As filed with the Securities and Exchange Commission on May 15, 2018

 

Table of Contents

Registration No. 333-____________

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM S-1

REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933

KISSES FROM ITALY, INC.

(Exact name of registrant as specified in its charter)

Florida 5810 46-2388377

(State or other jurisdiction of

Incorporation or organization)

(Primary Standard Industrial

Classification Code Number)

(I.R.S. Employer

Identification No.)

 

80 SW 8 th ST.

Suite 2000

Miami, Florida 33130

305 423-7129

(Address, including zip code, and telephone number, including area code,

of registrant’s principal executive offices)

Michele Di Turi, Chief Executive Officer

KISSES FROM ITALY, INC.

80 SW 8 th ST.

Suite 2000

Miami, Florida 33130

305 423-7129

(Name, address, including zip code, and telephone number, including area code, of agent for service)

Copies to:

Andrew I. Telsey, Esq.

Andrew I. Telsey, P.C.

12835 E. Arapahoe Road

Tower I Penthouse #803

Centennial, CO 80112

Tel: (303) 768-9221

As soon as practicable after the effective date of this Registration Statement
(Approximate date of commencement of proposed sale to the public)

If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box: x

If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering:  o

If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):

o  Large accelerated filer   o  Accelerated filer
o  Non-accelerated filer (Do not check if a smaller reporting company)   x  Smaller reporting company
x  Emerging Growth Company    

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act. o

CALCULATION OF REGISTRATION FEE

Title of Each Class of Securities

to be Registered

 

Amount to be

Registered

 

Proposed Maximum

Offering Price Per Share (1)

 

Proposed Maximum

Aggregate

Offering Price

 

Amount of

Registration Fee

                 

Common Stock,

Par value $0.001 per share

  22,201.250   $0.10   $2,220,125   $276.41

__________________

(1) Estimated solely for purposes of calculating the registration fee in accordance with Rule 457(a) under the Securities Act of 1933.

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE.

     

 

 

Subject to Completion, dated May 15, 2018

 

PROSPECTUS

 

PRELIMINARY

PROSPECTUS

Kisses From Italy, Inc.

a Florida corporation

22,201,250 Shares of Common Stock

 

This Prospectus relates to the offer and sale of up to 22,201,250 shares of our Common Stock (“Common Stock”) held by Selling Stockholders listed beginning on page 15 of this Prospectus (the “Selling Stockholders”), (the “Offering”). See SELLING STOCKHOLDERS .”

 

The Selling Stockholders may sell their shares of our Common Stock (the “Shares”) from time to time at the initial price of $0.10 per share until our Common Stock is quoted on the OTCQB and thereafter at prevailing market prices or privately negotiated prices. Each Selling Stockholder may be an underwriter within the meaning of Section 2(a)(11) of the Securities Act. See DETERMINATION OF OFFERING PRICE ,” “ SELLING STOCKHOLDERS ” and “ PLAN OF DISTRIBUTION .”

 

We will pay the expenses of registering these Shares. We will not receive any proceeds from the sale of Shares of Common Stock in this Offering. All of the net proceeds from the sale of the Shares will go to the Selling Stockholders. The Selling Shareholders are expected to receive aggregate net proceeds of approximately $2,220,125 from the sale of their Shares (approximately $0.10 per share).

 

Our Common Stock is not currently listed for trading on any exchange. It is our intention to seek quotation on the OTCQB if we qualify for listing on the same. There can be no assurances that our Common Stock will be approved for trading on the OTCQB, or any other trading exchange.

 

This Prospectus is part of a registration statement that we have filed with the US Securities and Exchange Commission. Prior to filing of our registration statement, we were not a reporting company under the Securities Exchange Act of 1934, as amended. Following the effectiveness of our registration statement we will become subject to the reporting requirements under the aforesaid Act.

 

We are an “emerging growth company” as defined under the federal securities laws and are subject to reduced public company reporting requirements.

 

Investing in our Common Stock involves a high degree of risk. You should invest in our Common Stock only if you can afford to lose your entire investment.

 

SEE RISK FACTORS ” BEGINNING ON PAGE 3.

 

The information in this Prospectus is not complete and may be changed. This Prospectus is included in the registration statement that was filed by Kisses From Italy, Inc. with the Securities and Exchange Commission. The Selling Stockholders may not sell these Shares until the registration statement becomes effective. This Prospectus is not an offer to sell these Shares and is not soliciting an offer to buy these Shares in any State where the offer or sale is not permitted.

 

Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

 

The date of this Prospectus is ____________, 2018

 

 

     

 

 

TABLE OF CONTENTS

 

  Page No.  
   
Prospectus Summary 1  
Special Note About Forward-Looking Statements 2  
Risk Factors 3  
Use of Proceeds 14  
Determination of the Offering Price 14  
Market Price of and Dividends on the Company’s Common Equity and Related Stockholder Matters 14  
Selling Stockholders 15  
Plan of Distribution 17  
Management’s Discussion and Analysis of Financial Condition and Results of Operations 19  
Description of Business 22  
Management 29  
Executive Compensation 30  
Summary Compensation Table 31  
Security Ownership of Certain Beneficial Owners & Management 32  
Certain Relationships and Related Transactions 32  
Description of Securities 32  
Shares Eligible for Future Sale 33  
Interests of Named Experts and Counsel 34  
Legal Matters 34  
Experts 34  
Disclosure of Commission Position on Indemnification for Securities Act Liabilities 34  
Additional Information 34  
Financial Statements 34  

 

 

 

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PROSPECTUS SUMMARY

 

This summary provides an overview of certain information contained elsewhere in this Prospectus and does not contain all of the information that you should consider or that may be important to you. Before making an investment decision, you should read the entire Prospectus carefully, including the “RISK FACTORS” section and the financial statements and the notes to the financial statements. In this Prospectus, the terms “the “Company,” “we,” “us” and “our” refer to Kisses From Italy, Inc., unless otherwise specified herein.

 

We were incorporated in the State of Florida on March 7, 2013, and are focused on developing a fast casual food dining chain restaurant business. Our restaurants theme is to provide ‘traditional Italian delicacies with an All-American Flair’. Enveloped in our mission is our philosophy to support and partner with local producers and suppliers within the regions in order to provide a truly authentic experience to our customers.

 

Our intent is to leverage what we believe to be the acceptance of our restaurant concept derived from our flagship store and our initial hotel locations in the South Florida market and to expand into other regions on a local, state, national and global level. We intend to expand our current business through the development of additional corporate owned locations, as well as selling franchises to third parties through the advancement of our franchise and territorial rights program. As of the date of this Prospectus we have sold two franchises.

 

Since inception we have opened 4 corporate owned retail locations, all in Southern Florida. In September 2017, Hurricane Irma caused significant damage to the area, which caused a significant setback in the implementation of our business plan. All of our locations were closed until January 2018 in order to renovate the premises from the damage done by the hurricane. We elected not to re-open one of the locations and as a result, currently have 3 operating restaurants.

 

Our menu includes an Italian style Panini, sausage, beef, or chicken topped with quality natural “sott'olio” (grilled and marinated vegetable) products. Our vision is to transport true authentic and rustic taste from the provinces of Italy through a fresh Panini with an espresso, latte or cold slush espresso to go. We intend to offer products that will cater to all diets including gluten free diets and emphasize fresh products with no preservatives.

 

During the year ended December 31, 2017, we accepted subscription agreements from 9 investors, including 2 “accredited” investors, as that term is defined under the Securities Act of 1933, as amended and issued 1,350,000 shares of our common stock at a price of $0.10 per shares for gross proceeds totaling $135,000. During the year ended December 31, 2016, we accepted subscription agreements from 8 investors, including 5 “accredited” investors and issued 1,698,750 shares of our common stock for gross proceeds totaling $169,785. Except for shares purchased by members of our management in these offerings, all of the remaining shares sold in these private offerings are being registered herein.

 

We have yet to generate profits in any fiscal year since our inception. During our fiscal years ended December 31, 2017 and 2016, we generated revenues of $740,412 and $928,624, respectively, and incurred net losses of $639,144 in 2017 and $697,093 in 2016. Total stockholders’ equity at December 31, 2017 was $21,888. As of December 31, 2017, we had $51,955 in cash. See “RISK FACTORS” and “FINANCIAL STATEMENTS.”

 

Our principal offices are located at 80 SW 8 th St. Suite 2000, Miami, Florida, 33130, and our phone number is (305) 423-7024. Our website is www.kissesfromitaly.com

 

About The Offering

 

Common Stock to be Offered by Selling Shareholders   22,201,250 shares. This number represents approximately 27.2% of the total number of shares outstanding following this Offering.
     
Number of shares outstanding before and after the Offering   81,780,170 (1)
     
Use of Proceeds   We will not receive any proceeds from the sale of the Common Stock.
     
Risk Factors   See the discussion under the caption “RISK FACTORS” and other information in this Prospectus for a discussion of factors you should carefully consider before deciding to invest in our Common Stock.

_________________________

(1) Because we are not selling any of our Common Stock as part of this Offering, the number of issued and outstanding shares of our Common Stock will remain the same following this Offering.

 

 

 

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Selected Financial Data

 

The following selected financial data should be read in conjunction with our financial statements and the related notes to those statements included in “FINANCIAL STATEMENTS” and with “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS” appearing elsewhere in this Prospectus. The selected financial data has been derived from our audited financial statements.

 

Statement of Operations:

  

    Year Ended December 31,  
    2017     2016  
             
Revenues   $ 740,412     $ 928,624  
                 
Total operating expenses   $ 1,042,747     $ 1,209,492  
Income (Loss) from operations   $ (603,293 )   $ (686,231 )
Other income (expense)   $ (48,336 )   $ (15,643 )
Provision for income tax   $     $  
Net loss   $ (651,629 )   $ (701,873 )
Net income (loss) per share – (basic and fully diluted)   $ (0.01 )   $ (0.01 )
Weighted common shares outstanding     76,036,654       72,517,441  

 

Balance Sheet:

 

    Year Ended December 31,  
    2017     2016  
             
Cash   $ 51,955     $ 32,692  
Current assets   $ 51,955     $ 32,692  
Total assets   $ 183,150     $ 201,816  
Current liabilities   $ 161,262     $ 131,799  
Total liabilities   $ 161,262     $ 131,799  
Total stockholders’ equity   $ 21,888     $ 70,017  

 

SPECIAL NOTE ABOUT FORWARD-LOOKING STATEMENTS

 

We have made some statements in this Prospectus, including some under “RISK FACTORS,” “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS,” “DESCRIPTION OF BUSINESS” and elsewhere, which constitute forward-looking statements. These statements may discuss our future expectations or contain projections of our results of operations or financial condition or expected benefits to us resulting from acquisitions or transactions and involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity, performance or achievements to be materially different from any results, levels of activity, performance or achievements expressed or implied by any forward-looking statements. These factors include, among other things, those listed under “RISK FACTORS” and elsewhere in this Prospectus. In some cases, forward-looking statements can be identified by terminology such as “may,” “should,” “could,” “expects,” “intends,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.

 

 

 

 

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RISK FACTORS

 

An investment in our Common Stock is a risky investment. In addition to the other information contained in this Prospectus, prospective investors should carefully consider the following risk factors before purchasing shares of our Common Stock offered hereby. We believe that we have included all material risks.

 

Risks Related to Our Business

 

Our independent accountants have expressed a "going concern" opinion.

 

Our financial statements accompanying this Prospectus have been prepared assuming that we will continue as a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The financial statements do not include any adjustment that might result from the outcome of this uncertainty. We have a minimal operating history and minimal revenues or earnings from operations. We have no significant assets or financial resources. We will, in all likelihood, sustain operating expenses without corresponding revenues for the immediate future. See “DESCRIPTION OF BUSINESS” and “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Liquidity and Capital Resources .” There are no assurances that we will generate profits from operations.

 

We have not generated profits from our operations.

 

We incurred net losses of $651,629 in 2017, and $701,873 in 2016. Based upon our current business plan, our ability to begin to generate profits from operations is dependent upon our obtaining additional financing to continue to develop our business plan and there can be no assurances that we will ever establish profitable operations. As we pursue our business plan, we are incurring significant expenses without corresponding revenues. In the event that we remain unable to generate significant revenues to pay our operating expenses, we will not be able to achieve profitability or continue operations.

 

Our ability to continue as a going concern is dependent on raising additional capital, which we may not be able to do on favorable terms, or at all.

 

We need to raise additional capital to support our current operations and fund our sales and marketing programs including developing additional company owned stores and expanding our marketing of our franchise concept. We estimate that we will need approximately $1,000,000 in additional capital in order to generate profits from operations. We can provide no assurance that additional funding will be available on a timely basis, on terms acceptable to us, or at all. If we are unsuccessful in raising additional funding, our business may not continue as a going concern. Even if we do find additional funding sources, we may be required to issue securities with greater rights than those currently possessed by holders of our Common Stock. We may also be required to take other actions that may lessen the value of our Common Stock or dilute our common stockholders, including borrowing money on terms that are not favorable to us or issuing additional equity securities. If we experience difficulties raising money in the future, our business and liquidity will be materially adversely affected. See “MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS – Liquidity and Capital Resources ,” below.

 

We do not currently have an external line of credit facility with any financial institution.

 

As indicated above, we have estimated that we need approximately $1,000,000 in additional capital to generate profits from operations. Aside from factoring our accounts receivable, we have attempted to establish credit facilities with financial institutions but have experienced little or no success in these attempts due primarily to the current economic climate, specifically the reluctance of most financial institutions to provide such lines of credit to relatively new business ventures. We also have limited assets available to secure such a line of credit. We intend to continue to attempt to establish an external line of credit in the future, but there can be no assurances we will be able to do so. The failure to obtain an external line of credit could have a negative impact on our ability to generate profits.

 

 

 

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Our financial results may fluctuate from period to period as a result of several factors which could adversely affect our stock price.

 

Our operating results may fluctuate significantly in the future as a result of a variety of factors, many of which are outside our control. Factors that will affect our financial results include:

 

· acceptance of our restaurant concept and market penetration;
· the amount and timing of capital expenditures and other costs relating to the implementation of our business plan;
· the introduction of new products by our competitors;
· seasonality applicable to our geographic location; and
· general economic conditions and economic conditions specific to our industry.

 

As a strategic response to changes in the competitive environment, we may from time to time make certain pricing, service, or marketing decisions or acquisitions that could have a material adverse effect on our business, prospects, financial condition, and results of operations.

  

We are an early-stage venture with limited operating history, and our prospects are difficult to evaluate.

 

We commenced operations by opening our initial corporately owned location in Fort Lauderdale, Florida, in May 2015. We opened three additional locations by April 2016, all in Southern Florida, Because of the damage caused by Hurricane Irma, we had to close all of our restaurants from September 2017 through January 2018. We have also only recently commenced sales of franchises, where we have sold 2 to date. Therefore, there is nominal historical financial information related to our operations and contemplated business plan available upon which you may base your evaluation of our business and prospects.  The revenue and income potential of our business is unproven.  If we are unable to develop our business, we will not achieve our goals and could suffer economic loss or collapse, in which case you may lose your entire investment.

 

The fast-food segment of the restaurant industry is highly competitive.

 

We operate in the fast food segment of the restaurant industry, which is highly competitive with respect to, among other things, taste, consumer trends, price, food quality and presentation, service, location and the ambiance and condition of the restaurant. Our competition includes a variety of locally owned restaurants, as well as national and regional chains. Our competitors offer dine-in, carry-out, delivery and drive-through services. Most of our competitors have existed longer and often have a more established brand and market presence with substantially greater financial, marketing, personnel and other resources than us. Among our main competitors include Jimmy John’s, Chipotle Mexican Grill, Miami Subs Grill, Subway and Starbucks, most of whom have expanded nationally. As we expand, our existing restaurants may face competition from existing and new restaurants that operate in these markets.

 

Several of our competitors compete by offering menu items that are specifically identified as low in fat, carbohydrates and calories, allegedly better for customers, or otherwise targeted at healthier consumer preferences. Many of our competitors in the fast food segment of the restaurant industry also emphasize lower cost, “value meal” menu options, which is a strategy we also pursue.

 

Moreover, new companies will likely enter our markets and target our customers. For example, additional competitive pressures have come recently from the deli sections and in-store cafés of several major grocery chains, including those targeted at customers who want higher quality and healthier food, as well as from convenience stores and casual dining outlets.  These competitors may have, among other things, lower operating costs, better locations, better brand awareness, better facilities, better management, more effective marketing and more efficient operations than we do.

 

In the restaurant industry, labor is a primary operating cost component. Competition for qualified employees could also require us to pay higher wages to attract a sufficient number of employees.

 

We also expect to compete for restaurant locations with other fast food restaurants. Until our name is better recognized, landlords may prefer well-known fast food restaurants over us and we may experience difficulties in securing desirable restaurant locations.

 

All of these competitive factors may adversely affect us and reduce our sales and profits.

 

 

 

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We face risks associated with the expansion of our restaurant operations.

 

The success of our business model depends on our ability to open either additional company-owned or franchised restaurants. We may not have the funds required to open additional restaurants or be able to identify and secure sufficient restaurant sites that we consider favorable. Our success depends on our ability to operate and manage our growing operations. Our ability to expand successfully will depend upon a number of factors, including the following:

 

· availability and cost of suitable restaurant locations for development;
· hiring, training, and retention of additional management and restaurant personnel in each local market;
· obtaining financing and negotiating leases with acceptable terms;
· managing construction and development costs of new restaurants at affordable levels, particularly in competitive markets;
· availability of construction materials and labor;
· securing required governmental approvals (including construction, parking and other permits) in a timely manner;
· continued development and implementation of management information systems;
· competitive factors; and
· general economic and business conditions.

 

Increased construction costs and delays resulting from governmental regulatory approvals, strikes, or work stoppages, adverse weather conditions, and various acts of God may also affect the opening of new restaurants. Moreover, newly opened restaurants may operate at a loss for a period following their initial opening. The length of this period will depend upon a number of factors, including the time of the year the restaurant is opened, the sales volume, and our ability to control costs.

 

We may not successfully achieve our expansion goals.  Additional restaurants that we develop may not be profitable. In addition, the opening of additional restaurants in an existing market may have the effect of drawing customers from and reducing the sales volume of our existing restaurants in those markets.

 

We may not be able to successfully execute a franchising and area developer strategy.

 

To achieve our expansion goals within our desired timeframe we have adopted a franchising and area developer model into our business strategy. We hope to continue to open new company-owned restaurants, while also moving forward to developing our franchised operation where we will solicit others to become our franchisees. We have not used a franchising or area developer model in the past and may not be successful in attracting franchisees and developers to our business concept or identifying franchisees and developers that have the business abilities or access to financial resources necessary to open our restaurants or to develop or operate successfully our restaurants in a manner consistent with our standards. Incorporating a franchising and area developer model into our strategy will required us to devote significant management and financial resources to prepare for and support the eventual sale of franchises.  If we are not successful in incorporating a franchising or area developer model into our strategy we may experience delays in our growth or may not be able to expand and grow our business.

 

Our expansion into new markets may present increased risks due to our unfamiliarity with those areas and our target customers’ unfamiliarity with our brand.

 

Our initial 3 restaurants are located, and future restaurants will be located, in markets where we have no operating experience and our restaurants may be less successful than restaurants where established restaurants are more familiar. Consumers in our new markets will not be familiar with our brand, and we will need to build brand awareness in those markets through investments in advertising and promotional activity. We may find it more difficult in our markets to secure desirable restaurant locations and to hire, motivate and keep qualified employees.

 

We expect to incur losses in the near future, which may impact our ability to implement our business strategy and adversely affect our financial condition.

 

We expect to significantly increase our operating expenses by expanding our marketing activities and increasing our level of capital expenditures in order to grow our business. Such increases in operating expense levels and capital expenditures may adversely affect our operating results if we are unable to immediately realize benefits from such expenditures.  In addition, if we are unable to manage a significant increase in operating expenses, our liquidity will likely decrease and negatively impact our cash flow and ability to sustain operations. In turn, this would have a negative impact on our financial condition and share price.

 

 

 

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We also expect that our operating expenses will significantly increase as a result of becoming a public company in the future, of which there can be no assurance. We also cannot assure you that we will be profitable or generate sufficient profits from operations in the future. If our revenues do not grow, we may experience a loss in one or more future periods. We may not be able to reduce or maintain our expenses in response to any decrease in our revenue, which may impact our ability to implement our business strategy and adversely affect our financial condition. This would also have a negative impact on our share price.

 

Food safety and food-borne illness concerns may have an adverse effect on our business.

 

We have and intend to continue to dedicate substantial resources to ensure that our customers enjoy safe, quality food products. However, food-borne illnesses (such as E. coli, hepatitis A, trichinosis or salmonella) and food safety issues are an ongoing issue in the restaurant industry. If a food-borne illness or other food safety issues occur, whether at our restaurant, or a competitor’s restaurant, it is likely that negative publicity would adversely affect our sales and profitability. If our customers become ill from food-borne illnesses, we might need to temporarily close our restaurant. Separately, the occurrence of food-borne illnesses or food safety issues could adversely affect the price and availability of affected ingredients and could increase the cost of insurance.

 

We face risks associated with changes in customer tastes and preferences, spending patterns and demographic trends.

 

Changes in customer preferences, general economic conditions, discretionary spending priorities, demographic trends, traffic patterns and the type, number and location of competing restaurants affect the restaurant industry. Our success depends to a significant extent on consumer confidence, which is influenced by general economic conditions, local and regional economic conditions in the markets in which we operate, and discretionary income levels. Our sales may decline during economic downturns, which can be caused by various economic factors such as high gasoline prices, or during periods of uncertainty, such as those that followed the terrorist attacks on the United States in 2001. Any material decline in consumer confidence or a decline in family “food away from home” spending could cause our sales, operating results, business or financial condition to decline. If we fail to adapt to changes in customer preferences and trends, we may lose customers and our sales may deteriorate.

 

We rely on a single line of business.

 

Our only line of business is operating and developing franchised our restaurants. We have no plans to operate restaurants based on other concepts or to develop alternative business lines. If this restaurant concept fails in the marketplace, we may have to curtail drastically our business plans or cease operations altogether.

 

Changes in commodity and other operating costs or supply chain and business disruptions could adversely affect our results of operations.

 

Changes in food and supply costs are a part of our business; any increase in the prices of the cost to continue to increase in the near future. We may be unable to make the improvements in our operations to mitigate the effects of higher costs.

 

Failure to receive frequent deliveries of higher quality food ingredients and other supplies could harm our operations.

 

Our ability to maintain our menu depends in part on our ability to acquire ingredients that meet our specifications from reliable suppliers.  Interruptions or shortages in the supply of ingredients caused by unanticipated demand, problems in production or distribution, food contamination, inclement weather or other conditions could adversely affect the availability, quality and cost of our ingredients, which could harm our operations If any of our distributors or suppliers fails to perform adequately, or our distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or cash flows could be adversely affected. Our inability to replace or engage distributors or suppliers who meet our specifications in a short period of time could increase our expenses and cause shortages of food and other items at our restaurant, which could cause a restaurant to remove items from its menu. If that were to happen to our restaurants that affected our key ingredients such as beef, chicken, cheese and produce, it could adversely affect our operating results. We are susceptible to increases in food costs as a result of factors beyond our control, such as general economic conditions, seasonal fluctuations, weather conditions, demand, food safety concerns, product recalls, labor disputes and government regulations. In addition to food, we purchase electricity, oil and natural gas needed to operate our restaurants, and suppliers purchase gasoline needed to transport food and supplies to us. Any significant increase in energy costs could adversely affect our business through higher rates and the imposition of fuel surcharges by our suppliers. Because we provide moderately priced food, we may choose not to, or be unable to, pass along commodity price increases to our customers. Additionally, significant increases in gasoline prices could result in a decrease of customer traffic at our restaurants. We rely on third-party distribution companies to deliver food and supplies to our restaurant. Interruption of distribution services due to financial distress or other issues could impact our operations.

 

 

 

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Our operating costs also include premiums that we pay for our insurance (including workers’ compensation, general liability, property and health). The cost of insurance has risen significantly in the past few years and we expect could experience significant reductions in sales during the shortage or thereafter, if our customers change their dining habits as a result.

 

In addition, we intend to use a substantial amount of naturally raised and organically grown ingredients, and try to make our food as fresh as we can, in light of pricing considerations. As we increase our use of these ingredients, the ability of our suppliers to expand output or otherwise increase their supplies to meet our needs may be constrained. Our inability to obtain a sufficient and consistent supply of these ingredients on a cost-effective basis, or at all, could cause us difficulties in aligning our brand with the principle of “fresh and healthy.” That could make us less popular among our customers and cause sales to decline.

 

If we fail to retain our key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our anticipated level of growth and our business could suffer.

 

Our future success and ability to implement our business strategy depends, in part, on our ability to attract and retain key personnel, and on the continued contributions of members of our senior management team and key technical personnel, each of whom would be difficult to replace. All of our employees, including our senior management, are free to terminate their employment relationships with us at any time. Competition for highly skilled technical people is extremely intense, and we face challenges identifying, hiring and retaining qualified personnel in many areas of our business. If we fail to retain our senior management and other key personnel or if we fail to attract additional qualified personnel, we may not be able to achieve our strategic objectives and our business could suffer.

 

Changes in accounting standards and subjective assumptions, estimates and judgments by management related to complex accounting matters could significantly affect our financial results.

 

Generally accepted accounting principles and related pronouncements, implementation guidelines and interpretations with regard to a wide variety of matters that are relevant to our business, such as, but not limited to, revenue recognition, stock-based compensation, trade promotions, and income taxes are highly complex and involve many subjective assumptions, estimates and judgments by our management. Changes to these rules or their interpretation or changes in underlying assumptions, estimates or judgments by our management could significantly change our reported results.

 

If we are unable to build and sustain proper information technology infrastructure, our business could suffer.

 

We depend on information technology as an enabler to improve the effectiveness of our operations and to interface with our customers, as well as to maintain financial accuracy and efficiency. If we do not allocate and effectively manage the resources necessary to build and sustain the proper technology infrastructure, we could be subject to transaction errors, processing inefficiencies, the loss of customers, business disruptions, or the loss of or damage to intellectual property through security breach. Our information systems could also be penetrated by outside parties’ intent on extracting information, corrupting information or disrupting business processes. Such unauthorized access could disrupt our business and could result in the loss of assets.

 

The restaurant industry, specifically the fast food industry, is highly competitive and we expect to face increased competition as new and existing competitors introduce competing products, which could negatively impact our results of operations and market share.

 

Most of our competitors have greater name recognition, as well as greater financial resources that those available to us. If we are not able to compete effectively against companies with greater resources, our prospects for future success will be jeopardized.

 

We are dependent upon third party suppliers of our raw materials.

 

We are dependent on outside vendors for our supplies of raw materials. While we believe that there are numerous sources of supply available, if the third-party suppliers were to cease production or otherwise fail to supply us with quality raw materials in sufficient quantities on a timely basis and we were unable to contract on acceptable terms for these services with alternative suppliers, our ability to produce our products would be materially adversely affected.

 

 

 

  7  

 

 

Our inability to protect our trademarks, patents and trade secrets may prevent us from successfully marketing our products and competing effectively.

 

Failure to protect our intellectual property could harm our brand and our reputation, and adversely affect our ability to compete effectively. Further, enforcing or defending our intellectual property rights, including our trademarks, patents, copyrights and trade secrets, could result in the expenditure of significant financial and managerial resources. We regard our intellectual property, particularly our trademarks, patents and trade secrets to be of considerable value and importance to our business and our success. We rely on a combination of trademark, patent, and trade secrecy laws, confidentiality procedures and contractual provisions to protect our intellectual property rights. There can be no assurance that the steps taken by us to protect these proprietary rights will be adequate or that third parties will not infringe or misappropriate our trademarks, patented processes, trade secrets or similar proprietary rights. In addition, there can be no assurance that other parties will not assert infringement claims against us, and we may have to pursue litigation against other parties to assert our rights. Any such claim or litigation could be costly. In addition, any event that would jeopardize our proprietary rights or any claims of infringement by third parties could have a material adverse effect on our ability to market or sell our brands, profitably exploit our products or recoup our associated research and development costs.

 

Our operating results may fluctuate due to factors that are difficult to forecast and not within our control.

 

Our past operating results may not be accurate indicators of future performance, and you should not rely on such results to predict our future performance. Our operating results have fluctuated significantly in the past, and could fluctuate in the future. Factors that may contribute to fluctuations include:

 

  changes in aggregate capital spending, cyclicality and other economic conditions, or domestic and international demand in the industries we serve;

 

  our ability to effectively manage our working capital;

 

  our ability to satisfy consumer demands in a timely and cost-effective manner;

 

  pricing and availability of labor and materials;

 

  our inability to adjust certain fixed costs and expenses for changes in demand;

 

  seasonal fluctuations in demand and our revenue; and

 

  disruption in component supply from foreign and or domestic vendors.

 

If we are unable to manage any future growth effectively, our profitability and liquidity could be adversely affected.

 

Our ability to achieve our desired growth depends on our execution in functional areas such as management, sales and marketing, and general administration and operations. To manage any future growth, we must continue to improve our distribution, operational and financial processes and systems and expand, train and manage our employee base. If we are unable to manage our growth effectively, our business and results of operations could be adversely affected.

 

We may be subject to legal claims against us or claims by us which could have a significant impact on our resulting financial performance.

