SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

FORM 8-K

 

CURRENT REPORT

 

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

 

March 20, 2013 (March 13, 2010)

Date of Report (Date of earliest event reported)

 

NATUREWELL, INCORPORATED

(Exact name of registrant as specified in its charter)

 

Delaware

(State or other jurisdiction of

incorporation)

 

0-26108

(Commission File No.)

 

94-2901715

(IRS Employer Identification

No.)

 

110 West C Street, San Diego, California 92101

(Address of principal executive offices)

Registrant’s telephone number, including area code: (201) 777-3395

 

N/A

(Former name or former address, if changed since last report.)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions.

£ Written communication pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

£ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

£ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

£ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

 

 
 

 

This Current Report on Form 8-K of NatureWell, Incorporated, a Delaware Corporation (the “Company”), as well as other filings with the Securities and Exchange Commission (“ SEC ”) and the Company’s press releases contain statements relating to future results, plans, assumptions, assessments and information, including certain projections and business trends, that constitute “ Forward-Looking Statements ” within the meaning of the Private Securities Litigation Reform Act of 1995.

 

Forward-looking statements include statements concerning plans, objectives, goals, strategies, expectations, future events or performance and underlying assumptions and other statements that are other than statements of historical facts. Certain statements contained herein are forward-looking statements and, accordingly, involve risks and uncertainties that could cause actual results or outcomes to differ materially from those expressed in such forward-looking statements, including, without limitation, risks related to our business and risks associated with our securities. The Company’s expectations, beliefs and projections are expressed in good faith and are believed by the Company to have a reasonable basis, including without limitations, management’s examination of historical operating trends, and data contained in the Company’s records and other data available from third parties. There can be no assurance that management’s expectations, beliefs or projections will be achieved or accomplished. Certain risks and uncertainties may cause actual results to be materially different from projected results contained in forward-looking statements in this Current Report and in other disclosures.  The Company’s future results will depend upon various other risks and uncertainties, including, but not limited to, those detailed in the Company’s other filings with the SEC. Actual results may differ materially from those expressed or implied by forward-looking statements. The Company disclaims any obligation to revise any forward-looking statements to reflect the occurrence, or lack thereof, of events or circumstances after the date such forward-looking statements were made, except as required by law.

 

Explanatory Note

 

Under the Agreement and Plan of Merger (the “Merger Agreement”), as described more fully below, NatureWell, Incorporated (“NatureWell” or “Company”) became the ultimate parent company of Brazil Interactive Media, Inc., a Delaware corporation (“Brazil Interactive Media”). Under the terms of the Merger Agreement, the Company will file a Certificate of Amendment to change its name to “Brazil Interactive Media, Inc.”, and Brazil Interactive Media will change its name to “BIMI, Inc.” The Company will also decrease its authorized capital from 5,000,000,000 shares of common stock, par value $0.00001, and 15,000,000 shares of preferred stock, par value $0.01, to 100,000,000 shares of common stock, par value $0.0001, and 5,000,000 shares of preferred stock, par value $0.0001.

 

Unless otherwise provided in this Current Report on Form 8-K, all references in this Current Report to “we,” “us,” “Company,” “our,” “Brazil Interactive Media, Inc.,” or the “Registrant” refer to the combined entity, NatureWell together with its wholly-owned subsidiary, Brazil Interactive Media, and Brazil Interactive Media’s Brazilian subsidiary, Brazil Interactive Media Participações, Ltda. Unless otherwise indicated in this Current Report, all references in

2
 

this Current Report to the Company’s Board of Directors shall refer to the Board of Directors of NatureWell, which was appointed in conjunction with the closing of the Merger Agreement. The business operations of Brazil Interactive Media, Inc. following the transaction consist of those of its Delaware subsidiary, Brazil Interactive Media, and Brazil Interactive Media’s subsidiary located in the Federal Republic of Brazil. 

 

Item 1.01

Entry Into a Material Definitive Agreement

 

On March 13, 2013 (the “Closing Date”), NatureWell, Incorporated, a Delaware corporation, entered into the Merger Agreement with Brazil Interactive Media, Inc., a Delaware corporation, and the Company’s wholly-owned subsidiary, BIMI Acquisition Corp., a Delaware corporation incorporated by the Company on February 20, 2013 specifically for the purpose of consummating the Merger Agreement (the “Merger Sub”), pursuant to which the Company acquired all of the issued and outstanding shares of Brazil Interactive Media (the “Brazil Interactive Media Shares”). Prior to entering into the Merger Agreement, there was no relationship between the Company or its affiliates and Brazil Interactive Media, other than in respect of the Merger Agreement and the transactions contemplated thereby.

 

The Merger Agreement is discussed in more detail in Item 2.01 below, which information is hereby incorporated by reference into this Item 1.01. The description of the Merger Agreement in this Current Report is qualified in its entirety by reference to the full text of the Merger Agreement, a copy of which is filed as Exhibit 2.1 to this Current Report, and which is hereby incorporated by reference into this Item 1.01. Capitalized terms used herein not otherwise defined shall have the meanings assigned to them in the Merger Agreement.

 

Item 2.01

Completion or Acquisition or Disposition of Assets

 

On the Closing Date, the Company entered into the Merger Agreement with the Company’s Merger Sub and Brazil Interactive Media. In accordance with the Merger Agreement, the shareholders of Brazil Interactive Media (the “Brazil Interactive Media Shareholders”) were issued an aggregate of 3,740,000 shares of Series G Convertible Preferred Stock of the Company (the “Series G Convertible Preferred Stock”) in exchange for all of the issued and outstanding Brazil Interactive Media Shares, or approximately 4 shares of the Company’s Series G Convertible Preferred Stock for every Brazil Interactive Media share held by the Brazil Interactive Media Shareholders (the “Share Exchange”).

 

On the Effective Date of the Merger, as provided for in the Merger Agreement, Brazil Interactive Media will file a certificate of merger with the state of Delaware, causing the merger of the Merger Sub into Brazil Interactive Media pursuant to Delaware Law. Brazil Interactive Media will be the surviving company, and Brazil Interactive Media will become a wholly-owned subsidiary of NatureWell. Subsequently, Brazil Interactive Media’s name will be changed to BIMI, Inc., and NatureWell’s name will be changed to Brazil Interactive Media, Inc.

3
 

 

The Merger Agreement further provided that after the Closing Date, the Company will perform a reverse merger at a ratio of 8,484 to one, and subsequently convert all issued and outstanding Series G Convertible Preferred Stock to Company common stock at a ratio of one to ten. Pursuant to the conversion ratios in the Merger Agreement, after the reverse merger and conversion of Series G Convertible Preferred Stock to common stock, the former Brazil Interactive Media Shareholders will hold approximately 93.5% of the issued and outstanding Common Stock of the Company and the remaining 6.5% will be owned by the Company's pre-merger shareholders.

 

As a condition to closing of the Merger Agreement, the Company has requested that the Series G Convertible Preferred Stock issued pursuant to the Share Exchange, and the Common Stock to be newly issued upon its conversion, will be subject to a voluntary Lock Up and Leak Out Agreement between the Company and certain shareholders.

 

Prior to the Closing Date, the Company converted 3,190 shares of its issued and outstanding preferred stock to common stock, consisting of 75 shares of Series C Convertible Preferred Stock issued and outstanding, and 3,115 shares of Series E Convertible Preferred Stock. As a result, on the Closing Date, 2,454,693,045 shares of the Company’s common stock were issued and outstanding, and 3,970,746 shares of the Company’s Series G Convertible Preferred Stock were issued in connection with the Merger Agreement. Our current authorized capitalization consists of 5,000,000,000 shares of common stock, par value $0.00001, and 15,000,000 shares of preferred stock, par value $0.01.  However, pursuant to the terms of the Merger Agreement, the Company will file a Certificate of Amendment to decrease our authorized capitalization to 100,000,000 shares of common stock, par value $0.00001, and 5,000,000 shares of preferred stock, par value $0.01.

 

Under the Merger Agreement, Brazil Interactive Media will become a wholly owned subsidiary of NatureWell, and Brazil Interactive Media will continue to own its assets and operate its business as a wholly-owned subsidiary.

 

As a result of the Merger Agreement, Mr. James R. Arabia and Mr. Matthew Malesek resigned as Chief Executive Officer and Chief Financial Officer, respectively, and as directors of the Company. Also as a result of the Merger Agreement, Mr. Themistocles Psomiadis became the Chief Executive Officer and a director of the Company.

 

For accounting purposes, we will account for the assets and liabilities of the Company and Brazil Interactive Media on a consolidated basis at their historical cost, as presented in Exhibit 99.1.

 

We will begin to file annual and quarterly reports based upon the fiscal year-end of Brazil Interactive Media, which is December 31. 

 

4
 

FORM 10 INFORMATION

 

THE BUSINESS

 

Corporate Overview

 

NatureWell, Incorporated, a Delaware corporation formed on September 24, 2001, is a public company quoted on the Over-the-Counter "Pink Sheets" under the symbol "NAWL." The Company was formerly engaged in the research and development of healthcare products intended for a variety of conditions. On May 9, 2008 the Company completed the sale of essentially all of its assets. As a result of the sale of its assets, the Company became a shell company as defined under Rule 12b-2 of the Exchange Act.

 

On March 13, 2013, the Company entered into the Merger Agreement with Brazil Interactive Media, as described above. In accordance with the terms of the Merger Agreement, the Company issued 3,740,000 shares of Series G Convertible Preferred Stock to the Brazil Interactive Media Shareholders, which constitutes approximately 94% of the post-exchange issued and outstanding Series G Convertible Preferred Stock, and will be converted into the Company’s common stock at a conversion rate that equals approximately 93.5% of the post-transaction issued and outstanding common stock.

  

Under the terms of the Merger Agreement, the Company will proceed to change its corporate name to Brazil Interactive Media, Inc. and intends to seek a new stock symbol that more appropriately reflects the name of the Company.

 

Corporate History of Brazil Interactive Media

 

Brazil Interactive Media, Inc. (“Brazil Interactive Media”), a corporation organized under the laws of Delaware on September 11, 2012, is the parent of Brazil Interactive Media Participações, Ltda., a Brazilian holding company, which through its wholly-owned subsidiary EsoTV Promoção Publicidade Licenciamento e Comércio Ltda. (“EsoTV”), combines live television broadcasts with a telecommunications component to create live, interactive television programming for the Brazilian viewing public. Brazil Interactive Media, Brazil Interactive Media Participações, Ltda. and EsoTV shall be collectively referred to herein as “Brazil Interactive Media”. Brazil Interactive Media’s Brazilian subsidiary, EsoTV, was founded and commenced operations in 2008.

 

Using its São Paulo, Brazil-based studios, Brazil Interactive Media has created a broadcast platform enabling the Company to live feed its proprietary interactive programming to the entire Brazilian television market. The Company creates income by generating telephone call traffic through co-billing contracts with Brazilian telecommunications providers.

 

Current Business of our Company

 

As of March 13, 2013, the Company, through its wholly-owned subsidiary, Brazil Interactive

5
 

Media, commenced the business of producing live TV shows with an interactive telephone calling component using its own unique and proprietary program formats that include quiz shows, games, psychics and adult entertainment. The Company’s program content reaches the nationwide Brazilian television audience via an in-studio satellite signal uplink to a variety of Brazilian TV broadcast networks.

 

At its facilities in São Paulo, Brazil, the Company operates two modern television studios, producing and transmitting via satellite live television content to TV stations throughout Brazil. The Company has the capacity to broadcast the same signal throughout Latin America. Through the negotiation and purchase of block television time for strategic times and networks, the Company is able to distribute its content directly to its target audience throughout Brazil. Brazil Interactive Media currently leases two satellite uplinks and produces three daily live shows, providing 13 hours of live television program content daily. Brazilian television viewers participate in the shows in real time through “pay-per-calls”. The Company’s Brazilian telecommunications partners charge audience participants various per-minute rates for the incoming calls and share a portion of the revenue with the Company.

 

Patents and Trademarks

 

The Company has applied for several trademarks with the Brazilian patent and trademark office.

 

Competition

 

The Company is unaware of any direct competitors in the Brazilian television market.

 

Employees

 

As of the Closing Date, the Company had 36 full-time employees and no part-time employees. None of our employees are represented by a union. We believe that our relationship with all of our employees is good.

 

Regulatory Approvals Required

 

None.

 

REPORTS TO SECURITY HOLDERS

 

We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov . The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at

6
 

1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and formation statements, and other information regarding issuers that file electronically with the SEC, at http://www.sec.gov

 

A copy of any public filing is also available, at no charge, by contacting us at telephone no. (201) 777-3395.

 

RISK FACTORS

 

You should carefully consider the risks described below together with all of the other information included in this Current Report before making an investment decision with regard to our securities. The statements contained in or incorporated into this Current Report 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. If any of the following risks 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.

 

Risks Relating to Our Business

 

Our success depends on our management team, the loss of any of whom could disrupt our business operations.

 

We believe that our continued success will depend to a significant extent upon the efforts and abilities of our management team, particularly our CEO, Themistocles Psomiadis, and our CFO, Jesus Quintero.  We cannot ensure that we will be able to retain the services of such officers and our failure to retain them could adversely affect our operations.  We do not currently have employment agreements executed with these two executives but anticipate entering into such agreements definitively in the near future. Further, we do not currently carry key-man life insurance on any of our executive officers.

 

If our products and services do not achieve market acceptance, our business will be materially and adversely affected.

 

Our success will depend upon widespread market acceptance of our product and any future products and services which we may offer.  There can be no assurance as to the overall acceptance by our targeted customers of the product and services that we offer. There can be no assurance that the market for these products and/or services will develop or be sustained.

  

We may not be able to manage our growth effectively.

 

The expansion necessary for us to fully exploit the market for our products and services requires an effective planning and management process.  Growth, if it occurs, will likely place a significant strain on our managerial, operational and financial resources.  To manage our growth, we must implement and improve our operational system and expand, train and manage our

7
 

employee base.  There can be no assurance that our systems, procedures or controls will be adequate to support operations or that management will be able to achieve the expansion necessary to fully exploit the market for our products and services, and the failure to do so would have a material adverse effect on our business, operations and financial condition.

 

We could be materially adversely affected by changes or imbalances in foreign currency exchange and other rates.

 

Given the location of our business in the country of Brazil, we have significant exposures to risks related to changes in foreign currency exchange rates, and interest rates, which can have material adverse effects on our business. For example, significant strengthening of the Brazilian Real relative to the U.S. dollar would affect the profitability of our U.S. parent company. In addition, in preparing our consolidated financial statements, we translate our revenues and expenses outside the U.S. into U.S. Dollars using the average foreign currency exchange rate for the period and the assets and liabilities using the foreign currency exchange rate at the balance sheet date. As a result, foreign currency fluctuations and the associated translations could have a material adverse effect on our results of operations.

 

Our business outside the U.S. exposes us to additional risks that may materially adversely affect our business.

 

Our business income is generated outside the U.S. We are pursuing growth opportunities for our business in the Federal Republic of Brazil. Operating in a foreign country exposes us to political, economic, and other risks, as well as multiple foreign regulatory requirements that are subject to change, including:

 

Economic downturns in foreign countries or geographic regions where we have significant operations, such as Brazil;
Economic tensions between governments and changes in international trade and investment policies, including imposing restrictions on the repatriation of dividends, especially between the United States and Brazil;
Foreign regulations restricting our ability to market our products in those countries;
Differing labor regulations and union relationships; 
Consequences from changes in tax laws;
Difficulties in obtaining financing in foreign countries for local operations; and
Political and economic instability, natural calamities, war, and terrorism.

