 6. Management's Discussion and Analysis
or Plan of Operation......................................8
Item 7. Financial Statements.......................................10
Item 8. Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure...................................10
Item 8A. Controls and Procedures....................................10
Part III
Item 9. Directors, Executive Officers, Promoters
and Control Persons;
Compliance with Section 16(a) of the Exchange Act..........11
Item 10. Executive Compensation.....................................13
Item 11. Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters.................13
Item 12. Certain Relationships and Related Transactions.............14
Item 13. Principal Accountant Fees and Services Signatures...................15
Item 14. Exhibits and Reports on Form 8-K...........................16
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FORWARD LOOKING STATEMENTS
In this registration statement references to "company"; "we," "us," and "our" refer to TWISTEE TREAT CORPORATION.
This Form 10-KSB contains certain forward-looking statements. For this purpose any statements contained in this Form 10-KSB that are not statements of historical or present facts may be deemed to be forward-looking statements. Without limiting the foregoing, words such as "may," "will," "expect," "believe," "anticipate," "estimate" or "continue" or comparable terminology are intended to identify forward-looking statements. These statements by their nature involve substantial risks and uncertainties, and actual results may differ materially depending on a variety of factors, many of which are not within the company's control. These factors include but are not limited to economic conditions generally and in the industries in which Twistee Treat may participate; competition within Twistee Treat's chosen industry, including competition from much larger competitors; technological advances and failure by Twistee Treat to successfully develop business relationships.
PART I
ITEM 1. DESCRIPTION OF BUSINESS
GENERAL
Twistee Treat Corporation TM (the "Company") was incorporated in Missouri on April 27, 1995 and redomiciled in Delaware in June 1997. The original Twistee Treat Corporation was formed in the early 1980's as a Colorado corporation doing business primarily in Florida. By the mid 1980's it had opened approximately 35 company stores, but no franchise units. The original Twistee Treat Corporation utilized proprietary cone-shaped buildings to sell its dessert products and obtained certain federal and state patents, trademarks and service marks in connection with its business. In 1989, Twistee Treat's original founder retired and Twistee Treat filed for bankruptcy protection (U.S. Bankruptcy Court, Middle District of Florida, Ft. Myers Division, Case No. 89-4700-9P1). On August 6, 1990, Andrew Brennan, a founder and former principal stockholder of Twistee Treat, purchased the assets of the original Twistee Treat Corporation from the Bankruptcy Court, including its patent, trademark and service mark rights. Subsequently, Mr. Brennan sold 50% of his interests in such assets to Don Matthews, owner of Soft Serve System, Inc., a Missouri corporation. In 1996, Messrs. Matthews and Wells reorganized the Company, with Mr. Matthews contributing his 50% of the assets obtained from the original Twistee Treat Corporation. On May 6, 1997, Mr. Brennan sold to us his 50% interest in the assets obtained from the original Twistee Treat Corporation.
As of November 30, 2005, the Company had three inactive franchises. The Canadian franchisee is still producing revenues, but is not paying any franchise fee to Twistee Treat pending a resolution of outstanding claims described elsewhere in this report. The Company is attempting to raise funding for its product line or engage in alternative business activities by merger or acquisition. The Company conducted no direct operations during the last two (2) fiscal years ended November 30, 2004 and 2005, respectively.
We currently have no direct operations and no revenue from franchise operations. During fiscal year 2001, the Company entered into an agreement with HD Brous, a prior investment banking firm, to develop business concepts and expand the Company's business. The Company pursued acquiring at least 10 of the existing Twistee Treat stores. However, HD Brous did not move forward with financing for the Company due to market conditions; therefore, the Company has had to refocus its direction and is currently attempting to negotiate alternate funding or a reorganization, as outlined under Item 6 of Management's Discussion and Analysis. Twistee Treat has no current contracts, commitments or funding for development.
During fiscal year 2003, we continued to develop our business plan, franchise program, franchise circular and operating manual, as well as operate three pilot stores, and open and test two kiosk pilot units. We closed our three test pilot stores and closed the two kiosk units for several months in order to evaluate the information obtained during such test periods and to make adjustments to menus, equipment and operating procedures. We then refurbished the three pilot stores, changed the menus, ordered additional equipment and reopened two of them: one in Eustis, Florida and one in Branson West, Missouri. Twistee Treat sold the Branson West store as a franchise store to Danny Hammond LLP. Mr. Hammond also became a Regional Developer for Branson and Springfield, Missouri. Twistee Treat's Eustis, Florida store became a franchise store also. These franchises and the remaining operations were terminated in fiscal year 2003 as they did not generate sufficient operating revenues. The Company did not conduct any revenue producing activities in fiscal year 2004 or 2005.
Twistee Treat licensed its rights in Canada to a group who collectively has 37 years of experience in the ice cream franchise business with Good Humor and Breyers Ice Cream. One of the principals of our Canadian franchisee previously owned five franchises, and became regional franchise manager and another was national operations manager responsible for product distribution and sales in support of 300 distribution units across Canada. The group opened its first Twistee Treat store in July 2000, and has since opened an additional four franchise stores. However, due to pending litigation between Twistee Treat and the Canadian franchisee, the Canadian franchise is not paying franchise fees to Twistee Treat.
SIGNIFICANT CURRENT AND SUBSEQUENT EVENTS
o Twistee Treat was informed during the first quarter of 2006 that its
Canadian franchise had terminated an anticipated reorganization with
Twistee. As a result, Twistee may consider pursuing its pending claims
against this Canadian franchise, as more particularly described under
Management's Discussion and Analysis, (Item 6).
o Twistee Treat has no present plans to pursue development or marketing
of its proprietary snack food items which likely would require
substantial new capital to pursue. Twistee Treat has no present funding
commitments or revenue creating activities.
o The Company maintains its status as a publicly traded inactive company
from certain advances and loans made by Mr. James Tilton, one of its
principal shareholders.
o The Company is continuing to work with a shareholder, who is also a
licensed broker/dealer on a current non-contractual, non-fee informal
basis to identify possible merger or acquisition candidates or to
obtain funding for development of its existing proprietary business
techniques, design and products.