 

At any given time, we may be subject to litigation, the disposition of which may have an adverse effect upon our business, financial condition, or results of operation. Such claims include but are not limited to and may arise from product liability and related claims in the event that any of the products that we sell is faulty or contains defects in materials or design. We may be subject to patent infringement claims from our products. In addition, we may be subject to claims by our lenders, claims for rent, and claims from our vendors on our accounts payable; and although we have been able to obtain understandings with the foregoing and have informal forbearance agreements from those parties, one or more of them may elect to commence collection proceedings which could result in judgments against us and have a significant negative impact on our operations.

 

 

 

  8  

 

 

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

 

As a public company, we are subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, and the Exchange Act, the Sarbanes-Oxley Act, the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations increases our legal and financial compliance costs, make some activities more difficult, time-consuming or costly, and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company,” as defined in the Jumpstart our Business Startups Act, or the JOBS Act. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants who will increase our costs and expenses.

 

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

 

However, for as long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

 

We would cease to be an “emerging growth company” upon the earliest of: (i) the first fiscal year following the fifth anniversary of our becoming a reporting company, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities, or (iv) as of the end of any fiscal year in which the market value of our Common Stock held by non-affiliates exceeded $75 million as of the end of the second quarter of that fiscal year.

 

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

 

As a result of disclosure of information in this Prospectus and in future filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

 

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our Common Stock less attractive to investors.

 

We are an “emerging growth company,” as defined in the JOBS Act, and we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

 

 

 

  9  

 

 

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. However, we are choosing to “opt out” of such extended transition period, and as a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non-emerging growth companies. Section 107 of the JOBS Act provides that our decision to opt out of the extended transition period for complying with new or revised accounting standards is irrevocable.

 

Our management and principal shareholders have the ability to significantly influence or control matters requiring a shareholder vote and other shareholders may not have the ability to influence corporate transactions.

 

Currently, our principal shareholders own in excess of a majority of our outstanding Common Stock. As a result, they have the ability to determine the outcome on all matters requiring approval of our shareholders, including the election of directors and approval of significant corporate transactions.

 

Risks Relating to our Common Stock

 

There is no trading market for our securities and there can be no assurance that such a market will develop in the future.

 

We intend to cause an application to be filed on our behalf to trade our Common Stock on the OTCQB in the near future. There is no assurance that our application will be approved, or once approved that a market will develop in the future or, if developed, that it will continue. In the absence of a public trading market, an investor may be unable to liquidate his investment in our Company.

 

There are no automated systems for negotiating trades on the OTCQB and it is possible for the price of a stock to go up or down significantly during a lapse of time between placing a market order and its execution, which may affect your trades in our securities.

 

Because there are no automated systems for negotiating trades on the OTCQB, they are conducted via telephone. In times of heavy market volume, the limitations of this process may result in a significant increase in the time it takes to execute investor orders. Therefore, when investors place market orders, an order to buy or sell a specific number of shares at the current market price, it is possible for the price of a stock to go up or down significantly during the lapse of time between placing a market order and its execution.

 

If our application to trade our Common Stock is approved, our stock will be considered a “penny stock” so long as it trades below $5.00 per share. This can adversely affect its liquidity.

 

If our application to trade our Common Stock on the OTCQB is approved, of which there can be no assurance, it is anticipated that our Common Stock will be considered a “penny stock” and will continue to be considered a penny stock so long as it trades below $5.00 per share and as such, trading in our Common Stock will be subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction.

 

SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities. In addition, few broker or dealers are likely to undertake these compliance activities. Other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market.

 

Any adverse effect on the market price of our Common Stock could make it difficult for us to raise additional capital through sales of equity securities at a time and at a price that we deem appropriate.

 

Sales of substantial amounts of our Common Stock, or in anticipation that such sales could occur, may materially and adversely affect prevailing market prices for our Common Stock, if and when such market develops in the future.

  

 

 

  10  

 

 

The market price of our Common Stock may fluctuate significantly in the future.

 

If our application to trade our Common Stock on the OTCQB is approved, we expect that the market price of our Common Stock may fluctuate in response to one or more of the following factors, many of which are beyond our control:

 

  · competitive pricing pressures;
  · our ability to market our services on a cost-effective and timely basis;
  · our inability to obtain working capital financing, if needed;
  · changing conditions in the market;
  · changes in market valuations of similar companies;
  · stock market price and volume fluctuations generally;
  · regulatory developments;
  · fluctuations in our quarterly or annual operating results;
  · additions or departures of key personnel; and
  · future sales of our Common Stock or other securities.

 

The price at which you purchase shares of our Common Stock may not be indicative of the price that will prevail in the trading market. You may be unable to sell your shares of Common Stock at or above your purchase price, which may result in substantial losses to you and which may include the complete loss of your investment. In the past, securities class action litigation has often been brought against a company following periods of stock price volatility. We may be the target of similar litigation in the future. Securities litigation could result in substantial costs and divert management’s attention and our resources away from our business. Any of the risks described above could adversely affect our sales and profitability and also the price of our Common Stock.

 

Provisions of our Articles of Incorporation and Bylaws may delay or prevent a take-over that may not be in the best interests of our stockholders.

 

Provisions of our Articles of Incorporation and Bylaws may be deemed to have anti-takeover effects, which include when and by whom special meetings of our stockholders may be called, and may delay, defer or prevent a takeover attempt.

 

The requirements of being a public company may strain our resources, divert management’s attention and affect our ability to attract and retain executive management and qualified board members.

 

As a public company, we will be subject to the reporting requirements of the Securities Exchange Act of 1934, as amended, the Sarbanes-Oxley Act, the Dodd-Frank Act, and other applicable securities rules and regulations. Compliance with these rules and regulations will increase our legal and financial compliance costs, make some activities more difficult, time-consuming or costly and increase demand on our systems and resources, particularly after we are no longer an “emerging growth company,” as defined in the Jumpstart our Business Startups Act, or the JOBS Act. The Exchange Act requires, among other things, that we file annual, quarterly and current reports with respect to our business and operating results. The Sarbanes-Oxley Act requires, among other things, that we maintain effective disclosure controls and procedures and internal control over financial reporting. In order to maintain and, if required, improve our disclosure controls and procedures and internal control over financial reporting to meet this standard, significant resources and management oversight may be required. As a result, management’s attention may be diverted from other business concerns, which could adversely affect our business and operating results. We may need to hire more employees in the future or engage outside consultants, which will increase our costs and expenses.

 

In addition, changing laws, regulations and standards relating to corporate governance and public disclosure are creating uncertainty for public companies, increasing legal and financial compliance costs and making some activities more time consuming. These laws, regulations and standards are subject to varying interpretations, in many cases due to their lack of specificity, and, as a result, their application in practice may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices. We intend to invest resources to comply with evolving laws, regulations and standards, and this investment may result in increased general and administrative expenses and a diversion of management’s time and attention from revenue-generating activities to compliance activities. If our efforts to comply with new laws, regulations and standards differ from the activities intended by regulatory or governing bodies due to ambiguities related to their application and practice, regulatory authorities may initiate legal proceedings against us and our business may be adversely affected.

 

 

 

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However, for as long as we remain an “emerging growth company,” we may take advantage of certain exemptions from various reporting requirements that are applicable to public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We may take advantage of these reporting exemptions until we are no longer an “emerging growth company.”

 

We would cease to be an “emerging growth company” upon the earliest of: (i) the first fiscal year following the fifth anniversary of this offering, (ii) the first fiscal year after our annual gross revenues are $1.0 billion or more, (iii) the date on which we have, during the previous three-year period, issued more than $1.0 billion in non-convertible debt securities, or (iv) as of the end of any fiscal year in which the market value of our Common Stock held by non-affiliates exceeded $700 million as of the end of the second quarter of that fiscal year.

 

We also expect that being a public company and these new rules and regulations will make it more expensive for us to obtain director and officer liability insurance, and we may be required to accept reduced coverage or incur substantially higher costs to obtain coverage once we put such coverages in place, which we intend to implement in the near future. These factors could also make it more difficult for us to attract and retain qualified members of our board of directors, particularly to serve on our audit committee and compensation committee, and qualified executive officers.

 

As a result of disclosure of information in this Prospectus and in filings required of a public company, our business and financial condition will become more visible, which we believe may result in threatened or actual litigation, including by competitors and other third parties. If such claims are successful, our business and operating results could be adversely affected, and even if the claims do not result in litigation or are resolved in our favor, these claims, and the time and resources necessary to resolve them, could divert the resources of our management and adversely affect our business and operating results.

 

The market price for our Common Stock will be particularly volatile given our status as a relatively unknown company, with a limited operating history and lack of profits which could lead to wide fluctuations in our share price. You may be unable to sell your Common Stock at or above your purchase price, which may result in substantial losses to you.

 

While there is no market for our Common Stock, our price volatility in the future will be particularly volatile when compared to the shares of larger, more established companies that trade on a national securities exchange and have large public floats. The volatility in our share price will be attributable to a number of factors. First, our Common Stock will be, compared to the shares of such larger, more established companies, sporadically and thinly traded. As a consequence of this limited liquidity, the trading of relatively small quantities of shares by our shareholders may disproportionately influence the price of those shares in either direction. The price for our shares could decline precipitously in the event that a large number of our Common Stock are sold on the market without commensurate demand. Secondly, we are a speculative or “risky” investment due to our limited operating history and lack of profits to date, and uncertainty of future market acceptance for our potential products. As a consequence of this enhanced risk, more risk-adverse investors may, under the fear of losing all or most of their investment in the event of negative news or lack of progress, be more inclined to sell their shares on the market more quickly and at greater discounts than would be the case with the stock of a larger, more established company that trades on a national securities exchange and has a large public float. Many of these factors are beyond our control and may decrease the market price of our Common Stock, regardless of our operating performance. We cannot make any predictions or projections as to what the prevailing market price for our Common Stock will be at any time.

 

Our future results may vary significantly which may adversely affect the price of our Common Stock.

 

It is possible that our quarterly revenues and operating results may vary significantly in the future and that period-to-period comparisons of our revenues and operating results are not necessarily meaningful indicators of the future. You should not rely on the results of one quarter as an indication of our future performance. It is also possible that in some future quarters, our revenues and operating results will fall below our expectations or the expectations of market analysts and investors. If we do not meet these expectations, the price of our Common Stock may decline significantly.

 

We are classified as an “emerging growth company” as well as a “smaller reporting company” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies and smaller reporting companies will make our Common Stock less attractive to investors.

 

As a reporting company under the Exchange Act, we expect to be classified as an "emerging growth company," as defined in the JOBS Act, we may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We cannot predict if investors will find our Common Stock less attractive because we may rely on these exemptions. If some investors find our Common Stock less attractive as a result, there may be a less active trading market for our Common Stock and our stock price may be more volatile.

 

 

 

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Section 107 of the JOBS Act provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act of 1933 (the “Securities Act” or “33 Act”) for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have irrevocably opted out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act.

 

We could remain an “emerging growth company” for up to five years, or until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues exceed $1 billion, (ii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our Common Stock that is held by non-affiliates exceeds $700 million as of the last business day of our most recently completed second fiscal quarter, or (iii) the date on which we have issued more than $1 billion in non-convertible debt during the preceding three-year period.

 

Notwithstanding the above, we expect that we would be a “smaller reporting company.” In the event that we are still considered a “smaller reporting company,” at such time are we cease being an “emerging growth company,” the disclosure we will be required to provide in our SEC filings will increase, but will still be less than it would be if we were not considered either an “emerging growth company” or a “smaller reporting company.” Specifically, similar to “emerging growth companies,” “smaller reporting companies” are able to provide simplified executive compensation disclosures in their filings; are exempt from the provisions of Section 404(b) of the Sarbanes-Oxley Act requiring that independent registered public accounting firms provide an attestation report on the effectiveness of internal control over financial reporting; and have certain other decreased disclosure obligations in their SEC filings. Decreased disclosures in our SEC filings due to our status as an “emerging growth company” or “smaller reporting company” may make it harder for investors to analyze our results of operations and financial prospects. Should we cease to be an “emerging growth company” but remain a “smaller reporting company”, we would be required to: (1) comply with new or revised US GAAP accounting standards applicable to public companies, (2) comply with new Public Company Accounting Oversight Board requirements applicable to the audits of public companies, and (3) to make additional disclosures with respect to related party transactions, namely Item 404(d).

 

Risks Relating To This Offering

 

There is no public market for the securities and even if a market is created, the market price of our Common Stock will be subject to volatility.

 

Prior to this Offering, there has been no public market for our securities and there can be no assurance that an active trading market for the securities offered herein will develop after this Offering, or, if developed, be sustained. We anticipate that, upon completion of this Offering, we will cause an application to be filed on our behalf to list our Common Stock for trading on the OTCQB. If for any reason, however, our application is not approved or if and when listed we do not take all action necessary to allow such market to continue quotation on the OTCQB or a public trading market does not develop, purchasers of our Common Stock may have difficulty selling their securities should they desire to do so and holders may lose their entire investment.

 

FINRA sales practice requirements may limit a stockholder’s ability to buy and sell our stock.

 

The Financial Industry Regulatory Authority (“FINRA”) has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer’s financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our Common Stock, which may have the effect of reducing the level of trading activity in our Common Stock. As a result, fewer broker-dealers may be willing to make a market in our Common Stock, reducing a stockholder’s ability to resell shares of our Common Stock.

 

State securities laws may limit secondary trading, which may restrict the states in which you can sell the shares offered by this Prospectus.

 

If you purchase shares of our Common Stock sold in this Offering you may not be able to resell the shares in any state unless and until the shares of our Common Stock are qualified for secondary trading under the applicable securities laws of such state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in such state. There can be no assurance that we will be successful in registering or qualifying our Common Stock for secondary trading, or identifying an available exemption for secondary trading in our Common Stock in every state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of, our Common Stock in any particular state, our Common Stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our Common Stock, the market for our Common Stock will be limited which could drive down the market price of our Common Stock and reduce the liquidity of the shares of our Common Stock and a stockholder’s ability to resell shares of our Common Stock at all or at current market prices, which could increase a stockholder’s risk of losing some or all of his investment.

 

 

 

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USE OF PROCEEDS

 

We will receive none of the proceeds from the sale of the Common Stock issued and held by our Selling Stockholders in this Offering.

 

DETERMINATION OF THE OFFERING PRICE

 

There is no public market for our Common Stock. We have arbitrarily determined the offering price of our publicly tradable Common Stock offered pursuant to this Prospectus to be $0.10 per share. We believe that this price reflects the appropriate price that a potential investor would be willing to invest in our Common Stock at this initial stage of our development. The price was arbitrarily determined and bears no relationship whatsoever to our business plan, the price paid for our shares by our founders, our assets, earnings, book value or any other criteria of value. The offering price should not be regarded as an indicator of the future market price of the securities, which is likely to fluctuate.

 

MARKET PRICE OF AND DIVIDENDS ON THE COMPANY'S

COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

 

Market Information

 

As of the date of this Prospectus there is no market for our Common Stock. We intend to take certain steps to cause a licensed market maker to file an application with FINRA to list our Common Stock for trading on the OTCQB. There can be no assurances that our Common Stock will be approved for listing on the OTCQB, or any other existing U.S. trading market. See “RISK FACTORS.”

 

Holders

 

As of the date of this Prospectus we had 93 holders of record for our Common Shares. See “DESCRIPTION OF SECURITIES.”

 

We are registering the 22,201,650 shares of Common Stock held by 82 holders of our Shares in our registration statement of which this Prospectus is a part.

 

Dividend Policy

 

We have not paid any dividends since our incorporation and do not anticipate the payment of dividends in the foreseeable future. At present, our policy is to retain earnings, if any, to develop and market our products. The payment of dividends in the future will depend upon, among other factors, our earnings, capital requirements, and operating financial conditions. 

 

 

 

 

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SELLING STOCKHOLDERS

 

The Selling Stockholders named in this Prospectus are offering the 22,201,250 shares of Common Stock offered through this Prospectus. The Selling Stockholders acquired the 22,201,250 shares of Common Stock offered through this Prospectus from us in either our private placement transactions pursuant to Regulation D promulgated under the 33 Act, via assignment from existing shareholders or as a result of other authorized issuance by our Board of Directors pursuant to available exemptions from registration.

 

The following table provides as of the date of this Prospectus, information regarding the beneficial ownership of our Common Stock held by each of the Selling Stockholders and the percentage owned by each Selling Stockholder. Assuming all of the shares registered below are sold by the Selling Stockholders, none of the Selling Stockholders will own one percent or more or our Common Stock.

 

Name of Selling Shareholder (1)   Shares of
Common Stock
Owned (2)
    % of
Ownership
 
Francesca Ierfino     3,005,000       3.7%  
Giuseppe Regina     700,000       *  
Pasqualina Romeo (3)     2,998,000       3.7%  
Neil Hudson Jr. Welch     600,000       *  
State Pro Construction (3)     100,000       *  
Paulo Rego     100,000       *  
Alex Gaudio     100,000       *  
Patrizia Orlando     100,000       *  
Michele Bavaro     700,000       *  
Domenico Ferri     140,000       *  
Domenico Pelle     100,000       *  
Michele Desiderato     100,000       *  
Franco Romeo     25,000       *  
Angela Pietrantonio     20,000       *  
Domenico Mimmo Pileggi     20,000       *  
Elena Palmieri Bono     5,000       *  
Vincenza Ferri     5,000       *  
Anna Maria Arcidiacono     10,000       *  
Marie Josee Belec     5,000       *  
Donato Desiderato     5,000       *  
Gina Vutrano     40,000       *  
Zinanna Holdings Inc.     239,000       *  
Pasqualina Romeo     123,000       *  
Raffaee Romeo     2,000       *  
Vincenzo Bruzzese     1,070,000       1.31%  
Mariangela Miccolis     2,000       *  
Pietro Morina     20,000       *  
Augusto Salmone     2,000       *  
Antonio Ferri     5,000       *  
Gennaro Ierfino     2,000       *  
Vladyslav Dobrovolskyy     300,000       *  
Maria Desiderato     35,000       *  
Angela Franceschini     200,000       *  
Eugenio Dacampo     5,000       *  
Marie Valiante     30,000       *  
Sabino Grassi     25,000       *  
Konstantinos Maragos     100,000       *  
Carmen Presseault     25,000       *  
Michele Desiderato     60,000       *  
Riccardo Varisco     50,000       *  
Gaetano Di Turi     1,000       *  
Giovanni Di Salvo     50,000       *  

 

 

 

  15  

 

 

Name of Selling Shareholder (1)   Shares of
Common Stock
Owned (2)
    % of
Ownership
 
Angela Di Turi     1,000       *  
Giancarlo Bono     10,000       *  
Domenico Pelle     75,000       *  
Miguel Medeiro Girasol     10,000       *  
Gualtiero Medda     100,000       *  
Nicola Sacco     100,000       *  
Antonio Michele Deluca     100,000       *  
Vincent De Felice     35,500       *  
Yolanda Pandolfo     1,000,000       1.22%  
Dominic Siciliano     100,000       *  
Giovanni Amoruso     28,750       *  
Philippe Nolet     200,000       *  
Lynn Baudart     50,000       *  
Sydney Azancot     50,000       *  
Iole Persechino     15,000       *  
Michele Hughes     50,000       *  
Anne Cepleanu     30,000       *  
Caroll Zeliniotis     50,000       *  
Manon Robitaille     2,000       *  
Niki Di Stefano     100,000       *  
Denis Senecal     2,100,000       2.57%  
David Natan     150,000       *  
Silvio Tomanelli     150,000       *  
Daniel Kolchkov     350,000       *  
Kosta Maragos     700,000       *  
Daniel Joseph Machak     200,000       *  
Casey Pierre     25,000       *  
John Brown     50,000       *  
Josh Phipps     100,000       *  
Mashina Mahmoud     350,000       *  
Nicholas Dietrich     100,000       *  
Ross Golub     700,000       *  
William Dyas     50,000       *  
Cheryl Biggs     25,000       *  
Kenneth Keefe     2,500,000       3.06%  
Lynn Baudart     100,000       *  
Harold Kestenbaum     10,000       *  
Andrew Telsey (6)     1,010,000       1.24%  
Stacia Telsey     100,000       *  
Matthew Telsey     100,000       *  

* less than 1%

 

(1) The named party beneficially owns such shares. The numbers in this table assume that none of the Selling Stockholders purchases additional shares of Common Stock.
(2) All of the shares listed are being offered by each of the Selling Shareholders listed.
(3) Includes 180,000 shares owned under the name Giulietta Romeo Distribution, Inc.
(4) The principal of this company is. Gianfranco Marinelli
(5) The principal of this company is Gaetano Di Turi.
(6) Mr. Telsey is the owner and principal shareholder of Andrew I. Telsey, P.C., our legal counsel.

 

Antonio and Vincenza Ferri are Claudio Ferri’s mother and father. Domenico Ferri is his brother.

 

Gaetano and Angelo Di Turi are the father and mother of Michele De Turi.

 

Other than as disclosed above, none of the Selling Stockholders has had a material relationship with us or any of our affiliates other than as a stockholder at any time within the past three years.

 

 

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PLAN OF DISTRIBUTION

 

The Selling Stockholders registering Common Stock and any of his/her pledges, assignees, and successors-in-interest may, from time to time, sell any or all of their shares of Common Stock on any stock exchange, market, or trading facility on which the shares are traded or in private transactions. The Selling Stockholders may offer shares in transactions at fixed or negotiated prices. We intend to encourage a securities broker-dealer to apply on Form 211 to quote our stock in the OTCQB, concurrent with the date of the Prospectus, but we cannot assure when or whether this application will be approved or that, if approved, quotations of our Common Stock will commence on any trading facility or will result in the development of a viable trading market for our shares sufficient to provide stockholders with the opportunity for liquidity. See “RISK FACTORS.” Sales may be at fixed or negotiated prices. A selling security holder may use any one or more of the following methods when selling shares:

 

  · ordinary brokerage transactions and transactions in which the broker-dealer solicits purchasers;
  · block trades in which the broker-dealer will attempt to sell the shares as agent but may position and resell a portion of the block as principal to facilitate the transaction;
  · purchases by a broker-dealer as principal and resale by the broker-dealer for its account;
  · an exchange distribution in accordance with the rules of the applicable exchange;
  · privately negotiated transactions;
  · settlement of short sales entered into after the effective date of the registration statement of which this Prospectus is a part;
  · broker-dealers may agree with the selling security holders to sell a specified number of such shares at a stipulated price per share;
  · through the writing or settlement of options or other hedging transactions, whether through an options exchange or otherwise;
  · a combination of any such methods of sale; or
  · any other method permitted pursuant to applicable law.

 

Broker-dealers engaged by the Selling Stockholders may arrange for other broker-dealers to participate in sales in amounts to be negotiated, but in the case of an agency transaction not in excess of a customary brokerage commission, and in the case of a principal transaction a markup or markdown not in excessive amounts. Each Selling Stockholder may be an underwriter, within the meaning of Section 2(a)(11) of the Securities Act. Any broker-dealers or agents that participate in the sale of the Common Stock or interests therein may also be deemed to be an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act. Any discounts, commissions, concessions or profit earned on any resale of the shares may be underwriting discounts and commissions under the Securities Act. A Selling Stockholder, who is an “underwriter” within the meaning of Section 2(a)(11) of the Securities Act is subject to the Prospectus delivery requirements of the Securities Act.

 

We are bearing all costs relating to the registration of the Common Stock, which are estimated at approximately $42,386. The Selling Stockholders, however, will pay any commissions or other fees payable to brokers or dealers in connection with the sale of the Common Stock. We are paying the expenses of the Offering because we seek to enable our Common Stock to be traded on the OTCQB. We believe that the registration of the resale of shares on behalf of existing shareholders may facilitate the development of a public market in our Common Stock if our Common Stock is approved for trading on the OTCQB. We have agreed to indemnify the Selling Stockholders against certain losses, claims, damages, and liabilities, including liabilities under the 33 Act.

 

We agreed to keep this Prospectus effective until the earlier of: (i) the date on which the shares may be resold by the Selling Stockholders without registration by reason of Rule 144 under the Securities Act or any other rule of similar effect, or (ii) all of the shares have been sold pursuant to this Prospectus or Rule 144 under the Securities Act or any other rule of similar effect. The resale shares will be sold only through registered or licensed brokers or dealers if required under applicable state securities laws. In addition, in certain states, the resale shares may not be sold unless they have been registered or qualified for sale in the applicable state or an exemption from the registration or qualification requirement is available and is complied with.

 

Under applicable rules and regulations under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), any person engaged in the distribution of the resale shares may not simultaneously engage in market-making activities with respect to the Common Stock for the applicable restricted period, as defined in Regulation M, prior to the commencement of the distribution. In addition, the Selling Stockholders will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including Regulation M, which may limit the timing of purchases and sales of shares of the Common Stock by the selling stockholders or any other person. We will make copies of this Prospectus available to the Selling Stockholders and have informed them of the need to deliver a copy of this Prospectus to each purchaser at or prior to the time of the sale.

 

 

 

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Some of the information in this Prospectus contains forward-looking statements that involve substantial risks and uncertainties. You can identify these statements by forward-looking words such as “may,” “will,” “expect,” “anticipate,” “believe,” “estimate,” and “continue,” or similar words. You should read statements that contain these words carefully because they:

 

  · discuss our future expectations;
  · contain projections of our future results of operations or of our financial condition; and
  · state other “forward-looking” information.

 

We believe it is important to communicate our expectations. However, there may be events in the future that we are not able to accurately predict or over which we have no control. Our actual results and the timing of certain events could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including those set forth under “RISK FACTORS” and “DESCRIPTION OF BUSINESS” and elsewhere in this Prospectus. See “RISK FACTORS.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION

AND RESULTS OF OPERATIONS

 

Overview

 

We are a Florida corporation incorporated on March 7, 2013, focused on developing a fast casual food dining chain restaurant business. We commenced operations by opening our initial corporately owned location in Fort Lauderdale, Florida, in May 2015. We opened three additional locations by April 2016, all in Southern Florida, through a working relationship with Wyndham Hotels. In September 2017, Hurricane Irma caused significant damage to the area. As a result, we closed all of our stores for renovation following the storm. We reopened two of these locations but elected not to reopen our 4 th location. See “Business - Restaurant Development” below. If we are able to raise additional capital, of which there is no assurance, our intention is to own and operate up to 10 of our restaurants and utilize them as a showcase in the marketing of our proposed franchise operations.

 

In May 2017, we completed our National Franchise License and now have the ability to sell franchises in all of the states in the US except for New York, Virginia and Maryland which we intend to add at later dates if sufficient demand exists. In June 2017, we completed the sales of two franchise locations in Florida. We anticipate commencement of the building and development of these locations by the end of 2018.

 

We have never been subject to any bankruptcy proceeding. Our principal offices are located at 80 SW 8 th St. Suite 2000, Miami, Florida, 33130, telephone (305) 423-7129 and our website is www.kissesfromitaly.com.

 

Results of Operations

 

Comparison of Results of Operations for the years ended December 31, 2017 and 2016

 

During the year ended December 31, 2017, we generated revenues of $740,412 compared to revenues of $928,624 during the year ended December 31, 2016, a decrease of $188,212. We believe this decrease arose primarily as a result of Hurricane Irma, which caused significant damage to the area in September 2017. All of our restaurants were closed until January 2018 in order to renovate the premises from the damage done by the hurricane. Our 2017 revenue represents approximately 8+ months of operations, while 2016 represents a full year of operations. Further, the economy in Southern Florida is seasonal, as the population increases significantly beginning in the fall, through the spring. Because we closed during four of the busiest months of the year because of the seasonality of the Southern Florida economy. Additionally, during the year ended December 31, 2017, we generated our initial revenue of approximately $30,000 from the sale of our initial 2 franchises.

 

Cost of goods sold were $300,958 in 2017, compared to $405,363 in 2016, a decrease of $104,405, as a result of operations and sales being affected by Hurricane Irma, which greatly affected the area in early September 2017. We expect that cost of goods will remain relatively constant at 40% of gross revenues for our corporate owned restaurants.

 

Operating expenses during the year ended December 31, 2017, were $1,042,747, compared to operating expenses of $1,209,492 incurred during the year ended December 31, 2016, a decrease of $166,745. This decrease arose from our stores being closed for the last calendar quarter of 2017 due to Hurricane Irma, as well as decreased executive compensation of $86,473, consulting and professional fees of $37,015, and payroll expense of $56,263. However, we did incur franchise consulting fees during 2017 that we did not incur in 2016. All other operating expenses remained relatively constant in 2017 and 2016.

  

As a result, we generated a net loss of $639,144 during the year ended December 31, 2017 ($0.01 per share), compared to a net loss of $697,093 during the year ended December 31, 2016 ($0.01 per share).

 

Liquidity and Capital Resources

 

At December 31, 2017, we had $51,955 in cash.

 

Net cash used in operating activities was ($115,066) during the year ended December 31, 2017, compared to ($121,560) during 2016. This nominal decrease in the cash used in 2017 compared to 2016 was primarily attributable to an increase in loans payable in 2017, offset by higher accrued liabilities during 2016.

 

 

 

  19  

 

 

Cash flows provided or used in investing activities were $$671 and $37,334 during the years ended December 31, 2017 and 2016, respectively.