 

The effects of these risks may, individually or in the aggregate, materially adversely affect our business. 

 

We may not be able to obtain sufficient capital and may be forced to limit the scope of our operations or discontinue operations.

 

If adequate additional financing is not available when needed, we may not be able to undertake any planned operational expansions and as a result, we may have to modify our business plans

8
 

accordingly, or may be required to discontinue our business operations. There is no assurance that additional financing will be available to us when needed, or if made available, that such will be on terms favorable to us.  Further, any future capital investments could dilute or otherwise materially and adversely affect the holdings or rights of our existing shareholders. In addition, new equity or convertible debt securities issued by us to obtain financing could have rights, preferences and privileges senior to those granted to existing shareholders.

 

If we are not able to adequately protect our intellectual property, other parties may develop competing products and/or services that utilize our intellectual property.

 

Although we have filed trademark applications in Brazil, as of this time we have not yet obtained any registered trademarks or patents over our products.  We intend to obtain trademark and copyright law, patent law and trade secret protection for our products and services.  At this time, we have submitted several trademark applications to the Brazilian government, to protect our intellectual property, which are being processed, however, no assurance can be made that third parties will not develop competing products that imitate or utilize our intellectual property.

 

In addition, there can be no assurance that other parties will not assert infringement claims against us.  Any such claims, with or without merit, could be time consuming to defend, result in costly litigation, divert management’s attention and resources or require us to enter into royalty or licensing agreements.  There can be no assurance that such licenses would be available on commercially reasonable terms, if at all, and the assertion or prosecution of any such claims could have a material adverse effect on our business, financial condition and operations.

 

Risks Associated with our Securities

 

Our securities are restricted securities with limited transferability

 

Our securities should be considered a long-term, illiquid investment. Our common stock has not been registered under the Securities Act of 1933 (the “Act”), and cannot be sold without registration under the Act or any exemption from registration. In addition, our common stock is not registered under any state securities laws that would permit their transfer. Because of these restrictions, a shareholder will likely find it difficult to liquidate an investment in our common stock.

 

We are subject to penny stock rules which will make the shares of our common stock more difficult to sell.

 

We are subject to the SEC’s “penny stock” rules since our shares of common stock sell below $5.00 per share. Penny stocks generally are equity securities with a per share price of less than $5.00. The penny stock rules require broker-dealers to deliver a standardized risk disclosure document 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 must also provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson, and monthly account statements showing the market value of each penny

9
 

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 completing 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 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. The penny stock rules are burdensome and may reduce purchases of any offerings and reduce the trading activity for shares of our common stock. As long as our shares of common stock are subject to the penny stock rules, the holders of such shares of common stock may find it more difficult to sell their securities.

 

Our shares of common stock are very thinly traded, and the price may not reflect our value and there can be no assurance that there will be an active market for our shares of common stock in the future.

 

Our shares of common stock are thinly traded. Due to the illiquidity, the market price may not accurately reflect the relative value of the Company. There can be no assurance that there will be an active market for our shares of common stock either now or in the future. Investors may not be able to liquidate their investment or liquidate it at a price that reflects the value of the business. If a more active market should develop, the price may be highly volatile. Because there may be a low price for our shares of common stock, many brokerage firms may not be willing to effect transactions in the securities. Even if an investor finds a broker willing to effect a transaction in the shares of our common stock, the combination of brokerage commissions, transfer fees, taxes, if any, and any other selling costs may exceed the selling price. Further, many lending institutions will not permit the use of such shares of common stock as collateral for a loans.

 

SELECTED FINANCIAL DATA

 

Not applicable.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the financial statements and the related notes thereto included elsewhere in this Report. This Report contains certain forward-looking statements and the Company's future operating results could differ materially from those discussed herein. Certain statements contained in this Report, including, without limitation, statements containing the words “believes”, “anticipates,” “expects” and the like, constitute “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). However, as the Company intends to issue “penny stock,” as such term is defined in Rule 3a51-1 promulgated

10
 

under the Exchange Act, the Company is ineligible to rely on these safe harbor provisions. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Given these uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to announce publicly the results of any revisions of the forward-looking statements contained or incorporated by reference herein to reflect future events or developments, except as required by the Exchange Act.

 

The MD&A discussion set forth below is based on the audited financial statements of Brazil Interactive Media Inc. and its subsidiary as of December 31, 2012 and 2011, and the related statements of operations, shareholders' equity and cash flows for years ended December 31, 2012 and 2011. A copy of these financial statements is attached as Exhibit 99.1 hereto.

 

Overview

 

Brazil Interactive Media, Inc. (“Brazil Interactive Media”), a corporation organized under the laws of Delaware on September 11, 2012, is the parent of Brazil Interactive Media Participações, Ltda., a Brazilian holding company, which through its wholly-owned subsidiary EsoTV Promoção Publicidade Licenciamento e Comércio Ltda. (“EsoTV”), combines live television broadcasts with an interactive telephone calling component using its own unique and proprietary program formats that include quiz shows, games, psychics and adult entertainment. Brazil Interactive Media, Brazil Interactive Media Participações, Ltda. and EsoTV shall be collectively referred to herein as “BIM”. BIM commenced operations in 2011. BIM’s program content reaches the nationwide Brazilian television audience via an in-studio satellite signal uplink to Brazilian television broadcasting companies. BIM creates income by generating telephone call volume and sharing the resulting revenue by means of co-billing contracts with Brazilian telecommunications providers.

 

At its facilities in São Paulo, Brazil, BIM operates two modern television studios, producing and transmitting via satellite live television content to TV stations throughout Brazil. BIM has the capacity to broadcast the same signal throughout Latin America. Through the negotiation and purchase of block television time for strategic times and networks, BIM is able to distribute its content directly to its target audience throughout Brazil. BIM currently leases two satellite uplinks and produces three daily live shows, providing 13 hours of live television program content daily. Brazilian television viewers participate in the shows in real time through “pay-per-calls”. BIM’s Brazilian telecommunications partners charge audience participants various per-minute rates for the incoming calls and share a portion of the revenue with BIM.

 

Results of Operations 

 

For the years ended December 31, 2012 and 2011

 

11
 

Revenues

 

BIM had revenues of $3,949,624 and $2,035,416 for the years ended December 31, 2012 and 2011, respectively. Pursuant to the co-billing contracts entered between BIM and Brazilian telecommunications providers, BIM obtained its revenues from BIM’s portion of charge on the incoming calls related to the live shows. The increase by $1,914,208 during the year of 2012 was due to the revenues in 2011 representing seven-month operation in BIM, which commenced operations in June of 2011.

Cost of Sales

 

Cost of sales consists primarily of media cost, leasing expenses related to satellite uplinks and other costs directly attributable to the provision of services. During the year ended December 31, 2012, BIM had $2,518,980 in cost of sales, or 63.8% of sales revenue. During the year ended December 31, 2011, BIM had $1,195,695 in cost of goods sold, or 58.7% of sales revenue. The increase by $1,323,285 during the year of 2012 was due to the cost of sales in 2011 representing seven-month operation in BIM, which commenced operations in June of 2011.

Expenses

 

BIM had operating expenses of $1,017,224 and $749,989 for the years ended December 31, 2012 and 2011, respectively. The increase by $267,235 during the year of 2012 was due to the increase in other taxes by $221,436, the increase in rent by $75,921, and the increase in other general and administrative expenses by $110,957. BIM commenced operations in June of 2011 so that the operating expenses in 2011 represented only seven-month operation in BIM.

 

Income Taxes

 

BIM is subject to Brazil enterprises income tax at the applicable tax rates on the taxable income as reported in its Brazilian statutory accounts in accordance with the relevant enterprises income tax laws applicable to domestic enterprises. During the years ended December 31, 2012 and 2011, BIM had income taxes of $303,679 and $19,646, respectively.

 

Liquidity and Capital Resources

 

Operating Activities

 

Net cash used in operating activities was $24,128 during the year ended December 31, 2012, compared to net cash of $188,544 provided by operating activities during the year ended December 31, 2011. Negative cash flow from operation during the year ended December 31, 2012 was due solely to the increase in accounts receivable in amount of $354,904. Positive cash flow from operation during the year ended December 31, 2011 was due primarily to the net income of $55,880, plus the increase in accounts payable and tax payable in amounts of $405,820 and $81,684, respectively, offset by the increase in accounts receivable and prepayments in amount of $176,709 and $178,132, respectively.

 

12
 

Investing Activities

 

Net cash used in investing activities was $8,450 during the year ended December 31, 2012, due solely to purchase of equipment. There was no cash flow from investing activities during the year ended December 31, 2011.

 

Financing Activities

 

Net cash provided by financing activities was $3,334 and $23,561 during the years ended December 31, 2012 and 2011, respectively. Positive cash flow from financing activities during the year ended December 31, 2012 was due to proceeds of $67,478 from bank loans, which was $114,860 during the year of 2011, offset by the repayment to bank loan in amount of $64,244, which was $91,299 during the year of 2011.

 

BIM had cash of 146,331 on hand as of December 31, 2012, the most readily available recent date. BIM also had working capital surplus in amount of $311,220 as of December 31, 2012. Current cash on hand and working capital are sufficient to meet BIM’s working capital requirements for the next twelve month period. However, expansion of BIM’s plan of operations is subject to attaining adequate revenue. BIM cannot assure investors that adequate revenues will be generated. Without adequate revenues within the next twelve months, BIM still anticipate being able to continue with its present activities, but BIM may require financing to achieve operation and growth goals and to meet its working capital requirements. If BIM is able to conduct an equity offering, there will be dilution to the current stockholders of the Company and to the investors that acquire shares in the offering; and if BIM is able to conduct a debt offering, BIM will likely be subject to various covenants on its business operations and may be required to make payments during the term of the securities.

 

BIM anticipate that its operational, and general and administrative expenses for the next 12 months will total approximately $500,000. BIM also does not expect any significant additions to the number of employees, unless financing is raised. The foregoing represents its best estimate of its cash needs based on current planning and business conditions. The exact allocation, purposes and timing of any monies raised in subsequent private financings may vary significantly depending upon the exact amount of funds raised and its progress with the execution of its business plan.

 

Off Balance Sheet Arrangements

 

As of December 31, 2012, BIM did not have any off balance sheet arrangements that have or are reasonably likely to have a current or future effect on its financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

 

13
 

Critical Accounting Policies

 

Revenue Recognition

 

In accordance with guidance by paragraph 605-10-S99-1 of the FASB ASC for revenue recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

 

The Company produces live TV shows including quizzes, games, psychics and talk show formats, which are distributed via its satellite signal to its distribution channels (TV stations). The Company currently leases two satellite uplinks and produces three live shows which provide 13 hours of daily live television programming. Members of the television audiences participate in real time through “pay-per-calls”. The local telecommunications providers charge various rates (per minute) for the incoming calls and share a portion of the revenue with the Company. Revenue is recognized by the Company when the minutes of calls from audiences are determined by the local telecommunications providers.

 

DESCRIPTION OF PROPERTY

 

Following the Merger Agreement, our principal executive offices will be at 151 W. Passaic Street, Rochelle Park, New Jersey 07662. Our principal offices and television studios in Brazil are located in the city of São Paulo, state of São Paulo, at Alameda Uapixana, 278 - Planalto Paulista, São Paulo, SP CEP: 04085-030, Brazil.  

 

Our telephone number in the United States is (201) 777-3395, and our facsimile number is (352)2600890. Our telephone number in Brazil is +55 (11) 5051-2240.

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The following table sets forth information regarding the number of shares of our Common Stock beneficially owned, as of March 13, 2013 (following the Merger Agreement), presented on a post-transaction basis (assuming conversion of the Series G Convertible Preferred Stock according to the terms of the Merger Agreement) by (i) each stockholder who we know to own beneficially 5% or more of our outstanding common stock; (ii) all directors; (iii) all nominees for director; (iv) our executive officers; and (v) all executive officers and directors as a group. Except as otherwise indicated, we believe, based on information furnished by such persons, that each person listed below has sole voting and investment power over the shares of common stock shown as beneficially owned, subject to community property laws, where applicable. Beneficial ownership is determined under the rules of the SEC and includes any shares which the person has the right to acquire within 60 days after March 13, 2013 through the exercise of any stock option, warrant or other right.

 

14
 

 

Name of Beneficial Owners  Title/Status 

Amount and Nature of

Beneficial Ownership

Percentage

of Class (1)(2)

Themistocles Psomiadis (3)

Chief Executive Officer

 

287,000 Series G Convertible Preferred (4) 8%
Andrea Villas Boas (5) 82% Owner, Significant Employee 3,280,000 Series G Convertible Preferred (6) 82%
Alan T. Hawkins (7) Secretary 127,000 Series G Convertible Preferred (8) 2%

Michael Novielli (9)

 

Director 200,000 Series G Convertible Preferred 5%
Douglas H. Leighton (9) Director 200,000 Series G Convertible Preferred 5%
Officers and Directors as a group (10)   520,000 Series G Convertible Preferred 15%

 

 

 

(1) Based on 2,454,693,045 shares common stock outstanding and 3,970,746 shares of Series G outstanding after the closing of the Merger Agreement.

(2) Figures presented on a post-reverse split, post Series G Convertible Preferred Stock conversion basis, showing anticipated post-transaction ownership, according to the terms of the Merger Agreement, to be 40,000,000 shares of common stock issued and outstanding and no preferred shares issued and outstanding.

(3) Shares held in the name of Themistocles Psomiadis, Themistocles Psomiadis Pension Trust, and Brazilian Investment Group, LLC. Themistocles Psomiadis has sole voting and dispositive power over the securities in his name and the name of Themistocles Psomiadis Pension Trust, and shared voting and dispositive power over the securities in the name of Brazilian Investment Group, LLC.

(4) Consisting of 240,000 shares of Series G Convertible Preferred Stock pursuant to the Merger Agreement discussed under Item 2.01, convertible to 2,400,000 shares of common stock.

(5) Shares held in the name of Brazil Interactive Holdings, LLC. Andrea Villas Boas has voting and dispositive power over the securities.

(6) Consisting of 3,280,000 shares of Series G Convertible Preferred Stock pursuant to the Merger Agreement discussed under Item 2.01, convertible to 32,800,000 shares of common stock.

(7) Shares held in the name of Alan T. Hawkins and Brazilian Investment Group, LLC. Alan Hawkins has sole voting and dispositive power over the securities in his name and shared voting and dispositive power over the securities in the name of Brazilian Investment Group, LLC.

(8) Consisting of 80,000 shares of Series G Convertible Preferred Stock pursuant to the Merger Agreement discussed under Item 2.01, convertible to 800,000 shares of common stock.

15
 

 

(9) Shares held in the name Dutchess Opportunity Fund II, LP, of which Douglas H. Leighton and Michael Novielli are each managing directors, and each have voting and dispositive power over the securities.

(10) The Series G Convertible Preferred Stock held by the officers and directors as a group is convertible into 5,200,000 shares of Common Stock.

 

Changes in Control

 

There are no arrangements known to us that may, at a subsequent date, result in a change of control of the Company.

 

MANAGEMENT

 

Directors, Executive Officers and Key Employees

 

The following individuals serve as the executive officers and key employees of our Company as of the Closing Date of the Merger Agreement. The executive officers of our Company are appointed by our board of directors and hold office as set forth in their respective employment agreements or until their earlier death, resignation or removal from office.