ITEM 1A. RISK FACTORS
(1) Potential Reorganization
The Company is presently involved in plans to move forward to seek a potential reorganization or acquisition as outlined under the Management Discussion and Analysis, but there is no assurance that such reorganization will be completed. If a reorganization does not occur, the Company would be without any immediate prospects of funding to restart any type of ongoing operations and may be forced into a position to terminate as an entity. If any reorganization or acquisition is completed, the Company will most likely have an entirely new Board of Directors and new management personnel and may pursue unrelated business activities.
(2) Lack of Control
In its present situation, or if a proposed reorganization is completed, Twistee Treat will not be in position where the "non-affiliated public shareholders" will have control of Twistee Treat, nor will they be in position to gain control of the Company for the foreseeable future. This means that either the existing control shareholders, or the anticipated control shareholders in the event of a reorganization, would continue to manage and direct all the affairs of the Company by their majority shareholder position and would be in a position to elect all directors and appoint all officers to the Company in their discretion.
(3) Going Concern
The auditors have expressed a reservation that the Company can continue as a going concern. It should be noticed in this regard the Company had no operations in fiscal year 2004 and no revenues or income-producing activities in 2005 and is not likely to be able to engage in any income-producing activities without a substantial infusion of capital either through a reorganization or by other means. This factor should constitute a significant risk factor for those considering acquiring stock in the present corporation.
(4) Limited Trading
The Company presently has very limited trading on the Electronic Bulletin Board and it is not anticipated that there would be substantial increases in the number of shares traded, even in the event of a proposed reorganization. As a result, the Company must be considered as having a very "thinly-traded" market which would be subject to dramatic swings in pricing based upon any significant event, positive or adverse, occurring with regard to the Company's anticipated operations, financing or management.
(5) Competitive Markets
The Company has historically been engaged in an area of consumer product and services which is highly competitive and for which there are not significant barriers to entry. As a result, the Company may be adversely impacted by similar related products sold by better-financed and more established companies at any time. Further, the Company because of its significant periods of inactivity has lost significant markets and will be placed in a degree of competitive disadvantage to regain or reestablish its marketing efforts even if interim financing and new management are available.
(6) New Management
The Company, if reorganized, will receive new management which will not have a proven track record in the operation of this company, nor may they have experience in the operation or management of a public company. This potential unknown management will constitute a potential risk factor to those considering the purchase of stock in this company. Further, the new management will not be subject to any employment contract.
(7) Current Status as Inactive Public Company
At present, Twistee Treat is an inactive public company. In this capacity it has no revenues and limited management. Essentially, Mr. James Tilton, as president and as a principal shareholder, has advanced the minimum amounts believed necessary to maintain Twistee Treat's corporate status and its listing as a small public company. There is no assurance Mr. Tilton, or any associated parties, can or will continue to advance these maintenance funds. Even if such maintenance funds are advanced, there is a possibility that future
rule making by the NASD, SEC or state securities regulatory agencies may not limit or terminate the status of Twistee Treat as a public company. Further, even if maintenance funding continues, there may never be realized sufficient funding to engage in the historical or any other business by Twistee Treat and there is no assurance a merger or acquisition candidate will be located.
ITEM 2. DESCRIPTION OF PROPERTY
The Company's principal executive office is presently located in the home of Steven Levin, the Company's acting vice president, at 2983 Ravensway Rd., Ft. Lauderdale, Florida 33312. The Company has not entered into a lease of office space with Mr. Levin. Mr. Levin provides this office space to the Company on a rent-free basis. The Company does not own or otherwise use any other property.
ITEM 3. LEGAL PROCEEDINGS
(A) Twistee Treat has a dispute with a law firm regarding past due fees. The law firm, Feldhake, August & Roquemore LLP, entered a default judgment for $16,349.94 composed of principal and interest on May 28, 2002 in the Superior Court of California, County of Orange, styled as case number 01HL04797. The Company has made no arrangement at present to discharge this obligation.
(B) Twistee Treat filed a lawsuit on February 5, 2004 against 3866955
Canada Inc., Liptok, Inc., Twistee Treat Canada, 3585468 Canada, Inc., Andrew
Evans and Twisters Ice Cream in the United States District Court in the Southern
District of Florida styled as cause number 03-60168. The Company is seeking a
declaratory judgment with respect to the sole and exclusive right to a trademark
and service mark relating to the cone shaped design employed by the Company.
Among the other causes of action brought by the Company include the following:
falsity and fraud in trademark application; federal trademark infringement;
trade dress infringement; unfair competition and false designation of origin;
common law trademark, trade name infringement and unfair competition; and domain
infringement. In 2005 the Company did not actively pursue this litigation
pending a potential reorganization with this franchisee defendant which would
obviate and discharge this litigation, if completed. However, based upon recent
notice of Twistee Treat of Canada not to further pursue a reorganization, the
Company will have to determine the status of the litigation; and, if still
viable, whether it can afford to further prosecute these claims.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no shareholder votes taken in fiscal year 2005. The Company currently does not have any shareholder meetings scheduled.
PART II
ITEM 5. MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock is traded on an extremely limited basis in the Over-the-Counter market and is quoted on the electronic Bulletin Board under the symbol "TWTE". The following table represents the range of the high and low bid prices of our stock as reported by the NASDAQ Trading and Market Services for each fiscal quarter for the last two fiscal years ending November 30, 2005 and 2004, respectively. These quotations represent prices between dealers, may not include retail markups, markdowns, or commissions, and may not necessarily represent actual transactions.