 

Cash flows provided or used by financing activities for the years ended December 31, 2017 and 2016 were $135,000 and $169,875, respectively. All of net cash was provided from the issuance of capital stock and will vary from period to period based on the effectiveness of our fund raising efforts.

 

Our consolidated financial statements have been prepared assuming we will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. We have incurred annual losses since inception and expect we may incur additional losses in future periods.

 

We have two asset-based lines of credit of $25,000, each with two separate lenders. The amount of credit available to be accessed is dependent on the amount of documented credit receipts received by our restaurants. The due dates on these credit advances are typically between 90 and 180 days. The interest rate on the facilities are approximately 38% and 31%, respectively, plus additional processing fees of approximately 5%. As of the date of this Prospectus we were in compliance with the terms of these loans. We recorded interest expense on these facilities of $48,336 and $15,643 for the years ended December 31, 2017 and 2016, respectively. As of December 31, 2017, and 2016, loan payable balances were $45,119 and $12,551 respectively.

 

During 2016 and 2017 we raised an aggregate of $304,785 from the sale of our common stock, including the sale of 1,350,000 shares in 2017 and 1,698,750 shares in 2016. We utilized these funds to implement our business plan, including opening of our 3 restaurants and development and commencement of the sale of franchises. In order to continue this development, including opening additional company owned restaurants and continuing to develop and enhance marketing of our franchise concept, we estimate we will need approximately $1 million in additional capital. We believe we can open at least 2 additional locations for approximately $300,000. We intend to use the balance of the funds to either open additional locations, or use the balance of the funds on franchise marketing. We believe that by continuing to open company owned restaurants we can use these locations to market the franchises.

 

We need to raise additional capital to support our current operations and fund our sales and marketing programs including developing additional company owned stores and expanding our marketing of our franchise concept. We estimate that we will need approximately $1,000,000 in additional capital in order to generate profits from operations. We can provide no assurance that additional funding will be available on a timely basis, on terms acceptable to us, or at all. While we have had discussions with potential investors and investment bankers, we have no agreement with any third party to provide us this additional financing and there can be no assurances that we will obtain this financing, either debt or equity or both, on favorable terms, or at all. Our inability to receive this financing may have a significant negative impact on our continued development and results of our operations. See “RISK FACTORS.”

 

Critical Accounting Policies and Estimates

 

Critical accounting estimates – The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these consolidated financial statements requires us to make estimates and judgments that affect the amounts of assets, liabilities, revenues and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions. The following represents a summary of our critical accounting policies, defined as those policies that we believe are the most important to the portrayal of our financial condition and results of operations and that require management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effects of matters that are inherently uncertain.

 

Stock-based Compensation – We account for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

 

Leases – We follow the guidance in ASC 840 “ Leases ,” which requires us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception of the lease.

 

Inflation

 

Although our operations are influenced by general economic conditions, we do not believe that inflation had a material effect on our results of operations during the year ended December 31, 2017.

 

 

 

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Off-Balance Sheet Arrangements

 

We have not entered into any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources and would be considered material to investors.

 

Recent Accounting Pronouncements

 

Under the Jumpstart Our Business Startups Act, or the JOBS Act, we meet the definition of an “emerging growth company.” We have irrevocably elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the JOBS Act. As a result, we will comply with new or revised accounting standards on the relevant dates on which adoption of such standards is required for non- emerging growth companies.

 

FASB ASU 2016-02, Leases (Topic 842)  - ASU 2016-02 requires that a lessee recognize the assets and liabilities that arise from operating leases. A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability) and a right-of-use asset representing its right FASB ASU No. 2014-15, “Disclosure of Uncertainties about an Entities Ability to Continue as a Going Concern, to use the underlying asset for the lease term. For leases with a term of 12 months or less, a lessee is permitted to make an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. In transition, lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. Public business entities should apply the amendments in ASU 2016-02 for fiscal years beginning after December 15, 2018, including interim periods within those fiscal years (i.e., January 1, 2019, for a calendar year entity). Early application is permitted for all public business entities and all nonpublic business entities upon issuance. The adoption of this standard is not expected to have a material impact on our financial position and results of operations. 

 

FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash (a consensus of the FASB Emerging Issues Task Force)  – Adopted in November 2016, this ASU requires that the reconciliation of the beginning-of-period and end-of-period amounts shown in the statement of cash flows include cash and restricted cash equivalents. This ASU is effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The adoption of this standard is not expected to have a material impact on our financial position and results of operations.

 

We have implemented all new accounting pronouncements that are in effect and that may impact our financial statements and we do not believe that there are any other new pronouncements that have been issued that might have a material impact on our financial position or results of operations.

 

 

 

  21  

 

 

DESCRIPTION OF BUSINESS

 

Overview and History

 

Kisses From Italy, Inc. (hereinafter referred to as “us,” “our,” “we,” the “Company” or “Kisses”) is a Florida corporation incorporated on March 7, 2013, which is focused on developing a fast casual food dining chain restaurant business. We commenced operations by opening our initial corporately owned location in Fort Lauderdale, Florida, in May 2015. Thereafter, by April 2016 we opened three additional locations, all in Southern Florida, through a working relationship with Wyndham Hotels, where we have built two of our other locations. In September 2017, Hurricane Irma made landfall in Southern Florida, causing significant damage to the area. As a result, we closed all of our stores for renovation following the storm. Our Fort Lauderdale location was reopened in early November 2017. We reopened two of the hotel locations in in Pompano Beach in January 2018 but elected not to reopen our 4 th location, as this location suffered significant damage in the storm. See “Restaurant Development” below. Our intention is to own and operate up to 6 of our restaurants and utilize them as a showcase in the marketing of our proposed franchise operations.

 

In May 2017, we completed our National Franchise License and now have the ability to sell franchises in all of the states in the US except for New York, Virginia and Maryland which we intend to add at later dates if sufficient demand exists. In June 2017, we completed the sales of two franchise locations in Florida. We anticipate commencement of the building and development of these locations by the end of 2018

 

We strive to provide the highest level of service, high quality ingredients and products. Enveloped in our mission is our philosophy to support and partner with local producers and suppliers within the regions in order to provide a truly authentic experience to our customers. Our vision is to leverage the success from our flagship store and our initial hotel locations in the South Florida market and to expand into other regions on a local, state, national and global level. The main focus is doing so through our continued corporate owned store expansion, along with the development and sales of additional locations through the advancement of our franchise and territorial rights program.

 

Our principal offices are located at 80 SW 8 th St. Suite 2000, Miami, Florida, 33130, telephone (305) 423-7024 and our website is www.kissesfromitaly.com.

 

Current Business Plan

 

Each of our restaurants has been and will continue to be designed to deliver great-tasting food in less than five minutes for in-restaurant dining or take-out orders.  In addition, the restaurant’s menu and operating systems have been specifically designed for consistent quality, which we believe is necessary for high-growth franchising. Hours of operation are expected to be from 7:00am to 11:00pm, subject to change if additional hours are required based upon the respective location of our restaurants.

 

Our Menu

 

Our menu includes grilled panini’s including an Italian style Panini, sausage, beef, sliced pork or chicken topped with quality natural “sott'olio” (grilled and marinated vegetable) products at prices ranging from $5.95 to $7.95. We also offer deli panini’s including fresh cheese Panini, prosciutto, salami, calicollo, bresaola and turkey panini’s ranging in price from $5.95 to $7.95. All our panini’s include lettuce, tomato and one choice of cheese and three choices of marinated vegetables, or three choices of grilled vegetables.

 

We also will offer desserts including a Nutella sandwich, a variety of fresh Danish, cannoli, Italian biscotti, sfogliatelle or a corneti, ranging in price from $1.50 to $2.50. We will provide an egg sandwich for breakfast only.

 

We will also have a full coffee and tea favorites, including espresso, cappuccino and other coffee drinks, soft drinks, bottled water and juices, as well as various flavors of granite (ices).

 

Our vision is to transport true authentic and rustic taste from the provinces of Italy through a fresh Panini with an espresso, latte or cold slush espresso to go. We intend to offer products that will cater to all diets including gluten free diets and emphasize fresh products with no preservatives.

 

 

 

  22  

 

 

All our sott'olio and coffee products are made in Italy. Our management is in constant communication with our product manufacturers and search for the high quality and authentic products from different regions from Southern Italy including Sicily, Calabria, Puglia, Napoli, Potenza, and Toscana. Ensuring freshness and quality, our representatives work closely with local farmers and ranchers for all meats and fresh vegetables. All our products are D.O.P. (Protected Designation of Origin) certified and defined in the European Commission Regulations.

 

Our Fast Food Restaurants

 

Between May 2015 and May 2016 we opened four (4) restaurants in Southern Florida. Each of our restaurants is owned by a wholly owned limited liability company. Our initial restaurant is located at 3146 NE 9 th Street in Fort Lauderdale, Florida. This location is across the street from an Atlantic Ocean public beach and consists of approximately 1,000 square feet of a retail restaurant with seating for up to 25 guests. See “Property,” below. This restaurant opened for business in May 2015. Subsequently, we opened three additional similar restaurants, all in Southern Florida. In September 2017, Hurricane Irma caused significant damage to the area, which caused a significant setback in the implementation of our business plan. All of our locations were closed until January 2018 in order to renovate the premises from the damage done by the hurricane. We elected not to re-open one of the locations and as a result, currently have 3 operating restaurants.

 

Except for the Fort Lauderdale location, all of our restaurant locations arose out of a relationship we established with Wyndham Vacation Ownership, Inc., which operates time share apartment complexes. Of our three restaurants, two are located in Wyndham time share resort properties where they are the only restaurants on site. Our lease agreements provide for our restaurants to provide room service that can be charged to the customer’s room, as well as an opportunity to provide food and beverage service to various sales, orientations, marketing and owner events held by Wyndham on a regular basis on these properties. Wyndham remits payments for these services bi-weekly and charges us with a 5% administrative fee for processing costs.

 

The initial relationship with Wyndham has provided us with an additional revenue stream that we had not considered when we originally began implementing our business plan. We have continued our discussions with Wyndham, as well as other similar companies and believe that our continued expansion of our restaurant concept will be enhanced as a result of our developing a more extensive relationship with Wyndham or another similar company. There are no assurances this will occur/

 

We incurred construction and equipment costs associated with the development of our initial restaurant location in Fort Lauderdale of approximately $225,000. However the costs associated with the development of our two Wyndham locations was approximately $110,000 per location. This discrepancy in development costs is primarily attributable to additional unforeseen costs for additional remodeling that we deemed necessary in order to have the new locations to our standards.

 

Each location is managed by one senior employee/manager and individually assessed based on foot traffic, seasonality, and other demographic factors. Training is provided in a peer training scenario. Whereby a new employee begins “on-the-job” training. We abide by the standards and rules set forth by the State of Florida Department of Health. Michele Di Turi and Ross Golub have the Certified Food Manager accreditation and have the proper authority to provide necessary food safety courses.

 

In March 2014 we entered into a consulting agreement with Jade Dragon Enterprises LLC, a Florida limited liability company (“Jade Dragon”), wherein Jade Dragon has agreed to assist us in locating and negotiating lease agreements for our future restaurant locations. In consideration for these services, we have agreed to issue 300,000 shares of our common stock. These shares will remain “locked up” for a period of one year from the date our common stock is approved for trading. There can be no assurances that our common stock will be approved for trading. The agreement is for a 3 year term, but may be terminated by either party upon 30 days’ notice.

 

Restaurant Franchising

 

In addition to opening our company-owned restaurants, we are engaged in franchising of our restaurant concept so that we can build market share and brand awareness. We have retained legal counsel specializing in franchise operations, who has prepared our Franchise Agreement. In May 2017, we completed its National Franchise License and now have the ability to sell franchises in all of the states in the US except for New York, Virginia and Maryland which we intend to add at later dates if sufficient demand exists. On June 23 rd , 2017 we completed the sale of our initial two franchises at a price of $15,000 per location, each to be located in Florida. These locations are set to be developed at a later date. We anticipate commencement of the building and development of these locations by the end of 2018.

 

 

 

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Each of our franchise restaurants will require that they conform to a standard of interior design, featuring a distinctive and comfortable Italian décor. We will require our approval for each specific location of a proposed franchise restaurant, which will include a requirement that the same be in a clearly identifiable commercial location built out in accordance with our standards. Franchisees will also be required to satisfactorily complete training, and purchase certain equipment and supplies from us and other approved suppliers. We will also require purchase of a point-of-sale system and data polling services from a specified supplier and a computer system that meets established system standards.

 

Franchisees will be required to purchase approximately 90% to 95% of their supplies and food inventory either directly from us, or from approved suppliers. We will attempt to negotiate system-wide volume discounts and/or rebates for our franchisees from approved suppliers and if successful, pass such discounts and/or rebates on to franchisees based on the volume of their purchases from the suppliers providing the discounts.

 

The franchise agreement is also expected to require our franchisee to pay royalties of 8% of gross sales, which are defined to be total actual charges for all products (food and non-food) and services, such as catering and delivery, sold to customers, exclusive of taxes on a weekly basis. It is also possible that we may require franchisees to pay up to 2% of their gross sales to a national marketing fund to be maintained and administered by us, depending upon the number and location of franchise operations owned by a franchisee. We anticipate that until national coverage is warranted, local and/or regional marketing campaigns may be implemented.

 

We will also require that our franchisee enter into a collateral assignment and assumption of lease through which we will be granted a security interest in all of the furniture, removable trade fixtures, inventory, licenses and supplies located in the restaurant as collateral for (1) the payment of any obligation owed to us, (2) any default or breach under the terms of the lease, and (3) any default or breach of any of the terms and provisions of the franchise agreement. In the event of a breach of or default under the lease or a payment by a franchisee as a result of a breach or default, we may be entitled to possession of the restaurant and all of our rights, title and interest in and to the lease. We also expect to enter into a conditional assignment of telephone numbers and listings that assigns us telephone numbers and directory listings upon termination or expiration of a franchisee relationship.

 

We anticipate that the initial term of a franchise agreement will be ten years, with a renewal provision of between 2-5 years on the terms and conditions of the franchise agreement so long as there has been substantial compliance with the franchise agreement, and pay a to-be-determined fee for each renewal.

 

Franchisees will also be required to replace any franchise that terminates or expires or any restaurant that closes within the territory if necessary to maintain the number of our named restaurants required in the development schedule. If a franchisee fails to meet the development schedule, we may terminate the agreement or adjust that territory to eliminate any state in the territory where we they have not achieved the minimum number required for that state.  

 

We will be required to perform the following services:

 

· Solicitation of new franchise owners - Actively and continuously market and promote through advertising and solicit prospective franchise owners in their territory according to an annual plan and budget that they develop and submit for our approval.

 

· Site selection, leasing and build-out - Consult and advise franchise owners with site selection and lease negotiation of the restaurants. Develop and maintain relationships with landlords for purposes of obtaining sites for restaurants and coordinating efforts with franchise owners to lease such sites. Develop relationships with landlords, contractors, equipment suppliers and service providers in the territory and assist in supervision of the build-out for the restaurants in our territory.

 

· Training - Provide all initial training to the franchise owners, as well as supplemental and refresher training at our training restaurant.  Schedule and coordinate all training of all franchise owners with our required mode of operations.

 

· Opening assistance - Provide grand opening support, including coordinating marketing with local television, radio, newspapers and trade publications. Provide franchise owners with supervisory assistance and guidance in connection with the opening and initial operations of their restaurants. Provide pre-opening and post-opening assistance for each new restaurant.

 

· Monitoring, audit and inspection - Be responsible for at least monthly monitoring of the operation of their restaurants, including monitoring and reporting of the sales volume and other data as determined from time to time. Monitor and communicate to our franchisee he marketing efforts of our restaurants. Conduct or assist franchisees with inspecting or auditing restaurants and their owners, with visits no less than monthly and in-depth reports at least quarterly.

 

 

 

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· Vendors and suppliers - Notify vendors and, if necessary, locate new vendors for the franchises and coordinate distribution and purchasing programs. Assist franchisees in developing programs for suppliers and distributors of approved products. Maintain positive relationships and evaluate additional incentive programs and marketing programs from approved and preferred suppliers, vendors and other designated parties.

 

· Continuing assistance to franchise owners - Provide continuing operating assistance and assist in facilitating transfers and renewals of franchises. Assist franchise owners during transfers of their franchises or restaurants.

 

We also expect that we will require our franchisees to maintain certain staffing levels to meet all of the terms of the agreement. For the first development year we expect we will require each location to have 2 corporate employees, increasing to 3 for the fifth development year.  

 

If a franchisee fails to perform any of the above services and we need to step in to perform such tasks, we will require that they pay us an amount equal to 125% of the expenditures incurred by us in performing the services that they failed to perform. In addition, such failure will constitute a breach of the agreement. A breach of the agreement gives us the right to terminate the agreement after delivering notice to them of the breach and their failure to cure the breach within 30 days after delivery of the notice.

 

The agreement is also expected to include provisions where each franchisee must refer all inquiries for franchises in their territory to us. Under the terms of the Area Representative Agreement, we will have the sole right to grant franchises in all our unsold territories, terminate a franchise agreement, and approve site selections, leases and other franchise real estate transactions.

 

The aforesaid is only our best estimates of the terms we expect to include in our franchise agreements. No assurances can be provided that our franchise agreements, once completed, will contain all or most of the aforesaid terms, or that we will not elect to modify any terms in the future.

 

Franchise Marketing

 

Our marketing strategy for establishing multi-unit franchises is to contact individuals or entities that have previously developed franchises in other concepts.  This strategy allows us to find people with the proper knowledge, experience, and financial resources to develop a successful franchise operation in a timely fashion.  

 

We are seeking individuals or groups with the skills and financial strength to operate multi-unit franchise organizations within specific geographic territories.  These persons must qualify on the basis of their skill sets and financial ability to develop a territory. We anticipate a franchise territory will consist of areas that are either cities or counties depending on population. We seek to identify people with considerable experience in management of food service venues who also have sufficient start-up capital to open several of our restaurants.

 

As of the date of this Prospectus we have entered into discussions with several possible franchise owners. It is anticipated that these franchisees will initially open multiple units, including restaurants in Florida, New York and California, the United Kingdom, Italy and Canada. However, there is no definitive agreement binding these potential franchisees to purchasing any of our franchises and there are no assurances that we will sell any franchises in the future.

 

We will consider the skills and investment capital that each potential multiple franchise owner presents to determine the size and nature of the territory and the minimum number of our restaurants that the franchise owner will be required to maintain in the territory in order keep the exclusive rights to that territory. We will review the demographics of each proposed location to consider the appropriate number of restaurants in each area based upon population and other factors including per capita income and then set the minimum number of restaurants at half the amount. Franchisees will not be restricted from opening additional restaurants beyond the minimum for their territory. We have not yet generated revenue from the sourcing of franchises and there are no assurances we will ever generate revenues from this business concept.

 

Commissary System

 

We plan to develop centralized commissary facilities that will serve all of the restaurants that we own in a given region. We believe that a commissary that serves a region of restaurants will improve efficiency and consistency for the restaurant concept. We also believe that a commissary system will allow our restaurants to be approximately 500 square feet smaller than they would otherwise be. We plan to build commissaries in areas with lower rent. In this manner, we plan to save the difference between the 500 fewer square feet that retail rental space would cost and the commissary’s costs located in a lower rent area. Our commissary will have storage space for paper products as well as walk-in coolers to store food. Food preparation for sauces, salad dressings, and other base ingredients will be done in the commissary “clean room” and then delivered to local restaurants daily. We believe central food preparation of sauces and base ingredients will maintain consistency of our restaurants’ products and possibly reduce labor costs.

 

 

 

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Restaurant Advertising

 

Our advertising has and will consist primarily of newspaper print ads, direct mailing efforts and also through social media, including Facebook, Twitter and other social media outlets. We also participated in other forms of advertising. For example, we intend to use an airplane to advertise our Kisses banner to the Fort Lauderdale beach crowd, offering promotional free coffee and T-shirts. Our ads will contain a coupon for a free coffee with the purchase of any meal item.

 

As we open restaurants in new markets we plan to duplicate the advertising effort we employed in Fort Lauderdale and to spend initially approximately 2% to 3% of monthly revenue for local advertising on a per company-owned restaurant basis. Since we plan to build multiple restaurants simultaneously within a specific geographic region, we believe our advertising cost as a percentage of revenue will decrease as we increase the number of restaurants within a region. There are no assurances we will successfully open multiple restaurants moving forward.

 

Employees

 

We currently employ 8 full time persons, plus our officers. Employees include 4 chefs, 3 barista’s and an inventory manager. Our employees work at will and are not represented by a collective bargaining unit. We believe our relationship with our employees is excellent in most cases. We require all our employees and consultants to sign a confidentiality and non-disclosure agreement.  Our success relies on our ability to hire additional employees, particularly on the local sales side. We believe there are numerous quality people to choose from throughout our area of targeted expansion.

 

As we grow we anticipate in the near future we will require a franchise director and a Chief Financial Officer/Controller, as well as various administrative support personnel.

 

Property

 

Our principal place of business is located at 80 SW 8 th St. Suite 2000, Miami, Florida, 33130, which is an executive virtual office. This location consists of approximately 1,000 square feet of office and conference room space. The relevant lease expired March 1, 2014, but we have reverted to a month to month tenancy. We pay monthly rent of $179. We do not anticipate that we will need to expand the office facility for the next 12 months.

 

We have also executed lease agreements for our three company owned restaurants, including:

 

· 3146 NE 9 th ST, Ft Lauderdale, Fl, 33304; (Lease signed in December 2013 for 7 years + 7 year option, 990 sq. ft.; initial monthly rent of $2,300 per month, plus 6% tax, with annual escalator;

 

·   2601 N Palm Aire Dr, Pompano Beach, Fl, 33069; Lease signed in December 2015 for 2 years + 1 year automatic renewal. 2,270 sq. ft., monthly rent cost $3,600; and

 

· 615 N Ocean Blvd, Pompano Beach, Fl, 33062; Lease signed in December 2015 for 1 years + 1 year automatic renewal. 600 sq. ft., monthly rent cost $545

 

Competition

 

The fast food segment of the restaurant industry is highly competitive and fragmented. In addition, fast food restaurants compete against other segments of the restaurant industry, including fast-casual restaurants and casual dining restaurants. The number, size and strength of our competitors vary by region. Our competitors also compete based on a number of factors, including taste, speed of service, value, name recognition, restaurant location and customer service.

 

The restaurant industry is often affected by changes in consumer tastes; national, regional or local economic conditions; currency fluctuations; demographic trends; traffic patterns; the type, number and location of competing food retailers and products; and disposable purchasing power. Our restaurant concept is expected to compete with international, national, and regional restaurant chains as well as locally owned restaurants. We will compete not only for customers, but also for management and hourly personnel, suitable real estate sites, and qualified franchisees.

 

 

 

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We believe that each of the following restaurants may provide competition to our proposed restaurants because they all are franchise operations that sell sandwiches and coffee:

 

· Jimmy John’s
· Subway
· Chipotle Mexican Grill
· Miami Subs Grill
· Starbucks

 

Of the above-listed restaurants, all are larger and have significantly greater financial resources than we currently have available.

 

Government Regulations

 

We are subject to various federal, state and local laws affecting our business.  Our restaurants must comply with licensing and regulation by a number of governmental authorities, which include health, sanitation, safety and fire agencies in the state or municipality in which the restaurant is located. In addition, we must comply with various state laws that regulate the franchisor/franchisee relationship.

 

We are also subject to federal and state laws governing employment and pay practices, overtime, tip credits and working conditions. The bulk of our employees are paid on an hourly basis at rates related to the federal and state minimum wages.

 

We are also subject to federal and state child labor laws which, among other things, prohibit the use of certain “hazardous equipment” by employees 18 years of age or younger. Under the Americans with Disabilities Act, we could be required to expend funds to modify our restaurants to better provide service to, or make reasonable accommodation for the employment of disabled persons. We continue to monitor our facilities for compliance with the Americans with Disabilities Act in order to conform to its requirements. We believe future expenditures for such compliance would not have a material adverse effect on our operations.

 

As a potential franchisor we will be soliciting prospects for franchises and are subject to federal and state laws pertaining to franchising. These laws require that certain information be provided to franchise prospects at certain times and regulate what can be said and done during the offering process. Some states require the franchise offering circular to be registered and renewed on an annual basis.

 

Legal Proceedings

 

We are not involved in any material legal proceedings, nor are we aware of any legal proceedings threatened or in which any director or officer or any of their affiliates is a party adverse to our Company or has a material interest adverse to us.

 

Trademarks and Patents

 

We have applied for and received a registered trademark of our logo in Italy, No. 0001 528191. We have also obtained the registered trademark of our logo in the United States (United States Patent and Trademark Office) Serial Number. 87138230

 

Industry Overview

 

According to the National Restaurant Association, the fast food industry’s economic health is now a leading indicator of the nation’s economic health, and industry growth is a significant factor in the nation’s economic outlook. Restaurant industry sales are growing, with projected sales of $660.5 billion in 2013, up approximately 9% in two years. On a typical day, restaurant industry sales are $1.8 billion across the 980,000 restaurant locations nationwide. Today, restaurant industry sales are 4% of the U.S. GDP. Like 2012, focus on cost containment, value, quality, price and international expansion will be on most restaurateurs' wish-list to tide over some of the macro difficulties this year. (www.restaurant.org/home).

 

 

 

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Also according to the National Restaurant Association, as much as 41% of restaurant operators expect to see an uptick in sales in the coming six months on an improving economy. Restaurant operators' capital spending plans are also riding uphill, reaffirming their positive outlook. We are optimistic of bottom-line expansion in the near term . In addition, for every dollar spent in restaurants, an additional $2 is generated in sales for other industries, generating even more tax dollars and economic activity. (www.restaurant.org/home).

 

Recently, food costs account for about one-third of restaurant sales, thus making the industry vulnerable to food cost inflation. As suggested by the U.S. Department of Agriculture (USDA) report, price inflation for all food is expected at 2.5-3.5% in 2013 down from the prior expectation of 3-4% level. Commodities like fish and seafood, dairy products, fats and oils, cereals and bakery products and other foods will likely witness a decline in prices. However, prices for beef and pork have risen significantly over the past 6 months due to the severe drought in parts of the US, with beef prices being the highest. The drought in the Midwest growing region last year resulted in steeper grain costs, which in turn pushed up the feed costs. Some believe that feed prices will cool off with the new harvest season and that could lead to lower chicken prices in 2014. There are no assurances that this will occur.

 

Consumers are now on the lookout for new ways to eat fast without having to sacrifice their nutrition. Consumers are now gravitating toward quick meals that offer healthy choices with fresh ingredients while still enjoying great tasting food. We are attempting to penetrate this market by positioning ourselves in the high quality sandwiches and coffee to go at affordable prices.

 

 

 

 

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MANAGEMENT

 

Executive Officers, Directors and Key Personnel

 

The following table sets forth information regarding our executive officers and directors:

 

Name   Age   Position
Michele Di Turi   41   Co-Chief Executive Officer, President and Chairman of the Board
Claudio Ferri   41   Co-Chief Executive Officer, Chief Investment Officer and a director
Leonardo Fraccalvieri   33   Chief Operating Officer and Director

 

The above listed officers and directors will serve until the next annual meeting of the shareholders or until their death, resignation, retirement, removal, or disqualification, or until their successors have been duly elected and qualified. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. Officers serve at the will of the Board of Directors.

 

Resumes

 

Michele Di Turi has been our Co-Chief Executive Officer, President and Director since our inception. In addition, Mr. Di Turi has been Chief Operating Officer and a Director of Sunshine Biopharma, Inc., a publicly held biotech company, since October 15, 2009. Since November 2008, Mr. Di Turi has also been President of Sunshine Bio Investments, Inc., a privately held Canadian corporation engaged in the sale of non-regulated biotechnology and medical products. Prior, from February 2003 through November 2008, he was employed by Mazda President, Inc., Montreal, Canada, as a sales representative and director of customer service. He devotes substantially all of his time to our business affairs.

 

Claudio Ferri is our Co-Chief Executive Officer, Chief Investment Officer and a director, positions he assumed at our inception. From May 2001 through September 2013, Mr. Ferri was employed by State Street Global Advisors, Montreal, Canada as Vice President, Senior Portfolio Manager and Trader where his responsibilities included the management of Canadian government bonds and provincial/agency investment strategies and trading for active and enhanced fixed income portfolios. Mr. Ferri received a Bachelor of Commerce degree from Concordia University in 2001 with a major in finance. He devotes approximately 30% of his time to our business affairs.

 

Leonardo Fraccalvieri has been our Chief Operating Officer and a director since our inception. Previously, from April 2013 through January 2014, he was Business Development Manager at Italy America Chamber of Commerce, West LA, CA, where he was responsible for management of project development and evaluation of Italian companies looking to expand in the US. From June 2012 through December 2013, he was a business analyst at 10EQS Management Consulting where he was responsible for market strategy definition. From May 2009 through June 2011, he was a Business Development specialist at BusinessviaItaly, where he worked with companies looking to expand their business internationally to find new commercial partners abroad, as well as providing new business opportunities for foreign nationals. Mr. Fraccalvieri attended Universita’ Commerciale Luigi Bocconi Milano, and received an undergraduate degree in Economics of International Market and New Technologies in Milan and a graduate degree from 2 Universita’ Commerciale Luigi Bocconi Milano in Milan where he received a Masters’ degree in International Management and Business Administration, majoring in Management Consulting and Strategy. He devotes substantially all of his time to our business affairs.