 

Name   Position
     
Themistocles Psomiadis   Chief Executive Officer, Director
     
Jesus Quintero   Chief Financial Officer
     
Alan T. Hawkins   Secretary
     
Andrea Villas Boas   Key Employee
     
Michael Novielli   Director
     
Douglas H. Leighton   Director

 

Themistocles Psomiadis -   From December, 2012 to the present, Mr. Psomiadis has served as CEO and chairman of Brazil Interactive Media, Inc. Under the Merger Agreement, Mr. Psomiadis has also been appointed as CEO and director of the Company beginning on the Closing Date. From June, 2011 to September, 2012, Mr. Psomiadis was a consultant to Brazil Interactive Media’s Brazilian subsidiary EsoTV with Brazilian Investment Group, LLC. From 1970 to 2010, Mr. Psomiadis worked in the financial sector, serving as CFO of County Trust Company from 1970 to 1980 and from 2005 to 2010 with New York Life, where he was a partner. Also during that time, he started and developed several financial businesses. From 2009 to the present, he has served as executive director of Brazilian Investment Group, LLC. Mr. Psomiadis attended New York University and holds general securities Series 7, Series 63 and Series 66 licenses. He is fluent in English, Brazilian Portuguese, Spanish and Greek.

16
 

 

Jesus Quintero, CPA -  From January, 2013 to the present, Mr. Quintero has served as Brazil Interactive Media’s Chief Financial Officer. Under the Merger Agreement, Mr. Quintero has also been appointed as the CFO of the Company beginning on the Closing Date. From 2011 to the present, Mr. Quintero has served as a financial consultant to several multi-million dollar businesses in South Florida. He has extensive experience in public company reporting and SEC/SOX compliance, and held senior finance positions with Avnet, Inc. (NYSE:AVT), Latin Node, Inc., Globetel Communications Corp. (AMEX:GTE) and Telefonica of Spain. His prior experience also includes tenure with PriceWaterhouse and Deloitte & Touche. Mr. Quintero earned a B.S. in Accounting from St. John’s University and is a certified public accountant. He is fluent in English and Spanish, and conversant in Brazilian Portuguese.

 

Alan T. Hawkins - From September 2012 to the present, Mr. Hawkins has served as general counsel to Brazil Interactive Media, and under the Merger Agreement, has been appointed as the corporate secretary and general counsel of the Company beginning on the Closing Date. Mr. Hawkins is a practicing attorney representing venture capital funds in operational, corporate and tax law matters, and representing private companies in transactional, corporate finance, venture capital, and general corporate matters. From 2009 to the present, he has been a managing director at Brazilian Investment Group, LLC. Mr. Hawkins earned a JD from the University of Florida School of Law in Gainesville, where he also studied Latin American Business and Language. He received his BA in Language from Fort Lewis College. Mr. Hawkins is a member of the Florida Bar Association. He is fluent in English, Brazilian Portuguese and Spanish.

Andrea Villas Boas - From November 28, 2012 until the present, Ms. Villas Boas has served as a director and key employee of Brazil Interactive Media, Inc. and due to the Merger Agreement, became the majority beneficial shareholder of the Company. From 2011 to the present, she has served as a key employee, managing human resources for the Company’s Brazilian subsidiary. From 1994 to 2001, Ms. Villas Boas worked as human resources manager at Chase Manhattan Bank in São Paulo, Brazil. From 2001 to 2004, she served as director of human resources at ING Bank in São Paulo. From 2005 to the present, she has provided consulting services to Brazilian banks and businesses with Minds and Methods, a Brazilian human resources and management consulting firm she founded in 2005. From 2007 to 2009, she served as a director of the Brazilian Human Resources Association. Ms. Villas Boas earned her MBA in Human Resources from the University of São Paulo’s FIA Business School in 2000 and was awarded her undergraduate degree in psychology from the Catholic University of São Paulo in 1988.

 

Michael Novielli – Since 1996 to the present, Mr. Novielli has served as a Managing Partner of Dutchess Capital, where he co-managed an investment portfolio of $125 million in assets and has made over $200 million in principal investments in emerging growth companies, within the U.S. domestic as well as global markets. Mr. Novielli co-manages risk assessment, oversees investment opportunities and deal origination in Asia and Latin America, as well as the firm’s legal and compliance matters. He is also a member of Dutchess’s investment committee and has 21 years of experience in securities, investment banking and asset management. Prior to founding Dutchess, Mr. Novielli began his investment career with PaineWebber and Co., where he served from 1992 to 1995. He received a Bachelor of Science degree in Business from the University of South Florida.

 

17
 

Douglas H. Leighton - Since 1996 to the present, Mr. Leighton has served as a Managing Partner of Dutchess Capital, where he co-managed an investment portfolio of $125 million in assets and has made over $200 million in principal investments in emerging growth companies, within the U.S. domestic as well as global markets. Mr. Leighton co-manages risk assessment, oversees investment opportunities and deal origination in North America, Europe and Australia, as well as trading and investor relations. He is also a member of Dutchess’s investment committee and has 22 years of experience in trading, investment banking and asset management. Prior to founding Dutchess, from 1990 to 1996, Mr. Leighton was president of Beacon Capital, a Boston-based investment banking firm. He received a combined Bachelor of Arts and Bachelor of Science in Economics and Finance from the University of Hartford. 

 

Family Relationships

 

There are no family relationships between any of our directors or executive officers.

 

Involvement in Certain Legal Proceedings

 

None of our directors, executive officers, promoters or control persons has been involved in any of the following events during the past five years:

 

1. Any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

 

2. Any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offences); 

 

3. Being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

 

4. Being found by a court of competent jurisdiction (in a civil action), the Securities and Exchange Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.

 

Meetings of the Board

 

Our board of directors meets on a quarterly basis.

 

Board Committees

 

Our board of directors does not have any committees.  However, at such time in the future that we appoint independent directors to the board, we expect to form the appropriate board committees.

 

18
 

 

Director Independence

 

We do not have any independent directors.  Our determination of independence of directors is made by using the definition of “independent director” contained under Rule 5605(a)(2) of the NASDAQ Marketplace Rules.

 

EXECUTIVE COMPENSATION

 

As of the present time, Brazil Interactive Media has not entered into employment agreements with any of its executive management team and is not paying any executive compensation. However, the Company intends to enter into employment agreements with its officers and executive management in the near future.

 

Employment Contracts

 

As of the present time, Brazil Interactive Media has not entered into employment agreements with any of its executive management team and is not paying any executive compensation. However, the Company intends to enter into employment agreements with its officers and management in the near future.

 

Director Compensation

 

In the three most recent fiscal years, the Company has not paid any cash or other type of compensation to any Directors.

  

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

 

Certain key management personnel hold positions in another entity that results in them having control or significant influence over the financial or operating policies of that entity.  That entity transacted with the Company in the reporting period.  The terms and conditions of the transactions with key management personnel were no more favorable than those available, or which might reasonably be expected to be available, on similar transactions to non-key management personnel related entities on an arm’s length basis.

 

LEGAL PROCEEDINGS

 

We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.

19
 

 

MARKET PRICE OF AND DIVIDENDS ON COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

The Company's Common Stock is traded on the Over-the-Counter Pink Sheets under the symbol "NAWL." The following table sets forth the high and low closing prices per share for the Company's Common Stock for the prior three years:

 

  HIGH LOW
Fiscal Year 2009:    
First Quarter 0.0003 0.0001
Second Quarter 0.0008 0.0001
Third Quarter 0.0007 0.0002
Fourth Quarter 0.0005 0.0002
Fiscal Year 2010:    
First Quarter 0.0003 0.0001
Second Quarter 0.0004 0.0002
Third Quarter 0.0007 0.0001
Fourth Quarter 0.0006 0.0002
Fiscal Year 2011:    
First Quarter 0.0004 0.0002
Second Quarter 0.0002 0.0001
Third Quarter 0.0002 0.0001
Fourth Quarter 0.0001 0.0001

 

Holders

 

As of June 30, 2012, there were over 600 holders of record of the Company’s common stock. Pacific Stock Transfer Company, of 4045 S. Spencer Street, Suite 403, Las Vegas, Nevada 89119, (702) 361-3033 (Phone), (702) 433-1979 (Fax), is the transfer agent for the Company’s common stock.

 

Pursuant to the Merger Agreement, the Company will perform a reverse stock split of the Company’s common stock on a ratio of one share for every eight thousand four hundred and eighty (8,484) shares issued and outstanding on the record date. The approximate record date of the reverse stock split will be March 30, 2013, upon determination of the Board of Directors.

 

Prior to the Closing Date of the Merger Agreement, the Company converted 3,190 shares of its issued and outstanding preferred stock to ordinary common stock, consisting of 75 shares of

20
 

 

Series C Convertible Preferred Stock issued and outstanding, and 3,115 shares of Series E Convertible Preferred Stock.  As a result, as of March 13, 2013, the Company had 2,454,693,045 shares of the Company’s common stock issued and outstanding, and 3,970,746 shares of the Company’s Series G Convertible Preferred Stock issued and outstanding, held by 11 shareholders.

 

Our current authorized capitalization consists of 5,000,000,000 shares of common stock, par value $0.00001, and 15,000,000 shares of preferred stock, par value $0.01.  However, pursuant to the terms of the Merger Agreement, the Company will file a Certificate of Amendment to decrease our authorized capitalization to 100,000,000 shares of common stock, par value $0.00001, and 5,000,000 shares of preferred stock, par value $0.01.

 

Pursuant to the Merger Agreement, the majority shareholder of the Company is Brazil Interactive Holdings, LLC, a Delaware holding company wholly-owned by Andrea Villas Boas. Prior to the  Closing Date of the Merger Agreement, Brazil Interactive Holdings, LLC was the majority shareholder in Brazil Interactive Media, Inc., the private Delaware company which merged into NatureWell, Incorporated’s wholly-owned subsidiary. Ms. Villas Boas received her interest in Brazil Interactive Holdings, LLC from its previous owner, José Percival Palesel, by means of an assignment agreement dated December 6, 2012.

 

Common Stock

 

We are currently authorized to issue 5,000,000,000 shares of common stock, par value $0.00001. As of March 13, 2013, 2,454,693,045 common shares were issued and outstanding. However, under the terms of the Merger Agreement, the Company will file a Certificate of Amendment to decrease its authorized capital to consist of 100,000,000 shares of common stock, par value $0.00001. 

 

Warrants

 

None.

 

Dividend Policy

 

We have not paid any cash dividends on Series G Convertible Preferred Stock and we have no intention of paying any dividends on our shares of common stock in the near future. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.

 

Securities Authorized for Issuance Under Equity Compensation Plans

 

Not applicable.

21
 

 

RECENT SALES OF UNREGISTERED SECURITIES

 

For information about recent sales of unregistered securities, see Item 3.02 of this Current Report on Form 8-K.

 

DESCRIPTION OF SECURITIES

 

The Company had 2,448,665,750 common shares issued and outstanding as of March 13, 20103 as a result of the conversion of 3,190 shares of preferred stock in connection with the closing of the Merger Agreement. Our authorized capitalization consists of 5,000,000,000 shares of common stock, $0.00001 par value. The following summary description of the capital stock describes the material terms of our capital stock.

 

Common Stock

 

The holders of our common stock are entitled to one vote per share on all matters for which shareholders are able to vote. The holders of our common stock are not entitled to cumulative voting rights. Therefore, the holders of a majority of the shares voting in the election of directors can elect all of the directors then standing for election, subject to the rights of the holders of preferred stock, if and when issued. The holders of common stock have no preemptive or other subscription rights.

 

The holders of our common stock are entitled to receive dividends, if they are ever declared by the Board of Directors from legally available funds, with each share of common stock sharing equally in the dividends. The possible issuance of preferred stock with a preference over common stock as to dividends could impact the dividend rights of holders of our common stock.

 

There are no redemption provisions with respect to our common stock. All outstanding shares of common stock are fully paid and non-assessable.

 

The by-laws provide that the number of directors shall be fixed by the board of directors. Any director of the Company may be removed from office with or without cause by the holders of a majority of the outstanding shares of the Company entitled to vote at an election of directors.

 

INDEMNIFICATION OF OFFICERS AND DIRECTORS

 

Our directors and officers are indemnified as provided by the Delaware Revised Statutes and our Bylaws. We have been advised that in the opinion of the Securities and Exchange Commission, indemnification for liabilities arising under the Act is against public policy as expressed in the Act, and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities is asserted by one of our directors, officers, or controlling persons in connection with the securities being registered, we will, unless in the opinion of our legal counsel the matter has been settled by controlling precedent, submit the question of whether such indemnification is against public policy to a court of appropriate jurisdiction. We will then be governed by the court’s decision.

22
 

 

At present, there is no pending litigation or proceeding involving any of our directors, officers, employees or agents where indemnification will be required or permitted. We are not aware of any threatened litigation or proceeding that may result in a claim for indemnification by any director or officer.

 

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

 

There were no changes in accounting principles or disagreements with our auditors regarding applications of any accounting principles during the fiscal years ended June 30, 2012 and 2011.

 

FINANCIAL STATEMENTS AND EXHIBITS

 

See Item 9.01 below, which is incorporated by reference herein.

 

Item 3.02 Unregistered Sales of Equity Securities.

 

In connection with the closing of the Merger Agreement on March 13, 2013, the Company issued 3,740,000 shares of the Company’s Series G Convertible Preferred Stock to the Brazil Interactive Media Shareholders in exchange for Brazil Interactive Media Shares.

 

Due to the Brazil Interactive Media Shareholder's sophistication and the nature of the transaction, the issuances are exempt from registration under the Securities Act of 1933 pursuant to Section 4(2) thereunder. The exchange of the Brazil Interactive Media Shares for Series G Convertible Preferred Stock also qualifies as an the exemption from registration pursuant to Rule 506 of Regulation D promulgated under the Act.  The facts relied upon to make the exemption were, among other things, the representations made by the parties to the Merger Agreement, that there was no general solicitation and the limited number of participants.

 

Item 5.01 Changes in Control of Registrant

 

As set forth in more detail in Item 2.01 above, which information is hereby incorporated by referenced into this Item 5.01, as of the Closing Date, former Brazil Interactive Media Shareholders hold approximately 93.5% of the issued and outstanding Series G Convertible Preferred Stock and control the post-exchange Company.

 

Item 5.02 Departure of Directors or Certain Officers; Election of Directors;Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

 

In conjunction with the Merger Agreement, James R. Arabia resigned from his positions as Chief Executive Officer and director, and Matthew Malesek resigned as director, effective as of the Closing Date.  Themistocles Psomiadis was appointed to serve as Chief Executive Officer, Jesus Quintero was appointed as the Chief Financial Officer and Alan T. Hawkins was appointed to serve as secretary.  A description of the business experience of the individuals named above over the past five years can be found in Item 2.01 of the Current Report. Mr. Arabia and Mr. Malesek

23
 

will be replaced on the Company’s board of directors by Messrs. Themistocles Psomiadis and Michael A. Novielli.

 

Item 5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.

 

Under the Merger Agreement, the Company will file a Certificate of Amendment to amend its Articles of Incorporation in order to change its name to Brazil Interactive Media, Inc. and to decrease the Company’s authorized capital stock from 5,000,000,000 to 100,000,000.  These amendments to the Company’s Articles of Incorporation have been previously approved by shareholders of the Company owning approximately 52% of the Company’s outstanding common stock.

 

In addition, the Company’s Board of Directors has determined to change the Company’s fiscal year end to December 31, which is the fiscal year end of Brazil Interactive Media, the accounting acquirer.

 

Item 5.06 Change in Shell Company Status.

 

Upon completion of the transactions contemplated by the Merger Agreement, which are described in more detail in Item 2.01 above, management has determined that, as of the Closing Date, the Company has ceased to be a shell company as defined in Rule 12b-2 of the United States Securities Exchange Act of 1934, as amended.  Prior to the Closing Date, the Company had no or nominal operation or assets. 