Year Quarter ... High Low
---- ------- ---- ---
2005 First Quarter $.04 $.03
Second Quarter $.04 $.035
Third Quarter $.045 $.04
Fourth Quarter $.07 $.03
2004 First Quarter $.275 $.07
Second Quarter $.25 $.07
Third Quarter $.15 $.03
Fourth Quarter $.15 $.035
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Twistee Treat has authorized a total of 50,000,000 shares of its Common Stock, $0.001 par value per share. As of November 30, 2005, we had a total of 7,577,795 shares of our Common Stock issued and outstanding. We have also authorized 10,000,000 shares of preferred stock, $0.001 par value, none of which is outstanding. Management has the current right to control approximately 62.9% of our outstanding shares. These are 391,000 shares subject to warrants to purchase shares at a price of $.075 per share and 300,000 warrants to purchase shares at a price of $0.85 per share which expire in December, 2007.
DIVIDENDS
We have not declared dividends on our common stock and do not anticipate paying dividends on our common stock in the foreseeable future.
RECENT PRIVATE EQUITY TRANSACTIONS
In June, 2004, Twistee Treat issued 1,000,000 shares of common stock for $30,000.00 or $0.03 per share.
In November, 2004, Twistee Treat cancelled 30,000 shares of common stock.
On April 24, 2004, Twistee Treat issued 1,000,000 shares of common
stock for $30,000.00 or $0.03 per share.
On February 25, 2004, Twistee Treat issued 100,000 shares of common
stock for $3,000.00 or $0.03 per share.
On February 14, 2004, Twistee Treat issued 1,500,000 shares of common
stock for $45,000.00 or $0.03 per share.
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There were no funding activities or stock issued in 2005.
ITEM 6. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
CAUTIONARY STATEMENT
Statements contained or incorporated by reference in this document that are not based on historical or present facts are "forward-looking statements." Forward-looking statements may be identified by use of forward-looking terminology such as "believe," "intends," "may," "will," "expects," "estimate," "anticipate," "continue," or similar terms, variations of those terms or the negative of those terms. No assurance or warranty is made that such projections or estimates of future performance will be realized.
OVERVIEW
Twistee Treat operated and franchised soft-serve ice cream desserts and an assortment of other foods and beverages in its proprietary, cone-shaped buildings and kiosks. Incorporated under the laws of Missouri in 1997, we redomiciled by merger into a Delaware corporation in June of 1999 with the name Twistee Treat Corporation. On April 6, 2000, we purchased a publicly-reporting Nevada corporation, Perfection Plus, Inc., as described more fully in our Form 8-K filed with the Securities and Exchange Commission on April 8, 2000, and as subsequently amended. In 1998, Stephen Wells, formerly the president of our largest franchisee (Twistee Treat of the Southeast, Inc.), became our President and Chief Executive Officer. Mr. Wells continued the testing program, begun in 1999, of our "Express Grill" unit, a full-service restaurant loosely based on the design of the Brazier units operating by "Dairy Queen" (TM). During the year ended November 30, 2005, the Company did not have any direct operations and owned three inactive franchises. The Canadian franchise has remained active, but has not contributed revenue due to ongoing litigation.
INTENDED REORGANIZATION
In fiscal year 2005, but terminating in the first quarter of 2006, Twistee Treat was in reorganization discussions with its Canadian franchisee, Twistee Treat of Canada. At present, these reorganization discussions have terminated and the Company intends to pursue informal merger or acquisition discussions with various third parties directly and through the efforts of one of its shareholders, who is a licensed broker-dealer.
OPERATING EXPENSES
Operating expenses for the fiscal year ended November 30, 2005 equaled $7,575.00 compared to $98,709.00 for the same period ended November 30, 2004. The decrease in operating expenses is primarily due to a decrease in all depreciation and impairment expenses and a decrease in most overhead expenses as an inactive company.
Other general and administrative expenses incurred by us for the fiscal year ended November 30, 2005 were $7,575.00 as compared to $29,749.00 for the fiscal year ended November 30, 2004. The company experienced a loss from operations of $12,935.00 for the fiscal year ended November 30, 2005, compared to a loss from operations of $106,469 for fiscal year ending November 30, 2004.
NET LOSS PER SHARE
Twistee Treat's net loss per common share and equivalence - basic and diluted - for the fiscal year ended November 30, 2005 equaled $(Nil) per share compared to net loss per common per share for the year ended November 30, 2004 ($0.01).
LIQUIDITY AND CAPITAL RESOURCES
As of November 30, 2005, the Company had no cash. Net cash used in operations in fiscal year 2005 was $2,200.00 as advanced by a shareholder, a decrease of approximately 94% from $34,462.00 (representing the amount of net cash used in operations during the same period in 2004). Non-cash adjustments for fiscal year 2005 primarily consisted of depreciation and amortization of $0.00 and non-cash adjustments for fiscal year 2005 consisting of $0.00 of depreciation and amortization. The Company has been wholly sustained in its limited maintenance operations by advances from its principal shareholder, Mr. James Tilton, and by accruing, but not currently paying, many expenses for legal and accounting.
Our debt structure includes total current liabilities of $257,358.00 on November 30, 2005, as explained above.
Twistee Treat has no credit line or other bank debt, and has generated cash for its operations solely from advances by Mr. Tilton. As of November 30, 2005, the Company has an accumulated deficit of $4,043,939.00.
We would require equity or debt financing to restart our operations. To the extent that we cannot obtain such financing on terms that we would consider favorable, or at all, it could have a materially adverse impact on our ability to have operations and to take advantage of the opportunities we would like to develop during fiscal year 2006 and beyond. There can be no assurance that we will be able successfully to raise the cash proceeds we require to implement our business plan as currently envisioned. Alternatively, Twistee Treat continues to seek merger or acquisition candidates.
GOING CONCERN RISK FACTORS
Substantial doubt about the Company's Ability to Continue as a Going Concern. The Company's auditor has issued an opinion that the current conditions raise substantial doubt about the Company's ability to continue as a going concern. The Company requires working capital to restart its operations and pursue a business strategy. In the event the Company is unable to raise capital it will be forced to curtail operations and it may cease to exist.