 

Board Committees

 

As of the date of this prospectus we do not have any committees of our Board of Directors. We expect to appoint outside Directors to serve on our Board in the near future, but as of the date of this Prospectus we have not identified such prospective Directors.  Once appointed and we become a reporting company, of which there is no assurance, we expect to form an Audit Committee, a Compensation Committee, a Corporate Governance Committee and a Nominating Committee.

 

Family Relationships

 

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

 

 

 

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Director Independence

 

Our Board is currently composed of three members. Our Common Stock is not currently listed for trading on a national securities exchange and, as such, we are not subject to any director independence standards. No member of our Board of Directors is considered an independent director. We evaluated independence in accordance with the rules of The New York Stock Exchange, Inc., which generally provides that a director is not independent if: (i) the director is, or in the past three years has been, an employee of ours; (ii) a member of the director’s immediate family is, or in the past three years has been, an executive officer of ours; (iii) the director or a member of the director’s immediate family has received more than $120,000 per year in direct compensation from us other than for service as a director (or for a family member, as a non-executive employee); (iv) the director or a member of the director’s immediate family is, or in the past three years has been, employed in a professional capacity by our independent public accountants, or has worked for such firm in any capacity on our audit; (v) the director or a member of the director’s immediate family is, or in the past three years has been, employed as an executive officer of a company where one of our executive officers serves on the compensation committee; or (vi) the director or a member of the director’s immediate family is an executive officer of a company that makes payments to, or receives payments from, us in an amount which, in any twelve-month period during the past three years, exceeds the greater of $1,000,000 or 2% of that other company’s consolidated gross revenues.

 

Once we achieve public status, of which there can be no assurance, we will insure that our committees as well as Board of Directors complies with all the requirements of a public company under the auspices of the OTC Marketplace.

 

EXECUTIVE COMPENSATION

 

Remuneration

 

The following table sets forth information concerning all cash and non-cash compensation awarded to, earned by or paid to our executive officers. We do not currently have an established policy to provide compensation to members of our Board of Directors for their services in that capacity, although we may choose to adopt a policy in the future.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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SUMMARY COMPENSATION TABLE  

 

Name and Principal Position   Year  

Salary

($)

 

Bonus

($)

 

Option
Awards

($)

 

All Other

Compensation ($)

 

Total

($)

 
                                       
Michele Di Turi     2016     113,190     0     0     0     113,190  
President, CEO     2017     26,717     0     0     0     26,717  
                                       
Claudio Ferri     2016     0     0     0     0     0  
CEO, CIO     2017     0     0     0     0     0  

 

Salaries are established by our Board of Directors. We currently do not have a Compensation Committee but expect to have one in place in the future once we have independent directors. None of our employees are employed pursuant to an employment agreement.

 

Compensation of Directors

 

Other than the compensation described above in the Summary Compensation Table, our officers and directors are reimbursed for actual expenses incurred.

 

Stock Plan

 

We have not adopted a stock plan but may do so in the future.

 

Employment Agreements

 

None of our executive officers are party to any employment agreement with us.

 

 

 

 

 

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SECURITY OWNERSHIP OF CERTAIN

BENEFICIAL OWNERS AND MANAGEMENT

 

The following table contains certain information regarding beneficial ownership of our Common Stock as of the date of this Prospectus by (i) each person who is known by us to own beneficially more than 5% of our Common Stock, (ii) each of our officers and Directors, and (iii) all Directors and executive officers as a group.

    

Class of Shares   Name and Address   # of Shares   % of Class
             
Common  

Michele Di Turi (1)

80 SW 8 th St. Suite 2000

Miami, Florida 33130

  38,089,000   46.6%
             
Common  

Claudio Ferri (1)

80 SW 8 th St. Suite 2000

Miami, Florida 33130

  20,409,920 (2)   25%
             
Common  

Leonardo Fraccalvieri (1)

80 SW 8 th St. Suite 2000

Miami, Florida 33130

  1,000,000   1.2%
             
Common   All Officers and Directors as a Group (3 persons)   59,498,920   72.8%

 

(1)      Officer and director of our Company.

(2)      Includes 410,000 shares of common stock held in the name of his wife.

 

 

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

 

Messrs. Di Turi and Ferri, our two officers and directors, invested $8,000 and $46,792 to acquire 80,000 and 460,792 shares, respectively, in our private placement that closed in 2016. They participated in this offering on the same terms and conditions as all of the other investors.

 

There have been no other related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-K.

 

DESCRIPTION OF SECURITIES

 

Common Stock

 

There are 200,000,000 shares of Common Stock, $.001 par value, authorized, with 81,780,170 shares issued and outstanding and 25,000,000 shares of Preferred Stock, par value $0.001 per share, authorized, none of which has been issued or is outstanding. The holders of Common Stock are entitled to one vote for each share held on all matters submitted to a vote of shareholders. Holders of Common Stock are entitled to receive ratably such dividends, if any, as may be declared by the Board of Directors out of funds legally available therefor, subject to any preferential dividend rights of outstanding Preferred Stock, which may be authorized and issued in the future. Upon a liquidation, dissolution or winding up of our Company the holders of Common Stock are entitled to receive ratably the net assets available after the payment of all debts and other liabilities, and subject further only to the prior rights of any outstanding Preferred Stock which may be authorized and issued in the future. The holders of Common Stock have no preemptive, subscription, redemption or conversion rights. The outstanding shares of Common Stock are, and the shares offered herein will be, when issued and paid for, fully paid and non-assessable. Cumulative voting in the election of directors is not permitted and the holders of a majority of the number of outstanding shares will be in a position to control the election of directors at a general shareholder meeting and may elect all of the directors standing for election. We have no present intention to pay cash dividends to the holders of Common Stock.

 

 

 

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Preferred Stock

 

Our Articles of Incorporation, as amended, also authorizes twenty-five million shares of Preferred Stock, par value of $0.01 per share, none of which has been issued. The Preferred Stock is entitled to preference over the Common Stock with respect to the distribution of assets of our Company in the event of liquidation, dissolution, or winding-up of our Company, whether voluntarily or involuntarily, or in the event of the any other distribution of our assets, among our stockholders for the purposes of winding-up affairs. The authorized but unissued shares of Preferred Stock may be divided into and issued in designated series from time to time by one or more resolutions adopted by the Board of Directors. The Directors, in their sole discretion, have the power to determine the relative powers, preferences, and rights of each series of Preferred Stock.

 

Transfer Agent and Registrar

 

We have retained ClearTrust Stock Transfer, Inc., 16540 Pointe Village Drive, Suite 205, Lutz, FL 33558, phone (813) 235-4490 as the transfer agent for our Common Stock.

 

 

SHARES ELIGIBLE FOR FUTURE SALE

 

In the event our Common Stock is approved for trading in the future, of which there can be no assurance, market sales of shares of our Common Stock after this Offering and from time to time, and the availability of shares for future sale, may reduce the market price of our Common Stock. Sales of substantial amounts of our Common Stock, or the perception that these sales could occur, could adversely affect prevailing market prices for our Common Stock and could impair our future ability to obtain capital, especially through an offering of equity securities. After the effective date of the registration statement of which this Prospectus is a part, all of the shares sold in this Offering will be freely tradable without restrictions or further registration under the Securities Act, unless the shares are purchased by our affiliates. After the effective date of the registration statement of which this Prospectus is a part, all of the shares registered in this Offering, constituting 22,201,650 shares, will be freely tradable without restrictions or further registration under the Securities Act, unless the shares are purchased by our affiliates, as that term is defined in Rule 144 under the Securities Act. The balance of 59,578,920 shares which are not being registered will be eligible for sale pursuant to the exemption from registration. However, these shares not being registered are held by our management and other affiliates who are limited to selling only 1% of our issued and outstanding shares every 90 days.

 

If our application to trade our Common Stock on the OTCQB is approved, of which there can be no assurance, it is anticipated that our Common Stock will be considered a “penny stock” and will continue to be considered a penny stock so long as it trades below $5.00 per share and as such, trading in our Common Stock will be subject to the requirements of Rule 15g-9 under the Securities Exchange Act of 1934. Under this rule, broker/dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements. The broker/dealer must make an individualized written suitability determination for the purchaser and receive the purchaser’s written consent prior to the transaction.

 

SEC regulations also require additional disclosure in connection with any trades involving a “penny stock,” including the delivery, prior to any penny stock transaction, of a disclosure schedule explaining the penny stock market and its associated risks. In addition, broker-dealers must disclose commissions payable to both the broker-dealer and the registered representative and current quotations for the securities they offer. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from recommending transactions in our securities, which could severely limit the liquidity of our securities and consequently adversely affect the market price for our securities. In addition, few broker or dealers are likely to undertake these compliance activities. Other risks associated with trading in penny stocks could also be price fluctuations and the lack of a liquid market. See “RISK FACTORS.”

 

Rule 144

 

Rule 144, adopted by the Securities and Exchange Commission pursuant to the Securities Act of 1933, generally provides an exemption for the resale or privately offered securities provided the conditions of the rule are met, which include, among other limitations, that the securities be held for a minimum of nine months due to the fact that we expect to be a reporting company pursuant to the Securities Exchange Act of 1934, as amended. Consequently, our shareholders who are affiliates and whose shares are not being registered as part of the registration statement we have filed with the SEC (of which this Prospectus is a part) may not be able to avail themselves of Rule 144 or otherwise be readily able to liquidate their investments in the event of an emergency or for any other reason, and the shares may not be accepted as collateral for a loan. If such non-affiliate has owned the shares for at least nine months, he or she may sell the shares without complying with any of the restrictions of Rule 144 once we are deemed a reporting company.

 

 

 

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INTERESTS OF NAMED EXPERTS AND COUNSEL

 

No expert or counsel named in this Prospectus as having prepared or certified any part of this Prospectus or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of the Common Stock was employed on a contingency basis, or had, or is to receive, in connection with the Offering, a substantial interest, direct or indirect, in the Company or any of its parents or subsidiaries. Nor was any such person connected with the Company or any of its parents or subsidiaries as a promoter, managing or principal underwriter, voting trustee, director, officer, or employee.

 

 

LEGAL MATTERS

 

The validity of the Common Stock offered hereby will be passed upon by Andrew I. Telsey, P.C., Centennial, Colorado. Andrew I. Telsey, sole shareholder of Andrew I. Telsey, P.C., owns 1,010,000 shares of our Common Stock.

 

EXPERTS

 

The financial statements of Kisses From Italy, Inc. as of and for the years ended December 31, 2017 and 2016 included herein have been audited by BF Borgers CPA PC, independent registered public accountants, as indicated in their reports with respect thereto, and are in reliance upon the authority of said firm as experts in accounting and auditing.

 

DISCLOSURE OF COMMISSION POSITION ON

INDEMNIFICATION FOR SECURITIES ACT LIABILITIES

 

Insofar as indemnification for liabilities arising under the 33 Act may be permitted to directors, officers or persons controlling our Company pursuant to the foregoing provisions, or otherwise, we have been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

ADDITIONAL INFORMATION

 

We have filed this registration statement on Form S-1, including exhibits, with the SEC with respect to the shares being offered in this Offering. This Prospectus is part of the registration statement, but it does not contain all of the information included in the registration statement or exhibits. If and when the SEC declares our registration statement effective, we will begin filing reports pursuant to the Securities Exchange Act of 1934, as amended. For further information with respect to our Common Stock, and us we refer you to the registration statement and to the exhibits and schedules to the registration statement. Statements contained in this Prospectus as to the contents of any contract or any other document referred to herein are not necessarily complete, and in each instance, we refer you to the copy of the contract or other document filed as an exhibit to the registration statement. Each of these statements is qualified in all respects by this reference. You may inspect a copy of the registration statement without charge at the SEC’s principal office in Washington, D.C., and copies of all or any part of the registration statement may be obtained from the Public Reference Section of the SEC, 100 F. St. NE, Washington, D.C. 20549, upon payment of fees prescribed by the SEC. The SEC maintains a worldwide website that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. The address of the website is http://www.sec.gov . The SEC’s toll free investor information service can be reached at 1-800-SEC-0330.

 

FINANCIAL STATEMENTS

 

The audited financial statements for the fiscal years ending December 31, 2017 and 2016 are set forth on pages F-1 - F-10;

 

YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE INFORMATION DIFFERENT FROM THAT CONTAINED IN THIS PROSPECTUS. WE ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, SHARES OF COMMON STOCK ONLY IN JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THE INFORMATION CONTAINED IN THIS PROSPECTUS IS ACCURATE ONLY AS OF THE DATE OF THIS PROSPECTUS REGARDLESS OF THE TIME OF DELIVERY OF THIS PROSPECTUS, OR OF ANY SALE OF OUR COMMON STOCK.

 

 

  34  

 

 

 

KISSES FROM ITALY, INC.

Financial Statements

 

For the Years Ended December 31, 2017 and 2016

Table of Contents

 

 

    Page
Report of Independent Registered Public Accounting Firm   F-3
Balance Sheet as of December 31, 2017 and 2016   F-4
Statement of Operations for the years ended December 31, 2017 and 2016   F-5
Statement of Changes in Stockholders’ Deficit for the years ended December 31, 2017 and 2016   F-6
Statement of Cash Flows for the years ended December 31, 2017 and 2016   F-7
Notes to Financial Statements   F-8

 

 

 

 

 

 

 

 

 

  F- 1  

 

 

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

 

To the shareholders and the board of directors of Kisses From Italy, Inc.

 

Opinion on the Financial Statements

 

We have audited the accompanying consolidated balance sheets of Kisses From Italy, Inc. (the "Company") as of December 31, 2017 and 2016, the related statements of operations, stockholders' equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017 and 2016, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States.

 

Basis for Opinion

 

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) ("PCAOB") and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud.

 

Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.

 

Substantial Doubt about the Company’s Ability to Continue as a Going Concern

 

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered recurring losses from operations and has a significant accumulated deficit. In addition, the Company continues to experience negative cash flows from operations. These factors raise substantial doubt about the Company's ability to continue as a going concern. Management's plans in regard to these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

 

/S/ BF Borgers CPA PC

BF Borgers CPA PC

 

We have served as the Company's auditor since 2018.

Lakewood, CO

May 15, 2018

  

 

  F- 2  

 

 

Kisses From Italy Inc.

Consolidated Balance Sheets

 

 

    December 31,     December 31,  
    2017     2016  
             
ASSETS                
Current assets:                
Cash and cash equivalents   $ 51,955     $ 32,692  
Total current assets     51,955       32,692  
                 
Property and equipment, net     130,102       169,123  
Other Assets     1,093        
Total assets   $ 183,150     $ 201,816  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
Current liabilities:                
Accounts payable   $ 13,482     $ 2,483  
Accrued liabilities     102,581       116,765  
Loans payable     45,199       12,551  
Total current liabilities     161,262       131,799  
Total liabilities     161,262       131,799  
Stockholders' Equity:                
Preferred stock, $0.001 par value. 25,000,000 shares authorized; zero shares issued and outstanding            
Common stock, $0.001 par value. 100,000,000 shares authorized; 81,780,170 and 74,535,170 shares issued and outstanding as of December 31, 2017 and 2016, respectively     81,780       75,745   
Additional paid-in capital     1,545,796       948,331  
Retained earnings deficit     (1,658,422 )     (1,019,278 )
Total Kisses From Italy Stockholders' Equity     (30,846 )     4,798  
Non-controlling interest     52,734       65,219  
Total stockholders' equity     21,888       70,017  
Total liabilities and equity   $ 183,150     $ 201,816  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

  F- 3  

 

 

Kisses From Italy Inc.

Consolidated Statements of Operations

 

 

    December 31,     December 31,  
    2017     2016  
             
Sales   $ 740,412     $ 928,624  
Cost of goods sold     300,958       405,363  
Gross margin     439,454       523,262  
Operating expenses:                
Depreciation and amortization     39,694       38,343  
Executive compensation     26,717       113,190  
Stock based compensation     468,500       441,000  
Payroll Expenses     230,620       286,883  
Rent     100,367       96,719  
Consulting and professional fees     47,527       84,542  
General and administrative     129,321       148,816  
Total operating expenses     1,042,747       1,209,492  
Income (loss) from operations     (603,293 )     (686,231 )
Other income (expense)                
Interest income (expense), net     (48,336 )     (15,643 )
Total other income (expense)     (48,336 )     (15,643 )
Income (loss) before income taxes     (651,629 )     (701,873 )
Provision for income taxes (benefit)            
Net loss   $ (651,629 )   $ (701,873 )
Less: net gain(loss) attributable to non-controlling interests     (12,486 )     (4,781 )
Net loss attributable to Kisses From Italy, Inc.   $ (639,144 )   $ (697,093 )
                 
Basic and diluted earnings (loss) per common share   $ (0.01 )   $ (0.01 )
                 
Weighted-average number of common shares outstanding:                
Basic and diluted     76,036,654       72,517,441  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

  F- 4  

 

 

Kisses from Italy

Consolidated Statements of Changes in Stockholders' Equity

   

 

                  Additional   Non-       Total  
  Preferred Stock   Common Stock   Paid-in   controlling   Retained   Stockholders'  
  Shares   Value   Shares   Value   Capital   Interest   Earnings   Equity  
                                 
Balance, December 31, 2015     $     69,636,420   $ 69,636   $ 343,565   $ 70,000   $ (322,185 ) $ 161,016  
                                                 
Net income (loss)                       (4,781 )   (697,093 )    
                                                 
Issuance of common stock in connection with sales made under private offerings           1,698,750     1,699     168,176              
                                                 
Issuance of common stock in exchange for consulting, professional and other services           4,410,000     4,410     436,590              
                                                 
Balance, December 31, 2016     $     75,745,170     75,745     948,331     65,219   $ (1,019,278 ) $ 70,017  
                                                 
Net income (loss)                       (12,486 )   (639,144 )    
                                                 
Issuance of common stock in connection with sales made under private offerings           1,350,000     1,350     133,650              
                                                 
Issuance of common stock in exchange for consulting, professional and other services           4,685,000     4,685     463,815              
                                                 
Balance, December 31, 2017     $     81,780,170   $ 81,780   $ 1,545,796   $ 52,734   $ (1,658,422 ) $ 21,888  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

  F- 5  

 

 

Kisses From Italy Inc.

Consolidated Statements of Cash Flows

 

 

    December 31,     December 31,  
    2017     2016  
Cash flows from operating activities of continuing operations:                
Net income (loss)   $ (639,144 )   $ (697,093 )
Net income loss attributable to non-controlling interest     (12,486 )     (4,781 )
Adjustments to reconcile net loss to cash used in operating activities:                
Depreciation and amortization     39,694       38,343  
Stock based compensation     468,500       441,000  
Changes in operating assets and liabilities:                
Other assets     (1,092 )        
Accounts payable     10,999       2,483  
Accrued liabilities     (14,184 )     85,937  
Loan payable     32,647       12,551  
Net cash provided by (used in) operating activities   $ (115,066 )   $ (121,560 )
                 
Cash flows from investing activities:                
Purchase of fixed assets     (671 )     (37,334 )
Net cash provided by (used in) financing activities     (671 )     (37,334 )
                 
Cash flows from financing activities:                
Proceeds from private placements     135,000       169,875  
Net cash provided by (used in) financing activities     135,000       169,875  
                 
Net increase (decrease) in cash and cash equivalents     19,262       10,981  
Cash and cash equivalents at beginning of period     32,692       21,711  
Cash and cash equivalents at end of period   $ 51,955     $ 32,692  
                 
Supplemental disclosure of cash flow information:                
Cash paid for interest   $     $  
Cash paid for income taxes   $     $  

 

The accompanying notes are an integral part of the consolidated financial statements.

 

 

 

  F- 6  

 

 

Kisses From Italy, Inc.

Notes to Consolidated Financial Statements

For the Years Ended December 31, 2017 and 2016

 

 

NOTE 1 – ORGANIZATION AND DESCRIPTION OF BUSINESS

 

Kisses From Italy Inc. (“the Company” or “KFI”) was incorporated in Florida on March 7, 2013. The Company’s main focus is to develop a fast, casual food dining chain restaurant business of corporate owned restaurants by expanding it through a nationwide/international franchise and territory sales program. The Company commenced operations in May of 2015 by opening its first location in Ft. Lauderdale, Florida. Three additional restaurants, which were located in various Wyndham Hotel properties in the Pompano Beach city area, were then opened within the following 10 months. All locations which were in leased facilities were fully operational by April 2016. In December 2017, the Company vacated one of its restaurants

 

The Company’s accounting year end is December 31st.

 

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

Basis of Presentation and Principles of Consolidation

 

The consolidated financial statements of the Company have been prepared in accordance with generally accepted accounting principles in the United States of America (“US GAAP”). This basis of accounting involves the application of accrual accounting and consequently, revenues and gains are recognized when earned, and expenses and losses or recognized when incurred. The consolidated financials include the accounts of the Company and its wholly owned subsidiaries; Kisses from Italy 9 th LLC, Kisses from Italy-Franchising LLC; and its 70% owned subsidiary, Kisses-Palm Sea Royal LLC.

 

All intercompany accounts and transactions are eliminated in consolidation.

 

Going Concern

 

The accompanying consolidated financial statements have been prepared assuming the Company will continue as a going concern, which contemplates realization of assets and the satisfaction of liabilities in the normal course of business for the twelve-month period following the date of these financial statements. On a consolidated basis, the Company has incurred significant operating losses since inception.

 

Because the Company does not expect that existing operational cash flow will be sufficient to fund presently anticipated operations, this raises substantial doubt about the Company’s ability to continue as a going concern. Therefore, the Company will need to raise additional funds and is currently exploring alternative sources of financing. Historically, the Company has raised capital through private placements, as an interim measure to finance working capital needs and may continue to raise additional capital through sale of common stock or other securities and obtaining some short-term loans. The Company will be required to continue to so until its consolidated operations become profitable. Also, the Company has, in the past, paid for consulting services with its common stock to maximize working capital, and intends to continue this practice where feasible.

 

Use of Estimates

 

The preparation of financial statements in conformity with US GAAP requires management to make estimates and assumptions that affect the reported amounts of liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. The most significant estimates relate to revenue recognition, valuation of accounts receivable and inventories, purchase price allocation of acquired businesses, impairment of long lived assets and goodwill, valuation of financial instruments, income taxes, and contingencies. The Company bases its estimates on historical experience, known or expected trends and various other assumptions that are believed to be reasonable given the quality of information available as of the date of these financial statements. The results of these assumptions provide the basis for making estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates.

 

 

 

  F- 7  

 

 

Revenue Recognition

 

Sales, as presented in our consolidated statements of earnings, represents food and beverage product sold and is presented net of discounts, coupons, employee meals and complimentary meals. Revenue from restaurant sales is recognized when food and beverage products are sold.

 

 

Non-controlling interest

 

Non-controlling interest represents third party ownership in the net assets of one of our consolidated subsidiaries. For financial reporting purposes, the assets and liabilities of our majority owned subsidiary consolidated with those of our own wholly owned subsidiaries, with any third-party investor’s interest shown as non-controlling interest.

 

Cash and Cash Equivalents

 

The Company considers all highly liquid temporary cash investments with an original maturity of three months or less to be cash equivalents. At December 31, 2017 and December 31, 2016, the Company cash equivalents totaled $51,955 and $32,692 respectively.

 

Property and equipment

 

Property and equipment are stated at cost or fair value if acquired as part of a business combination. Depreciation is computed by the straight-line method and is charged to operations over the estimated useful lives of the assets. Maintenance and repairs are charged to expense as incurred. The carrying amount and accumulated depreciation of assets sold or retired are removed from the accounts in the year of disposal and any resulting gain or loss is included in results of operations. The estimated useful lives of property and equipment are as follows:

 

Computers, software and office equipment 1 – 5 years
Machinery and equipment 3 – 5 years
Leasehold improvements Lesser of lease term or estimated useful life

 

Income taxes

 

The Company accounts for income taxes under FASB ASC 740,  “Accounting for Income Taxes” . Under FASB ASC 740, 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 bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under FASB ASC 740, the 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. FASB ASC 740-10-05,  “Accounting for Uncertainty in Income Taxes”  prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities.

 

The amount recognized is measured as the largest amount of benefit that is greater than 50 percent likely of being realized upon ultimate settlement. The Company assesses the validity of its conclusions regarding uncertain tax positions on a quarterly basis to determine if facts or circumstances have arisen that might cause it to change its judgment regarding the likelihood of a tax position’s sustainability under audit.

 

Stock-based Compensation 

 

We account for stock-based compensation using the fair value method following the guidance set forth in section 718-10 of the FASB Accounting Standards Codification for disclosure about Stock-Based Compensation. This section requires a public entity to measure the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award (with limited exceptions). That cost will be recognized over the period during which an employee is required to provide service in exchange for the award- the requisite service period (usually the vesting period). No compensation cost is recognized for equity instruments for which employees do not render the requisite service.

 

 

 

  F- 8  

 

 

Leases

 

We follow the guidance in ASC 840 “ Leases ,” which requires us to evaluate the lease agreements we enter into to determine whether they represent operating or capital leases at the inception of the lease.

 

Net Loss per Share

 

Net loss per common share is computed by dividing net loss by the weighted average common shares outstanding during the period as defined by Financial Accounting Standards, ASC Topic 260, "Earnings per Share." Basic earnings per common share (“EPS”) calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding.

 

Recent Accounting Pronouncements

 

The Company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new pronouncements that have been issued that might have a material impact on its financial position or results of operations.

 

NOTE 3 – PROPERTY AND EQUIPMENT

 

The following table sets forth the components of the Company’s property and equipment at December 31, 2017 and December 31, 2016:

 

  December 31, 2017     December 31, 2016  
  Cost     Accumulated Depreciation     Net Book Value     Cost     Accumulated Depreciation     Net Book Value  
Capital assets subject to depreciation:                                                
Furniture and equipment   $ 52,868     $ (24,733 )   $ 28,135     $ 52,196     $ (14,325 )   $ 37,871  
Leasehold improvements     175,716       (73,749 )     101,967       175,715       (44,463 )     131,252  
Total fixed assets   $ 228,584     $ (98,482 )   $ 130,102     $ 227,911     $ (58,788 )   $ 169,123  

 

For the years ended December 31, 2017 and the year ended December 31, 2016, the Company recorded depreciation and amortization of leasehold expenses of $39,694 and $38,343 respectively.

 

NOTE 4 -ACCRUED AND OTHER LIABILITIES

 

The following table sets forth the components of the Company’s accrued liabilities at December 31, 2017 and December 31, 2016.

 

  December 31,
2017
    December 31,
2016
 
Sales tax payable   $ 42,462     $ 63,749  
Payroll tax liabilities     60,119       53,016  
Total accrued liabilities   $ 102,581     $ 116,765  

 

NOTE 5 – LOANS PAYABLE

 

The Company has two asset-based lines of credit of $25,000, each with two separate lenders. The amount of credit available to be accessed is dependent on the amount of documented credit receipts received by the Company’s restaurants. The due dates on these credit advances are typically between 90 and 180 days. The interest rate on the facilities are approximately 38% and 31%, respectively, plus additional processing fees of approximately 5%. As of May 10, 2018, the Company was in compliance with the terms of these loans The Company recorded interest expense on these facilities of $48,336 and $15,643 for the years ended December 31, 2017 and 2016, respectively.

 

As of December 31, 2017, and 2016, loan payable balances were $45,119 and $12,551 respectively.

 

 

 

  F- 9  

 

 

NOTE 6 – STOCKHOLDERS EQUITY

 

Common Stock

 

At December 31, 2017 there were 100,000,000 shares of Common Stock, $.001 par value, authorized, with 81,780,170 and 75,745,170 shares issued and outstanding, respectively as of December 31, 2017 and 2016, and 25,000,000 shares of Preferred Stock, par value $0.01 per share, authorized, none of which has been issued or is outstanding as of December 31, 2017 and 2016, respectively. In May 2018, the Company’s Board of Directors and Shareholders approved an amendment to the Company’s Articles of Incorporation, increasing the number of authorized Common Shares to 200,000,000, par value $0.01 per share.

 

Common Stock Issued in Private Placements

 

During the year ended December 31, 2017, the Company accepted subscription agreements from 9 investors and issued 1,350,000 shares of its common stock at a price of $0.10 per shares for gross proceeds totaling $135,000.

 

During the year ended December 31, 2016, the Company accepted subscription agreements from 8 investors and issued 1,698,750 shares of its common stock for gross proceeds totaling $169,785.

 

The officers of the Company purchased $8,000 and $46,792, respectively, worth of shares or 80,000 and 460,792 shares, respectively, at a value of $0.10 per share in the Company’s private placement that closed in 2016.

 

Common Stock Issued in Exchange for Services

 

During the year ended December 31, 2017, the Company issued 4,685,000 shares of its common stock for services valued at $0.10 per share valued at $468,500. These shares were issued to an aggregate of 13 persons. The price of $0.10 represented the Company’s share price in its private placement throughout all of 2017.

 

During the year ended December 31, 2016, the Company issued 4,410,000 shares of its common stock for services valued at $0.10 per share values at $441,000. These shares were issued to an aggregate of 5 persons. The price of $0.10 represented the Company’s share price in its private placement throughout all of 2016.