 

Item 9.01. Financial Statements and Exhibits.

 

Exhibit No. Description

 

2.1   Merger Agreement dated March 13, 2013
     
99.1   Audited Financial statements for the fiscal year ended June 30, 2012 and 2011 and related notes.

 

 

24
 

SIGNATURE

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

Date:  March 20, 2013

 

NatureWell, Incorporated   

 

 

/s/Themistocles Psomiadis

Chief Executive Officer

  

 

EXHIBIT INDEX

 

Exhibit No.  Description

 

2.1   Merger Agreement dated March 13, 2013
     
99.1   Audited Financial statements for the fiscal year ended June 30, 2012 and 2011 and related notes.

 

Exhibit 2.1

 

 

 

 

 

 

 

 

 

AGREEMENT AND PLAN OF MERGER

 

 

by and among

 

 

Naturewell, Incorporated,

 

BIMI Acquisition Corp.,

 

and

 

Brazil Interactive Media, Inc.,

 

 

 

 

 

 

Dated as of March 13, 2013

 

 
 

 

AGREEMENT AND PLAN OF MERGER, dated as of March 13, 2013 (this ''Agreement''), by and among NatureWell, Incorporated, a Delaware corporation (the ''Company''), BIMI Acquisition Corp., a Delaware corporation and a wholly owned subsidiary of the Company (''Merger Sub''), and Brazil Interactive Media, Inc., a Delaware corporation (''BIMI'').

 

WHEREAS, the respective Boards of Directors of the Company, Merger Sub and BIMI have approved and declared advisable the merger of Merger Sub with and into BIMI (the ''Merger'') upon the terms and subject to the conditions of this Agreement and in accordance with the General Corporation Law of the State of Delaware (the ''DGCL'');

 

WHEREAS, the respective Boards of Directors of the Company and BIMI have determined that the Merger is in furtherance of and consistent with their respective business strategies and is in the best interest of their respective stockholders, and the Company has approved this Agreement and the Merger as the sole stockholder of Merger Sub;

 

WHEREAS, for federal income tax purposes, the Company, Merger Sub and BIMI intend that the Merger qualify as a reorganization within the meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended (the ''Code'');

 

WHEREAS, immediately after the Effective Time, BIMI shall be renamed BIMI, Inc. and the Company shall be renamed Brazil Interactive Media, Inc.

 

NOW, THEREFORE, in consideration of the foregoing and the respective representations, warranties, covenants and agreements set forth in this Agreement and intending to be legally bound hereby, the parties hereto agree as follows:

 

Article I The Merger

 

Section 1.1 The Merger. Upon the terms and subject to satisfaction or waiver of the conditions set forth in this Agreement, and in accordance with the DGCL, Merger Sub, at the Effective Time, shall be merged with and into BIMI. As a result of the Merger, the separate corporate existence of Merger Sub shall cease and BIMI shall continue as the surviving corporation of the Merger (the ''Surviving Corporation'') and shall be a wholly owned subsidiary of the Company.

 

Section 1.2 Closing. The closing of the Merger (the ''Closing'') shall take place on such date as mutually determined by the parties hereto after the satisfaction or waiver of the conditions (excluding conditions that, by their nature, cannot be satisfied until the Closing Date) set forth in Article VI, unless this Agreement has been theretofore terminated pursuant to its terms (the actual date of the Closing being referred to herein as the ''Closing Date''). The Closing shall be held at the place previously agreed to in writing by the parties. As soon as practicable on or after the Closing Date, the parties hereto shall cause the Merger to be consummated by filing a certificate of merger relating to the Merger (the ''Certificate of Merger'') with the Secretary of

2
 

State of the State of Delaware, in such form as required by, and executed in accordance with the relevant provisions of, the DGCL (the date and time of such filing, or if another date and time is specified in such filing, such specified date and time, being the ''Effective Time'').

 

Section 1.3 Effect of the Merger. At the Effective Time, the effect of the Merger shall be as provided in the applicable provisions of the DGCL. Without limiting the generality of the foregoing, at the Effective Time, except as otherwise provided herein, all the property, rights, privileges, powers and franchises of BIMI and Merger Sub shall vest in the Surviving Corporation, and all debts, liabilities and duties of BIMI and Merger Sub shall become the debts, liabilities and duties of the Surviving Corporation.

 

Section 1.4 Certificate of Incorporation; By-laws. At the Effective Time, (i) the Certificate of Incorporation, as amended, of the Surviving Corporation shall be its Certificate of Incorporation and (ii) the By-laws of the Surviving Corporation shall be its By-laws, in each case until thereafter changed or amended as provided therein or applicable Law.

 

Section 1.5 Directors and Officers of Surviving Corporation. At the Effective Time, the initial directors of the Surviving Corporation shall be the persons designated on Exhibit A hereto, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation. The initial officers of the Surviving Corporation shall be the persons designated on Exhibit A hereto, each to hold office in accordance with the Certificate of Incorporation and By-laws of the Surviving Corporation.

 

Section 1.6 Directors; Officers; Change of Company Name. The parties will take all action necessary such that as of the Effective Time (x) the Board of Directors of the Company shall consist of the three (3) members set forth on Exhibit B hereto, which annex shall also designate the class of director and the committees to which each such member will initially belong, of whom one (1) directors have been designated by BIMI (it being understood that BIMI shall have the right to change the persons as set forth on Exhibit B hereto only with the written consent of the Company) and two (2) directors have been designated by the Company (it being understood that the Company shall have the right to change the persons as set forth on Exhibit B hereto only with the written consent of BIMI) and (y) the officers of the Company shall consist of the officers set forth on Exhibit B hereto. The parties shall take such action as is necessary to structure the Board of Directors of the Company to satisfy applicable stock exchange and corporate governance requirements. Immediately after the Effective Time, the Company shall take, or cause to be taken, all action necessary to amend the Company Certificate (as defined) such that the Company shall be renamed Brazil Interactive Media, Inc. (the ''Name Change'').

 

3
 

Article II Exchange and Conversion of Securities; Reverse Split; Series G Conversion; Amendments

 

Section 2.1 Exchange and Conversion of Securities. At the Effective Time, by virtue of the Merger and without any action on the part of the Company, Merger Sub, BIMI or the holders of any of the following securities:

 

(a) Exchange of BIMI Common Stock for Company Series G Preferred Stock . Each share of common stock, par value $0.0001 per share, of BIMI (''BIMI Common Stock'') issued and outstanding immediately prior to the Effective Time, shall be exchanged for that number of shares of Series G Convertible Preferred Stock of the Company (''Company Series G Preferred'') equal to four to one (4 to 1) (the “Exchange Ratio”). Prior to the Effective Time, the Company Series G Preferred Stock into which such BIMI Common Stock will be exchanged in the Merger shall be issued according to the Series G Convertible Preferred Stock Schedule attached to this Agreement as Exhibit F. At the Effective Time, all such shares of BIMI Common Stock shall be tendered to Merger Sub.

 

(b) Merger Sub . Each share of common stock of Merger Sub issued and outstanding immediately prior to the Effective Time shall be converted into and be exchanged for one newly and validly issued, fully paid and nonassessable share of common stock of the Surviving Corporation.

 

(d) Conversion of Debt and Shares . The parties acknowledge and agree that the Exchange Ratio assumes that a conversion of all of the Company’s issued and outstanding Series A Common Stock, Series E Convertible Preferred Stock, and all outstanding Company convertible debt (subject to any exceptions in the Company Disclosure Schedule), to Company regular common stock (or to Company Series G Preferred issued according to Exhibit F), will have occurred prior to or upon the Effective Time. If between the date of this Agreement and the Effective Time the outstanding shares of Company stock shall have been further changed into a different number of shares or a different class so that the Company’s capitalization differs from that established in Section 3.3(a), by reason of any stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares, the Exchange Ratio shall be correspondingly adjusted to reflect such stock dividend, subdivision, reclassification, recapitalization, split, combination or exchange of shares. The Company Series C Convertible Preferred Stock shall be converted into Company regular common stock immediately upon execution of the actions described in Section 2.2(d) infra.

 

Section 2.2 Post-Merger Reverse Split and Series G Conversion.

 

(a) Post-Merger Reverse Split . As soon as practicable after the Effective Time, the Company shall effect a reverse stock split of all outstanding shares of Company Common Stock at a ratio of one-to-8,484.

4
 

 

(b) Series G Conversion . As soon as practicable after the Effective Time and the completion of the post-merger reverse split, the Company Series G Preferred Stock shall be converted into newly-authorized shares of Company Common Stock according to the terms of the Series G Convertible Preferred Stock Certificate of Designation attached to this Agreement as Exhibit E and as summarized in the Series G Convertible Preferred Stock Schedule attached to this Agreement as Exhibit F (the “Series G Conversion”).

 

(c) Further Rights in BIMI Common Stock or BIMI Preferred Stock . All shares of Company Series G Preferred issued upon conversion of the shares of BIMI Common Stock in accordance with the terms hereof shall be deemed to have been issued in full satisfaction of all rights pertaining to such shares of BIMI Common Stock.

 

(d) Post-Merger Amendments to Company Articles . Immediately after the reverse stock split and Series G Conversion have taken place, the Company shall take, or cause to be taken, all action necessary to amend the Company Certificate (as defined) such that the authorized capital stock of the Company shall consist of 100,000,000 shares of Company Common Stock, par value $0.00001 per share, and 5,000,000 shares of blank check preferred stock, par value $0.01 per share (the ''Company Preferred Stock'').

 

Section 2.3 Appraisal Rights. Notwithstanding anything in this Agreement to the contrary, shares of BIMI Common Stock and BIMI Preferred Stock outstanding immediately prior to the Effective Time and held by a stockholder who has not voted in favor of the Merger or consented thereto in writing and who has properly demanded appraisal for such shares in accordance with the DGCL, shall not be converted into a right to receive shares of Company Common Stock unless such stockholder fails to perfect or withdraws or otherwise loses such stockholder's right to appraisal. If, after the Effective Time such stockholder fails to perfect or withdraws or loses such stockholder's right to appraisal, such shares of BIMI Common Stock or BIMI Preferred Stock shall be treated as if they had been converted as of the Effective Time into the right to receive such consideration. BIMI shall give the Company prompt notice of any demands received by BIMI for appraisal of shares of BIMI Common Stock. BIMI shall not settle, make any payments with respect to, or offer to settle, any claim with respect to dissenting shares without the consent of the Company.

 

 

Article III Representations and Warranties of the Company and Merger Sub

 

Except as set forth in the Disclosure Schedule which identifies exceptions by specific section references delivered by the Company to BIMI prior to the execution of this Agreement (the ''Company Disclosure Schedule''), the Company and Merger Sub hereby jointly and severally represent and warrant to BIMI as follows:

5
 

Section 3.1 Organization and Qualification; Subsidiaries. The Company is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each subsidiary of the Company has been duly organized, and is validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be.

 

Section 3.2 Certificate of Incorporation and By-laws; Corporate Books and Records. The copies of the Company's Restated Certificate of Incorporation (the ''Company Certificate'') and Amended and Restated By-laws (the ''Company By-laws'') provided to BIMI are complete and correct copies thereof as in effect on the date hereof. The Company is not in violation of any of the provisions of the Company Certificate or the Company By-laws. True and complete copies of all minute books of the Company have been made available by the Company to BIMI.

 

Section 3.3 Capitalization

 

(a) As of the Effective Time, (A) 2,481,913,195 shares of Company Common Stock (other than treasury shares) will be issued and outstanding, all of which shall be validly issued and fully paid, nonassessable and free of preemptive rights, and (B) 2,518,086,805 shares of Company Common Stock will be held in the treasury of the Company. As of the Effective Time, 3,970,746 shares of Company Series G Convertible Preferred Stock (the “Company Series G Preferred”) will be issued and outstanding, and no shares of Company Series A Common Stock will be issued or outstanding. The Company Series G Preferred shall have the powers, preferences and rights established by the certificate of designation attached to this Agreement as Exhibit D, and the issued and outstanding Company Series G Preferred shall be distributed as shown in the schedule attached to this Agreement as Exhibit F. All capital stock or other equity securities of the Company have been issued in compliance with applicable federal and state securities laws.

 

(b) There are no options, warrants or other rights, agreements, arrangements or commitments of any character to which the Company or any of its subsidiaries is a party or by which the Company or any of its subsidiaries is bound relating to the issued or unissued capital stock or other equity interests of the Company or any of its subsidiaries, or securities convertible into or exchangeable for such capital stock or other equity interests, or obligating the Company or any of its subsidiaries to issue or sell any shares of its capital stock or other equity interests, or securities convertible into or exchangeable for such capital stock of, or other equity interests in, the Company or any of its subsidiaries.

 

(c) Other than as disclosed in Exhibit C [Disclosure Schedule] attached, there are no outstanding contractual obligations of the Company or any of its subsidiaries (A) restricting the transfer of, (B) affecting the voting rights of, (C) requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (D) requiring the registration for sale of, or (E) granting any preemptive or antidilutive right with respect to, any shares of Company Common Stock, Company Series G Preferred, or any capital stock of, or other equity interests in, the Company or any of its subsidiaries. Each outstanding share of capital stock of each

6
 

subsidiary of the Company is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by the Company or another of its subsidiaries, free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on the Company's or such other of its subsidiary's voting rights, charges and other encumbrances of any nature whatsoever. There are no outstanding contractual obligations of the Company or any of its subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any of its subsidiaries or any other person, other than guarantees by the Company of any indebtedness or other obligations of any wholly-owned subsidiary.

 

(d) Other than as disclosed in Exhibit C [Disclosure Schedule] attached, the Company does not have outstanding any bonds, debentures, notes, or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of the Company on any matter. The Company has not adopted a stockholder rights plan.

 

Section 3.4 Authority.

 

(a) Each of the Company and Merger Sub has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by the Company and Merger Sub and the consummation by the Company and Merger Sub of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of the Company or Merger Sub and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by each of the Company and Merger Sub and constitutes a legal, valid and binding obligation of each of the Company and Merger Sub, enforceable against each of the Company and Merger Sub in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

 

(b) The Board of Directors of the Company (the ''Company Board''), by resolutions duly adopted by unanimous vote at a meeting duly called and held and not subsequently rescinded or modified in any way (the ''Company Board Approval''), has duly (i) determined that this Agreement and the transactions contemplated hereby (including the Merger) are advisable and fair to and in the best interests of the Company and its stockholders, and (ii) approved and adopted this Agreement, and the transactions contemplated hereby (including the Merger). The Company Board Approval constitutes approval of this Agreement and the Merger as required under any applicable state takeover Law and no such state takeover Law is applicable to the Merger or the other transactions contemplated hereby, including, without limitation, the restrictions on business combinations contained in Section 203 of the DGCL.

7
 

 

(c) Merger Sub's Board of Directors, at a meeting duly called and held, has (i) determined that this Agreement and the transactions contemplated hereby (including the Merger) are advisable and fair to and in the best interests of the Company, as Merger Sub's sole stockholder, (ii) approved and adopted this Agreement and the transactions contemplated hereby (including the Merger) and (iii) recommended that the Company approve and adopt this Agreement and the transactions contemplated hereby (including the Merger).

 

Section 3.5 No Conflict; Required Filings and Consents.