Dependence Upon External Financing. It is imperative that we raise capital or find a suitable merger or acquisition to stay in business. If we are unable to obtain debt and/or equity financing upon terms that our management deems sufficiently favorable, or at all, it would have a materially adverse impact upon our ability to maintain operations, or to implement our business plan as we envision it today.
ITEM 7. FINANCIAL STATEMENTS
We have attached our consolidated audited financial statements for the year ended November 30, 2005.
ITEM 8. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
None
ITEM 8A. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. Our chief executive officer and principal financial officer, after evaluating the effectiveness of the Company's "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this annual report (the "Evaluation Date"), have concluded that as of the Evaluation Date, our disclosure controls and procedures were adequate and designed to ensure that material information relating to us and our consolidated
subsidiaries would be made known to them by others within those entities. It is understood that should the Company resume business activities in fiscal year 2005, it may need to increase and augment accounting procedures and controls.
(b) Changes in internal control over financial reporting. There were no significant changes in our internal control over financial reporting during the fourth fiscal quarter that materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
(c) The Company is aware of the requirements of the Sarbannes-Oxley Act and has implemented those requirements as applicable, but does not believe it is presently required to have an independent Audit Committee as an "Eelectronic Bulletin Board Company" and has not implemented such a committee at present.
PART III
ITEM 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT.
DIRECTORS AND OFFICERS
The Directors and Officers of the Company are as follows:
Name Age Position
---- --- --------
Steven Levin 41 Chief Executive Officer and Director
James Tilton 45 President, Chief Financial Officer,
Secretary, and Director
Gordon Wilson 64 Director
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Steven Levin was appointed President and Director in July 2002. From 1999 through 2002, Mr. Levin served as a private consultant to various companies specializing in restructuring and start-up companies From 1997 through 1999, Mr. Levin worked for Mikron Instrument Company, ISO 9001 (NASDAQ-MIKR) Oakland, New Jersey, a manufacturer and marketer of infrared non-contact temperature measuring equipment and thermal imagers. Mr. Levin graduated in 1988 from the University of Miami with a Bachelor of Business Administration and a minor in Finance.
James Tilton was appointed as a Director in November 2000. Mr. Tilton has extensive business and marketing experience in the Far East and has worked with his wife, Jane Zheng, in partnership with Metallic Building Company("MBC"), a subsidiary of NCI Building Systems, to market its pre-engineered building materials in the People's Republic of China ("PRC") since 1992. For the last five years, he and Jane Zheng have assisted Star Brite, a division of Oceans
Bio-Tech, in establishing a sales distribution system in the PRC for its Chemical products. Mr. Tilton is also a director of Tianrong Building Material Holdings, Ltd., a Utah corporation.
Gordon Wilson was appointed a director of the company in 2002. Mr. Wilson has been a successful senior executive, team leader and trouble shooter having set up, developed and turned around UK and International trading operations for major banking, financial services and trading groups in East and Western Europe, Middle East, Africa and North America. He presently is a director of a number of UK companies including Wilton Corporate Finance a member of the WiltonGroup.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the securities Exchange Act of 1934, as amended, requires the Company's directors, executive officers and persons who own more than 10% of a class of the Company's equity securities which are registered under the Exchange Act to file with the Securities and Exchange Commission initial reports of ownership and reports of changes of ownership of such registered securities. Such executive officers, directors and greater than 10% beneficial owners are required by Commission regulation to furnish the Company with copies of all Section 16(a) forms filed by such reporting persons.
To the Company's knowledge, based solely on a review of the copies of such reports furnished to the Company and on representations that no other reports were required, no person required to file such a report failed to file during fiscal year 2005.
CODE OF ETHICS
The Board of Directors adopted a Code of Ethics in November 2004, meeting the requirements of Section 406 of the Sarbanes-Oxley Act of 2002. The Company will provide to any person without charge, upon request, a copy of such Code of Ethics. Persons wishing to make such a request should contact Steven Levin, Chief Executive Officer, 2983 Ravenswood Rd., Ft. Lauderdale, Florida 33312, (877) 6667-9377.
ITEM 10. EXECUTIVE COMPENSATION
The following table shows compensation of our officers and directors for the last four completed fiscal years ended November 30, 2004.
SUMMARY COMPENSATION TABLE
---------------------- ------ ------------ -------- ---------------- ----------- ------------ ------------ -----------
Name and Principal Year Salary(1) Bonus Other Annual Restricted Securities LTIP Other
Position Compensation Stock Underlying Payouts (Loans)
Awards Options
---------------------- ------ ------------ -------- ---------------- ----------- ------------ ------------ -----------
Mr. James Tilton
President and 2005 $0 -- -- -- -- -- 0
Director 2004 $0 -- -- -- -- --
2003 $0
---------------------- ------ ------------ -------- ---------------- ----------- ------------ ------------ -----------
Mr. Steven Levin,
CEO and Director 2005 $0 -- -- -- -- -- 0
2004 $0 --
2003 $59,855
---------------------- ------ ------------ -------- ---------------- ----------- ------------ ------------ -----------
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COMPENSATION OF DIRECTORS
We do not have any standard arrangement for compensation of our directors for any services provided as a director, including services for committee participation or for special assignments.
EMPLOYMENT CONTRACTS
We have not entered into formal written employment agreements with our officers and directors.
ITEM 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth, as of November 30, 2005, information regarding the beneficial ownership of shares of Common Stock by each person known by us to own five percent or more of the outstanding shares of Common Stock, by each of our Officers, by each of our Directors, and by our Officers and Directors as a group. On November 30, 2005 there were 7,577,795 shares issued and outstanding of record.