 

NOTE 7 – COMMITMENTS AND CONTINGENCIES

 

As of December 31, 2017, the Company had three operating store locations. The Company leases these spaces based upon the following schedules:

 

· Kisses From Italy 9 th LLC based in Fort Lauderdale, Fl. leases approximately 990 square feet of space at a cost of $2,650 per month. The lease ends on December 9, 2020.
· Kisses From Italy-Palm Aire based in Pompano Beach, Florida leases approximately 2,300 square feet of space at a cost of $3,600 per month. The lease ends on May 1, 2019. The Company has a one-year automatic renewal provision for this lease but is not obligated to exercise this renewal provision.
· Kisses From Italy -Sea Gardens based in Pompano Beach, Florida leases approximately 600 square feet of space at a cost of $546 per month. The lease ends on August 1, 2018. The Company has a one-year automatic renewal provision for this lease, but is not obligated to exercise this renewal provision.
· Kisses from Royal Vista which closed in August 2017, had been paying $1,800 per month in rent for approximately 950 square feet of space.

 

Additionally, the Company for its corporate offices located rents professional and furnished space on a month to month basis in Miami, Florida at a cost of $ 223 per month.

 

NOTE 8 – SUBSEQUENT EVENT

 

In May 2018, the Company’s Board of Directors and Shareholders approved an amendment to the Company’s Articles of Incorporation, increasing the number of authorized Common Shares to 200,000,000, par value $0.01 per share.

 

 

  F- 11  

 

 

 

 

 

PROSPECTUS

 

 

 

 

 

__________________, 201__

 

 

 

 

 

 

 

 

Until ____________, 20__, all dealers that effect transactions in these securities, whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealers’ obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 

     

 

 

 

PART II - INFORMATION NOT REQUIRED IN PROSPECTUS

 

ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

 

The expenses to be paid by the Registrant are as follows. All amounts, other than the SEC registration fee, are estimates.

 

    Amount to be Paid  
SEC registration fee   $ 277  
Legal fees and expenses   $ 40,000  
Accounting fees and expenses   $ 25,000  
Miscellaneous   $ 1,000  
         
Total   $ 66,277  

 

ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS

 

Under the Florida Business Corporation Act and our Articles of Incorporation, our directors and officers will have no personal liability to us or our shareholders for monetary damages incurred as the result of the breach or alleged breach by a director or officer of his “duty of care.” This provision does not apply to the directors’: (i) acts or omissions that involve intentional misconduct, fraud or a knowing and culpable violation of law, or (ii) approval of an unlawful dividend, distribution, stock repurchase or redemption. This provision would generally absolve directors of personal liability for negligence in the performance of his duties, including gross negligence.

 

The effect of this provision in our Articles of Incorporation is to eliminate the rights of our Company and our shareholders (through shareholder’s derivative suits on behalf of our Company) to recover monetary damages against a director for breach of his fiduciary duty of care as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described in clauses (i) and (ii) above. This provision does not limit nor eliminate the rights of our Company or any shareholder to seek non-monetary relief such as an injunction or rescission in the event of a breach of a director’s duty of care. Section 145 of the Florida General Corporation Law provides corporations the right to indemnify their directors, officers, employees and agents in accordance with applicable law.

 

Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to directors, officers, or persons controlling the Company pursuant to the foregoing provisions, the Company has been informed that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.

 

ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES

 

During the year ended December 31, 2017, we accepted subscription agreements from 9 investors and issued 1,350,000 shares of common stock at a price of $0.10 per shares for gross proceeds totaling $135,000. During the year ended December 31, 2016, we accepted subscription agreements from 8 investors and issued 1,698,750 shares of common stock for gross proceeds totaling $169,785. We relied upon the exemption from registration provided by Regulation D promulgated under the Securities Act of 1933, as amended, to issue these shares. The proceeds of these offerings were used to implement our business plan, including opening of 4 restaurants and for working capital.

 

During the year ended December 31, 2017, we issued 4,685,000 shares of common stock for services to employees and consultants. These shares were issued to an aggregate of 13 persons. During the year ended December 31, 2016, we issued 4,410,000 shares of common stock for services. These shares were issued to an aggregate of 5 persons. We did not receive any proceeds from the issuance of these shares. We relied upon the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, to issue these shares.

 

 

 

  II- 1  

 

 

ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

 

Exhibit

Number

 

 

Description

     
3.1   Articles of Incorporation
3.2   Amendment to Articles of Incorporation
3.3   Bylaws
5.1   Opinion of Andrew I. Telsey, P.C. re: legality
10.1   Assignment of Lease Agreement – Palm Aire Location
10.2   Assignment of Lease Agreement – Sea Garden Location
10.3   Lease Agreement – Fort Lauderdale Location
23.1   Consent of Andrew I. Telsey, P.C.
23.2   Consent of BF Borgers CPA PC
       

  

 

ITEM 17. UNDERTAKINGS

 

The undersigned registrant hereby undertakes to:

 

  (1) File, during any period in which offers or sales are being made, a post-effective amendment to this registration statement to:

 

  (A) Include any Prospectus required by Section 10(a)(3) of the Securities Act of 1933;

 

  (B) Reflect in the Prospectus any facts or events which, individually or together, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of Prospectus filed with the Securities and Exchange Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than a 20 percent change in the maximum aggregate offering price set forth in the “Calculation of Registration Fee” table in the effective registration statement;

  

  (C) Include any additional or changed material information on the plan of distribution.

 

  (2) For determining liability under the Securities Act of 1933, treat each post-effective amendment as a new registration statement of the securities offered, and the offering of the securities at that time to be the initial bona fide offering thereof.

 

  (3) File a post-effective amendment to remove from registration any of the securities that remain unsold at the end of the offering.

 

  (4) For determining liability of the undersigned registrant under the Securities Act of 1933 to any purchaser in the initial distribution of the securities, the undersigned registrant undertakes that in a primary offering of securities of the undersigned registrant pursuant to this registration statement, regardless of the underwriting method used to sell the securities to the purchaser, if the securities are offered or sold to such purchaser by means of any of the following communications, the undersigned registrant will be a seller to the purchaser and will be considered to offer or sell such securities to such purchaser:

 

 

 

  II- 2  

 

 

  (A) Any preliminary Prospectus or Prospectus of the undersigned registrant relating to the offering required to be filed pursuant to Rule 424 under the Securities Act of 1933;
  (B) Any free writing Prospectus relating to the offering prepared by or on behalf of the undersigned registrant or used or referred to by the undersigned registrant;
  (C) The portion of any other free writing Prospectus relating to the offering containing material information about the undersigned registrant or its securities provided by or on behalf of the undersigned registrant; and
  (D) Any other communication that is an offer in the offering made by the undersigned registrant to the purchaser.

 

Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.

 

In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.

 

Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 

 

 

 

 

  II- 3  

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned in the city of Miami, Florida on May 15, 2018.

 

  KISSES FROM ITALY, INC.
 

 

 

By Michele Di Turi,

Michele Di Turi, Chief Executive Officer

 

POWER OF ATTORNEY

 

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below hereby constitutes and appoints Michele Di Turi, Chief Executive Officer, as his true and lawful attorney-in-fact and agent, with full power of substitution and re-substitution, for him and in his name, place and stead in any and all capacities, in connection with this Registration Statement, including to sign in the name and on behalf of the undersigned, this Registration Statement and any and all amendments thereto, including post-effective amendments and registrations filed pursuant to Rule 462 under the U.S. Securities Act of 1933, and to file the same, with all exhibits thereto, and other documents in connection therewith, with the Securities and Exchange Commission, granting unto such attorney-in-fact and agents full power and authority to do and perform each and every act and thing requisite and necessary to be done in and about the premises, as fully to all intents and purposes as he might or could do in person, hereby ratifying and confirming all that said attorney-in-fact and agent, or his substitute, may lawfully do or cause to be done by virtue hereof.

 

Pursuant to the requirements of the Securities Act, the following persons in the capacities and on the dates indicated have signed this Registration Statement:

 

Signature   Title   Date
         

/s/ Michele Di Turi

Michele Di Turi

  Director    May 15, 2018
         

/s/ Claudio Ferri

Claudio Ferri

  Director    May 15, 2018
         

/s/ Leonardo Fraccalvieri

Leonardo Fraccalvieri

  Director   May 15, 2018

 

 

Exhibit 3.1

 

 

 

 

     

 

 

 

 

 

     

 

 

 

 

 

     

 

 

 

ATTACHMENT TO ARTICLES OF INCORPORATION

OF

KISSES FROM ITALY INC.

 

ARTICLE IV SHARES :

 

The amount of the total authorized capital stock of the corporation shall be one hundred twenty five million (125,000,000) shares consisting of one hundred million (100,000,000) shares of Common Stock, $0.001 par value per share, arid twenty five million (25,000,000) shares of Preferred Stock, $0.010 par value per share and the designations, preferences, limitations and relative rights of the shares of each such class are as follows:

 

  A. Common Shares

 

(a) The rights of holders of the Common Shares to receive dividends or share in the distribution of assets in the event of liquidation, dissolution or winding up of the affairs of the Corporation shall be subject to the preferences, limitations and relative rights of the Preferred Shares fixed in the resolution or resolutions which may be adopted from time to time by the Board of Directors of the Corporation providing for the issuance of one or more series of the Preferred Shares.

 

(b) The holders of the Common Shares shall be entitled to one vote for each share of Common Shares held by them of record at the time for determining the holders thereof entitled to vote.

 

  B. Preferred Shares

 

The corporation may divide and issue the Preferred Shares into series. Preferred Shares of each series, when issued, shall be designated to distinguish it from the shares of all other series of the class of Preferred Shares. The Board of Directors is hereby expressly vested with authority to fix and determine the relative rights and preferences of the shares of any such series so established to the fullest extent permitted by these Articles of Incorporation and the 2012 Florida Statutes in respect to the following;

 

(a) The number of shares to constitute such series, and the distinctive designations thereat:

 

(b) The rate and preference of dividend, if any, the time of payment of dividend, whether dividends are cumulative and the date from which any dividend shall accrue;

 

(c) Whether the shares may be redeemed and, if so, the redemption price and the terms and conditions of redemption;

 

(d) The amount payable upon shares in the event of involuntarily liquidation;

 

(e) The amount payable upon shares in the event of voluntary liquidation;

 

(f) Sinking fund or other provisions, if any, for the redemption or purchase of shares;

 

(g) The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion;

 

(h) voting powers, if any; and

 

(i) Any other relative rights and preferences of shares of such series, including, without limitation, any restriction on an increase in the number of shares of any series theretofore authorized and any limitation or restriction of rights or powers to which shares of any further series shall be subject.

 

The Board of Directors is also vested with the authority to determine or alter the rights, preferences, privileges and restrictions granted to or imposed upon any wholly unissued series of Preferred Shares and, within the limits and restrictions stated in any resolution or resolutions of the Board of Directors originally fixing the number of shares constituting any series, to increase or decrease (but not below the number of shares of such series then outstanding) the number of shares of any such series subsequent to the issuance of shares of that series.

 

 

 

  1  

 

 

ARTICLE VIII - ADDITIONAL PROVISIONS :

 

A. The corporate powers shall be exercised by or under the authority of, and the business and affairs of the corporation shall be managed under the direction of, a board of directors. The number of directors of the corporation shall be fixed by the bylaws, or if the bylaws fail to fix such a number, then by resolution adopted from time to time by the board of directors, provided that the number of directors shall not be more than seven (7) nor less than one (I).

 

B. Cumulative voting shall not be permitted in the election of directors or otherwise.

 

C. Except as the bylaws adopted by the shareholders may provide for a greater quorum requirement, a majority of the votes entitled to be cast on any matter by each voting group entitled to vote on a matter shall constitute a quorum of that voting group for action on that matter at any meeting of shareholders. Except as bylaws adopted by the shareholders may provide for a greater voting requirement and except as is otherwise provided by the Florida Statutes, with respect to action on amendment to these Articles of Incorporation, on a plan of merger or share exchange, on the disposition of substantially all of the property of the corporation, on the granting of consent to the disposition of property by an entity controlled by the corporation, and on the dissolution of the corporation, action on a matter other than the election of directors is approved if a quorum exists and if the votes cast favoring the action exceed the votes cast opposing the action, Any bylaw adding, changing, or deleting a greater quorum or voting requirement for shareholders shall meet the same quorum requirement and he adopted by the same vote required to take action under the quorum and voting requirements then in effect or proposed to be adopted, whichever are greater.

 

D. Any action required or permitted to be taken at a meeting of the shareholders may be taken without a meeting if a written consent (or counterparts thereof) that sets forth the action so taken is signed by shareholders holding shares having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all of the shares entitled to vote on such action were present and voted. Such consent shall have the same force and effect as a unanimous vote of the shareholders and may be stated as such in any document. Action taken under this subsection D is effective as of the date the last writing necessary to effect the action is received by the corporation, unless• all of the writing specify a different effective date, in which case such specified date shall be the effective: date for such action. If any shareholder revokes his consent as provided for herein prior to what would otherwise he the effective date, the action proposed in the consent shall be invalid. The record date for determining shareholders entitled to take action without a meeting is the date the corporation first receives' a writing upon which the action is taken.

 

Any shareholder who has signed a writing describing and consenting to action taken pursuant to this subsection D may revoke such consent by a writing signed by the shareholder describing the action and : stating that the shareholder's prior consent thereto is revoked, if such writing is received by the corporation before the effectiveness of the action.

 

The following provisions are inserted for the management of the business and for the conduct of the affairs of the corporation, and the same are in furtherance of and not in limitation or exclusion of the powers conferred by law.

 

(a) Conflicting Interest Transactions. As used in this paragraph, "conflicting interest transactions" means any of the following: (i) a loan or other assistance by the corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest; (ii) a guaranty by the corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest; or (iii) a contract or transaction between the corporation and a director of the corporation or between the corporation and an entity in which a director of the corporation is a director or officer or has a financial interest. No conflicting interest transaction shall be void or voidable, be enjoined, be set aside, or give rise to an award of damages or other sanctions in a proceeding by a shareholder or by or in the right of the corporation, solely because the conflicting interest transaction involves a director of the corporation or an entity in which a director of the corporation is a director or officer or has a financial interest, or solely because the director is present at or participates in the meeting of the corporation's board of directors or of the committee of the board of directors which authorizes, approves or ratifies a conflicting interest transaction, or solely because the director's vote is counted for such purpose, if: (a) the material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the board of directors or the committee, and the board of directors or committee in good faith authorizes, approves or ratifies the conflicting interest transaction by the affirmative vote of a majority of the disinterested directors, even though the disinterested directors are less than quorum; or (b) the material facts as to the director's relationship or interest and as to the conflicting interest transaction are disclosed or are known to the shareholders entitled to vote thereon, and the conflicting interest transaction is specifically authorized, approved or ratified in good faith by a vote of the shareholders; or (c) a conflicting interest transaction is fair as to the corporation as of the time it is authorized, approved or ratified by the board of directors, a committee thereof, or the shareholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the board of directors or of a committee which authorizes, approves or ratifies the conflicting interest transaction.

 

 

 

  2  

 

 

(b)   Loans and Guarantees for the Benefit of Directors. Neither the board of directors nor any committee thereof shall authorize a loan by the corporation to a director of the corporation or to an entity in which a director of the corporation is a director or officer or has a financial interest, or a guaranty by the corporation of an obligation of a director of the corporation or of an obligation of an entity in which a director of the corporation is a director or officer or has a financial interest, until at least ten days written notice of the proposed authorization of the loan or guaranty has been given to the shareholders who would be entitled to vote thereon if the issue of the loan or guaranty were submitted to a vote of the shareholders. The requirements of this subparagraph (b) are in addition to, and not in substitution for, the provisions of subparagraph (a) of this subsection (D).

 

(c) Indemnification. The corporation shall indemnify, to the maximum extent permitted by law any person who is or was a director, officer, agent, fiduciary or employee of the corporation against any claim, liability or expense arising against or incurred by such person made party to a proceeding because he is or was a director, officer, agent, fiduciary or employee of the corporation or because he is or was serving another entity or employee benefit plan as a director, officer, partner, trustee, employee, fiduciary or agent at the corporation's request. The corporation shall further have the authority to the maximum extent permitted by law to purchase and maintain insurance providing such indemnification.

 

(d) Limitation on Director's Liability. No director of this corporation shall have any personal liability for monetary damages to the corporation or its shareholders for beach of his fiduciary duty as a director, except that this provision shall not eliminate or limit the personal liability of a director to the corporation or its shareholders for monetary damages for: (i) any breach of the director's duty of loyalty to the corporation or its shareholders; (ii) acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law; (iii) voting for or assenting to a distribution in violation of The 2012 Florida Statutes § 607.06401(3) or the Articles of Incorporation if it is established that the director did not perform his duties in compliance with The 2012 Florida Statutes § 607.0830, provided that the personal liability of a director in this circumstances shall be limited to the amount of the distribution which exceeds what could have been distributed without violation of The 2012 Florida Statutes § 607.06401 or the Articles of Incorporation; or (iv) any transaction from which the director directly or indirectly derives an improper personal benefit. Nothing contained herein will be construed to deprive any director of his right to all defenses ordinarily available to a director nor will anything herein be construed to deprive any director of any right he may have for contribution from any other director or other person.

 

 

 

 

 

 

  3  

Exhibit 3.2

 

FLORIDA DEPARTMENT OF STATE

DIVISION OF CORPORATION

 

Attached is a form for filing Articles of Amendment  to amend the articles of incorporation of a  Florida Profit Corporation  pursuant to section 607.1006, Florida Statutes. This is a basic amendment form and may not satisfy all statutory requirements for amending.

 

A corporation can amend or add as many articles as necessary in one amendment.

 

 

Ø ·    The original incorporators cannot be amended.

 

Ø   If amending/adding officers/directors, list titles and addresses for each officer/director.

 

Ø   If amending the “initial or first” officers/directors/registered agent, do not refer to the newly designated individuals as the “initial or first” O/D/RA.

 

Ø   If amending the registered agent, the new agent must sign and state that he/she is familiar with the obligations of the position.

 

Ø    If amending from a general corporation to a professional corporation, the purpose (specific nature of business) must be amended or added if not contained in the articles of incorporation.

 

If a section is not being amended, enter N/A or Not Applicable.

The document must be typed or printed and must be legible.

 

Pursuant to section 607.0123, Florida Statutes, a delayed effective date may be specified but may not be later that the 90 th  day after the date on which the document is filed.

 

Filing Fee $35.00  (Includes a letter of acknowledgment)
   
Certified Copy (optional  $8.75
   
Certificate of Status (optional)  $8.75

 

Send one check in the total amount made payable to the Florida Department of State.

 

Please include a letter containing your telephone number, return address and certification requirements, or complete the attached cover letter.

 

Mailing Address Street Address
Amendment Section Amendment Section
Division of Corporation Division of Corporation
Tallahassee, FL 32314 Clifton Building
  2661 Executive Center Circle
  Tallahassee, FL 32301

 

 

For the further information you may call the Amendment Section at (850) 245-6050

 

 

 

  1  

 

 

COVER LETTER

 

TO: Amendment Section
Division of Corporations

 

NAME OF CORPORATION:  KISSES FROM ITALY Inc.

 

DOCUMENT NUMBER:  P13000021836____________________________________

 

The enclosed  Article of Amendment  and fee are submitted for filing.

 

Please return all correspondence concerning this matter to the following:

 

Andrew I. Telsey

 

(Name of Contact Person)

 

Andrew I. Telsey, P.C.

 

(Firm/Company)

 

12835 E. Arapahoe Road, Suite I-803

 

(Address)

 

Centennial, CO 80112

 

(City/State and Zip Code)

 

 

 

E-mail address: (to be used for future annual report notification)

 

For further information concerning this matter, please call:

 

Andrew I. Telsey _____________ at  (303) 768-9221                                                         

(Name of Contact Person)                               (Area Code & Daytime Telephone Number

 

Enclose is a check for the following amount:

 

☐ $35 Filing Fee ☐ $43.75 Filing Fee
& Certificate of Status
☐ $43.75 Filing Fee &
Certified Copy
(Additional copy is enclosed)
$52.50 Filing Fee
Certificate of Status
Certificated Copy
(Additional Copy is enclosed)

 

Mailing Address Street Address
Amendment Section Amendment Section
Division of Corporations Division of Corporations
P.O. Box 6327 Clifton Building
Tallahassee, FL 32314 2661 Executive Center Circle
  Tallahassee, FL 32301

 

 

 

 

  2  

 

 

Articles of Amendment
to
Articles of Incorporation
of

Kisses From Italy Inc.

( Name of Corporation as currently filed with the Florida Dept. of State )

 

P13000021836                    

(Document Number of Corporation (if known)

 

Pursuant to the provisions of section 607.1006, Florida Statutes, this Florida Profit Corporation adopts the following amendment(s) to its Articles of Incorporation:

 

A. If amending name, enter the new name of the corporation:

 

 

 

 

The new name must be distinguishable and contain the word “corporation,” “company,” or “incorporated” or the abbreviation “Corp.,” “Inc.,” or Co.,” or the designation “Corp,” “Inc,” or “Co”. A professional corporation name must contain the word “chartered,” “professional association,” or the abbreviation “P.A.”

 

B. Enter new principal office address, if applicable:
(Principal office address MUST BE A STREET ADDRESS )

 

 

 

 

 

 

 

 

 

C. Enter new mailing address, if applicable:
(Mailing address MAY BE A POST OFFICE BOX )

 

 

 

 

 

 

 

 

D. If amending the registered agent and/or registered office address in Florida, enter the name of the new registered agent and/or the new registered office address:

 

Name of New Registered Agent  
  (Florida street address)
     

 

 

New Registered Office Address : _________, Florida _____________________________
  (City) (Zip Code)

 

New Registered Agent’s Signature, if changing Registered Agent:

I hereby accept the appointment as registered agent. I am familiar with and accept the obligations of the position.

 

  _________________________________________

Signature of New Registered Agent, if changing

 

 

 

  3  

 

 

If amending the Officers and/or Directors, enter the title and name of each officer/director being removed and title, name, and address of each Officer and/or Director being added:

(Attach additional sheets, if necessary)

Please note the officer/director title by the first letter of the office title:

P = President; V= Vice President; T= Treasurer; S= Secretary; D= Director; TR= Trustee; C = Chairman or Clerk; CEO = Chief Executive Officer; CFO = Chief Financial Officer. If an officer/director holds more than one title, list the first letter of each office held. President, Treasurer, Director would be PTD.

Changes should be noted in the following manner. Currently John Doe is listed as the PST and Mike Jones is listed as the V. There is a change, Mike Jones leaves the corporation, Sally Smith is named the V and S. These should be noted as John Doe, PT as a Change, Mike Jones, V as Remove, and Sally Smith, SV as an Add.  

 

Example:    
X Change PT John Doe
X Remove V Mike Jones
X Add SV Sally Smith

 

 

Type of Action   Title   Name   Address
(Check One)            
(1) ____ Change            
  ____ Add            
  ____ Remove            

 

 

(2) ____ Change            
  ____ Add            
  ____ Remove            

 

(3) ____ Change            
  ____ Add            
  ____ Remove            

 

(4) ____ Change            
  ____ Add            
  ____ Remove            

 

(5) ____ Change            
  ____ Add            
  ____ Remove            

 

(6) ____ Change            
  ____ Add            
  ____ Remove            

 

 

 

  4  

 

 

E. If amending or adding additional Articles, enter change(s) here :
(Attach additional sheets, if necessary). (Be specific)

 

See Annexed.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

E. If an amendment provides for an exchange, reclassification, or cancellation of issued shares,

provisions for implementing the amendment if not contained in the amendment itself:

( if not applicable, indicate N/A )

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  5  

 

 

The date of each amendment(s) adoption: ______________________________________________________ , if other than the date this document was signed.

 

Effective date if applicable: ________________________________________ __________

                                                             (no more than 90 days after amendment file date)

 

Note: If the date inserted in this block does not meet the applicable statutory filing requirements, this date will not be listed as the document’s effective date on the Department of State’s records.

 

Adoption of Amendment(s) (CHECK ONE)

 

The amendment(s) was/were adopted by the shareholders. The number of votes cast for the amendment(s) by the shareholders was/were sufficient for approval.
The amendment(s) was/were approved by the shareholders through voting groups. The following statement must be separately provided for each voting group entitled to vote separately on the amendment(s):

 

“The number of votes cast for the amendment(s) was/were sufficient for approval

by ________________________________________________________________.”

                                                   (voting group)

 

The amendment(s) was/were adopted by the board of directors without shareholder action and shareholder action was not required.

 

The amendment(s) was/were adopted by the incorporators without shareholder action and shareholder action was not required.

 

Dated________________________________________________

 

Signature______________________________________________________________________

(By a director, president or other officer – if directors or officers have not been selected, by an incorporator – if in the hands of a receiver, trustee, or other court appointed fiduciary by that fiduciary)

 

Michele Di Turi

(Typed or printed name of person signing)

 

 

President

(Title of person signing)

 

 

  6  

 

 

ATTACHMENT TO
ARTICLES OF AMENDMENT
TO
ARTICLES OF INCORPORATION
OF
KISSES FROM ITALY INC.

 

Article IV of the Articles of Incorporation of this corporation is hereby amended so that, as amended, said Article shall be read as follows:

 

ARTICLE IV SHARES :

 

The amount of the total authorized capital stock of the corporation shall be two hundred twenty five million (225,000,000) shares consisting of two hundred million (200,000,000) shares of Common Stock, $0.001 par value per share, and twenty five million (25,000,000) shares of Preferred Stock, $0.010 par value per share and the designations, preferences, limitations and relative rights of the shares of each such class are as follows:

 

A.        Common Shares

 

(a)           The rights of holders of the Common Shares to receive dividends or share in the distribution of assets in the event of liquidation, dissolution or winding up of the affairs of the Corporation shall be subject to the preferences, limitations and relative rights of the Preferred Shares fixed in the resolution or resolutions which may be adopted from time to time by the Board of Directors of the Corporation providing for the issuance of one or more series of the Preferred Shares.

 

(b)          The holders of the Common Shares shall be entitled to one vote for each share of Common Shares held by them of record at the time for determining the holders thereof entitled to vote.

 

B.        Preferred Shares

 

The corporation may divide and issue the Preferred Shares into series. Preferred Shares of each series, when issued, shall be designated to distinguish it from the shares of all other series of the class of Preferred Shares. The Board of Directors is hereby expressly vested with authority to fix and determine the relative rights and preferences of the shares of any such series so established to the fullest extent permitted by these Articles of Incorporation and Florida Business Corporation Act in respect to the following:

 

(a)         The number of shares to constitute such series, and the distinctive designations thereof;

 

(b)           The rate and preference of dividend, if any, the time of payment of dividend, whether dividends are cumulative and the date from which any dividend shall accrue;

 

(c)           Whether the shares may be redeemed and, if so, the redemption price and the terms and conditions of redemption;

 

(d)           The amount payable upon shares in the event of involuntarily liquidation;

 

(e)           The amount payable upon shares in the event of voluntary liquidation;

 

(f)            Sinking fund or other provisions, if any, for the redemption or purchase of shares;

 

(g)           The terms and conditions on which shares may be converted, if the shares of any series are issued with the privilege of conversion;

 

(h)           voting powers, if any; and

 

(i)            Any other relative rights and preferences of shares of such series, including, without limitation, any restriction on an increase in the number of shares of any series theretofore authorized and any limitation or restriction of rights or powers to which shares of any further series shall be subject.

 

 

 

  7  

Exhibit 3.3

 

 

 

 

 

BYLAWS

 

OF

 

KISSES FROM ITALY INC.

 

(A Florida Corporation)

 

 

 

 

 

 

 

 

 

 

 

 

     
 

 

INDEX

 

  PAGE
ARTICLE 1 – OFFICES 1
  Section 1.  Registered Office 1
  Section 2.  Other Offices 1
     
ARTICLE 2 - MEETINGS OF SHAREHOLDERS 1
  Section 1.  Place 1
  Section 2.  Time of Annual Meeting 1
  Section 3.  Call of Special Meetings 1
  Section 4.  Conduct of Meetings 1
  Section 5.  Notice and Waiver of Notice 1
  Section 6.  Business of Special Meeting 2
  Section 7.  Quorum. 2
  Section 8.  Voting Per Share. 2
  Section 9.  Voting of Shares 2
  Section 10. Proxies 3
  Section 11. Shareholder List 3
  Section 12. Action Without Meeting 3
  Section 13. Fixing Record Date 4
  Section 14. Inspectors and Judges 4
  Section 15. Voting for Directors 4
  Section 16. Voting Trusts 4
  Section 17. Shareholders’ Agreements 4
  Section 18. Advance Notice of Shareholder Proposals and Director Nominations. 5
     
ARTICE 3 – DIRECTORS 5
  Section 1.  Number, Election and Term 5
  Section 2.  Vacancies 6
  Section 3.  Powers 6
  Section 4.  Duties of Directors 6
  Section 5.  Place of Meetings 6
  Section 6.  Annual Meeting 6
  Section 7.  Regular Meetings 6
  Section 8.  Special Meetings and Notice. 6
  Section 9.  Quorum; Required Votes; Presumption of Assent 7
  Section 10. Action Without Meeting 7
  Section 11. Conference Telephone or Similar Communications Equipment Meetings 7
  Section 12. Committees 7
  Section 13. Compensation of Directors 7
  Section 14. Chairman of the Board 7
  Section 15. Removal of Directors 7
  Section 16. Director Conflicts of Interest 8
     
ARTICLE 4 – OFFICERS 8
  Section 1.  Positions 8
  Section 2.  Election of Specified Officers by Board 8
  Section 3.  Election or Appointment of Other Officers. 8

 

 

 

 

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  Section 4.  Salaries 8
  Section 5.  Term; Resignation 8
  Section 6.  Chairman of the Board 8
  Section 7.  Chief Executive Officer 9
  Section 8.  President 9
  Section 9.  Vice Presidents 9
  Section 10.  Secretary 9
  Section 11.  Treasurer 10
  Section 12. Other Officers, Employees and Agents 10
     
ARTICLE 5 - CERTIFICATES FOR SHARES 10
  Section 1.  Issue of Certificates 10
  Section 2.  Legends for Preferences and Restrictions on Transfer 10
  Section 3.  Facsimile Signatures 10
  Section 4.  Lost Certificates 11
  Section 5.  Transfer of Shares 11
  Section 6.  Registered Shareholders 11
     
ARTICLE 6 – INDEMNIFICATION 11
     
ARTICLE 7 - BOOKS AND RECORDS 11
  Section 1.  Books and Records 11
  Section 2.  Shareholders’ Inspection Rights 12
  Section 3.   Financial Information 12
     
ARTICE 8 - GENERAL PROVISIONS 12
  Section 1.  Dividends 12
  Section 2.  Reserves 12
  Section 3.  Checks 12
  Section 4.  Fiscal Year 12
  Section 5.  Seal 12
  Section 6.  Gender 12
   
ARTICLE 9 - AMENDMENTS OF BYLAWS 13
     
CERTIFICATE 13

 

 

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BYLAWS OF

 

KISSES FROM ITALY INC.