 

(a) The execution and delivery of this Agreement by each of the Company and Merger Sub does not, and the performance of this Agreement by each of the Company and Merger Sub will not, (A) (assuming the Company Stockholder Approval is obtained) conflict with or violate any provision of the Company Certificate or Company By-laws or any equivalent organizational documents of any of its Subsidiaries (including Merger Sub), (B) (assuming that all consents, approvals, authorizations and permits described in Section 3.5(b) have been obtained and all filings and notifications described in Section 3.5(b) have been made and any waiting periods thereunder have terminated or expired) conflict with or violate any Law applicable to the Company or any of its subsidiaries.

 

(b) The execution and delivery of this Agreement by each of the Company and Merger Sub does not, and the performance of this Agreement by each of the Company and Merger Sub will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or any other person, except (A) under the Exchange Act, the Securities Act, applicable Blue Sky Law and the filing and recordation of the Certificate of Merger as required by the DGCL and (B) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a material adverse effect.

 

Section 3.6 Ownership of Merger Sub; No Prior Activities. Merger Sub is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Merger Sub is a direct wholly-owned subsidiary of the Company. Merger Sub has not conducted any activities other than in connection with the organization of Merger Sub, the negotiation and execution of this Agreement and the consummation of the transactions contemplated hereby. Merger Sub has no Subsidiaries.

 

Section 3.7 Financials.

 

(a) The consolidated financial statements of the Company as of the period ending September 30, 2012, audited through June 30, 2012 (including the notes thereto) provided by the Company to BIMI (the “Company Financial Statements”) were prepared in accordance with GAAP applied (except as may be indicated in the notes thereto) on a consistent basis throughout the periods

8
 

indicated (except as may be indicated in the notes thereto), and present fairly the consolidated financial position, results of operations and cash flows of the Company and the consolidated subsidiaries of the Company as of the respective dates thereof and for the respective periods indicated therein. The books and records of the Company and each of its subsidiaries have been, and are being, maintained in accordance with applicable material legal and accounting requirements.

 

(b) Except as and to the extent set forth on the consolidated balance sheet of the Company and its consolidated subsidiaries included in the Company’s Financial Statements, none of the Company or any of its consolidated subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet or in notes thereto prepared in accordance with GAAP, except for normal year-end adjustments and liabilities or obligations incurred in the ordinary course of business that would not, individually or in the aggregate, have a material adverse effect.

 

Article IV Representations and Warranties of BIMI

 

Except as set forth in the Disclosure Schedule which identifies exceptions by specific section references delivered by BIMI to the Company prior to the execution of this Agreement (the ''BIMI Disclosure Schedule''), BIMI hereby represents and warrants to the Company as follows:

 

Section 4.1 Organization and Qualification; Subsidiaries. BIMI is a corporation duly organized, validly existing and in good standing under the laws of the State of Delaware. Each subsidiary of BIMI has been duly organized, and is validly existing and in good standing under the laws of the jurisdiction of its incorporation or organization, as the case may be. BIMI and each of its subsidiaries has the requisite power and authority and all necessary governmental approvals to own, lease and operate its properties and to carry on its business as it is now being conducted. BIMI and each of its subsidiaries is duly qualified or licensed to do business, and is in good standing, in each jurisdiction where the character of the properties owned, leased or operated by it or the nature of its business makes such qualification, licensing or good standing necessary, except for such failures to be so qualified, licensed or in good standing that would not, individually or in the aggregate, have a material adverse effect.

 

Section 4.2 Certificate of Incorporation and By-laws; Corporate Books and Records. The copies of BIMI's Certificate of Incorporation (the ''BIMI Certificate'') and By-laws (the ''BIMI By-laws'') as provided to the Company are complete and correct copies thereof as in effect on the date hereof. BIMI is not in violation of any of the provisions of the BIMI Certificate or the BIMI By-laws. True and complete copies of all minute books of BIMI have been made available by BIMI to the Company.

 

9
 

Section 4.3 Capitalization

 

(a) The authorized capital stock of BIMI consists of 80,000,000 shares of BIMI Common Stock and 20,000,000 shares of Preferred Stock. As of the Effective Time, (A) 935,000 shares of BIMI Common Stock (other than treasury shares) were issued and outstanding, all of which were validly issued and fully paid, nonassessable and free of preemptive rights, (B) no shares of BIMI Common Stock were held in the treasury of BIMI or by its Subsidiaries. All capital stock or other equity securities of BIMI have been issued in compliance with applicable federal and state securities laws.

 

(b) As of the Effective Time, there were no options, warrants or other rights, agreements, arrangements or commitments of any character to which BIMI or any of its subsidiaries is a party or by which BIMI or any of its subsidiaries is bound relating to the issued or unissued capital stock or other equity interests of BIMI or any of its subsidiaries, or securities convertible into or exchangeable for such capital stock or other equity interests, or obligating BIMI or any of its subsidiaries to issue or sell any shares of its capital stock or other equity interests, or securities convertible into or exchangeable for such capital stock of, or other equity interests in, BIMI or any of its subsidiaries. BIMI has not issued any shares of its capital stock, or securities convertible into or exchangeable for such capital stock or other Equity Interests, other than those shares of capital stock reserved for issuance as set forth in this Section 4.3 or Section 4.3 of the BIMI Disclosure Schedule. BIMI has previously provided the Company with a true and complete list, as of the date hereof, of the shareholders of BIMI.

 

(c) There are no outstanding contractual obligations of BIMI or any of its subsidiaries (A) restricting the transfer of, (B) affecting the voting rights of, (C) requiring the repurchase, redemption or disposition of, or containing any right of first refusal with respect to, (D) requiring the registration for sale of, or (E) granting any preemptive or antidilutive right with respect to, any shares of BIMI Common Stock or any capital stock of, or other equity interests in, BIMI or any of its subsidiaries. Each outstanding share of capital stock of each Subsidiary of BIMI is duly authorized, validly issued, fully paid, nonassessable and free of preemptive rights and is owned, beneficially and of record, by BIMI or another of its subsidiaries, free and clear of all security interests, liens, claims, pledges, options, rights of first refusal, agreements, limitations on BIMI's or such other of its subsidiary's voting rights, charges and other encumbrances of any nature whatsoever. There are no outstanding contractual obligations of BIMI or any of its subsidiaries to provide funds to, or make any investment (in the form of a loan, capital contribution or otherwise) in, any of its subsidiaries or any other person, other than guarantees by BIMI of any indebtedness or other obligations of any wholly-owned subsidiary.

 

(d) BIMI does not have outstanding any bonds, debentures, notes, or other obligations the holders of which have the right to vote (or convertible into or exercisable for securities having the right to vote) with the stockholders of BIMI on any matter. BIMI has not adopted a stockholders rights plan.

10
 

Section 4.4 Authority.

 

(a) BIMI has all necessary corporate power and authority to execute and deliver this Agreement, to perform its obligations hereunder and to consummate the transactions contemplated by this Agreement. The execution and delivery of this Agreement by BIMI and the consummation by BIMI of the transactions contemplated hereby have been duly and validly authorized by all necessary corporate action and no other corporate proceedings on the part of BIMI and no stockholder votes are necessary to authorize this Agreement or to consummate the transactions contemplated hereby. This Agreement has been duly authorized and validly executed and delivered by BIMI and constitutes a legal, valid and binding obligation of BIMI, enforceable against BIMI in accordance with its terms, subject to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and similar laws of general applicability relating to or affecting creditors' rights and to general equity principles.

 

(b) The Board of Directors of BIMI (the ''BIMI Board''), by resolutions duly adopted by unanimous vote of the directors present at a meeting duly called and held and not subsequently rescinded or modified in any way (the ''BIMI Board Approval''), has duly (i) declared that this Agreement and the transactions contemplated hereby (including the Merger) are advisable and fair to and in the best interests of BIMI and its stockholders, and (ii) approved and adopted this Agreement and the transactions contemplated hereby (including the Merger) and (iii) resolved to recommend that the stockholders of BIMI adopt this Agreement and vote for the approval of the Merger and directed that this Agreement and the transactions contemplated hereby be submitted for consideration by BIMI's stockholders in accordance with this Agreement.

 

Section 4.5 No Conflict; Required Filings and Consents.

 

(a) The execution and delivery of this Agreement by BIMI does not, and the performance of this Agreement by BIMI will not, (A) (assuming the BIMI Stockholder Approval is obtained) conflict with or violate any provision of the BIMI Certificate or BIMI By-laws or any equivalent organizational documents of any of its subsidiaries, (B) (assuming that all consents, approvals, authorizations and permits described in Section 4.5(b) have been obtained and all filings and notifications described in Section 4.5(b) have been made and any waiting periods thereunder have terminated or expired) conflict with or violate any Law applicable to BIMI or any of its subsidiaries or by which any property or asset of BIMI or any of its subsidiaries is bound or affected or (C) require any consent or approval under, result in any breach of or any loss of any benefit under, constitute a change of control or default (or an event which with notice or lapse of time or both would become a default) under or give to others any right of termination, vesting, amendment, acceleration or cancellation of, or result in the creation of a lien or other encumbrance on any property or asset of BIMI or any of its subsidiaries pursuant to, any contract or other instrument or obligation, except, with respect to clauses (B) and (C), for any such conflicts, violations, consents, approvals, breaches, losses, defaults or other occurrences which would not, individually or in the aggregate, have a material adverse effect.

11
 

 

(b) The execution and delivery of this Agreement by BIMI does not, and the performance of this Agreement by BIMI will not, require any consent, approval, authorization or permit of, or filing with or notification to, any Governmental Entity or any other person, except (A) under the Exchange Act, the Securities Act, applicable Blue Sky Law and the filing and recordation of the Certificate of Merger as required by the DGCL and (B) where failure to obtain such consents, approvals, authorizations or permits, or to make such filings or notifications, would not, individually or in the aggregate, have a material adverse effect.

 

Section 4.6 Financial Statements.

 

(a) The audited consolidated financial statements as of the period ending December 31, 2012 (including the notes thereto) provided to the Company (the “BIMI Financial Statements”) were prepared in accordance with GAAP applied (except as may be indicated in the notes thereto) on a consistent basis throughout the periods indicated (except as may be indicated in the notes thereto), and present fairly the consolidated financial position, results of operations and cash flows of BIMI and the consolidated subsidiaries of BIMI as of the respective dates thereof and for the respective periods indicated therein. The books and records of BIMI and each of its subsidiaries have been, and are being, maintained in accordance with applicable material legal and accounting requirements.

 

(b) Except as and to the extent set forth on the consolidated balance sheet of BIMI and its consolidated subsidiaries included in the BIMI Financial Statements, none of BIMI or any of its consolidated subsidiaries has any liabilities or obligations of any nature (whether accrued, absolute, contingent or otherwise) that would be required to be reflected on a balance sheet or in notes thereto prepared in accordance with GAAP, except for normal year-end adjustments and liabilities or obligations incurred in the ordinary course of business that would not, individually or in the aggregate, have a material adverse effect.

 

Section 4.7 Brokers. No broker, finder or investment banker is entitled to any brokerage, finder's or other fee or commission in connection with the Merger based upon arrangements made by or on behalf of BIMI or any of its subsidiaries.

 

Section 4.8 Tax Treatment. None of BIMI, any of its subsidiaries or any of BIMI's affiliates has taken or agreed to take any action that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code. BIMI is not aware of any agreement, plan or other circumstance that would prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

 

Section 4.9 Litigation. Except as and to the extent disclosed, (a) there is no suit, claim, action, proceeding or investigation pending or, to the knowledge of BIMI, threatened in writing against BIMI or any of its subsidiaries or for which BIMI or any of its subsidiaries is obligated to

12
 

indemnify a third party and (b) neither BIMI nor any of its subsidiaries is subject to any outstanding and unsatisfied order, writ, injunction, decree or arbitration ruling, award or other finding. There is no suit, claim, action, proceeding or investigation pending or, to the knowledge of BIMI, threatened in writing against BIMI or any of its subsidiaries that, as of the date hereof, challenges the validity or propriety, or seeks to prevent consummation of, the Merger or any other transaction contemplated by this Agreement.

 

Section 4.10 Vote Required. The affirmative vote of the holders of a majority of the outstanding shares of BIMI Common Stock are the only votes of the holders of any class or series of capital stock or other equity eecurities of BIMI necessary to approve this Agreement and the transactions contemplated hereby, including the Merger (the ''BIMI Stockholder Approval'').

 

Article V Covenants

 

Section 5.1 Tax-Free Reorganization Treatment

 

(a) The Company and BIMI shall use their commercially reasonable best efforts, and shall cause their respective Subsidiaries to use their commercially reasonable best efforts, to take or cause to be taken any action necessary for the Merger to qualify as a reorganization within the meaning of Section 368(a) of the Code. Neither the Company nor BIMI shall, nor shall they permit any of their respective Subsidiaries to, take or cause to be taken any action that could reasonably be expected to prevent the Merger from qualifying as a reorganization within the meaning of Section 368(a) of the Code.

 

(b) This Agreement is intended to constitute, and the parties hereto hereby adopt this Agreement as, a ''plan of reorganization'' within the meaning Treasury Regulation Sections 1.368-2(g) and 1.368-3(a). Each of the Company and BIMI shall report the Merger as a reorganization within the meaning of Section 368 of the Code, unless otherwise required pursuant to a ''determination'' within the meaning of Section 1313(a) of the Code.

 

Article VI Closing Conditions

 

Section 6.1 Conditions to Obligations of Each Party Under This Agreement. The respective obligations of each party to effect the Merger and the other transactions contemplated herein shall be subject to the satisfaction at or prior to the Effective Time of the following conditions, any or all of which may be waived, in whole or in part, to the extent permitted by applicable Law:

 

(a) Stockholder Approva l . The Company Stockholder Approval and the BIMI Stockholder Approval shall have been obtained.

 

(b) No Order . No governmental entity, nor any federal or state court of competent jurisdiction or

13
 

arbitrator shall have enacted, issued, promulgated, enforced or entered any statute, rule, regulation, executive order, decree, judgment, injunction or arbitration award or finding or other order (whether temporary, preliminary or permanent), in any case which is in effect and which prevents or prohibits consummation of the Merger or any other transactions contemplated in this Agreement.

 

(c) Consents and Approvals . All material consents, approvals and authorizations of any governmental entity required of BIMI, the Company or any of their subsidiaries shall have been obtained.

 

(d) Execution and Delivery of Lock-Up and Leak-Out Agreements . Each stockholder listed on attached Schedule F shall execute and deliver to the Company a Lock-Up and Leak-Out agreement on or prior to the Effective Time. A stockholder shall not receive its respective certificate evidencing its shares of Company Common Stock unless and until it has executed and delivered its Lock-Up and Leak-Out agreement to the Company.

 

Section 6.2 Additional Conditions to Obligations of the Company and Merger Sub. The obligations of the Company and Merger Sub to effect the Merger and the other transactions contemplated herein are also subject to the following conditions:

 

(a) Representations and Warranties . The representations and warranties of BIMI contained in this Agreement shall be true and correct (without giving effect to any limitation as to materiality set forth therein) at and as of the Effective Time as if made at and as of such time, except where the failure of such representations and warranties to be true and correct would not, individually or in the aggregate, have a material adverse effect.

 

(b) Agreements and Covenants . BIMI shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by it on or prior to the Effective Time.

 

Section 6.3 Additional Conditions to Obligations of BIMI. The obligation of BIMI to effect the Merger and the other transactions contemplated herein are also subject to the following conditions:

 

(a) Representations and Warranties . The representations and warranties of the Company and Merger Sub contained in this Agreement shall be true and correct at and as of the Effective Time.

 

(b) Agreements and Covenants . The Company and Merger Sub shall have performed or complied in all material respects with all agreements and covenants required by this Agreement to be performed or complied with by each of them on or prior to the Effective Time.