Name and Address of Shares of Percentage as of
Beneficial Owners * Common Stock November 30, 2005
----------------- ------------ -----------------
(Including Option Rights)
James Tilton (1)(2) 3,125,000 27.2%
Steven Levin (1)(2) 3,000,000 26.1%
George Levin 1,000,000 8.7%
Gordon Wilson 100,000 .9%
HD Brous & Associates 1,000,000 8.7%
Calder Investments 3,257,730 28.4%
All Executive Officers and Directors
As a group (3 persons) 7,225,000 62.9%
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* Less than one percent
(1) The business address of each individual officer is the same as the address of the Company's principal executive offices.
(2) Includes 3,000,000 exercisable options each at an exercise price of $.03 per share.
CHANGES IN CONTROL
The Company does not anticipate any changes in control of the Company except as to any potential reorganization, as outlined under Management's Discussion and Analysis above, (Item 6).
ITEM 12: CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In May 2004, we granted 3,000,000 in share options each to Steven Levin and James Tilton with an exercise price of $.03 per share which were to expire in November 2004. These options were extended by the Board to November 11, 2007 and may be adjusted slightly in the event of the Reorganization.
Stephen Wells, our former Chief Executive Officer and President, has loaned the Company funds on several occasions. One loan in the amount of $4,363 was non-interest bearing and had been in default since June 2000. Another loan in the amount of $27,000 bore interest at 12% and was due in February 2002. In connection with the settlement agreement entered into with Mr. Wells, Mr. Wells returned 125,000 shares of his common stock and an option to acquire 250,000 shares of common stock at $.02 per share to the Company and the Company extinguished all debts owed to Mr. Wells in consideration for $25,000. Accordingly, Twistee Treat reversed his accrued salary and reversed two notes payable. There remains no further obligation to Mr. Wells.
James Tilton, our Chief Financial Officer and Secretary, loaned the Company $26,000 evidenced by a note bearing interest at 12% due in March 2002, of which the Company has repaid $6,000 as of the date of this report. In fiscal year 2004, the Company borrowed an additional $__________ from Mr. Tilton and $7,575.00 in fiscal year 2005. At present, the Company owes a principal balance to Mr. Tilton of $__________.
Howard Hochrad, our former Vice-President, loaned the Company $39,547 evidenced by a note bearing interest at 9% which is in default and was due in September 2001. The Company does not treat this note as outstanding.
In May 2002, Stephen Wells our former Chief Executive Officer and President acquired our preferred stock. In connection with a settlement agreement between Mr. Wells and the Company, the preferred stock was cancelled.
In November 2002, we granted 3,000,000 options to each of Steven Levin and James Tilton with an exercise price of $.03 per share which was exercised in November 2004 and included in the foregoing table.
In October 2004, Twistee Treat received advances of $30,000 due upon demand from a shareholder. The advances are non-interest bearing and are unsecured.
In August 2004, Twistee Treat received advances of $2,000 due upon demand from a shareholder. The advances are non-interest bearing and are unsecured.
In July 2004, Twistee Treat received advances of $5,000 due upon demand from a shareholder. The advances are non-interest bearing and are unsecured.
ITEM 13. PRINCIPAL ACCOUNTANT FEES AND SERVICES
CHANGE IN AUDITORS
For the fiscal year ending November, 2004, the Company changed auditors from the firm of Malone & Bailey PLLC to Lopez, Blevins, Bork & Associates LLP of Houston, Texas. The attached reports were prepared by the current auditors, but which firm necessarily relied upon prior audited statements of Twistee Treats in preparing historical comparative data. The company has no disagreement with either its prior or current auditors.
AUDIT FEES
The aggregate fees billed for each of the fiscal years ended November
30, 2005 and 2004 and for professional services rendered by the principal
accountants
for the audit of the Company's annual financial statements was $_______________
and $_______________, respectively. The Company's principal current auditor has
not yet billed the Company for the November 30, 2005 audit. The aggregate fees
billed for each of the fiscal years ended November 30, 2005 and 2004 and for
professional services rendered by the principal accountant for review of the
financial statements included in the registrant's Form 10-QSB or for services
that are normally provided by the accountant in connection with statutory and
regulatory filings or engagements for those fiscal years was $_____________ and
$_________________, respectively.
AUDIT RELATED FEES
None
TAX FEES
None
ALL OTHER FEES
The aggregate fees billed for each of the fiscal years ended November 30, 2005 and 2004 and for products and services provided by the principal accountant, other than the services reported above, was $0.00 in 2005 and $___________ in 2004. The company currently has accrued fees to its present legal counsel of approximately $14,764.00 through November 30, 2005.
ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K
REPORTS ON FORM 8-K
The Company filed an 8-K on May 5, 2005 indicating the change in auditors described in this Report.
Attached Financial Statements
Exhibit No. Description of Exhibit
----------- ----------------------
31 Certification of the Chief Executive
Officer pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 *
31 Certification of the Chief Financial Officer
pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002 *
32 Certification of the Chief Executive
Officer pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002 *
32 Certification of the Chief Financial
Officer pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
|
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on behalf by the undersigned, thereunto duly authorized.