 

ARTICLE 1

 

OFFICES

 

SECTION 1. Registered Office . The registered office of Kisses From Italy Inc., a Florida corporation (the "Corporation"), shall be located in Miami, State of Florida, unless otherwise designated by the Board of Directors.

 

SECTION 2. Other Offices . The Corporation may also have offices at such other places, either within or without the State of Florida, as the Board of Directors of the Corporation (the "Board of Directors") may from time to time determine or as the business of the Corporation may require.

 

ARTICLE 2

 

MEETINGS OF SHAREHOLDERS

 

SECTION 1. Place . All annual meetings of shareholders shall be held at such place, within or without the State of Florida, as may be designated by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Special meetings of shareholders may be held at such place, within or without the State of Florida, and at such time as shall be stated in the notice of the meeting or in a duly executed waiver of notice thereof.

 

SECTION 2. Time of Annual Meeting . Annual meetings of shareholders shall be held on such date and at such time fixed, from time to time, by the Board of Directors, provided that there shall be an annual meeting held every year at which the shareholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.

 

SECTION 3. Call of Special Meetings . Special meetings of the shareholders shall be held if called by the Board of Directors, the President, or if the holders of not less than ten percent (10%) of all the votes entitled to be cast on any issue proposed to be considered at the proposed special meeting sign, date, and deliver to the Secretary one or more written demands for the meeting describing the purpose or purposes for which it is to be held.

 

SECTION 4. Conduct of Meetings . The Chairman of the Board (or in his absence, the President or such other designee of the Chairman of the Board) shall preside at the annual and special meetings of shareholders and shall be given full discretion in establishing the rules and procedures to be followed in conducting the meetings, except as otherwise provided by law or in these Bylaws.

 

SECTION 5. Notice and Waiver of Notice . Except as otherwise provided by law, written or printed notice stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than ten (10) nor more than sixty (60) days before the day of the meeting, either personally or by first-class mail, by or at the direction of the President, the Secretary, or the officer or person calling the meeting, to each shareholder of record entitled to vote at such meeting. If mailed, such notice shall be deemed to be delivered when deposited in the United States mail addressed to the shareholder at his address as it appears on the stock transfer books of the Corporation, with postage thereon prepaid. If a meeting is adjourned to another time and/or place, and if an announcement of the adjourned time and/or place is made at the meeting, it shall not be necessary to give notice of the adjourned meeting unless the Board of Directors, after adjournment, fixes a new record date for the adjourned meeting. Whenever any notice is required to be given to any shareholder, a waiver thereof in writing signed by the person or persons entitled to such notice, whether signed before, during or after the time of the meeting stated therein, and delivered to the Corporation for inclusion in the minutes or filing with the corporate records, shall be equivalent to the giving of such notice. Neither the business to be transacted at, nor the purpose of, any regular or special meeting of the shareholders need be specified in any written waiver of notice. Attendance of a person at a meeting shall constitute a waiver of (a) lack of or defective notice of such meeting, unless the person objects at the beginning to the holding of the meeting or the transacting of any business at the meeting, or (b) lack of defective notice of a particular matter at a meeting that is not within the purpose or purposes described in the meeting notice, unless the person objects to considering such matter when it is presented.

 

 

 

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SECTION 6. Business of Special Meeting . Business transacted at any special meeting shall be confined to the purposes stated in the notice thereof.

 

SECTION 7. Quorum. Shares entitled to vote as a separate voting group may take action on a matter at a meeting only if a quorum of these shares exists with respect to that matter. Except as otherwise provided in the Articles of Incorporation or by law, a majority of the shares entitled to vote on the matter by each voting group, represented in person or by proxy, shall constitute a quorum at any meeting of shareholders. If a quorum is present, the affirmative vote of the majority of the shares represented at the meeting and entitled to vote on the subject matter shall be the act of the shareholders unless otherwise provided in the Articles of Incorporation, these Bylaws or by law. If less than a majority of outstanding shares entitled to vote are represented at a meeting, a majority of the shares so represented may adjourn the meeting from time to time without further notice. After a quorum has been established at any shareholders’ meeting, the subsequent withdrawal of shareholders, so as to reduce the number of shares entitled to vote at the meeting below the number required for a quorum, shall not affect the validity of any action taken at the meeting or any adjournment thereof. Once a share is represented for any purpose at a meeting, it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for that adjourned meeting.

 

SECTION 8. Voting Per Share . Except as otherwise provided in the Articles of Incorporation or by law, each shareholder is entitled to one (1) vote for each outstanding share held by him on each matter voted at a shareholders’ meeting. Shares of stock of this Corporation owned by another corporation, the majority of the voting stock of which is owned or controlled by this Corporation, and shares of stock of this Corporation held by it in a fiduciary capacity shall not be voted, directly or indirectly, at any meeting, and shall not be counted in determining the total number of shares outstanding at any given time. At each election of Directors, every shareholder entitled to vote at such election shall have the right to vote, in person or by proxy, the number of shares owned by him for as many persons as there are Directors to be elected at that time and for whose election he has a right to vote.

 

SECTION 9. Voting of Shares . A shareholder may vote at any meeting of shareholders of the Corporation, either in person or by proxy. Shares standing in the name of another corporation, domestic or foreign, may be voted by the officer, agent or proxy designated by the bylaws of such corporate shareholder or, in the absence of any applicable bylaw, by such person or persons as the board of directors of the corporate shareholder may designate. In the absence of any such designation, or, in case of conflicting designation by the corporate shareholder, the chairman of the board, the president, any vice president, the secretary and the treasurer of the corporate shareholder, in that order, shall be presumed to be fully authorized to vote such shares. Shares held by an administrator, executor, guardian, personal representative, or conservator may be voted by him, either in person or by proxy, without a transfer of such shares into his name. Shares standing in the name of a trustee may be voted by him, either in person or by proxy, but no trustee shall be entitled to vote shares held by him without a transfer of such shares into his name or the name of his nominee. Shares held by or under the control of a receiver, a trustee in bankruptcy proceedings, or an assignee for the benefit of creditors may be voted by such person without the transfer thereof into his name. If shares stand of record in the names of two or more persons, whether fiduciaries, members of a partnership, joint tenants, tenants in common, tenants by the entirety or otherwise, or if two or more persons have the same fiduciary relationship respecting the same shares, unless the Secretary of the Corporation is given notice to the contrary and is furnished with a copy of the instrument or order appointing them or creating the relationship wherein it is so provided, then acts with respect to voting shall have the following effect: (a) if only one votes, in person or by proxy, his act binds all; (b) if more than one vote, in person or by proxy, the act of the majority so voting binds all; (c) if more than one vote, in person or by proxy, but the vote is evenly split on any particular matter, each faction is entitled to vote the share or shares in question proportionally; or (d) if the instrument or order so filed shows that any such tenancy is held in unequal interest, a majority or a vote evenly split for purposes hereof shall be a majority or a vote evenly split in interest. A shareholder whose shares are pledged shall be entitled to vote such shares until the shares have been transferred into the name of the pledgee, and thereafter the pledgee or his nominee shall be entitled to vote the shares so transferred. On or after the date on which written notice of redemption of redeemable shares has been mailed to the holders thereof and a sum sufficient to redeem such shares has been deposited with a bank or trust company with irrevocable instrument and authority to pay the redemption price to the holders thereof upon surrender of certificates therefor, such shares shall not be entitled to vote on any matter and shall not be deemed to be outstanding shares. The principles of this paragraph shall apply, insofar as possible, to execution of proxies, waivers, consents, or objections and for the purpose of ascertaining the presence of a quorum.

 

 

 

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SECTION 10. Proxies . Any shareholder of the Corporation, other person entitled to vote on behalf of a shareholder pursuant to law, or attorney-in-fact for such persons may vote the shareholder’s shares in person or by proxy. Any shareholder of the Corporation may appoint a proxy to vote or otherwise act for him by signing an appointment form, either personally or by his attorney-in-fact. An executed telegram or cablegram appearing to have been transmitted by such person, or a photographic, photostatic, or equivalent reproduction of an appointment form, shall be deemed a sufficient appointment form. An appointment of a proxy is effective when received by the Secretary of the Corporation or such other officer or agent which is authorized to tabulate votes, and shall be valid for up to 11 months, unless a longer period is expressly provided in the appointment form. The death or incapacity of the shareholder appointing a proxy does not affect the right of the Corporation to accept the proxy’s authority unless notice of the death or incapacity is received by the Secretary or other officer or agent authorized to tabulate votes before the proxy exercises his authority under the appointment. An appointment of a proxy is revocable by the shareholder unless the appointment is coupled with an interest.

 

SECTION 11. Shareholder List . After fixing a record date for a meeting of shareholders, the Corporation shall prepare an alphabetical list of the names of all its shareholders who are entitled to notice of the meeting, arranged by voting group with the address of, and the number and class and series, if any, of shares held by each. The shareholders’ list must be available for inspection by any shareholder for a period of ten (10) days prior to the meeting or such shorter time as exists between the record date and the meeting and continuing through the meeting at the Corporation’s principal office, at a place identified in the meeting notice in the city where the meeting will be held, or at the office of the Corporation’s transfer agent or registrar. Any shareholder of the Corporation or his agent or attorney is entitled on written demand to inspect the shareholders’ list (subject to the requirements of law), during regular business hours and at his expense, during the period it is available for inspection. The Corporation shall make the shareholders’ list available at the meeting of shareholders, and any shareholder or his agent or attorney is entitled to inspect the list at any time during the meeting or any adjournment thereof. If the requirements of this Section have not been substantially complied with, the meeting on demand of any shareholders in person or by proxy, shall be adjourned until the requirements are complied with. If no such demand is made, failure to comply with the requirements of this Section shall not affect the validity of any action taken at such meeting.

 

SECTION 12. Action Without Meeting . Any action required by law to be taken at a meeting of shareholders, or any action that may be taken at a meeting of shareholders, may be taken without a meeting or notice if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock constituting the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted with respect to the subject matter thereof, and such consent shall have the same force and effect as a vote of shareholders taken at such a meeting. Within ten days after obtaining such authorization by written consent, notice shall be given to those shareholders who have not consented in writing. The notice shall fairly summarize the material features of the authorized action and, if the action be a merger, consolidation or sale or exchange of assets for which dissenters rights are provided by law, the notice shall contain a clear statement of the right of shareholders dissenting therefrom to be paid the fair value of their shares upon compliance with further provisions as provided by law regarding the rights of dissenting shareholders.

 

 

 

 

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SECTION 13. Fixing Record Date . For the purpose of determining shareholders entitled to notice of or to vote at any meeting of shareholders or any adjournment thereof or entitled to receive payment of any dividend, or in order to make a determination of shareholders for any other proper purposes, the Board of Directors may fix in advance a date as the record date for any such determination of shareholders, such date in any case to be not more than seventy (70) days, and, in case of a meeting of shareholders, not less than ten (10) days, prior to the date on which the particular action requiring such determination of shareholders is to be taken. If no record date is fixed for the determination of shareholders entitled to notice of or to vote at a meeting of shareholders, or shareholders entitled to receive payment of a dividend, the date on which the notice of the meeting is mailed or the date on which the resolutions of the Board of Directors declaring such dividend is adopted, as the case may be, shall be the record date for such determination of shareholders. When a determination of shareholders entitled to vote at any meeting of shareholders has been made as provided in this Section 13, such determination shall apply to any adjournment thereof, except where the Board of Directors fixes a new record date for the adjourned meeting or as required by law.

 

SECTION 14. Inspectors and Judges . The Board of Directors in advance of any meeting may, but need not, appoint one or more inspectors of election or judges of the vote, as the case may be, to act at the meeting or any adjournment(s) thereof. If any inspector or inspectors, or judge or judges, are not appointed, the person presiding at the meeting may, but need not, appoint one or more inspectors or judges. In case any person who may be appointed as an inspector or judge fails to appear or act, the vacancy may be filled by the Board of Directors in advance of the meeting, or at the meeting by the person presiding thereat. The inspectors or judges, if any, shall determine the number of shares of stock outstanding and the voting power of each, the shares of stock represented at the meeting, the existence of a quorum, the validity and effect of proxies, and shall receive votes, ballots and consents, hear and determine all challenges and questions arising in connection with the right to vote, count and tabulate votes, ballots and consents, determine the result, and do such acts as are proper to conduct the election or vote with fairness to all shareholders. On request of the person presiding at the meeting, the inspector or inspectors or judge or judges, if any, shall make a report in writing of any challenge, question or matter determined by him or them, and execute a certificate of any fact found by him or them.

 

SECTION 15. Voting for Directors . Unless otherwise provided in the Articles of Incorporation, Directors shall be elected by a plurality of the votes cast by the shares entitled to vote in the election at a meeting at which a quorum is present.

 

SECTION 16. Voting Trusts . Any number of shareholders of the Corporation may create a voting trust for the purpose of conferring upon a trustee or trustees the right to vote or otherwise represent their shares, as provided by law. Where the counterpart of a voting trust agreement and the copy of the record of the holders of voting trust certificates has been deposited with the Corporation as provided by law, such documents shall be subject to the same right of examination by a shareholder of the Corporation, in person or by agent or attorney, as are the books and records of the Corporation, and such counterpart and such copy of such record shall be subject to examination by any holder of record of voting trust certificates either in person or by agent or attorney, at any reasonable time for any proper purpose.

 

SECTION 17. Shareholders’ Agreements . Two or more shareholders of the Corporation may enter an agreement providing for the exercise of voting rights in the manner provided in the agreement or relating to any phase of the affairs of the Corporation as provided by law. Nothing therein shall impair the right of the Corporation to treat the shareholders of record as entitled to vote the shares standing in their names. A transfer of shares of the Corporation whose shareholders have a shareholder’s agreement authorized by this Section shall be bound by such agreement if he takes shares subject to such agreement with notice thereof. A transferee shall be deemed to have notice of any such agreement if the exercise thereof is noted on the face or back of the certificate or certificates representing such shares.

 

 

 

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SECTION 18. Advance Notice of Shareholder Proposals and Director Nominations . At any annual or special meeting of shareholders, proposals by shareholders and persons nominated for election as Directors by shareholders shall be considered only if advance notice thereof has been timely given as provided herein and such proposals or nominations are otherwise proper for consideration under applicable law and the Articles of Incorporation and Bylaws of the Corporation. Notice of any proposal to be presented by any shareholder or of the name of any person to be nominated by any shareholder for election as a Director of the Corporation at any meeting of shareholders shall be delivered to the Secretary of the Corporation at its principal executive office not less than sixty (60) nor more than ninety (90) days prior to the date of the meeting; provided, however, that if the date of the meeting is first publicly announced or disclosed (in a public filing or otherwise) less than seventy (70) days prior to the date of the meeting, such advance notice shall be given not more than ten (10) days after such date is first so announced or disclosed. Public notice shall be deemed to have been given more than seventy (70) days in advance of the annual meeting if the Corporation shall have previously disclosed, in these Bylaws or otherwise, that the annual meeting in each year is to be held on a determinable date, unless and until the Board of Directors determines to hold the meeting on a different date. Any shareholder who gives notice of any such proposal shall deliver therewith the text of the proposal to be presented and a brief written statement of the reasons why such shareholder favors the proposal and setting forth such shareholder’s name and address, the number and class of all shares of each class of stock of the Corporation beneficially owned by such shareholder and any material interest of such shareholder in the proposal (other than as a shareholder). Any shareholder desiring to nominate any person for election as a Director of the Corporation shall deliver with such notice a statement in writing setting forth the name of the person to be nominated, the number and class of all shares of each class of stock of the Corporation beneficially owned by such person, the information regarding such person required by paragraphs (a), (e) and (f) of Item 401 of Regulation S-K adopted by the Securities and Exchange Commission (or the corresponding provisions of any regulation subsequently adopted by the Securities and Exchange Commission applicable to the Corporation), such person’s signed consent to serve as a Director of the Corporation if elected, such shareholder’s name and address and the number and class of all shares of each class of stock of the Corporation beneficially owned by such shareholder. As used herein, shares "beneficially owned" shall mean all shares as to which such person, together with such person’s affiliates and associates (as defined in Rule 12b-2 under the Securities Exchange Act of 1934), may be deemed to beneficially own pursuant to Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as well as all shares as to which such person, together with such person’s affiliates and associates, has the right to become the beneficial owner pursuant to any agreement or understanding, or upon the exercise of warrants, options or rights to convert or exchange (whether such rights are exercisable immediately or only after the passage of time or the occurrence of conditions). The person presiding at the meeting, in addition to making any other determinations that may be appropriate to the conduct of the meeting, shall determine whether such notice has been duly given and shall direct that proposals and nominees not be considered if such notice has not been given.

 

ARTICLE 3

 

DIRECTORS

 

SECTION 1. Number, Election and Term . The business and affairs of the Corporation shall be managed by or under the direction of a Board of Directors. The Board of Directors shall consist of at least one member, the exact number to be determined from time to time by the shareholders or the Board of Directors. The number of Directors may be increased or decreased from time to time by the shareholders or the Board of Directors, but no decrease shall have the effect of shortening the terms of any incumbent Director. Directors need not be residents of this State or shareholders of the Corporation. A Director shall hold office until the annual meeting for the year in which his or her term expires and until his or her successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office.

 

 

 

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SECTION 2. Vacancies . A Director may resign at any time by giving written notice to the Corporation, the Board of Directors or the Chairman of the Board. Such resignation shall take effect when the notice is delivered unless the notice specifies a later effective date, in which event the Board of Directors may fill the pending vacancy before the effective date if they provide that the successor does not take office until the effective date. Any vacancy occurring in the Board of Directors and any directorship to be filled by reason of an increase in the size of the Board of Directors shall be filled by the affirmative vote of a majority of the current Directors though less than a quorum of the Board of Directors, or may be filled by an election at an annual or special meeting of the shareholders called for that purpose, unless otherwise provided by law. A Director elected to fill a vacancy shall be elected for the unexpired term of his predecessor in office, or until the next election of one or more Directors by shareholders if the vacancy is caused by an increase in the number of Directors.

 

SECTION 3. Powers . Except as provided in the Articles of Incorporation and by law, all corporate powers shall be exercised by or under the authority of, and the business and affairs of the Corporation shall be managed under the direction of, its Board of Directors.

 

SECTION 4. Duties of Directors . A Director shall perform his duties as a Director, including his duties as a member of any committee of the Board upon which he may serve, in good faith, in a manner he reasonably believes to be in the best interests of the Corporation, and with such care as an ordinarily prudent person in a like position would use under similar circumstances. In performing his duties, a Director shall be entitled to rely on information, opinions, reports or statements, including financial statements and other financial data, in each case prepared or presented by (1) one or more officers or employees of the Corporation whom the Director reasonably believes to be reliable and competent in the matters presented, (2) counsel, public accountants, or (3) other persons as to matters which the Director reasonably believes to be within such person’s professional or expert competence, or a committee of the Board upon which he does not serve, duly designated in accordance with a provision of the Articles of Incorporation or the By-Laws, as to matters within its designated authority, which committee the Director reasonably believes to merit confidence. A Director shall not be considered to be acting in good faith if he has knowledge concerning the matter in question that would cause such reliance described above to be unwarranted. A person who performs his duties in compliance with this Section shall have no liability by reason of being or having been a Director of the Corporation and shall be indemnified by the Corporation for any and all claims and/or losses arising out of his service as a Director of the Corporation.

 

SECTION 5. Place of Meetings . Meetings of the Board of Directors, regular or special, may be held either within or without the State of Florida.

 

SECTION 6. Annual Meeting. The first meeting of each newly elected Board of Directors shall be held, without call or notice, immediately following each annual meeting of shareholders.

 

SECTION 7. Regular Meetings . Regular meetings of the Board of Directors may also be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

 

SECTION 8. Special Meetings and Notice . Special meetings of the Board of Directors may be called by the Chairman of the Board or by the President and shall be called by the Secretary on the written request of any two Directors. Written notice of special meetings of the Board of Directors shall be given to each Director at least two (2) days before the meeting. Except as required by statute, neither the business to be transacted at, nor the purpose of, any regular or special meeting of the Board of Directors need be specified in the notice or waiver of notice of such meeting. Notices to Directors shall be in writing and delivered personally or mailed to the Directors at their addresses appearing on the books of the Corporation. Notice by mail shall be deemed to be given at the time when the same shall be received. Notice to Directors may also be given by telegram, teletype or other form of electronic communication. Notice of a meeting of the Board of Directors need not be given to any Director who signs a written waiver of notice before, during or after the meeting. Attendance of a Director at a meeting shall constitute a waiver of notice of such meeting and a waiver of any and all objections to the place of the meeting, the time of the meeting and the manner in which it has been called or convened, except when a Director states, at the beginning of the meeting or promptly upon arrival at the meeting, any objection to the transaction of business because the meeting is not lawfully called or convened.

 

 

 

 

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SECTION 9. Quorum; Required Votes; Presumption of Assent . A majority of the number of Directors fixed by, or in the manner provided in, these Bylaws shall constitute a quorum for the transaction of business; provided, however, that whenever, for any reason, a vacancy occurs in the Board of Directors, a quorum shall consist of a majority of the remaining Directors until the vacancy has been filled. The act of a majority of the Directors present at a meeting at which a quorum is present when the vote is taken shall be the act of the Board of Directors. A majority of the Directors present, whether or not a quorum exists, may adjourn any meeting of the Board of Directors to another time and place. Notice of any such adjourned meeting shall be given to the Directors who were not present at the time of adjournment, and, unless the time and place of the adjourned meeting are announced at the time of adjournment, to the other Directors. A Director of the Corporation who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken shall be presumed to have assented to the action taken, unless he objects at the beginning of the meeting, or promptly upon his arrival, to holding the meeting or transacting specific business at the meeting, or he votes against or abstains from the action taken.

 

SECTION 10. Action Without Meeting . Any action required or permitted to be taken at a meeting of the Board of Directors or a committee thereof may be taken without a meeting if a consent in writing, setting forth the action taken, is signed by all of the members of the Board of Directors or the committee, as the case may be, and such consent shall have the same force and effect as a unanimous vote at a meeting. Action taken under this Section is effective when the last Director signs the consent, unless the consent specifies a different effective date. A consent signed under this Section 10 shall have the effect of a meeting vote and may be described as such in any document.

 

SECTION 11. Conference Telephone or Similar Communications Equipment Meetings . Members of the Board of Directors may participate in a meeting of the Board by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other at the same time. Participation in such a meeting shall constitute presence in person at the meeting, except where a person participates in the meeting for the express purpose of objecting to the transaction of any business on the ground the meeting is not lawfully called or convened.

 

SECTION 12. Committees . The Board of Directors, by resolution adopted by a majority of the full Board of Directors, may designate from among its members an executive committee and one or more other committees, each of which, to the extent provided in such resolution, shall have and may exercise all of the authority of the Board of Directors in the business and affairs of the Corporation except where the action of the full Board of Directors is required by statute. Each committee must have two or more members who serve at the pleasure of the Board of Directors. The Board of Directors, by resolution adopted in accordance with this Article Three, may designate one or more Directors as alternate members of any committee, who may act in the place and stead of any absent member or members at any meeting of such committee. Vacancies in the membership of a committee shall be filled by the Board of Directors at a regular or special meeting of the Board of Directors. The executive committee shall keep regular minutes of its proceedings and report the same to the Board of Directors when required. The designation of any such committee and the delegation thereto of authority shall not operate to relieve the Board of Directors, or any member thereof, of any responsibility imposed upon it or him by law.

 

SECTION 13. Compensation of Directors . The Directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed sum for attendance at each meeting of the Board of Directors or a stated salary as Director. No such payment shall preclude any Director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.

 

SECTION 14. Chairman of the Board . The Board of Directors may, in its discretion, choose a Chairman of the Board who shall preside at meetings of the shareholders and of the Directors and shall be an ex officio member of all standing committees. The Chairman of the Board shall have such other powers and shall perform such other duties as shall be designated by the Board of Directors. The Chairman of the Board shall be a member of the Board of Directors but no other officers of the Corporation need be a Director. The Chairman of the Board shall serve until his successor is chosen and qualified, but he may be removed at any time by the affirmative vote of a majority of the Board of Directors.

 

SECTION 15. Removal of Directors . At a meeting of shareholders called expressly for that purpose, any Director or the entire Board of Directors may be removed, with or without cause, by a vote of the holders of a majority of the shares then entitled to vote at an election of Directors.

 

 

 

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SECTION 16. Director Conflicts of Interest . No contract or other transaction between the Corporation and one or more of its Directors or any other corporation, firm, association or entity in which one or more of the Directors are directors or officers or are financially interested, shall be either void or voidable because of such relationship or interest or because such Director or Directors are present at the meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction or because his or their votes are counted for such purpose, if: (1) the fact of such relationship or interest is disclosed or known to the Board of Directors or committee which authorizes, approves or ratifies the contract or transaction by a vote or consent sufficient for the purpose without counting the votes or consents of such interested Directors; (2) the fact of such relationship or interest is disclosed or known to the shareholders entitled to vote and they authorize, approve or ratify such contract or transaction by vote or written consent; or (3) the contract or transaction is fair and reasonable as to the Corporation at the time it is authorized by the Board, a committee or the shareholders. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or a committee thereof which authorizes, approves or ratifies such contract or transaction.

 

ARTICLE 4

 

OFFICERS

 

SECTION 1. Positions . The officers of the Corporation shall consist of a President, one or more Vice Presidents, a Secretary and a Treasurer, and, if elected by the Board of Directors by resolution, a Chairman of the Board. Any two or more offices may be held by the same person.

 

SECTION 2. Election of Specified Officers by Board. The Board of Directors at its first meeting after each annual meeting of shareholders shall elect a President, one or more Vice Presidents, a Secretary, and a Treasurer.

 

SECTION 3. Election or Appointment of Other Officers . Such other officers and assistant officers and agents as may be deemed necessary may be elected or appointed by the Board of Directors, or, unless otherwise specified herein, appointed by the President of the Corporation. The Board of Directors shall be advised of appointments by the President at or before the next scheduled Board of Directors meeting.

 

SECTION 4. Salaries . The salaries of all officers of the Corporation to be elected by the Board of Directors pursuant to Article Four, Section 2 hereof shall be fixed from time to time by the Board of Directors or pursuant to its discretion. The salaries of all other elected or appointed officers of the Corporation shall be fixed from time to time by the President of the Corporation or pursuant to his direction.

 

SECTION 5. Term; Resignation . The officers of the Corporation shall hold office until their successors are chosen and qualified. Any officer or agent elected or appointed by the Board of Directors or the President of the Corporation may be removed, with or without cause, by the Board of Directors. Any officers or agents appointed by the President of the Corporation pursuant to Section 3 of this Article Four may also be removed from such officer positions by the President, with or without cause. Any vacancy occurring in any office of the Corporation by death, resignation, removal or otherwise shall be filled by the Board of Directors, or, in the case of an officer appointed by the President of the Corporation, by the President or the Board of Directors. Any officer of the Corporation may resign from his respective office or position by delivering notice to the Corporation. Such resignation is effective when delivered unless the notice specifies a later effective date. If a resignation is made effective at a later date and the Corporation accepts the future effective date, the Board of Directors may fill the pending vacancy before the effective date if the Board provides that the successor does not take office until the effective date.

 

SECTION 6. Chairman of the Board . The Chairman of the Board, if any, shall preside at all meetings of stockholders and of the Board of Directors and shall have such other authority and perform such other duties as are prescribed by law, by these Bylaws and by the Board of Directors. The Board of Directors may designate the Chairman of the Board as the Chief Executive Officer, in which case he shall have such authority and perform such duties as are prescribed by these Bylaws and the Board of Directors for the Chief Executive Officer.