 

(c) Consents and Approvals . All material consents, approvals and authorizations of any person

14
 

other than a Governmental Entity required to be set forth in Section 3.5 or Section 4.5 or the related sections of the Company Disclosure Schedule or the BIMI Disclosure Schedule, as applicable, shall have been obtained.

 

Article VII Termination, Amendment and Waiver

 

Section 7.1 Termination. This Agreement may be terminated, and the Merger contemplated hereby may be abandoned, at any time prior to the Effective Time, by action taken or authorized by the Board of Directors of the terminating party or parties, whether before or after approval of the matters presented in connection with the Merger by the stockholders of the Company or the stockholders of BIMI:

 

(a) By mutual written consent of BIMI and the Company, by action of their respective Boards of Directors;

 

(b) By either the Company or BIMI if the Merger shall not have been consummated prior to May 31, 2013 (such date, the ''Outside Date''); provided, however, that the right to terminate this Agreement under this Section 7.1(b) shall not be available to any party whose failure to fulfill any obligation under this Agreement (including without limitation such party's obligations set forth in Section 5.7) has been the cause of, or resulted in, the failure of the Effective Time to occur on or before the Outside Date;

 

(c) By either the Company or BIMI if any governmental entity shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the transactions contemplated by this Agreement, and such order, decree, ruling or other action shall have become final and nonappealable (which order, decree, ruling or other action the parties shall have used their commercially reasonable best efforts to resist, resolve or lift, as applicable, subject to the provisions of Section 5.7);

 

(d) By written notice of BIMI (if BIMI is not in material breach of its obligations or its representations and warranties under this Agreement), if there has been a breach by the Company or Merger Sub of any representation, warranty, covenant or agreement contained in this Agreement which (i) would result in a failure of a condition set forth in Section 6.3(a) or 6.3(b) and (ii) cannot be cured prior to the Outside Date; provided that BIMI shall have given the Company written notice, delivered at least twenty (20) days prior to such termination, stating BIMI's intention to terminate this Agreement pursuant to this Section 7.1(d) and the basis for such termination;

 

(e) By written notice of the Company (if the Company is not in material breach of its obligations or its representations and warranties under this Agreement), if there has been a breach by BIMI of any representation, warranty, covenant or agreement contained in this Agreement which (i) would result in a failure of a condition set forth in Section 6.2(a) or 6.2(b) and (ii) cannot be

15
 

cured prior to the Outside Date; provided that the Company shall have given BIMI written notice, delivered at least twenty (20) days prior to such termination, stating the Company's intention to terminate this Agreement pursuant to this Section 7.1(e) and the basis for such termination; or

 

(h) By written notice of either BIMI or the Company if (i) the Company Stockholder Approval shall not have been obtained at the Company Stockholders' Meeting duly convened therefor (or at any adjournment or postponement thereof), or (ii) the BIMI Stockholder Approval shall not have been obtained at the BIMI Stockholders' Meeting duly convened therefor (or at any adjournment or postponement thereof).

 

Section 7.2 Effect of Termination. Limitation on Liability . In the event of termination of this Agreement by either BIMI or the Company as provided in Section 7.1, this Agreement shall forthwith become void and there shall be no liability or obligation on the part of BIMI or the Company or their respective subsidiaries, officers or directors except (x) with respect to this Section 7.2 and Article VIII and (y) with respect to any liabilities or damages incurred or suffered by a party as a result of the willful and material breach by the other party of any representations, warranties, covenants or other agreements set forth in this Agreement.

 

Section 7.3 Amendment. To the extent permitted by applicable Law, this Agreement may be amended by the parties, by action taken or authorized by their respective Boards of Directors, at any time before or after approval of the matters presented in connection with the Merger by the stockholders of BIMI and the Company; provided , that after any such approval, no amendment shall be made that by law requires further approval by the Company's or BIMI's stockholders, as the case may be, without such further approval. This Agreement may not be amended except by an instrument in writing signed on behalf of each of the parties.

 

Section 7.4 Waiver. At any time prior to the Effective Time, any party hereto may (a) extend the time for the performance of any of the obligations or other acts of the other party hereto, (b) waive any inaccuracies in the representations and warranties of the other party contained herein or in any document delivered pursuant hereto, and (c) waive compliance by the other party with any of the agreements or conditions contained herein.

 

Section 7.5 Fees and Expenses. Subject to Section 7.2(a), Section 7.2(b) and Section 7.2(c) hereof, all expenses incurred by the parties hereto shall be borne solely and entirely by the party which has incurred the same (including, but not limited to, fees and expenses of counsel, accountants, investment bankers and other advisors).

 

Article VIII General Provisions

 

Section 8.1 Non-Survival of Representations and Warranties. None of the representations and

16
 

warranties in this Agreement or in any instrument delivered pursuant to this Agreement shall survive the Effective Time. This Section 8.1 shall not limit any covenant or agreement of the parties which by its terms contemplates performance after the Effective Time.

 

Section 8.2 Notices. Any notices or other communications required or permitted under, or otherwise in connection with this Agreement, shall be in writing and shall be deemed to have been duly given when delivered in person or upon confirmation of receipt when transmitted by facsimile transmission (but only if followed by transmittal by national overnight courier or hand for delivery on the next business day) or on receipt after dispatch by registered or certified mail, postage prepaid, addressed, or on the next business day if transmitted by national overnight courier, in each case as follows:

 

If to BIMI, addressed to it at:

 

Brazil Interactive Media, Inc.

Attention: T. Psomiadis

151 W. Passaic Street

Rochelle Park, NJ 07662

 

with a copy to:

 

Alan T. Hawkins, Esq.

2106 NW 4th Place

Gainesville, FL 32603

 

If to the Company or Merger Sub, addressed to it at:

 

NatureWell, Incorporated

Attention: Michael Novielli

50 Commonwealth Ave., Suite 2

Boston, MA 02116

 

with a copy to:

 

Thompson Hine LLP

Attention: Peter Gennuso, Esq.

335 Madison Avenue

New York, New York 10017

 

Section 8.3 Headings. The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement.

17
 

 

Section 8.6 Severability. If any term or other provision of this Agreement is invalid, illegal or incapable of being enforced by any rule of Law or public policy, all other conditions and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner materially adverse to any party. Upon such determination that any term or other provision is invalid, illegal or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that transactions contemplated hereby are fulfilled to the extent possible.

 

Section 8.7 Entire Agreement. This Agreement (together with the Exhibits, BIMI Disclosure Schedule and Company Disclosure Schedule and the other documents delivered pursuant hereto)constitutes the entire agreement of the parties and supersedes all prior agreements and undertakings, both written and oral, between the parties, or any of them, with respect to the subject matter hereof, and except as otherwise expressly provided herein, is not intended to confer upon any other person any rights or remedies hereunder.

 

Section 8.11 Governing Law; Consent to Jurisdiction; Waiver of Trial by Jury.

 

(a) This Agreement shall be governed by, and construed in accordance with, the Laws of the State of Delaware, without regard to laws that may be applicable under conflicts of laws principles.

 

(b) Each of the parties hereto hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Delaware State court, or Federal court of the United States of America, sitting in Delaware, and any appellate court from any thereof, in any action or proceeding arising out of or relating to this Agreement or the agreements delivered in connection herewith or the transactions contemplated hereby or thereby or for recognition or enforcement of any judgment relating thereto, and each of the parties hereby irrevocably and unconditionally (A) agrees not to commence any such action or proceeding except in such courts, (B) agrees that any claim in respect of any such action or proceeding may be heard and determined in such Delaware State court or, to the extent permitted by law, in such Federal court, (C) waives, to the fullest extent it may legally and effectively do so, any objection which it may now or hereafter have to the laying of venue of any such action or proceeding in any such Delaware State or Federal court and (D) waives, to the fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of such action or proceeding in any such Delaware State or Federal court. Each of the parties hereto agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party to this Agreement irrevocably consents to service of process in the manner provided for notices in Section 8.2. Nothing in this Agreement will affect the right of any party to this Agreement to serve process in any other manner permitted by Law.

18
 

 

Section 8.13 Counterparts. This Agreement may be executed in one or more counterparts, and by the different parties hereto in separate counterparts, each of which when executed shall be deemed to be an original but all of which taken together shall constitute one and the same agreement.

 

 

 

 

 

 

[ Remainder of page intentionally left blank ]

 

 

 

 

 

 

 

 

 

19
 

IN WITNESS WHEREOF, the Company, Merger Sub and BIMI have caused this Agreement to be executed as of the date first written above by their respective officers thereunto duly authorized.

 

NatureWell, Incorporated

 

By: James R. Arabia

 

 

_________________________

a duly authorized signatory

 

 

BIMI Acquisition Corp.

 

By: Michael Novielli

 

 

_________________________

a duly authorized signatory

 

 

Brazil Interactive Media, Inc.

 

By: Themistocles Psomiadis

 

 

_________________________

a duly authorized signatory

 

 

20
 

 

EXHIBIT A

DIRECTORS AND OFFICERS OF THE SURVIVING CORPORATION

 

Directors:

 

Themistocles Psomiadis

 

Officers:

 

Themistocles Psomiadis President & Treasurer

Alan T. Hawkins Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

21
 

 

EXHIBIT B

BOARD OF DIRECTORS AND OFFICERS OF THE COMPANY

 

Directors:

 

Themistocles Psomiadis

Michael Novielli

Douglas H. Leighton

 

Officers:

 

Themistocles Psomiadis Chief Executive Officer and Chairman of the Board

Jesus M. Quintero Chief Financial Officer

Alan T. Hawkins Secretary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

22
 

 

 

23
 

 

 

 

24
 

 

 

 

25
 

 

 

26
 

 

 

 

BIMI DISCLOSURE SCHEDULE ZERO

 

 

 

 

 

 

27
 

EXHIBIT D

CERTIFICATE OF DESIGNATION OF

SERIES G CONVERTIBLE PREFERRED STOCK

CERTIFICATE OF DESIGNATION

of

SERIES G CONVERTIBLE PREFERRED STOCK

Of

NatureWell, Incorporated

 

NatureWell, Incorporated, a corporation organized and existing under the General Corporation Law of the State of Delaware (the "Corporation"),

 

DOES HEREBY CERTIFY:

 

THAT, pursuant to the authority conferred upon the board of directors by the Certificate of Incorporation (as restated) of this Corporation and Section 151 of Title 8 of the Delaware Code; the board of directors has duly adopted the following resolution:

 

RESOLVED, that, pursuant to the authority expressly granted to and vested in the board of directors of this Corporation by the provisions of its Certificate of Incorporation, the board of directors hereby creates a series of Preferred Stock to consist of 4,000,000 of the 15,000,000 shares of Preferred Stock, $.01 par value per share, which this Corporation now has authority to issue, and the board of directors hereby fixes the designation, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, of the shares of such series (in addition to the designation, powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations or restrictions thereof, set forth in the Certificate of Incorporation of this Corporation which are applicable to Preferred Stock of all series) as follows:

 

1. Designation. The distinctive designation of such series shall be the Series G Convertible Preferred Stock (the “Series G Preferred Stock”).

 

2. Number of Shares. The number of shares, which shall constitute such series, shall be 4,000,000 shares, which number may not be increased or decreased in part without the prior written consent of a majority of the outstanding Series G Preferred Stock.

 

3. Dividends.

 

(a) The Corporation shall not be required to pay any dividend on the Series G Preferred Stock. However, so long as the Series G Preferred is outstanding, no dividends whatever shall be paid or declared, nor shall any distribution be made, on any Junior Stock, other than a dividend or distribution payable in Junior Stock or warrants or other rights to purchase Junior Stock, without the prior written consent of a majority of the outstanding Series G Preferred Stock.

 

 

4. Liquidation Rights. The Series G Preferred Stock shall have no liquidation preference over any Junior Stock.

 

5. Voting Rights. Except as otherwise provided by law or the Certificate of Incorporation, each share of the Series G Preferred Stock shall be entitled to cast a vote for all matters that are presented to the Corporation’s shareholders for a vote, whether by shareholder meeting (annual or special) or by

28
 

written consent, equal to 1 vote for each share of Common Stock that the Series G Preferred Stock is entitled to convert into at the time of such vote. For example; if 1 share of Series G Preferred Stock is entitled to convert into 84,840 shares of Common Stock at the time of a shareholder vote, then each share of Series G Preferred Stock is entitled to cast 84,840 votes, regardless of whether the Corporation has a sufficient number of authorized, but unissued, Common Stock available for the Series G Preferred Stock to convert into at the time of such vote.

 

6. Conversion Rights. All outstanding shares of the Series G Preferred Stock shall convert into fully paid and non-assessable Common Stock of the Corporation upon the terms and conditions of this section;

 

(a) For the purposes of this Section 6, each share of Series G Preferred Stock shall be convertible into 84,840 shares of the Corporation’s Common Stock.

 

(b) In case at any time the Common Stock outstanding shall be combined into a lesser number of shares, whether by reclassification, recapitalization, reduction of capital stock, whether referred to as a “reverse split” or otherwise, or other corporate action of similar or different kind, then the amount of common shares that the Series G Preferred shall be convertible into shall be proportionately decreased.

 

(c) In case at any time any Common Stock shall be issued, or be deemed to have been issued, as a dividend on outstanding Common Stock or shall be issued upon subdivision, reclassification, recapitalization, whether referred to as a “stock split” or otherwise, the amount of common shares that the Series G Preferred shall be convertible into shall be proportionately increased.

 

(d) In case at any time any warrants, rights or any other security which is declared or issued to the holders of Common Stock or which Common Stock holders have the right to acquire, the Series G Preferred Stock shall automatically be entitled to such rights and/or the receipt of such rights or warrants or other instrument in the same proportion as if the Series G Preferred Stock had been converted on the day such right, warrant or security was declared without having to convert the Series G Preferred Stock.

 

(e) At such time that the Corporation has a sufficient number of authorized and unissued shares of Common Stock available to facilitate the conversion into Common Stock of all outstanding shares of the Series G Preferred Stock, the conversion of the Series G Preferred Stock into Common Stock shall automatically occur one (1) business day following the date that such sufficient number of authorized and unissued shares of Common Stock becomes available, at the conversion rate that is in effect at that time (the “Forced Conversion”). The Corporation shall effect a Forced Conversion by delivering to each holder of Series G Preferred a notice (the “Notice of Forced Conversion”) informing each holder of the date that the Forced Conversion became effective (the “Effective Date”) and that their Series G Preferred Stock certificate or certificates are rendered null and void as of the Effective Date. All Series G Preferred certificates shall be rendered null and void as of the Effective Date of a Forced Conversion. Following a Forced Conversion the Corporation shall deliver to each holder of Series G Preferred Stock the shares of Common Stock that each holder is entitled to receive upon a Forced Conversion within thirty (30) days of the Effective Date of the Forced Conversion.

 

(f) Each share of Series G Preferred Stock shall be convertible, at the sole option of the holder thereof, into share(s) of the Corporation’s Common Stock, at any time after April 1, 2013. Such (voluntary) conversion of Series G Preferred Stock into Common Stock shall be made by the

29
 

surrender to the Corporation of the certificate or certificates representing the Series G Preferred Stock to be converted, duly endorsed or assigned (unless such endorsement or assignment is waived by the Corporation), together with a written request for conversion.

 

(g) All Series G Preferred Stock which shall have been surrendered for conversion or been the subject of a Forced Conversion as herein provided shall no longer be deemed to be outstanding and all rights with respect to such shares of stock, including the rights, if any, to receive notices and to vote, shall forthwith cease except only the rights of the holders thereof to receive Common Stock in exchange therefor. Any Series G Preferred Stock so converted shall be permanently retired, shall no longer be deemed outstanding and shall not be reissued.