REGISTRANT:
TWISTEE TREAT CORPORATION
Dated: March 31, 2006 By: /s/ Steve Levin
-------------------------- ------------------------------
Steve Levin,
Chief Executive Officer
Dated: March 31, 2006 By: /s/ James Tilton
-------------------------- ------------------------------
James Tilton,
Chief Financial Officer
|
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the date indicated have signed this report below:
Dated: March 31, 2006 By: /s/ James Tilton
-------------------------- ------------------------------
James Tilton, Director
Dated: March 31, 2006 By: /s/ Steve Levin
-------------------------- ------------------------------
Steve Levin, Director
Dated: March 31, 2006 By: /s/ Gordon Wilson
-------------------------- ------------------------------
Gordon Wilson, Director
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Twistee Treat Corporation
Index to Financial Statements
Balance Sheets.....................................Page 2 Statements of Operations...........................Page 3 Statements of Shareholders' Equity................. Page 4 Statements of Cash Flows............................Page 5 |
TWISTEE TREAT CORPORATION
Balance Sheets
November 30, 2005 and 2004
November 30
ASSETS 2005
-----------
CURRENT ASSETS
Cash $ --
-----------
Total Current Assets --
-----------
1,111,111
TOTAL ASSETS $ --
===========
|
LIABILITIES & STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts payable and accrued expenses $ 225,414
Advances-shareholders 13,662
Note payable-shareholders 20,000
-----------
Total Current Liabilities 259,076
-----------
TOTAL LIABILIITES 259,076
Commitments and Contingencies
STOCKHOLDERS' DEFICIT
Preferred stock, $.0001 par value, 10,000,000
authorized, no shares issued and outstanding --
Common stock, $.0001 par value, 50,000,000 shares
authorized, 7,077,795 shares issued and outstanding 708
Additional paid in capital 3,885,327
Accumulated deficit (4,045,111)
Less: subscriptions receivable (100,000)
-----------
Total Stockholders' Deficit (259,076)
-----------
TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT $ --
===========
|
The accompanying notes are an integral part of these financial statements.
TWISTEE TREAT CORPORATION
STATEMENT OF OPERATIONS
For the fiscal Years Ended November 30, 2005 and 2004
2005 2004
----------- -----------
REVENUES $ -- $ --
|
OPERATING EXPENSES:
Payroll and contractual compensation -- --
Legal and professional -- 4,462
Depreciation and impairment -- 64,498
Other general and administrative expenses 9,293 29,749
----------- -----------
Total Costs & Expenses 9,293 98,709
----------- -----------
LOSS FROM OPERATIONS 9,293 98,709
----------- -----------
OTHER INCOME (EXPENSE)
Interest expense 5,360 7,760
----------- -----------
Total Other Income (Expense) 5,360 7,760
----------- -----------
NET LOSS $ (14,653) $ (106,469)
=========== ===========
Net income (loss) per share $ -- $ (0.01)
=========== ===========
Weighted average shares outstanding 7,077,795 7,165,679
|
The accompanying notes are an integral part of these financial statements.
TWISTEE TREAT CORPORATION
STATEMENTS OF STOCKHOLDERS' DEFICIT
For the fiscal years ended November 30, 2005 and 2004
Additional
Common Stock Paid-In Accumulated Subscription Stockholders'
Shares Amount Capital Deficit Receivable (Deficit)
----------- ----------- ----------- ----------- ----------- -----------
Balance November 30, 2003 5,577,795 $ 558 $ 3,840,477 $(3,923,989) $ (100,000) $ (182,954)
Issuance of stock for cash 1,000,000 100 29,900 -- -- 30,000
Issuance of stock for debt 500,000 50 14,950 15,000 -- --
Net loss for the year ended
November 30, 2004 -- -- -- (106,469) -- (106,469)
----------- ----------- ----------- ----------- ----------- -----------
Balance November 30, 2004 7,077,795 708 3,885,327 (4,030,458) (100,000) (244,423)
Net loss for the year ended
November 30, 2005 (14,653) (14,653) -- -- -- --
----------- ----------- ----------- ----------- ----------- -----------
Balance December 31, 2005 7,077,795 708 3,885,327 (4,045,111) (100,000) $ (259,076)
=========== =========== =========== =========== =========== ===========
|
The accompanying notes are an integral part of these financial statements.
TWISTEE TREAT CORPORATION
STATEMENTS OF CASH FLOWS
For the fiscal years ended November 30, 2005 and 2004
2005 2004
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Loss ($ 14,653) ($ 106,469)
Adjustments to reconcile net loss to net cash
used by operating activities:
Depreciation & Amortization 0 16,125
Impairment 0 48,373
Changes in assets & liabilities
Increase (decrease) in accounts payable and accrued expenses 12,453 6,092
----------- -----------
Net Cash Provided (used) by Operating Activities (2,200) (35,879)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES -- --
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from shareholder advances 2,200 4,462
Proceeds from sale of common stock 0 30,000
----------- -----------
Net Cash Provided (used) by Financing Activities 2,200 34,462
----------- -----------
NET INCREASE (DECREASE) IN CASH $ 0 ($ 1,417)
CASH AT BEGINNING OF PERIOD 0 1,417
----------- -----------
CASH AT END OF PERIOD $ 0 $ 0
=========== ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ -- $ --
Income taxes paid $ -- $ --
|
The accompanying notes are an integral part of these financial statements.
TWISTEE TREAT CORPORATION
NOTES TO FINANCIAL STATEMENTS For the
fiscal years ended November 30, 2005 and 2004
NOTE 1 - SUMMARY OF ACCOUNTING POLICIES
Twistee Treat Corporation ("Twistee Treat") was originally incorporated under the laws of Missouri in 1995. Twistee Treat used to operate and franchise soft-serve ice cream, non-fat soft-serve yogurt, non-dairy soft-serve desserts and an assortment of other foods and beverages in distinctive freestanding Twistee Treat cone-shaped buildings designed for both "drive-thru" and walk-up service. In addition to the freestanding building, Twistee Treat offered specialty kiosk units designed to be located in stores, malls, food courts, business facilities, colleges and mobile trailer units (concession units) designed for short-term events such as fairs, carnivals, and sporting events.
Prior to November 30, 2003, Twistee Treat had closed its owned and franchised stores due to poor customer demand. Twistee Treat is in the process of developing its product line and has not focused on the sale of its franchises or its current line of ice cream products.
Use of Estimates
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 at the date of the balance sheet. Actual results could differ from those estimates.
Cash Equivalents
Cash equivalents include highly liquid, temporary cash investments having original maturity dates of three months or less. For reporting purposes, such cash equivalents are stated at cost plus accrued interest which approximates fair value.