 

 

 

 

  8  
 

 

SECTION 7. Chief Executive Officer . Unless the Board of Directors appoints a Chief Executive Officer or designates the Chairman of the Board as the Chief Executive Officer, the President shall be the Chief Executive Officer. The Chief Executive Officer of the Corporation shall have, subject to the supervision and direction of the Board of Directors, general supervision of the business, property and affairs of the Corporation, including the power to appoint and discharge agents and employees, and the powers vested in him by the Board of Directors, by law or by these Bylaws or which are appropriate and customary for the office of Chief Executive Officer.

 

SECTION 8. President . The President shall have such authority and perform such duties as are prescribed by law, by these Bylaws, by the Board of Directors and by the Chief Executive Officer (if the President is not the Chief Executive Officer). The President, if there is no Chairman of the Board, or in the absence or the inability to act of the Chairman of the Board, shall preside at all meetings of shareholders and all meetings of the Board of Directors. Unless the Board of Directors appoints a Chief Executive Officer, the President shall be the Chief Executive Officer, in which case he shall have such authority and perform such duties as are prescribed by these Bylaws and the Board of Directors for the Chief Executive Officer. Unless otherwise directed by the Board of Directors, the President shall attend in person or by substitute appointed by him, or shall execute on behalf of the Corporation written instruments appointing a proxy or proxies to represent the Corporation, at all meetings of the stockholders of any other corporation in which the Corporation holds any stock. On behalf of the Corporation, the President may in person or by substitute or by proxy execute written waivers of notice and consents with respect to any such meetings. At all such meetings and otherwise, the President, in person or by substitute or proxy, may vote the stock held by the Corporation, execute written consents and other instruments with respect to such stock, and exercise any and all rights and powers incident to the ownership of said stock, subject to the instructions, if any, of the Board of Directors. The President shall have such additional authority and duties as are appropriate and customary for the office of President, except as the same may be expanded or limited by the Board of Directors from time to time.

 

SECTION 9. Vice Presidents . The Vice Presidents in the order of their seniority, unless otherwise determined by the Board of Directors, shall, in the absence or disability of the President, perform the duties and exercise the powers of the President. They shall perform such other duties and have such other powers as the Board of Directors shall prescribe or as the President may from time to time delegate.

 

SECTION 10. Secretary . The Secretary shall attend all meetings of the Board of Directors and all meetings of the shareholders and record all the proceedings of the meetings of the shareholders and of the Board of Directors in a book to be kept for that purpose and shall perform like duties for the standing committees when required. The Secretary shall give, or cause to be given, notice of all meetings of the shareholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or President, under whose supervision the Secretary shall be. The Secretary shall keep in safe custody the seal of the Corporation and, when authorized by the Board of Directors, affix the same to any instrument requiring it.

 

 

 

 

  9  
 

 

SECTION 11. Treasurer . The Treasurer shall have the custody of corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the President and the Board of Directors at its regular meetings or when the Board of Directors so requires an account of all the Treasurer’s transactions as treasurer and of the financial condition of the Corporation. Unless otherwise specified by the Board of Directors, the Treasurer shall be the Corporation’s Chief Financial Officer.

 

SECTION 12. Other Officers, Employees and Agents . Each and every other officer, employee and agent of the Corporation shall possess, and may exercise, such power and authority, and shall perform such duties, as may from time to time be assigned to him by the Board of Directors, the officer so appointing him and such officer or officers who may from time to time be designated by the Board of Directors to exercise such supervisory authority.

 

ARTICLE 5

 

CERTIFICATES FOR SHARES

 

SECTION 1. Issue of Certificates . The Corporation shall deliver certificates representing all shares to which shareholders are entitled; and such certificates shall be signed by the Chairman of the Board, Chief Executive Officer, President or a Vice President, and by the Secretary or an Assistant Secretary of the Corporation, and may be sealed with the seal of the Corporation or a facsimile thereof.

 

SECTION 2. Legends for Preferences and Restrictions on Transfer . The designations, relative rights, preferences and limitations applicable to each class of shares and the variations in rights, preferences and limitations determined for each series within a class (and the authority of the Board of Directors to determine variations for future series) shall be summarized on the front or back of each certificate. Alternatively, each certificate may state conspicuously on its front or back that the Corporation will furnish the shareholder a full statement of this information on request and without charge. Every certificate representing shares that are restricted as to the sale, disposition, or transfer of such shares shall also indicate that such shares are restricted as to transfer and there shall be set forth or fairly summarized upon the certificate, or the certificate shall indicate that the Corporation will furnish to any shareholder upon request and without charge, a full statement of such restrictions. If the Corporation issues any shares that are not registered under the Securities Act of 1933, as amended, and registered or qualified under the applicable state securities laws, the transfer of any such shares shall be restricted substantially in accordance with the following legend:

 

"THESE SHARES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR UNDER ANY APPLICABLE STATE LAW. THEY MAY NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR PLEDGED WITHOUT (1) REGISTRATION UNDER THE SECURITIES ACT OF 1933 AND ANY APPLICABLE STATE LAW, OR (2) AT HOLDER’S EXPENSE, AN OPINION (SATISFACTORY TO THE CORPORATION) OF COUNSEL (SATISFACTORY TO THE CORPORATION) THAT REGISTRATION IS NOT REQUIRED.

 

SECTION 3. Facsimile Signatures . The signatures of the Chairman of the Board, the Chief Executive Officer, the President or a Vice President and the Secretary or Assistant Secretary upon a certificate may be facsimiles, if the certificate is manually signed by a transfer agent, or registered by a registrar, other than the Corporation itself or an employee of the Corporation. In case any officer who has signed or whose facsimile signature has been placed upon such certificate shall have ceased to be such officer before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer at the date of the issuance.

 

 

 

 

  10  
 

 

SECTION 4. Lost Certificates . The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost or destroyed. When authorizing such issue of a new certificate or certificates, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost or destroyed certificate or certificates, or his legal representative, to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost or destroyed.

 

SECTION 5. Transfer of Shares . Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transaction upon its books.

 

SECTION 6. Registered Shareholders . The Corporation shall be entitled to recognize the exclusive rights of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof except as otherwise provided by the laws of the State of Florida.

 

ARTICLE 6

 

INDEMNIFICATION

 

Any person, his heirs, or personal representative, made, or threatened to be made, a party to any threatened, pending, or completed action or proceeding, whether civil, criminal, administrative, or investigative, because he, his testator, or intestate is or was a Director, officer, employee, or agent of the Corporation or serves or served any other corporation or other enterprise in any capacity at the request of the Corporation, shall be indemnified by the Corporation, and the Corporation may advance his related expenses to the full extent permitted by law. In discharging his duty, any Director, officer, employee, or agent, when acting in good faith, may rely upon information, opinions, reports, or statements, including financial statements and other financial data, in each case prepared or presented by (1) one or more officers or employees of the Corporation whom the Director, officer, employee, or agent reasonably believes to be reliable and competent in the matters presented, (2) counsel, public accountants, or other persons as to matters that the Director, officer, employee, or agent believes to be within that person’s professional or expert competence, or (3) in the case of a Director, a committee of the Board of Directors upon which he does not serve, duly designated according to law, as to matters within its designated authority, if the Director reasonably believes that the committee is competent. The foregoing right of indemnification or reimbursement shall not be exclusive of other rights to which the person, his heirs, or personal representatives may be entitled. The Corporation may, upon the affirmative vote of a majority of its Board of Directors, purchase insurance for the purpose of indemnifying these persons. The insurance may be for the benefit of all Directors, officers, or employees.

 

ARTICLE 7

 

BOOKS AND RECORDS

 

SECTION 1. Books and Records . The Corporation shall keep correct and complete books and records of accounts and shall keep minutes of the proceedings of its shareholders, Board of Directors and committees of the Board of Directors. The Corporation shall keep at its registered office or principal place of business, or at the office of its transfer agent or registrar, a record of its shareholders, giving the names and addresses of all shareholders, and the number, class and series, if any, of the shares held by each. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time.

 

 

 

 

  11  
 

 

SECTION 2. Shareholders’ Inspection Rights . Any person who is the holder of record of, or the holder of record of voting trust certificates for, the outstanding shares of any class or series of the Corporation shall have the right to examine, in person or by agent or attorney, at any reasonable time or times, for any proper purpose its relevant books and records of accounts, minutes and records of shareholders and to make extracts therefrom, upon written demand given at least five (5) days prior to the date on which he or she wishes to inspect and copy the books and records of the Corporation, stating in such demand the purpose thereof; provided, that such demand is made in good faith and for a proper purpose and the records which the shareholder wishes to inspect are directly connected with the purpose for such inspection.

 

SECTION 3. Financial Information . Not later than one hundred twenty (120) days after the close of each fiscal year, the Corporation shall prepare a balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year, and a profit and loss statement showing the results of the operations of the Corporation during its fiscal year. Upon the written request of any shareholder or holder of voting trust certificates for shares of the Corporation, the Corporation shall mail to such shareholder or holder of voting trust certificates a copy of the most recent annual balance sheet and profit and loss statement. The balance sheets and profit and loss statements shall be filed in the registered office of the Corporation in this state, shall be kept for as long as the law requires and shall be subject to inspection during business hours by any shareholder or holder of voting trust certificates, in person or by agent.

 

ARTICLE 8

 

GENERAL PROVISIONS

 

SECTION 1. Dividends. The Board of Directors may from time to time declare, and the Corporation may pay, dividends on its outstanding shares in cash, property, or its own shares pursuant to law and subject to the provisions of the Articles of Incorporation.

 

SECTION 2. Reserves . The Board of Directors may by resolution create a reserve or reserves out of earned surplus for any proper purpose or purposes, and may abolish any such reserve in the same manner.

 

SECTION 3. Checks . All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

 

SECTION 4. Fiscal Year . The fiscal year of the Corporation shall be fixed by the Board of Directors and may be changed from time to time by resolution of the Board of Directors.

 

SECTION 5. Seal . The corporate seal shall have inscribed thereon the name and state of incorporation of the Corporation. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any other manner reproduced.

 

SECTION 6. Gender . All words used in these Bylaws in the masculine gender shall extend to and shall include the feminine and neuter genders.

 

 

 

 

 

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ARTICLE 9

 

AMENDMENTS OF BYLAWS

 

Unless otherwise provided by law, these Bylaws may be altered, amended or repealed or new Bylaws may be adopted by action of the Board of Directors or the shareholders, but the Board of Directors may not amend or repeal any Bylaw adopted by shareholders if the shareholders specifically provide such Bylaw shall not be subject to amendment or repeal by the Directors.

 

CERTIFICATE

 

I hereby certify that the foregoing Restated Bylaws, consisting of 14 pages, including this page, but excluding the Index, constitute the Bylaws of KISSES FROM ITALY INC. adopted by the Board of Directors of the Corporation as of March 7, 2013.

 

 

_______________________________________

Francesca Ierfino, Secretary

 

 

 

 

 

 

 

 

 

 

  13  

Exhibit 5.1

 

Andrew I . Telsey, P . C .    Attorney at Law

12835 E. Arapahoe Road, Tower One, Penthouse #803, Englewood, Colorado 80112

Telephone: 303/768-9221 • Facsimile: 303/768-9224 • E-Mail: andrew@telseylaw.com

 

 

 

May 15, 2018

 

Board of Directors

KISSES FROM ITALY, INC.

 

  RE: KISSES FROM ITALY, INC.
    Form S-1/ Registration Statement and Related Prospectus

 

 

Dear Sirs:

 

We have acted as counsel to KISSES FROM ITALY, INC. (the "Registrant"), a Florida corporation, in connection with the preparation of the above-referenced S-1 Registration Statement and related Prospectus ("Registration Statement"), relating to the registration of 22,201,250 shares of Common Stock, $.001 par value per share to be offered by the Registrant’s Selling Shareholders (as defined in the Prospectus).  We have examined the Articles of Incorporation, as amended, and By-laws of the Registrant, and such other documents as we have deemed relevant and material.  Based on the foregoing, and certain representations of the officers, directors and representatives of the Registrant as to factual matters, it is the opinion of this office that:

 

1. The Registrant has been duly organized and is validly existing and in good standing in the State of Florida, the jurisdiction of its incorporation.

 

2. The aforementioned securities to be registered pursuant to the Registration Statement have been duly and validly authorized by the requisite corporate action in accordance with the general requirements of corporation law.  The aforesaid securities are validly authorized and issued, fully paid and non-assessable in accordance with the general requirements of Florida corporation law including the statutory provisions, all applicable provisions of the Florida Constitution and reported judicial decisions interpreting those laws.

 

Yours truly,

 

ANDREW I. TELSEY, P.C.

 

/s/ ANDREW I. TELSEY

 

 

 

Exhibit 10.1

 

ASSIGNMENT OF LEASE AGREEMENT

 

THIS ASSIGNMENT OF LEASE AGREEMENT (“Assignment”) is made and entered into as of the _____ day of ________, 2015 (“Effective Date”), by and among Paradigm Shift Holdings, Inc. , (“Assignor”), and Kisses From Italy, Inc. , (“Assignee”) and Palm Vacation Group (“Landlord”).

 

WITNESSETH

 

WHEREAS, Landlord, as Landlord, and Assignor, as Tenant, executed that certain lease, dated May 1, 2015, a copy of which is attached hereto and made a part hereof as Exhibit “A” (hereinafter the “Lease”); and

 

WHEREAS, pursuant to such Lease, Landlord leased to Assignor and Assignor leased from Landlord that certain property at that resort commonly known as Wyndham Palm-Aire (“Resort”), which property consisted of that restaurant space at the Resort known as the “Palm Cafe”, as is more specifically provided in the Lease (“Leased Premises”); and

 

WHEREAS, as of the Effective Date of this Assignment, with the consent of Landlord, Assignor desires to assign all of its rights, title, interests and obligations as Tenant under the Lease to Assignee and Assignee desires to assume all of the same; and

 

NOW, THEREFORE, for the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                Assignment . Assignor does hereby absolutely and unconditionally grant, transfer, bargain, assign and convey to Assignee all of the rights, title, interest and obligations of Assignor in, to and under the Lease, together with all benefits, advantages, rights, powers, privileges, options and other benefits of Assignor as Tenant arising thereunder. From and after the Effective Date, all of the rights and obligations of the Assignor as Tenant under the Lease shall be deemed to be the rights and obligations of the Assignee, and the same will inure to the benefit of and be binding upon the Assignee. Any and all obligations of Assignor arising prior to the Effective Date shall remain the obligations of Assignor.

 

2.                Assumption . Assignee hereby accepts and assumes the assignment of all of Assignor’s rights, title, interest and obligations of Assignor in, to and under the Lease, and Assignee shall be entitled to receive, collect, use and enjoy all benefits, advantages, rights, powers, privileges, options and other benefits of Assignor as Tenant thereunder. From and after the Effective Date, Assignee shall hereby undertake and obligate itself to perform and fulfill all of the terms, covenants, conditions and obligations required of Assignor under the Lease, including without limitation or exception the making of all payments due to or payable to Landlord under the Lease as they become due and payable. Assignee further agrees to indemnify and hold the Assignor harmless from and against any breach of the Assignee’s duties under the Lease.

  

3.                  Consent . Landlord hereby consents, pursuant to paragraph 37 of the Lease, to the assignment of the Lease to Assignee on the terms and conditions stated herein, provided however no assignment hereunder shall be made effective unless or until Assignor brings current all of its outstanding financial obligations to Landlord. Notwithstanding Landlord’s consent hereunder, nothing herein contained shall be deemed to be the acceptance or consent of Landlord to any further assignment of the Lease and Landlord expressly reserves the right to withhold its consent to any future assignment or sublet, whether in whole or in part, for any reason or no reason.

 

4.                  Possession . Assignor hereby agrees to transfer possession of the Leased Premises to the Assignee on the Effective Date. Assignee understands and agrees that Landlord shall not have any liability for the failure of Assignor to promptly deliver the Leased Premises, and Assignee’s sole recourse shall be against Assignor. Further, no delay in delivery of the Leased Premises shall excuse Assignee from the payment of rent or from its other obligations as Tenant under the Lease from and after the Effective Date.

 

5.                  Representations . Assignor represents, warrants, covenants and agrees that (i) it has good right and authority to make this Assignment, (ii) it has not executed or granted any amendment or modification to the Lease, either oral or written, and Exhibit “A” is a true and complete copy of the Lease, (iii) it has fully performed all of the terms, covenants and conditions required of it under the Lease through the Effective Date, (iv) as of the Effective Date Assignor will be current on all Rent due to Landlord under the Lease and will not be in default of the Lease, and (v) Landlord has fully performed all of its obligations under the Lease through the Effective Date and Assignor knows of no default now existing under the Lease by Landlord.

 

 

 

  1  

 

 

6.                  Indemnification . Notwithstanding anything to the contrary stated in this Assignment, Assignor hereby agrees to indemnify, protect, defend and hold Landlord and Assignee, jointly and severally, harmless from and against any and all claims, actions, losses, damages, costs and expenses (including without limitation attorney fees and costs), whether or now yet known, arising out of, in connection with or accruing under the Lease from any direct or indirect act or omission of Assignor occurring at any time prior to the Effective Date.

 

7.                  Attorney Fees . In the event of any dispute under this Assignment between the parties, the non-prevailing party shall pay the reasonable attorney fees and court costs of the prevailing party arising in connection with such dispute.

 

8.                  Counterparts . This Assignment may be executed in any number of counterparts, each of which individually shall be considered to be an original, but all of which taken together shall constitute one and the same instrument. This Assignment may be executed and delivered by facsimile or email transmission of a file in “.pdf” or similar format and, upon such delivery, each signature shall be deemed to have the same effect as if the original signature had been delivered to the other Party hereto.

 

9.                  Entire Agreement . This Assignment shall constitute the entire understanding of the parties, shall be binding upon and inure to the benefit of the Assignor and Assignee and their respective successors and assigns shall be governed by and in accordance with the laws of the state of Florida, and may not be modified or amended in any manner other than by written agreement signed by the parties. Whenever possible, each provision of this Assignment shall be interpreted in such a manner as to be effective and valid under applicable law. However, if any provision of this Assignment shall be prohibited by or invalid under such law, it shall be deemed modified to conform to the minimum requirements of such law, or, if for any reason it is not deemed so modified, it shall be prohibited or invalidated only to the extent of such prohibition or invalidity without the remainder thereof or any other provision of this Assignment being prohibited or invalidated.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the date first written above.

 

ASSIGNOR: ASSIGNEE:
   
Paradigm Holdings, Inc. Kisses From Italy, Inc.
   
____________________ ____________________
Name: Name:
Title: Title:

 

Consent

 

 

Palm Vacation Group, as the Landlord under the Lease, hereby acknowledges and consents to
this Assignment of Lease from Paradigm Holdings, Inc. to Kisses From Italy, Inc. subject to the
conditions hereinabove provided.

 

LANDLORD:

 

Palm Vacation Group:

 

Palm Resort Group, Inc., Partner

 

By:__________________

          Name:
          Title:

 

Vacation Break Resorts at Palm-Aire, Inc., Partner

 

By:__________________

          Name:
          Title:

 

 

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EXHIBIT “A” – COPY OF LEASE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

 

 

DELI LEASE AGREEMENT

 

THIS LEASE AGREEMENT (this "Lease") is made and entered into as of the 1st day of May, 2015 ("Effective Date"), by and between PALM VACATION GROUP, a Florida general partnership, ("Landlord") having an address at 2601 Palm-Aire Drive N, Pompano Beach, FL 33069, and PARADIGM SHIFT HOLDINGS, INC., a Florida corporation

 

("Tenant"), having an address at 613 E. Atlantic Blvd., Pompano Beach, FL 33160. (Hereinafter, Landlord and Tenant are sometimes referred to individually as the "P arties" or collectively as the "Parties").

 

WITNESSETH

 

WHEREAS, Landlord is the owner of those certain premises consisting of approximately two thousand two hundred-seventy (2,270) square feet of interior commercial deli space located in the Fountain Palm Building, to be known as the "Palm Cafe" ("Leased Premises") located at the Wyndham Palm-Aire Resort in Pompano Beach, Florida (the "Resort"); and

 

WHEREAS, Tenant desires to lease the Leased Premises from Landlord and Landlord desires to lease the Leased Premises to Tenant on the terms, conditions, covenants and conditions more fully set forth in this Lease.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

 

1.               RECITALS . All of the foregoing recitals are true and correct and are hereby incorporated herein by this reference.

 

2.               LEASED PREMISES . Landlord hereby leases to Tenant and Tenant does hereby lease from Landlord, upon the terms, conditions and covenants contained in this Lease, those certain Leased Premises, which is more fully described on Exhibit "A", attached hereto and made a part hereof by this reference.

 

3.               TERM. This Lease shall commence on the Effective Date and shall continue in full force and effect for a period of two (2) years (the "Initial Term"). Upon expiration of the Initial Term, this Lease shall automatically renew for additional successive one (1) year periods ("Extension Term"), unless one Party provides the other Party written notice of its intent not to renew this Lease at least sixty (60) days prior to the expiration of the then current term. Upon the expiration or earlier termination of the Initial Term or, if applicable, any Extension Term, Tenant shall surrender the Leased Premises in as good condition as when delivered, reasonable wear and tear excepted. Notwithstanding anything to the contrary set forth in this Lease, either Party may terminate this Lease at any time, for any or no reason, upon not less than ninety (90) days prior written notice to the other Party.

 

4.               RENT AND ADDITIONAL RENT . Tenant shall pay to Landlord base rent ("Rent") in the amount of Forty-Three Thousand Two Hundred and 00/100 Dollars ($43,200.00) per year, payable in equal monthly installments of Three Thousand Six Hundred and 00/100 Dollars ($3,600.00) per month. The Rent due hereunder shall be due and payable in advance in equal monthly installments due on or before the first (1 ° ) day of each and every month for the term of this Lease, including any Extension Term (if applicable). Commencing on the first Extension Term, and each Extension Term thereafter (if any), the annual Rent due hereunder shall be increased by three percent (3%) of the previous period's Rent.

 

Additionally, Tenant agrees to promptly pay, on or before the first (1 st ) day of each successive month billed, unless otherwise requested, any and all additional costs or expenses that may arise under this Lease ("Additional Rent"). All payments of Rent and Additional Rent due hereunder shall be made payable to Landlord and sent to Palm Vacation Group, Inc., 2601 Palm-Aire Drive N, Pompano Beach, FL 33069, Attn: Accounting,

 

5.                   LATE CHARGES . Tenant agrees to promptly pay all Rent and Additional Rent when due, and Tenant acknowledges that such agreement is a material inducement for Landlord to enter into this Lease. If any Rent or Additional Rent remains unpaid for ten (10) days after it becomes due and payable, Landlord will bill and Tenant shall pay a late charge equal to five percent (5%) of the amount due. Further, any unpaid Rent or Additional Rent shall accrue interest at the greater of (i) eighteen (18%) percent per annum or (ii) the highest amount permissible at law, which interest charge shall be applied against any and all amounts due and shall accrue on a per diem basis from the original date payment was due through and including the date when such amounts are received in full by Landlord. All late charges and interest due hereunder shall be deemed Additional Rent and shall be immediately due and payable.

 

 

 

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Regardless of the number of times of Landlord's prior acceptance of late payments and/or late charges, if Landlord notifies Tenant twice in any six (6) month period that any payment of Rent or Additional Rent has not been paid as provided herein, any further late payment within such six (6) month period will constitute a default under this Agreement and shall entitle Landlord to terminate this Lease on three (3) days notice, as well as seek any other remedies available hereunder or at law.

 

6.                   SECURITY DEPOSIT . [Intentionally Omitted.]

 

7.                   USE OF THE LEASED PREMISES . Tenant agrees to use the Leased Premises as a deli and grill to serve breakfast, lunch, and dinner food items, snacks, and non-alcoholic beverages to owners and guests at the Resort, to be known as "Palm Cafe", and for no other purpose.

 

Tenant understands and agrees that Landlord shall have no obligation hereunder to supply any equipment, inventory or supplies necessary for conducting Tenant's business except as specifically provided herein, and Landlord expressly makes no representation or warranty as to the fitness of the Leased Premises for the purposes herein intended.

 

Tenant will not commit waste upon the Leased Premises or the Resort, nor do or permit to be done in or about the Leased Premises or the Resort, nor bring or keep or permit to be brought to or kept therein, anything prohibited by or which in any way will conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated, or which is prohibited by the standard for fire or other insurance upon the Leased Premises or any of its contents, nor cause a cancellation of any insurance policy covering the Leased Premises or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Leased Premises or the Resort which will in any way obstruct or interfere with the normal operation of the Resort or its HVAC, plumbing, or other mechanical or electrical systems. Further, Tenant shall not alter the appearance of the exterior or interior of the Resort or any portion of the Leased Premises, nor shall it interfere with the rights of guests or other Tenants or invitees of the Leased Premises, or injure or annoy them, or use or allow the Leased Premises to be used for any improper, immoral, unlawful or objectionable purpose. Tenant further represents and warrants that it shall not cause, maintain or permit any nuisance in, on or about the Leased Premises or commit or suffer to be committed any waste in, on or about the Leased Premises or the Resort.

 

8.                   OUALITY OF SERVICES . Tenant warrants and covenants that it shall at all times operate a first class eatery, and shall maintain high quality food and beverage, service, and operation standards reasonably acceptable to Landlord at all times, such standards to be above and beyond any health department or governmental agency standards. These standards include, without limitation, maintaining a high degree of satisfaction among the owners, guests and invitees of the Resort as to: (i) service efficiency, effectiveness, friendliness and professionalism; (ii) food and beverage quality and presentation; and (iii) management effectiveness and efficiency.

 

9.                   RESORT EVENTS . If requested by Landlord with reasonable notice to Tenant, Tenant shall provide food and beverage for the various sales, orientations, marketing and owner events held by Landlord or its agent for guests of the Resort. Any such events shall be subject to a mutually agreed upon schedule, menu and price. For any amounts due hereunder by Landlord, Tenant shall provide Landlord with a weekly invoice, which shall be paid by Landlord to Tenant not more than thirty (30) days after receipt of the same.

 

10.               PERMITS. Tenant shall at all times operate its businesses at the Leased Premises in compliance with applicable federal and territorial laws and regulations, and otherwise. in accordance with the Governing Documents. Tenant shall, at its sole cost and expense be responsible for obtaining any and all required governmental permissions, permits, licenses or waivers that may be reasonable and necessary in connection with the operation of Tenant's business at the Leased Premises, including without limitation any applicable business licenses, health permits, and liquor permits. Tenant shall indemnify and hold Landlord harmless from and against any costs and expenses that may arise as a result of Tenant's failure to obtain any such permissions.

 

11.               EQUIPMENT . Tenant shall have the right to use the equipment and personal property of Landlord remaining in the Leased Premises as of the date of this Lease, which is more fully described on Exhibit "B", attached hereto and made a part hereof by this reference (collectively, the "Equipment"). Landlord expressly makes no representation or warranty of merchantability, fitness or otherwise with respect to such Equipment.

 

 

 

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Tenant covenants and agrees not to remove the Equipment from the Leased Premises without the prior written consent of Landlord. If any such Equipment shall become damaged or unusable during the term of this Lease, Tenant covenants and agrees that Landlord shall have no obligation to replace said Equipment, provided however such damage is not the result of Tenant's gross negligence or willful misconduct. If Tenant should elect to replace any of the Equipment, such replacements shall become the sole property of Tenant, provided however that Tenant has returned to Landlord all of Landlord's Equipment and replaced any of Landlord's Equipment which Tenant negligently or willfully damaged. Further, Tenant shall be responsible for and repair any and all damage caused by the installation or removal of any equipment belonging to Tenant.

 

Upon the termination of this Lease, Tenant shall return all of Landlord's Equipment, unless otherwise provided herein, in as good condition and repair as was received on the Effective Date, reasonable wear and tear excepted.

 

12.                     ROOM CHARGES . During the term of this Lease, Tenant shall permit guests of the Resort to charge their room for meals provided to such guests by Tenant at the Leased Premises. Tenant shall bill Landlord for these charges on a nightly basis so that Landlord can timely adjust the guest folios to reflect meal charges for which payment is owed. Payment will be made to Tenant for said charges, minus five percent (5%) for processing costs, and Landlord will process and mail such payments to Tenant on a bi-weekly basis. Without having any obligation to do so, Landlord reserves the right, in its sole and absolute discretion, to apply any monies collected hereunder against any or all amounts owed by Tenant pursuant to this Lease.

 

13.                     FOOD & BEVERAGE DISCOUNTS . During the term of this Lease, Tenant shall provide Landlord's management and staff with a twenty-percent (20%) discount on purchases at the Leased Premises, to be paid by the individual at the point of sale. Landlord shall provide Tenant a current list of individuals entitled to the discount. In the event that no such list is provided, Tenant shall have no obligation to provide the discount.

 

14.                     HOURS OF OPERATION . Tenant agrees that its hours of operation, pricing, and menu format for the Leased Premises shall be subject to periodic review by Landlord and agreement between the Parties. Tenant covenants and agrees that the deli/grill shall provide service to owners and guests at the Resort during a mutually agreeable written schedule. As of the Effective Date of this Lease, Tenant shall operate the Leased Premises from 8:00 am through 8:00 pm, seven (7) days per week.

 

15.                     SIGNS AND ADVERTISING . Tenant shall obtain the consent of Landlord prior to posting, erecting or otherwise displaying any outdoor signage at the Leased Premises. All permitted signage hereunder must be in compliance with applicable laws of the State of Florida and the Governing Documents.