 

(h) The Corporation shall promptly take all actions necessary to provide for a number of authorized shares of Common Stock sufficient to provide for the conversion of the Series G Preferred Stock outstanding upon the basis hereinbefore provided, and thereafter shall at all times be reserved for such conversion. If the Corporation shall propose to issue any securities or to make any change in its capital structure which would change the number of shares of Common Stock into which each share of Series G Preferred Stock shall be convertible as herein provided, the Corporation shall at the same time also make proper provision so that thereafter there shall be a sufficient number of shares of Common Stock authorized and reserved for conversion of the outstanding Series G Preferred Stock on the new basis.

 

(i) The term "Common Stock" as used in this Section 6 shall mean stock of the class designated as regular Common Stock of the Corporation on the date the Series G Preferred Stock is created.

 

7. Definitions. For the purposes of this resolution, the following terms shall have the meanings indicated.

 

(a) The term "Preferred Stock" means the class of 15,000,000 shares of Preferred stock, par value $.01 per share, authorized for issuance by the Certificate of Incorporation of this Corporation.

 

(b) The term "Junior Stock" means (i) Common Stock, and (ii) all those classes and series of preferred or special stock and all those series of Preferred Stock, by the terms of the Certificate of Incorporation or of the instrument by which the board of directors, acting pursuant to authority granted in the Certificate of Incorporation, shall designate the special rights and limitations of each such class and series of preferred or special stock or series of Preferred Stock, which shall be subordinate to Series G Preferred Stock with respect to the right of the holders thereof to receive dividends or to participate in the assets of this Corporation distributable to stockholders upon any liquidation, dissolution or winding up of this Corporation.

 

8. General. The section headings contained in this resolution are for reference purposes only and shall not affect in any way the meaning of this resolution.

 

30
 

IN WITNESS WHEREOF, the Corporation has caused this Certificate of Designation to be executed as of the 12th day of March 2013, by an officer thereunto duly authorized.

 

NatureWell, Incorporated

 

 

 

By: ______________________________

James R. Arabia, Chief Executive Officer

 

 

31
 

 

Exhibit 99.1

 

 

 

 

 

 

 

 

 

 

 

 

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

Index to Consolidated Financial Statements

 

 

 

    Pages
     
Report of Independent Registered Public Accounting Firm   1
     
Consolidated Balance Sheets   2
     
Consolidated Income Statements   3
     
Consolidated Statement of Stockholders’ Equity   4
     
Consolidated Statements of Cash Flows   5
     
Notes to Consolidated Financial Statements   6 – 17
     

 

 

2
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

To the Board of Directors

Brazil Interactive Media, Inc. and its subsidiary

 

We have audited the accompanying consolidated balance sheets of Brazil Interactive Media, Inc. and its subsidiary (“the Company”) as of December 31, 2012 and 2011 and the related consolidated statements of income, stockholders’ equity, and consolidated cash flows for the years ended December 31, 2012 and 2011 . These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

 

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

 

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Brazil Interactive Media, Inc. and its subsidiary as of December 31, 2012 and 2011, and the results of its operations, changes in stockholders’ equity and cash flows for the years ended December 31, 2012 and 2011 in conformity with accounting principles generally accepted in the United States of America.

 

 

/ Bongiovanni & Associates, CPA’s/

Bongiovanni & Associates, CPA’s

Certified Public Accountants

Cornelius, North Carolina

The United States of America

February 27, 2013

 

 

 

 

 

3
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2012 AND 2011
                 
ASSETS     2012       2011  
Current assets:                
   Cash   $ 146,331     $ 193,255  
   Accounts receivable     484,982       161,005  
   Prepayments and advances     68,910       162,302  
Total current assets     700,222       516,562  
                 
   Fixed assets     447,619       -0  
TOTAL ASSETS   $ 1,147,841     $ 516,562  
                 
LIABILITIES AND STOCKHOLDERS’ EQUITY                
Current liabilities:                
   Accounts payable and accrued expenses   $ 171,497     $ 369,755  
   Taxes payable     194,883       74,425  
   Bank loans payable     22,621       21,467  
Total current liabilities     389,002       465,649  
                 
Long-term liabilities:                
   Tax installments payable     436,355       -0  
Total long-term liabilities     436,355       -0  
TOTAL LIABILITIES     825,357       465,649  
                 
COMMITMENTS AND CONTINGENCIES                
                 
Stockholders' equity                
Common stock ($0.0001 par value, 80,000,000 shares authorized;                
1,000,000 and -0- shares issued and outstanding as of December 31, 2012 and 2011, respectively)     100       -0  
Preferred stock ($0.0001 par value, 20,000,000 shares authorized,                
-0- and -0- shares issued and outstanding as of December 31. 2012 and 2011, respectively)     -0       -0  
   Due from shareholders     (5,367 )     (5,367 )
   Additional paid-in-capital     225,147       5,367  
   Accumulated other comprehensive income (loss)     (14,015 )     (4,966 )
   Retained earnings     116,620       55,880  
TOTAL STOCKHOLDERS’ EQUITY     322,485       50,914  
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY   $ 1,147,841     $ 516,562  
                 
The Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these financial statements

4
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY
CONSOLIDATED INCOME STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

         
   

For the year

ended

 

For the year

ended

    December 31, 2012   December 31, 2011
         
Revenue   $ 3,949,624     $ 2,035,416  
Cost of sales     (2,518,980 )     (1,195,695 )
Gross profit     1,430,645       839,721  
                 
Operating Expenses:                
Other taxes     283,374       61,938  
Payroll     435,574       432,521  
Contract labor     -0       144,131  
Rent     118,355       42,434  
Other general and administrative expenses     179,921       68,964  
Total operating expenses     1,017,224       749,989  
                 
Operating income     413,420       89,732  
                 
Other income (expense):                
Interest expense     (49,001 )     (14,207 )
Income before income taxes     364,419       75,525  
                 
Income taxes     (303,679 )     (19,646 )
Net income     60,740       55,880  
                 
Other comprehensive income (expense)                
   Foreign currency translation adjustment     (9,049 )     (4,966 )
Comprehensive income   $ 51,691     $ 50,914  
                 
Basic and fully diluted net income per common share:   $ 0.73       -0  
                 
Weighted average common shares outstanding     83,333       -0  
                 
                 
The Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these financial statements

 

5
 

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
                                         
    Common Stock   Common stock Preferred stock Due from shareholders   Additional paid-in capital   Accumulated other comprehensive income (loss)   Statutory reserve - restricted   Retained earnings   Total stockholders' equity
    Shares   Amount   Common share Amount (Par value $0.0001) Preferred share Amount          
Balances at January 1, 2010             - 0 $ 0   - 0 $ 0 $ (5,367)   $ 5,367   $ 0       $ 0   $ 0
   Net income             - 0   - 0   - 0   - 0   - 0     - 0     - 0         55,880     55,880
   Translation adjustments             - 0   - 0   - 0   - 0   - 0     - 0     (4,966)         - 0     (4,966)
Balances at December 31, 2011             - 0   - 0   - 0   - 0   (5,367)     5,367     (4,966)         55,880     50,914
   Common stock issued for cash             1,000,000   100   - 0   - 0   - 0     - 0     - 0         - 0     100
   Shareholder contribution of equipment             - 0   - 0   - 0   - 0   - 0     219,780     - 0         - 0     219,780
   Net lncome             - 0   - 0   - 0   - 0   - 0     - 0     - 0         60,740     60,740
   Translation adjustments             - 0   - 0   - 0   - 0   - 0     - 0     (9,049)         - 0     (9,049)
Balances at December 31, 2012             1,000,000 $ 100   - 0 $ 0 $ (5,367)   $225,147   $ (14,015)       $116,620   $ 322,485
                                         
The Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these financial statements

 

6
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

         
    For the year ended   For the year ended
    December 31, 2012   December 31, 2011
Cash flows from operating activities:                
Net income   $ 60,740     $ 55,880  
Changes in operating assets and liabilities:                
     Accounts receivable     (354,904 )     (176,709 )
     Prepayments and advances     82,618       (178,132 )
     Accounts payable and accrued expenses     54,087       405,820  
     Taxes payables     133,331       81,684  
Net cash provided by (used in) operating activities     (24,128 )     188,544  
                 
Cash flows from investing activities:                
Purchase of equipment     (8,450 )     -0  
Net cash (used in) investing activities     (8,450 )     -0  
                 
                 
Cash flows from financing activities:                
Proceeds from  bank loan payable     67,478       114,860  
Principal repayments of bank loan payable     (64,244 )     (91,299 )
Proceeds from issuing common stock     100       -0  
Net cash provided by financing activities     3,334       23,561  
                 
Effects of exchange rate change in cash     (17,651 )     (18,880 )
                 
Increase (decrease) in cash and cash equivalents     (46,894 )     193,225  
                 
Cash and cash equivalents at beginning of year     193,225       -0  
                 
Cash and cash equivalents at end of year   $ 146,331     $ 193,225  
                 
Cash paid for:                
   Income tax   $ 0       —    
   Interest   $ 24,028     $ 12,388  
                 
                 
NON-CASH INVESTING ACTIVITIES                
   Shareholder contribution of equipment   $ 219,780     $ 0  
   Payment of accounts receivable with fixed assets   $ 219,389     $ 0  
                 
The Report of Independent Registered Public Accounting Firm and accompanying notes are an integral part of these financial statements
7
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

NOTE-1 ORGANIZATION AND BUSINESS BACKGROUND

 

Brazil Interactive Media Inc. (the “Company” or “BIMI”) was incorporated in the State of Delaware on September 11, 2012.  The principal activities of BIMI at that time was seeking and consummating a merger or acquisition opportunity with ESOTV BRAZIL TRADE PROMOTION AND ADVERTISING LICENSE LTDA (“ESOTV”), a corporation organized under the laws of Federative Republic of Brazil (“Brazil”).

 

On November 28, 2012, the Company entered into a Plan of Exchange agreement (the “Plan of Exchange”) between and among the Company and Jose Percival Palesel, the sole owner of ESOTV. By this agreement, BIMI was transferred all issued and outstanding shares of EsoTV (100,000 "quotas") from Palesel in exchange for the founder's shares of BIMI issued on November 28, 2012.  As a result of the agreement, Palesel received an 88.5% stake in BIMI via his U.S.A. LLC Brazil Interactive Holdings, Brazilian Investment Group, LLC received a 5.5% stake, and Themistocles Psomiadis received a 6% stake. 

 

The stock exchange transaction was accounted for as a reverse acquisition and recapitalization of the Company whereby ESOTV was deemed to be the accounting acquirer (legal acquiree) and the Company to be the accounting acquiree (legal acquirer).  The accompanying consolidated financial statements are in substance those of ESOTV, with the assets and liabilities, and revenues and expenses, of the Company being included effective from the date of stock exchange transaction.  The Company is deemed to be a continuation of the business of ESOTV.  Accordingly, the accompanying consolidated financial statements include the following:

 

(1)         The balance sheet consists of the net assets of the accounting acquirer at historical cost and the net assets of the accounting acquiree at historical cost; 

 

(2)         The financial position, results of operations, and cash flows of the accounting acquirer for all periods presented as if the recapitalization had occurred at the beginning of the earliest period presented and the operations of the accounting acquiree from the date of stock exchange transaction.

 

Brazil Interactive Media, Inc. and ESOTV are hereinafter referred to as (the “Company”).

 

ESOTV started operation in June 2011.

 

NOTE - 2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation

 

The accompanying consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (U.S. GAAP) under the accrual basis of accounting.

 

Use of Estimates

 

In preparing consolidated financial statements in conformity with accounting principles generally accepted in the United States of America, management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the dates of the consolidated financial statements, as well as the reported amounts of revenues and expenses during the reporting periods. These accounts and estimates include, but are not limited to, the valuation of

8
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

accounts receivables, inventories, income taxes and the estimation on useful lives of property, plant and equipment. Actual results could differ from these estimates.

 

Generally Accepted Accounting Principles (“GAAP”)

 

These consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“U.S. GAAP”). Such accounting principles differ in certain respects from accounting principles generally accepted in Brazil (“Brazilian GAAP”), which is applied by the Company for its annual consolidated financial statement preparation. Unless otherwise specified, all references in these financial statements to (i) “reais,” the “real” or “R$” are to the Brazilian real (singular), or to the Brazilian reais (plural), the legal currency of Brazil, and (ii) “U.S. dollars” or “$” are to United States dollars.

 

Basis of Consolidation

 

The consolidated financial statements include the financial statements of the Company and its subsidiary. 

 

All significant inter-company balances and transactions within the Company and subsidiary have been eliminated upon consolidation.

 

Cash and Cash Equivalents

 

Cash and cash equivalents are carried at cost and represent cash on hand, demand deposits placed with banks or other financial institutions and all highly liquid investments with an original maturity of three months or less as of the purchase date of such investments.

 

Accounts Receivable

 

Accounts receivable are recorded at the invoiced amount and do not bear interest. The Company extends unsecured credit to its customers in the ordinary course of business but mitigates the associated risks by performing credit checks and actively pursuing past due accounts. An allowance for doubtful accounts is established and determined based on managements’ assessment of known requirements, aging of receivables, payment history, the customer’s current credit worthiness and the economic environment. As of December 31, 2012 and 2011, the Company did not record an allowance for uncollectible accounts as all receivable were fully collected subsequent to year end.

 

Fixed Assets, Net

 

Fixed assets are stated at cost less accumulated depreciation and accumulated impairment losses, if any. Depreciation is calculated on the straight-line basis over the following expected useful lives from the date on which they become fully operational and after taking into account their estimated residual values: 

 

  Depreciable life   Residual value    
Machinery and Equipment 5 years     5 %        
Furniture and fixture 7 years     5 %        

 

Expenditures for maintenance and repairs that do not make the fixed asset more useful or prolong its useful life are expensed as incurred.

 

9
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

Fair Value for Financial Assets and Financial Liabilities

 

The Company follows paragraph 825-10-50-10 of the FASB Accounting Standards Codification (“ASC”) for disclosures about fair value of its financial instruments and paragraph 820-10-35-37 of the FASB ASC (“Paragraph 820-10-35-37”) to measure the fair value of its financial instruments. Paragraph 820-10-35-37 establishes a framework for measuring fair value in 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 broad levels. 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. The three 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.

 

The carrying amounts of the Company’s financial assets and liabilities, such as cash and accounts payable approximate their fair values because of the short maturity of these instruments.

 

The Company does not have any assets or liabilities measured at fair value on a recurring or a non-recurring basis, consequently, the Company did not have any fair value adjustments for assets and liabilities measured at fair value at December 31, 2012 and 2011 nor gains or losses are reported in the statement of operations that are attributable to the change in unrealized gains or losses relating to those assets and liabilities still held at the reporting date for the for the years ended December 31, 2012 and 2011, respectively.

 

Revenue Recognition

 

In accordance with guidance by paragraph 605-10-S99-1 of the FASB ASC for revenue recognition, the Company recognizes revenue when persuasive evidence of an arrangement exists, transfer of title has occurred or services have been rendered, the selling price is fixed or determinable and collectability is reasonably assured.

 

The Company produces live TV shows including quizzes, games, psychics and adult entertainment, which are distributed via its satellite signal to its distribution channels (TV stations). The Company currently leases two satellite uplinks and produces three daily live shows “Quiz Cultural”, “Babestation Brasil” and “Mago Miguel”, which provide 13 hours of live television programming. Members of the television audiences participate in real time through “pay-per-calls”. The local telecommunications providers charge various rates (per minute) for the incoming calls and share a portion of the revenue with the Company. Revenue is recognized by the Company when the minutes of calls from audiences are determined by the local telecommunications providers.