Long-lived Assets
Property and equipment are stated at cost less accumulated depreciation. Major renewals and improvements are capitalized; minor replacements, maintenance and repairs are charged to current operations. Depreciation is computed by applying the straight-line method over the estimated useful lives of five to ten years. Twistee Treat performs reviews for the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. During 2004, the Company elected to write-off the balance of its assets due to impairment. No Long-lived assets exist in 2005.
Fair Value of Financial Instruments
The Company's financial instruments consist of accounts payable and debt. The
carrying amount of these financial instruments approximates fair value due
either to length of maturity or interest rates that approximate prevailing
market rates unless otherwise disclosed in these consolidated financial
statements.
Revenue Recognition
In connection with its franchising operations, Twistee Treat used to sell franchise facilities on a turnkey basis, receiving income from initial franchise fees, development fees, royalties and product sales.
Revenue from the sale of franchise equipment and leasehold improvements is recognized when delivery takes place and adequate consideration is received.
Initial franchise fees are recognized as income when substantially all services and conditions relating to the sale of the franchise have been performed and adequate consideration has been received.
Development fees are non-refundable and recognized when received, and the development agreements call for additional franchise fees as franchises are sold in the development regions. These fees are recognized as income on the same basis as franchise fees.
Royalties, which are based upon a percentage of each franchise's gross sales, are recognized as income when the fees are earned and become receivable and collectable. Revenue from the sales of products to the franchisees is recognized when the merchandise is shipped.
Income Taxes
Twistee Treat accounts for income taxes under the asset and liability approach. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities. Twistee Treat records a valuation allowance to reduce the deferred tax assets to the amount that is more likely than not to be realized.
Stock-Based Compensation
Twistee Treat accounts for stock-based compensation under the intrinsic value method. Under this method, Twistee Treat recognizes no compensation expense for stock options granted when the number of underlying shares is known and exercise price of the option is greater than or equal to the fair market value of the stock on the date of grant.
Basic Income (Loss) Per Share
Basic income (loss) per share has been calculated based on the weighted average number of shares of common stock outstanding during the period.
Recent Accounting Pronouncements
In December 2004, the FASB, issued a revision to SFAS 123, also known as SFAS 123R, that amends existing accounting pronouncements for share-based payment transactions in which an enterprise receives employee and certain non-employee services in exchange for (a) equity instruments of the enterprise or (b) liabilities that are based on the fair value of the enterprise's equity instruments or that may be settled by the issuance of such equity instruments. SFAS 123R eliminates the ability to account for share-based compensation transactions using APB 25 and generally requires such transactions be accounted
for using a fair-value-based method. SFAS 123R's effective date would be applicable for awards that are granted, modified, become vested, or settled in cash in interim or annual periods beginning after June 15, 2005. SFAS 123R includes three transition methods: one that provides for prospective application and two that provide for retrospective application. The Company intends to adopt SFAS 123R prospectively commencing in the third quarter of the fiscal year ending December 31, 2005. It is expected that the adoption of SFAS 123R will cause the Company to record, as expense each quarter, a non-cash accounting charge approximating the fair value of such share based compensation meeting the criteria outlined in the provisions of SFAS 123R.
Stock Options
The Company has elected to follow APB No. 25, and related interpretations in accounting for its employee stock options because, as discussed below, the alternative fair value accounting provided for under SFAS No. 123 requires the use of option valuation models that were not developed for use in valuing employee stock options. Under APB No. 25, no compensation expense is recognized if the exercise price of the Company's employee stock options equals the market price of the underlying stock on the date of grant. Twistee Treat did not recognize any compensation in 2005, 2004 or 2003, under APB No. 25.
For purposes of pro forma disclosures, the estimated fair value of the options is amortized to expense over the options' vesting period. Set forth below is a summary of the Company's net income and earnings per share as reported and pro forma as if the fair value-based method of accounting defined in SFAS No. 123 had been applied. The pro forma compensation expense may not be representative of future amounts because options vest over several years and generally expire upon termination of employment, and additional options may be granted in future years.
On May 30, 2003, Twistee Treat issued 3,000,000 options to the chief executive officer and 3,000,000 options to the chief financial officer. The options immediately vested and have an exercise price of $.03 and have eighteen month terms. The options were due to expire in November 30, 2004. In November of 2004, the company extended the exercise date of these options to November 30, 2005, and in November 2005 the company extended the exercise date of these options to November 30, 2006. The application of SFAS No. 123 would have no affect on the financial data for 2005.
The fair value of each option granted is estimated on the date of grant using the Black-Sholes option-pricing model with the following weighted average assumptions: dividend yield $0, expected volatility of 10%, risk-free interest rate of 3.0%, and expected lives of 1 year.
NOTE 2 - FINANCIAL CONDITION AND GOING CONCERN
Twistee Treat has negative working capital and has historically incurred losses, and at November 30, 2005 had a capital deficit. As a result of these historical losses and because Twistee Treat ceased operations, Twistee Treat will require additional working capital to develop and renew its business operations.
Twistee Treat intends to raise additional working capital through private placements, public offerings and/or bank financing. For the past several years Twistee Treat has had discussions with several investors, however no definitive agreements were ever reached.
There are no assurances that Twistee Treat will be able to either (1) restart its operations and achieve a level of revenues adequate to generate sufficient cash flow from operations; or (2) obtain additional financing through either private placements, public offerings and/or bank financing necessary to support Twistee Treat's working capital requirements. To the extent that funds generated from operations and any private placements, public offerings and/or bank financing are insufficient, Twistee Treat will have to raise additional working capital. No assurance can be given that additional financing will be available, or if available, will be on terms acceptable to Twistee Treat. If adequate working capital is not available, Twistee Treat may not renew its operations.
These conditions raise substantial doubt about Twistee Treat's ability to continue as a going concern. The financial statements do not include any adjustments relating to the recoverability and classification of asset carrying amounts or the amount and classification of liabilities that might be necessary should Twistee Treat be unable to continue as a going concern.
NOTE 3 - PROPERTY AND EQUIPMENT
During fiscal year ended November 30, 2004, the company elected to write-off the balance of its assets due to impairment resulting in depreciation/impairment expense of $48,373 for the year.
NOTE 4 - NOTE PAYABLE
Twistee Treat has a promissory note for $20,000 bearing interest at 12%, due upon demand with a shareholder. The promissory note is unsecured.
NOTE 5 - SHAREHOLDER ADVANCES
Twistee Treat has advances from shareholders of $13,662 due upon demand.
NOTE 6 - STOCKHOLDERS' EQUITY
Common and Preferred Stock
Twistee Treat has authorized 10,000,000 shares of preferred stock, $.0001 par value and 50,000,000 shares of common stock, $.0001 par value. The preferred stock will have such rights and preferences as determined by the Board of Directors. No preferred shares are outstanding at November 30, 2005.
During the year ended November 30, 2004, Twistee Treat issued 1,000,000 shares of common stock for cash of $30,000 or $.03 per share.
During the year ended November 30, 2004, Twistee Treat issued 500,000 shares of common stock as repayment of advances of $15,000 from a related party.
At December 31, 2005 and 2004 the Company had 7,077,795 shares of common stock outstanding.
Warrants
During the year ended November 30, 2004, Twistee Treat issued 300,000 warrants with a cashless option to purchase shares of common stock at $.085 per share. The warrants have a negligible value using the Black Scholes option pricing model. The fair value of each option granted is estimated on the date of grant using the Black-Scholes option-pricing model with the following weighted average assumptions: dividend yield $0, expected volatility of 10%, risk-free interest rate of 3.0%, and expected lives of 5 years.
Twistee Treat has 391,000 common shares subject to warrants; 91,000 warrants to purchase shares at a price of $.075 per share and 300,000 warrants to purchase shares at a price of $.085 per share which expire in December 2007.
Options
On May 30, 2003, Twistee Treat issued 3,000,000 options to the chief executive officer and 3,000,000 options to the chief financial officer. The options immediately vested and have an exercise price of $.03 and expire in November 2006.
NOTE 7 - INCOME TAXES
The Company follows Statement of Financial Accounting Standards Number 109 (SFAS 109), "Accounting for Income Taxes." Deferred income taxes reflect the net effect of (a) temporary difference between carrying amounts of assets and liabilities for financial purposes and the amounts used for income tax reporting purposes, and (b) net operating loss carry forwards. No net provision for refundable Federal income tax has been made in the accompanying statement of loss because no recoverable taxes were paid previously. Similarly, no deferred tax asset attributable to the net operating loss carry forward has been recognized, as it is not deemed likely to be realized.
At November 30, 2005 the company has an unused net operating loss carry forward approximating $4,100,000 that is available to offset future taxable income. The carry forward expires beginning in 2017.
NOTE 8 - COMMITMENTS AND CONTINGENCIES
Twistee Treat has terminated all leases and an officer of the company provides office services without charge. Such costs are immaterial to the financial statements and accordingly are not reflected herein.
Litigation, Claims, Assessments
Twistee Treat has an ongoing dispute with a law firm regarding past due fees. The firm of Feldhake, August & Roquemore LLP received a default judgment in the amount of $16,349.94 on May 28, 2002 in the Superior Court of California, County of Orange.
Twistee Treat filed a lawsuit on February 5, 2004 against Twistee Treat of Canada and an individual. The suit was filed the United States District Court in the Southern District of Florida. The Company is seeking a declaratory judgment with respect to the sole and exclusive right to a trademark and service mark relating to the cone shaped design employed by the Company. In 2005, the Company did not actively pursue this litigation pending a potential reorganization with the Canadian franchisee defendant which would obviate and discharge this litigation, if completed. In 2006, Twistee Treat of Canada has decided not to further pursue a reorganization.
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Steve Levin, certify that:
1. I have reviewed this report on Form 10-KSB of Prime Resource, Inc;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the small business as of, and for, the periods presented in this report.
4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e) and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure the material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation, of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
DATE: March 31, 2006 By: /s/ Steve Levin ------------------------------------- Steve Levin, Chief Executive Officer |
CERTIFICATION PURSUANT TO
SECURITIES EXCHANGE ACT OF 1934: RULES 13a-14, 13a-15, 15d-14, and 15d-15
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, James Tilton, certify that:
1. I have reviewed this report on Form 10-KSB of Prime Resource, Inc;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report fairly present in all material respects the financial condition, results of operations and cash flows of the small business as of, and for, the periods presented in this report.
4. The small business issuer's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15e and 15d-15(e) and have:
a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure the material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities particularly during the period in which this report is being prepared;
b. Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
c. Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
5. The small business issuer's other certifying officer(s) and I have disclosed, based on our most recent evaluation, of internal control over financial reporting, to the small business issuer's auditors and the audit committee of the small business issuer's board of directors (or persons performing the equivalent functions):
a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
DATE: March 31, 2006 By: /s/ James Tilton --------------------------------------- James Tilton, Chief Financial Officer |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Prime Resource, Inc. (the "Company") on
Form 10-KSB for the period ending December 31, 2005, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Mr. Terry
M. Deru, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The report fully complies with the requirements of section 13 (a) or 15
(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
DATE: March 31, 2006 By: /s/ Steve Levin -------------------------------------- Steve Levin, Chief Executive Officer |
CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
In connection with the Annual Report of Prime Resource, Inc. (the "Company") on
Form 10-KSB for the period ending December 31, 2005, as filed with the
Securities and Exchange Commission on the date hereof (the "Report"), Mr. Terry
M. Deru, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C.
Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that:
(1) The report fully complies with the requirements of section 13 (a) or 15
(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
DATE: March 31, 2006 By: /s/ James Tilton ---------------------------------------- James Tilton, Chief Financial Officer |