 

Cost of Revenues

 

Cost of revenues consists primarily of media cost, leasing expenses related to satellite uplinks and other costs directly attributable to the provision of services.

 

 

10
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

Income Taxes

 

Income taxes are determined in accordance with Accounting Standards Codification Topic 740, “ Income Taxes ” (“ASC 740”). Under this method, deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Any effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

ASC 740 prescribes a comprehensive model for how companies should recognize, measure, present, and disclose in their financial statements uncertain tax positions taken or expected to be taken on a tax return. Under ASC 740, tax positions must initially be recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions must initially and subsequently be measured as the largest amount of tax benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority assuming full knowledge of the position and relevant facts.

 

The Company conducts its primary business in Brazil and is subject to tax in this jurisdiction. As a result of its business activities, the Company files tax returns that are subject to examination by the foreign tax authority. As of December 31, 2012 and 2011, the Company had outstanding income taxes due with the tax authority in Brazil in the amounts of $305,897 and $16,287, respectively. A portion of the income tax due in 2012, or $222,316, will be paid over time pursuant to an installment plan entered into by the Company and the tax authority in Brazil.

 

Earnings per share

 

The Company reports earnings (loss) per share in accordance with FASB Accounting Standards Codification 260 “Earnings per Share” (“ASC 260”). This statement requires dual presentation of basic and diluted earnings (loss) with a reconciliation of the numerator and denominator of the earnings (loss) per share computations. Basic earnings per share amounts are based on the weighted average shares of common outstanding. If applicable, diluted earnings per share assume the conversion, exercise or issuance of all common stock instruments such as options, warrants and convertible securities, unless the effect is to reduce a loss or increase earnings per share. Accordingly, this presentation has been adopted for the periods presented. There were no adjustments required to net income for the periods presented in the computation of diluted earnings per share. There were no common stock equivalents (CSE) necessary for the computation of diluted earnings per share.

 

Comprehensive income

 

The Company adopted FASB Accounting Standards Codification 220 “Comprehensive Income” (ASC “220”) which establishes standards for reporting and display of comprehensive income, its components and accumulated balances. Comprehensive income as defined includes all changes in equity during the year from non-owner sources. Accumulated other comprehensive income, as presented in the accompanying consolidated balance sheets consists of changes in unrealized gains and losses on foreign currency translation. This comprehensive income is not included in the computation of income tax expense or benefit.

 

Foreign currency translation

 

The functional currency of the Company is the Brazilian Real. The Company maintains its consolidated financial statements in the functional currency. Monetary assets and liabilities denominated in currencies other than the functional currency are translated into the functional currency at rates of

11
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

exchange prevailing at the balance sheet date. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchanges rates prevailing at the dates of the transaction. Exchange gains or losses arising from foreign currency transactions are included in the determination of net income for the respective periods.

 

For financial reporting purposes, the consolidated financial statements of the Company, which are prepared using the functional currency, have been translated into United States dollars. Current assets and liabilities are translated at the exchange rates at the balance sheet dates and revenue and expenses are translated at the average exchange rates of the year while fixed assets and stockholders’ equity is translated at historical exchange rates. Any translation adjustments resulting are not included in determining net income but are included in foreign exchange adjustment to other comprehensive income, a component of stockholders’ equity. The exchange rates in effect as of December 31, 2012 and 2011 were US$1 for R$2.05 and R$1.86, respectively. The average exchange rates for the two years ended December 31, 2012 and 2011 were US$1 for R$1.95 and R$1.69, respectively. There is no significant fluctuation in exchange rate for the conversion of Brazilian Real to US dollars after the balance sheet date.

 

Off-balance sheet arrangements

 

The Company does not have any off-balance sheet arrangements.

 

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. amounts 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.

 

12
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

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, whiwhich 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 cl 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 financial statements. If the assessment indicates that a potentially 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, consolidated results of operations or consolidated cash flows. However, there is no assurance that such matters will not materially and adversely affect the Company’s business, consolidated financial position, and consolidated results of operations or consolidated cash flows.

 

Uncertain Tax Positions

 

The Company did not take any uncertain tax positions and had no adjustments to unrecognized income tax liabilities or benefits pursuant to the provisions of Section 740-10-25 for the years ended December 30, 2012 or 2011.

 

Subsequent Events

 

The Company evaluated for subsequent events through the issuance date of the Company’s financial statements.

 

Recently issued accounting standards

 

The Company has reviewed all recently issued, but not yet effective, accounting pronouncements and does not believe the future adoption of any such pronouncements may be expected to cause a material impact on its consolidated financial condition or the consolidated results of its operations.

 

In May 2011, FASB issued Accounting Standards Update No. 2011-04, “Fair Value Measurements (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”).  ASU 2011-04 changes the wording used to describe many of the requirements in U.S. GAAP for measuring fair value and for disclosing information about fair value measurements to ensure consistency between U.S. GAAP and IFRS. ASU 2011-04 also expands the disclosures for fair value measurements that are estimated using significant unobservable (Level 3) inputs. This new guidance is to be applied prospectively.  The Company anticipates that the adoption of this standard will not materially expand its financial statement note disclosures.

13
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

In June 2011, FASB issued ASU No. 2011-05, “Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income” (“ASU 2011-05”), which amends current comprehensive income guidance.  This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders’ equity.  Instead, the Company must report comprehensive income in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements.  ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after December 15, 2011, with early adoption permitted.  The Company is reviewing ASU 2011-05 to ascertain its impact on the Company’s financial position, results of operations or cash flows as it only requires a change in the format of the current presentation.

 

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment”, which allows, but does not require, an entity when performing its annual goodwill impairment test the option to first do an initial assessment of 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 for purposes of determining whether it is even necessary to perform the first step of the two-step goodwill impairment test. Accordingly, based on the option created in ASU 2011-08, the calculation of a reporting unit’s fair value is not required unless, as a result of the qualitative assessment, it is more likely than not that fair value of the reporting unit is less than its carrying amount. If it is less, the quantitative impairment test is then required. ASU 2011-08 also provides for new qualitative indicators to replace those currently used. Prior to ASU 2011-08, entities were required to test goodwill for impairment on at least an annual basis, by first comparing the fair value of a reporting unit with its carrying amount. If the fair value of a reporting unit is less than its carrying amount, then the second step of the test is performed to measure the amount of impairment loss, if any. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, with early adoption permitted. The Company adopted ASU 2011-08 during the first quarter of fiscal 2013. The adoption of ASU 2011-08 did not impact the Company’s results of operations or financial condition.

 

In December 2011, FASB issued Accounting Standards Update 2011-11, “Balance Sheet - Disclosures about Offsetting Assets and Liabilities” to enhance disclosure requirements relating to the offsetting of assets and liabilities on an entity's balance sheet. The update requires enhanced disclosures regarding assets and liabilities that are presented net or gross in the statement of financial position when the right of offset exists, or that are subject to an enforceable master netting arrangement. The new disclosure requirements relating to this update are retrospective and effective for annual and interim periods beginning on or after January 1, 2013. The update only requires additional disclosures, as such, the Company does not expect that the adoption of this standard will have a material impact on its results of operations, cash flows or financial condition.

 

In July 2012, the FASB issued ASU No. 2012-02, “Testing Indefinite-Lived Intangible Assets for Impairment”. The guidance allows companies to perform a “qualitative” assessment to determine whether further impairment testing of indefinite-lived intangible assets is necessary, similar in approach to the goodwill impairment test.

 

ASU 2012-02 allows companies the option to first assess qualitatively whether it is more likely than not that an indefinite-lived intangible asset is impaired, before determining whether it is necessary to perform the quantitative impairment test. An entity is not required to calculate the fair value of an indefinite-lived intangible asset and perform the quantitative impairment test unless the entity determines that it is more likely than not that the asset is impaired. Companies can choose to perform the qualitative assessment on none, some, or all of its indefinite-lived intangible assets or choose to only perform the quantitative impairment test for any indefinite-lived intangible in any period.

14
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

ASU 2012-02 is effective for annual and interim impairment tests performed for fiscal years beginning after September 15, 2012, with early adoption permitted. The Company is in the process of evaluating the guidance and the impact ASU 2012-02 will have on its consolidated financial statements.

 

NOTE-3 ACCOUNTS RECEIVABLE

 

Accounts receivable was comprised of the following amounts as of December 31, 2012 and 2011:

 

    2012   2011
         
Gross trade accounts receivable from customers   $ 484,982     $ 161,005  
Allowance for doubtful customer accounts     0       0  
Accounts receivable, net   $ 484,982     $ 161,005  
                 

 

There was no bad debt expenses recognized during the years ended December 31, 2012 and 2011 in the accompanying consolidated income statements.

 

NOTE - 4 FIXED ASSETS

 

Fixed assets were comprised of the following as of December 31, 2012 and 2011:

 

    2012   2011
Cost:                
Machinery and equipment   $ 439,560     $ 0  
Furniture and fixtures     8,059       0  
Total cost     447,619       0  
Less: Accumulated depreciation     0       0  
Property and equipment, net   $ 447,619     $ 0  

 

There was no depreciation expense recorded for the year ended December 31, 2012 since the acquisition was completed at the end of 2012 and the fixed assets were not yet placed in service for depreciation purpose.

 

NOTE - 5 BANK LOANS PAYABLE

 

The Company has a few monthly unsecured loans with HSBC at interest rates ranging from 1.08% to 6% per month. The balance on these loans was $22,621 and $21,467 as of December 31, 2012 and 2011, respectively. Accordingly, the Company recorded interest expense of $7,053 and $12,388 during the years ended December 31, 2012 and 2011, respectively.

 

NOTE-6 TAX INSTALLMENTS PAYABLE

 

In 2012, an installment plan was entered into by the Company and the tax authority in Brazil, pursuant to which the following taxes will be paid over time. As of December 31, 2012, the outstanding balance on the tax installments payable was $436,355.

15
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

Type of tax   Balance as of December 31, 2012
     
Cofins Payable - Tax on Service   $ 107,084  
PIS Withheld Payable – Tax on Services     22,725  
Social Contribution Payable – Social Security Tax     84,230  
Income Tax Payable     222,316  
Total   $ 436,355  

 

NOTE-7 CAPITAL STRUCTURE

 

As of December 31, 2012, the Company is authorized to issue 80,000,000 shares of common stock, par value $.0001 per share, and 20,000,000 shares of preferred stock, par value $.0001 per share. As of December 31, 2012, there were 1,000,000 shares of common stock issued and outstanding.

 

NOTE-8 INCOME TAXES

 

United States

 

The Company was incorporated in the United States of America and is subject to U.S. tax. No provisions for income taxes have been made as the Company has no U.S. related taxable income for the years presented.

 

Brazil

 

The Company’s subsidiary, ESOTV, is subject to Brazil enterprises income tax at the applicable tax rates on the taxable income as reported in its Brazilian statutory accounts in accordance with the relevant enterprises income tax laws applicable to domestic enterprises.

 

The Company uses the asset and liability method, where deferred tax assets and liabilities are determined based on the expected future tax consequences of temporary differences between the carrying amounts of assets and liabilities for financial and income tax reporting purposes. There are no material timing differences and therefore no deferred tax asset or liability as of December 31, 2012 and 2011. There are no net operating loss carry forwards as of December 31, 2012 and 2011.

 

The effective income tax expenses for the years ended December 31, 2012 and 2011 are as follows:

 

    2012   2011
         
         
Current taxes   $ 303,679     $ 19,646  
Deferred taxes     0       0  
    $ 303,679     $ 19,646  

 

The company, as allowed by tax laws in Brazil, recognizes and pays income and social contribution taxes on a presumed profit alternative, where taxes are calculated on revenues.

 

16
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

NOTE-9 EARNINGS PER SHARE

 

The following table sets forth the computation of basic earnings per share for the years ended December 31, 2012 and 2011 indicated:

 

    2012   2011
         
Numerator:                
Net income   $ 60,740     $ 55,880  
                 
Denominator:                
Weighted average number of shares outstanding                
Basic     83,333       —    
Earnings per share                
Basic and fully diluted   $ 0.73     $ —    

 

The basic earnings per share were calculated using the net income and the weighted average number of shares outstanding during the reporting periods. All share and per share data have been adjusted to reflect the recapitalization of the Company in the Exchange.

 

The Company had no dilutive instruments as of December 31, 2012 and 2011.

 

NOTE-10 COMMITMENT AND CONTINGENCIES

 

Office Leasing

 

The Company leases its office space under non-cancelable operating lease agreements.  The lease ends in December 2015. Based on the current rental lease agreement, the future 3 years minimum rental payments required as of December 31 are as follows:

 

    Lease payment
  Year ended, December 31, 2013     $ 119,766  
  2014     $ 123,359  
  2015     $ 127,060  
  Total     $ 370,185  

 

The two satellite uplink leases are on a month to month basis with no future operating lease commitments.

 

For the years ended December 31, 2012 and 2011, the Company had rental expenses of $118,355 and $42,434, respectively.

 

The Company had no contingencies existing as of December 31, 2012 and 2011.

17
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

NOTE-11 CONCENTRATION AND RISK

 

(a) Major Customers

 

The Company had one customer from which the Company generated 100% and 91.3% revenues during the years ended December 31, 2012 and 2011, respectively.

 

(b) Major Vendors

 

During the year ended December 31, 2012, major vendors were as follows:

 

Vendors       Purchases    
Rio Bonito             537,232     21%
      Total     $ 537,232     21%
                 

 

During the year ended December 31, 2011, major vendors were as follows:

 

 

Vendors

      Purchases    
Rio Bonito             251,811     21%
      Total     $ 251,811     21%

 

(c) Credit risk

 

Financial instruments that potentially subject the Company to significant concentrations of credit risk consist principally of cash and trade accounts receivable. The Company performs ongoing credit evaluations of its customers' financial condition, but does not require collateral to support such receivables.

 

As of December 31, 2012 and 2011, substantially all of the Company’s cash and cash equivalents were held by financial institutions located in Brazil, which the Company’s management believes are of high credit quality.

The Company’s operations are carried out in Brazil. Accordingly, the Company’s business, financial condition and results of operations may be influenced by the political, economic and legal environment in Brazil and by the general state of the local economy. The Company’s operations in Brazil are subject to specific considerations and significant risks not typically associated with companies in North America and Western Europe. The Company’s results may be affected by changes in governmental policies with respect to laws and regulations, anti-inflationary measures, currency conversion and remittance abroad, and rates and methods of taxation, among other things. 

In addition, the Company is subject to risks common to companies in its industry, including, but not limited to, litigation, development of new technological innovations and dependence on key personnel.

18
 

BRAZIL INTERACTIVE MEDIA, INC. AND ITS SUBSIDIARY

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011

 

NOTE-12 RELATED PARTY TRANSACTIONS

 

The Company had no material transactions carried out with its related parties during 2011 and 2012.

 

NOTE - 13 SEGMENTS

 

The Company determined that it do not operate in any material, separately reportable operating segments as of December 31, 2012 and 2011.

 

NOTE-14 SUBSEQUENT EVENTS

 

In accordance with ASC Topic 855-10, the Company has analyzed its operations subsequent to December 31, 2012 to the date these consolidated financial statements were issued. In addition to the transactions disclosed below, the Company does not have other material subsequent events to disclose in these financial statements, except as follows:

 

On January 28, 2013, Brazil Interactive Media Participações, Ltda., the Company’s Brazil holding company ("BIMI BR") was formed as a subsidiary of the Company, to be the holding company for EsoTV.  

 

 

 



19