 

Further, Tenant shall not advertise its businesses at the Leased Premises in any medium without having first obtained the prior approval by Landlord of any said advertisement. The immediately preceding restriction shall not apply to classified advertisements by Tenant soliciting interest in employment at the restaurant or advertisements in publications having a family oriented readership regarding dining, retail trade and (to the extent permitted by this Lease) entertainment at the restaurant. Nothing herein contained is intended to give Tenant any rights to use any marks or logos of the Resort, Landlord or any of its parents, affiliates or subsidiaries.

 

16.                HAZARDOUS MATERIALS . Tenant shall not use the Leased Premises for the storage, processing or disposal of any hazardous materials, nor shall it use the Leased Premises in such a way as could create any environmental condition that is actionable under any federal or territorial environmental law or regulations. Tenant shall indemnify and hold Landlord harmless from and against any costs and expenses that may arise as a result of the storage, processing or disposal of such materials by Tenant.

 

17.                UTILITIES, TRASH REMOVAL AND TELEPHONE SERVICE . Landlord shall provide heat, electricity, air conditioning, refuse removal and telephone service for the Leased Premises without additional cost to Tenant; provided, however, Landlord shall have the option, with notice to Tenant, to charge for any and all such utilities and telephone services based on any extraordinary or increased charges incurred by Landlord for providing the services to Tenant. Tenant agrees that it shall not install any additional telephone or cable lines without the prior written consent of Landlord. Tenant shall not commit any waste or nuisance at the Resort, and shall not dispose of any trash or refuse in any manner that is actionable under any federal or territorial law or regulation. Additionally, Tenant shall reimburse Landlord for the actual cost of any and all other services that may be furnished by Landlord from time to time for the Leased Premises during the term of this Lease. Any and all charges due hereunder to Landlord shall be deemed to be Additional Rent under this Lease, and shall be due and payable as provided in Section 5 of this Lease.

 

 

 

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18.                LOCKS. Tenant shall install such locks and other security devices it deems reasonable, and Tenant shall provide Landlord, or its property manager, with one (1) key to each lock and/or security device (excluding keys or combinations for Tenant's vaults, safes, and similar areas designated in writing by Tenant), which keys shall be for use in emergencies only.

 

19.                SECURITY . Tenant shall maintain, install and provide such security and alarm systems and other measures as may be reasonably necessary from time to time to secure the safety and welfare of the Leased Premises, and Tenant's agents, employees, invitees, and guests at the Leased Premises. Tenant agrees to indemnify and hold Landlord harmless from and against any cost, expense, liability, demand, violation, loss or action arising from or in connection with such security and safety measures or lack thereof.

 

20.                CONDITION OF THE PREMISES . The Parties acknowledge that the Leased Premises are leased to Tenant in its current "as is" condition, and Landlord shall not have any obligation to perform any improvements or alterations on the Leased Premises. Commencing upon the Effective Date and extending through the term of this Lease, and any Extension Term (if applicable), the Leased Premises shall remain in the same condition as of the date hereof, reasonable wear and tear excepted. Notwithstanding anything to the contrary set forth in this Lease, except as may be specifically required in this Lease, Landlord will not be obligated to make any improvements or repairs to the Leased Premises during the term of this Lease, and all such repair obligations shall remain the obligation of Tenant, at its sole cost and expense.

 

21.                REPAIRS . Tenant shall maintain the Leased Premises in good condition and repair, and shall be responsible, at its sole cost and expense, for all interior maintenance and repair of the

 

Leased Premises, including without limitation all interior and mechanical repairs, and all equipment, utilities and systems at or within the Leased Premises and all exterior maintenance and repair.

 

Tenant shall promptly make any and all necessary repairs required hereunder at its sole cost and expense, provide however that for any repairs or replacements required to be made by Tenant to the mechanical, electrical, sanitary, ventilating, air conditioning or other systems of the Leased Premises, or which may affect the Resort or the exterior or interior structure of any building thereat, Tenant shall first provide notice to and obtain written consent from Landlord as to the work, contractor and materials. If Tenant fails to make any necessary repairs required hereunder, or to maintain the Leased Premises in at least as good condition as at the Effective Date, Landlord may make any such repairs required hereunder and collect all expense therefor as Additional Rent. Notwithstanding anything to the contrary stated herein, Landlord reserves the right to install, erect, use, maintain, alter or repair the Leased Premises in any manner as it may deem necessary or reasonable, except that the same shall not unreasonably interfere with Tenant's use and enjoyment of the Leased Premises for the purposes provided herein.

 

22.                SUSTAINABILITY . Tenant shall cooperate with Landlord in its sustainability and greening efforts at the Resort, including without limitation initiatives for: (a) reduced consumption of energy, water and other natural resources, (b) minimizing waste and diverting from landfills, (c) improving air quality and reducing harmful chemical use, and (d) educating staff to drive sustainability improvements. Additionally, in connection with the operation of its business at the Leased Premises, Tenant shall consider organic and/or sustainable food and beverages, and purchase, where feasible, its consumable items (such as food, beverages, packaging, and dinnerware) from suppliers that incorporate sustainability and ethical treatment policies into their production standards.

 

23.                ALTERATIONS AND EXPANSIONS . Tenant shall not make or permit any alterations or improvements in, on or about the Leased Premises without the prior written consent of Landlord, which consent shall not be unreasonably withheld, but may be conditioned. If any improvements and/or alterations are approved by Landlord, Tenant shall submit all plans and specifications relating to such to Landlord for review and approval prior to commencement of such improvements and/or alterations. Tenant covenants and agrees that all improvements and alterations done hereunder shall be in a good and workmanlike manner, and otherwise in accordance with the terms of this Lease and the Governing Documents for the Resort. Further, Tenant represents that all improvements and alterations shall be completed within ninety (90) days from the execution of this Lease, and shall not materially interfere with the use and enjoyment of the Leased Premises or the Resort by the owners, guests and invitees at the Resort. All permitted alterations, additions or improvements shall be installed at Tenant's sole cost and expense, and in compliance with all applicable laws, ordinances, regulations, building and fire codes. All structural alterations additions and improvements must be performed by a licensed contractor according to plans and specifications approved in writing by Landlord, which approval may be withheld or conditioned for any or no reason.

 

 

 

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It is understood and agreed by Tenant that any and all alterations, additions or improvements and/or fixtures placed in or upon the Leased Premises by Tenant, or that are affixed so that they cannot be removed without material damage to any part of the Leased Premises, shall be deemed to be a part of the Leased Premises and not trade fixtures, and shall be surrendered with the Leased Premises upon termination of this Lease. The immediately preceding sentence shall not apply to Tenant's Equipment to the extent that such may be removed without material damage to any part of the Leased Premises. Landlord shall have no obligation to reimburse Tenant for any costs associated with any such alterations, additions, improvements or fixtures surrendered with the Leased Premises.

 

Tenant covenants to keep the Leased Premises free from any liens arising out of any work performed, materials furnished or obligations incurred by Tenant. Tenant shall cause, at its sole cost and expense, any such lien imposed to be released of record within ten (10) days after imposition of the lien or upon written request of Landlord. Tenant shall further indemnify and hold Landlord harmless from and against any cost, expense, liability, demand, violation, loss or action arising from or in connection with any and all work performed by Tenant at the Leased Premises, including without limitation, any liens arising from the same. Provided Tenant causes any lien to be released within such ten (10) day period, nothing in this Section shall be construed as to prohibit Tenant from contesting any lien or amount claimed thereunder which Tenant deems objectionable.

 

24.        DAMAGE, DESTRUCTION OR EMINENT DOMAIN . In the event that the Leased Premises or any portion thereof are damaged by fire, earthquake, act of God, the elements or other casualty, or are taken by eminent domain, Landlord shall promptly repair the same, subject to the provisions of this Section set forth below, provided that such repairs can reasonably be made within ninety (90) days. During any period of repairs, this Lease shall remain in full force and effect except that, provided only that such damage is not the result of the willful misconduct of Tenant or Tenant's employees or invitees, the Rent shall be abated for such part of the Leased Premises as shall be rendered unusable by Tenant in the conduct of its businesses and such abatement shall be only for so long as such part of the Leased Premises is unusable, which shall be determined in Landlord's sole and absolute discretion.

 

If such repairs cannot reasonably be made within ninety (90) days, either Party may elect, upon notice to the other Party within thirty (30) days after the date of such fire or other casualty, to terminate this Lease, in which event this Lease shall terminate on the thirtieth (30 th ) day after receipt of notice, and thereafter neither Party shall have any further obligation hereunder, except for those obligations specifically provided to survive the termination of this Lease. If; however, both Parties agree to repair the Leased Premises, this Lease shall continue in full force and effect, but the Rent shall be abated, as set forth above.

 

In the event that the whole or substantially whole of the Leased Premises, or the building in which the Leased Premises are located, is destroyed or taken, then Landlord reserves the right to terminate this Lease as of the date of the occurrence and neither Party shall have any further obligations hereunder, except that Tenant shall remain responsible for the payment of any amounts of Rent and Additional Rent accrued through and until the date of termination. Landlord shall have no liability or responsibility for any damage to the property of Tenant in or about the Leased Premises by reason of any flood, water, fire, windstorm, or other casualty or act of nature, and Landlord shall have no obligation to rebuild or restore the Leased Premises. Notwithstanding anything herein to the contrary, Tenant agrees that if the Leased Premises or any other portion of the building wherein the Leased Premises are located is damaged by fire or other casualty resulting from the fault or negligence of Tenant or any of its agents, employees, or invitees, then the damage shall be repaired at the sole cost and expense of Tenant, there shall be no abatement of Rent before or during the repair of the damages, and this Lease shall remain in full force and effect, unless otherwise determined by Landlord.

 

25.         INSURANCE. During the term of this Lease, Tenant shall maintain, at its own expense, with companies authorized to do business in the State of Florida and approved by Landlord, insurance throughout the period of this Lease and any Extension Term, if applicable, which shall include (i) public liability and indemnity insurance in an amount of not less than one million dollars ($1,000,000.00) per person and one million dollars ($1,000,000.00) per accident and in which the property damage liability shall not be less than one million dollars ($1,000,000.00), so as to hold Landlord free from any and all damages or litigation resulting from Tenant's use of the Leased Premises and operation of its businesses thereat, (ii) standard multi-peril insurance, including fire, windstorm, earthquake, theft and other hazards, with the usual extended coverage endorsement and endorsements for vandalism and malicious mischief and such other extended coverage endorsements as Landlord may reasonably, from time to time required, covering all of Tenant's stock in trade, fixtures, furniture, furnishings, floor coverings, equipment, signs and all other installations and improvements made by Tenant in, on or about the Leased Premises to the extent of their full insurable value, (iii) if the Leased Premises are located in a designated flood prone area, flood insurance covering all of Tenant's stock in trade, fixtures, furniture, furnishings, floor coverings, equipment, signs and all other installations and improvements made by Tenant in, on or about the Leased Premises in the maximum amount available, and (iv) appropriate workers' compensation insurance in respect of any employees and work on or about the Leased Premises in accordance with Florida law.

 

 

 

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Landlord and its agents, employees, assigns and other Tenants and occupants of the Resort shall not be liable for any damage by fire or other casualty covered by Tenant's insurance, no matter how caused, it being understood that Tenant will look solely to its insurer for reimbursement. Whenever, in Landlord's judgment, good business practice indicates the need for additional insurance coverage or different types of insurance, Tenant shall, upon demand, obtain such insurance at its expense. All of said insurance shall be in form and with companies reasonably satisfactory to Landlord and shall provide that it shall not be subject to cancellation, termination or change except after at least thirty (30) days prior written notice to Landlord. All insurance provided by Tenant as required by this Lease shall name Landlord (including its parent companies, subsidiaries and affiliates) as an additional loss payee, and shall include a waiver of subrogation in favor of Landlord. In the case of insurance against damage by fire or other casualty, the policy or policies shall provide that loss shall be adjusted between Landlord and Tenant in proportion to their respective interests in the Leased Premises. Tenant agrees to deliver to Landlord, at least five (5) days prior to the time such insurance is first required to be carried by Tenant, and thereafter at least fifteen (15) days prior to the expiration of any such policy, a certificate of insurance evidencing Tenant's compliance with its obligations hereunder, together with evidence of payment therefor and including an endorsement which states that such insurance may not be cancelled except upon thirty (30) days written notice to Landlord or any designee(s) of Landlord. Any renewals, replacements or endorsements thereto shall also sent to Landlord, with required copies to Wyndham Vacation Ownership, Inc., 22 Sylvan Way, Parsippany, NJ 07054, Attn: Risk Management. All said insurance shall be in full force and effect during the term of this Lease, including, if applicable, any Extension Term. If Tenant fails to comply with any requirement of this Section, Landlord may, but is not obligated to, obtain such insurance and keep the same in effect, and Tenant shall reimburse Landlord upon demand for such premium as Additional Rent.

 

26.              WAIVER OF SUBROGATION . Landlord and Tenant and all parties claiming under each of them mutually release and discharge each other from any and all claims and liabilities arising from or caused by any hazard covered by insurance on the Leased Premises, or covered by insurance in connection with the property or activity conducted on the Leased Premises, regardless of the cause of damage or loss.

 

27.              SUBORDINATION AND NONDISTURBANCE . This Lease and all of Tenant's rights hereunder are and shall be subject and subordinate to any third party existing or future ground, overriding or underlying lease of all or any part of the Resort and grants of term of all or any part of the Resort or portion thereof in which the Leased Premises are located, in whole or in part, and this Lease and all of Tenant's rights are and shall be subject and subordinate to the lien of any third party fee or leasehold mortgage, or other security instrument that now exists or may hereafter be placed upon the Resort or any part thereof and to any and all advances to be made thereunder, and to the interest thereon, and all renewals, replacements, modifications, consolidations, spreaders, and extensions thereof, provided, however, that neither the holder of the encumbrance, nor any person or entity claiming by or through said holder may disrupt, terminate or otherwise interfere with Tenant's quiet possession of the Leased Premises so long as Tenant keeps and performs the covenants of Tenant hereunder. Tenant agrees to execute and deliver any and all instruments that may be reasonably required to acknowledge such subordination in recordable form, and in the event Tenant fails so to do within ten (10) days after demand in writing, Tenant shall be deemed to have reaffirmed such subordination.

 

28.              TAXES. Tenant shall be responsible for any license fees, gross receipts taxes or other fees, taxes and charges levied, assessed or charged against Tenant or Landlord in connection with the operation of Tenant's businesses at the Leased Premises. Notwithstanding, Tenant shall have no obligation for the real estate taxes that may become due and owing in connection with the Leased Premises.

 

29.              RIGHT OF ENTRY . Landlord reserves the right to enter upon the Leased Premises at reasonable times, upon reasonable notice (except no notice shall be required in the event of an emergency) for the purposes of inspection, repair, alteration, exhibiting the Leased Premises to mortgagees or prospective Tenants, or for any other reason or purpose as may be reasonable or desirable by Landlord. Tenant shall permit Landlord to install, use and maintain pipes, ducts and conduits within or throughout the Leased Premises, or the walls, columns, ceiling therein, provided that the same does not unreasonably interfere with Tenant's use and occupancy of the Leased Premises.

 

30.              DEFAULT BY TENANT . The following events shall be deemed to be events of default by Tenant under this Lease:

 

(a)        the failure to pay any Rent or Additional Rent, as and when such sums become due, and such failure shall continue for a period of ten (10) days after the date due; or

 

 

 

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(b)         the failure of Tenant to comply with any other term, provision, condition or covenant of this Lease, and such failure shall continue for a period of thirty (30) days following written notice thereof by Landlord to Tenant (except that in the event that the default may not be reasonably cured within such thirty (30) day period, Tenant shall not be deemed to be in default of its obligations hereunder provided that it diligently pursues such cure within thirty (30) days after notice and completed such cure within sixty (60) days); or

 

(c)         the failure of Tenant to operate its businesses at the Leased Premises in a first class, businesslike and professional manner, or to maintain quality service and food standards reasonably acceptable to Landlord in connection with: (i) the service efficiency, effectiveness, and friendliness of the staff and the like; (ii) the food quality and presentation; or (iii) the management, effectiveness and efficiency of the business operated by Tenant at the Leased Premises, and such failure shall continue for a period of thirty (30) days following written notice thereof by Landlord to Tenant.

 

31.             DEFAULT BY LANDLORD . Landlord shall be deemed to be in default of this Lease upon the failure of Landlord to comply with any term, provision, condition or covenant of this Lease, provided that such failure shall continue for a period of thirty (30) days after written notice and opportunity to cure. Notwithstanding, in the event that the default may not be reasonably cured within such thirty (30) day period, Landlord shall not be deemed to be in default of its obligations hereunder provided that it diligently pursues such cure, and completed such cure, within sixty (60) days after notice thereof.

 

32.             REMEDIES . Upon the occurrence of any event of default, the non-defaulting Party hereunder shall have any and all remedies available to said Party at law or in equity by reason of such default, without prejudice to any other rights or remedies provided herein this Lease. Furthermore, in the event of a default, the non-defaulting Party may, at its option, declare this Lease to be terminated.

 

In the event of any default by Tenant, Landlord shall additionally have the right to enter upon and take possession of the Leased Premises, with notice, and to evict and expel Tenant and any or all of Tenant's property, belongings and effects therefore, without legal process and without any consequence of trespass, whether at law or in equity. All of the rights and remedies of the Parties hereunder shall be cumulative and the exercise of one or more remedies shall not be deemed to exclude or constitute a waiver of any other or additional remedy available hereunder or at law.

 

33.             INDEMNIFICATION . Tenant agrees to protect, defend, indemnify and hold Landlord (including its parent companies, subsidiaries and affiliates) and all other parties having an interest at the Resort harmless from and against any and all liabilities, claims, expenses, demands, actions losses and damages (including reasonable attorney fees and costs), that may at any time be asserted against Landlord by reason of: (i) the use or occupancy of the Leased Premises by Tenant, or its agents, servants, employees, customers, guests, visitors, contractors, invitees or licensees; or (ii) any change, repair, alteration, work or improvement made or carried out by Tenant, or its agents, servants, employees, or contractors, at or in the Leased Premises, whether or not performed at Tenant's request or direction; or (iii) any other reason relating to or arising from this Lease; except in the event such claim arises solely out of the gross negligence or willful misconduct of Landlord. Landlord agrees to protect, defend, indemnify and hold Tenant harmless from and against any and all liabilities, claims, expenses, losses and damages (including reasonable attorney fees and costs), that may at any time be asserted against Tenant by virtue of the gross negligence or willful misconduct of Landlord.

 

34.         ATTORNEY FEES: LIMITATION OF LIABILITY . In the event of any default under this Agreement by either Party hereunder, in addition to any other remedy available at law or in equity, the non-defaulting Party may bring an action against the defaulting Party for damages and/or specific performance. The prevailing Party shall be entitled to the recovery of reasonable attorney fees, in addition to the costs incurred as a result of such litigation. These remedies shall be cumulative, and the exercise of one or more remedy shall not be deemed to exclude or constitute a waiver of any other or additional remedies that may be available to the non-defaulting Party hereunder or at law or in equity. Notwithstanding the foregoing, in the event of any such action by a non-defaulting Party, the defaulting Party hereunder shall be liable only for the actual damages incurred by the non-defaulting Party, and under no circumstances shall either Party have any liability for the economic consequential damages, including lost profits or savings, indirect, special or other incidental damages, whether or not either Party knew or should have known of their possibility.

 

 

 

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Tenant expressly agrees that the obligations and liabilities of Landlord under this Lease and any exhibit or addendum thereto, or any document referenced herein shall not constitute personal obligations of the officers, directors, employees, agents, partners, members representatives, stockholders or other principals and representatives of Landlord. Notwithstanding anything to the contrary in this Lease, in any action brought to enforce the obligations of Landlord hereunder, any judgment or decree shall be enforceable against Landlord only to the extent of Landlord's interest in the Leased Premises and no such judgment shall be the basis of execution, levy or other enforcement procedure for the satisfaction of Tenant's remedies under this Lease or arising out of the relationship of Landlord and Tenant hereunder or out of Tenant's use or occupancy of the Leased Premises, or be a lien on any asset of Landlord other than its interest in the Leased Premises. Furthermore, Tenant waives all claims against Landlord and Landlord's agents, employees and assigns with respect to, any and all loss, cost, liability, damage, injury, expense (including attorney's fees and disbursements), penalties and fines incurred in connection with or arising from any injury or death to or of Tenant, its agents, servants, employees, customers, visitors, contractors, invitees or licensees, or any other person or for any damage to, or loss (by theft or otherwise) of, any of Tenant's property and/or of the property of Tenant's agents, servants, employees, customers, visitors, contractors, invitees or licensees or any other person in or about the Leased Premises, irrespective of the cause of such injury, damage or loss (including the acts or negligence of Tenant or any guest or occupant of the Resort or of any owners or occupants of adjacent or contiguous property) and whether occasioned by or from explosion, falling plaster, broken glass, electricity, smoke, wind, water, being upon or coming through or from the street, roof, subsurface, skylight, trapdoor or other pipes or sewage, or the failure of the air conditioning or refrigeration system, or the breaking of any electric wire, the bursting, leaking or running of water from any tank, washstand, watercloset, waste-pipe, sprinkler system, or any other pipe in, above, upon or about the Leased Premises or the Resort, or which may at any time hereafter be placed therein, or from any other cause whatsoever, except as may be caused by Landlord gross negligence or willful misconduct.

 

35 .       NOTICES . Any notice that may be required under this Lease shall be addressed to the Party to whom it is intended and delivered: (i) personally; (ii) by certified mail, return receipt requested; or (iii) by nationally recognized overnight courier. All notices shall be sent to address indicated below, and shall be deemed delivered: (a) when delivery is attempted, if delivered personally; (b) five (5) business days after deposit in a valid receptacle of the United States mail; or (c) the date following deposit with a nationally recognized overnight courier.

 

IF TO LANDLORD :

 

Palm Vacation Group, Inc.
2601 Palm-Aire Drive N
Pompano Beach, FL 33069
Attn: Resort Manager

 

IF TO TENANT :

Paradigm Shift Holdings, Inc.

925 NE 123' 1 Street

North Miami, FL 33161

Attn: Daniel Kolchkov, General Manager

WITH COPIES TO :

 

Wyndham Vacation Ownership, Inc.

6277 Sea Harbor Drive

Orlando, FL 328

Attn: Legal Services - RM

 

 

36.        HOLD OVER . The failure of Tenant to surrender the Leased Premises on expiration of the Initial Term, or approved Extension Term, or any subsequent holding over by Tenant, with or without the consent of Landlord, shall result in the creation of a tenancy at will, which may be cancelled by Landlord on thirty (30) days notice. The monthly Rent due for any such hold over period shall be equal to one hundred fifty percent (150%) of the average monthly Rent for the previous Lease year. Notwithstanding anything to the contrary, nothing contained herein is intended to give Tenant any right to hold over hereunder. All other terms and conditions of this Lease shall remain in full force and effect during any such tenancy at will.

 

37.        ASSIGNMENT OR SUBLETTING . Tenant may not assign, sublet or in any other way transfer all or part of the Leased Premises, and/or any or all of its interests or obligations in this Lease, without the prior written consent of Landlord, which consent may be withheld for any or no reason.

 

 

 

  10  

 

 

38.        BROKERS . Each Party hereto represents and warrants that it has not dealt with any broker in connection with this Lease, and each agrees to protect, defend, indemnify and hold the other harmless from and against any and all claims or liabilities for brokerage commissions or finder's fees arising in connection with this Lease.

 

39.        RADON GAS DISCLOSURE . In accordance with the provisions of Section 404.056(5), Florida Statutes, Landlord makes the following disclosure to Tenant: "RADON GAS: Radon is a naturally occurring radioactive gas that, when it has accumulated in a building in sufficient quantities, may present health risks to persons who are exposed to it over time. Levels of radon that exceed federal and state guidelines have been found in buildings in Florida. Additional information regarding radon and radon testing may be obtained from your county health department."

 

40 .       GENERAL PROVISIONS .

 

(a)        Severability. If any provision of this Lease or the application of any provision of this Lease to any person or circumstance is, to an extent, held to be invalid or unenforceable, the reminder of this Lease or the application of that provision to persons or circumstances other than those as to which it is held invalid or enforceable, will not be affected, and each provision of this Lease will be valid and be enforced to the fullest extent permitted by law.

 

(b)        Captions. Headings and captions to the Sections in this Lease are included for convenience only and do not modify any of the terms of this Lease.

 

(c)        Further Assurances. Each Party to this Lease will, at its own cost and expense, execute and deliver such further documents and instruments and will take such other actions as may be reasonably required or appropriated to evidence or carry out the intent and purposes of this Lease.

 

(d)        No Waiver. No term, covenant, representation, warranty or condition of this Lease may be waived without the execution of a written instrument signed by Landlord. The failure of Landlord at any time to require performance of any provision under this Lease, or to exercise any remedy available to it hereunder or at law, shall in no manner affect the right of Landlord to enforce or exercise the same at any later date. Further, no waiver by Landlord of any condition, term, covenant, representation, remedy or warranty contained in this Lease or available at law, whether by conduct or otherwise, in any one or more instances, shall be deemed to be or construed as a further or continuing waiver of the same.

 

(e)         Governing Law. This Lease will be governed by, and in all respects construed in accordance with, the laws of the State of Florida, without regard to principles of conflict of laws.

 

(f)          No Agency. The Parties hereto agree that the business relationship created by this Lease is solely that of Landlord and Tenant. This Lease does not create any partnership, joint venture or other joint undertaking between the Parties, and no Party shall be liable for the debts, obligations or liabilities of the other Party, or have the authority to make any representations on behalf of the other Party, except as provided in this Lease.

 

(g)        Construction. This Lease is a fully negotiated agreement, and both Parties participated in its drafting and negotiation. As such, the Parties hereby agree that the rule of construction that an agreement be construed harshly against the drafting party does not apply and should not be applied in the event this Lease is construed by a third party, including but not limited to a trier of fact.

 

(h)       Authority. Each Party hereby represents and warrants to the other that is has full right, power and authority to enter into and perform its duties under this Lease in accordance with the provisions hereof and that the execution and delivery of this Lease have been duly authorized.

 

(i)      Entire Agreement . This Lease constitutes the final, complete and exclusive statement between the Parties to this Lease pertaining to the Leased Premises, and it supersedes any and all prior and contemporaneous understandings or agreements between the Parties, whether written or oral, including without limitation any prior lease agreement by and between the Parties, if any. This Agreement is binding on and inures to the benefit of the Parties, their respective heirs, representatives, successor and permitted assigns. No Party has been induced to enter into this Lease by, nor is any Party relying upon, any representation or warranty outside those expressly set forth in this Lease. Any agreement made after the date of this Lease is ineffective to amend, modify, waive, release, or terminate this Lease, in whole or in part, unless that agreement is in writing, is signed by both Parties to this Lease, and specifically states that the agreement modifies this Lease.

 

IN WITNESS WHEREOF, the Parties have executed this Lease as of the date first stated above.

 

"Landlord"  
Palm Vacation Group:  
   
Palm Resort Group, Inc., Partner Vacation Break Resorts at Palm-Aire, Inc., Partner
   
By: /s/ Mark A. Johnson By: /s/
       Name: Mark A. Johnson         Name:
      Title:         Title: Sr. Vice President

 

 

   
“Tenant”  
Paradigm Shift Holdings,Inc.  
   
   
By: /s/ Daniel Kolchkov  
       Name: Daniel Kolchkov  
        Title:  

 

 

 

  11  

 

 

 

5 stainless steel shelves

1 stainless steel 2x4 shelve

1 11 tiers tray rack

4 dining tables

12 chairs

2 Displays (wood)

1 Coca Cola fridge- 2x6

1 Coca Cola Fridge- 4x6

2 32" Flat Screen tv's 1 wood cabinet 7x2

 

 

 

 

 

 

 

  12  

 

 

EXHIBIT "B" Equipment

 

1 Salad Bar/Fridge (Supera)
1 Display fridge (True)

3 Stainless Steel working tables 5
1 PizzaPro

1 two levels oven —broil

2 Stainless teel 5 Cabinets( storage units)

Three layer pizza heater

1 small stainless steel fridge

4 4x6 stainless steel fridge

1 deep fryer

1 stainless steel sink

1 stainless steel microwave oven

1 2x3 stainless steel work table

1 pizza tray rack

30 pizza trays

1 stainless steel 3 hole sink

1 stainless steel small sink 12"

1 Meat/ham/cheese slicer

1 48" stainless steel work table

1 commercial coffee machine

1 three trays food warmer (Hatco)

1 GE black refrigerator

1 5x6 Glass refrigerator

 

 

 

 

  13  

Exhibit 10.2

 

 

ASSIGNMENT OF LEASE AGREEMENT

 

THIS ASSIGNMENT OF LEASE AGREEMENT (“Assignment”) is made and entered into as of the _____ day of________________, 2015 (“Effective Date”), by and among Paradigm Holdings, Inc. , (“Assignor”), and Kisses From Italy, Inc. , (“Assignee”) and Sea Gardens Beach and Tennis Resort, Inc. (“Landlord”).

 

WITNESSETH

 

WHEREAS, Landlord, as Landlord, and Assignor, as Tenant, executed that certain lease, dated August 1, 2014, a copy of which is attached hereto and made a part hereof as Exhibit “A” (hereinafter the “Lease”); and

 

WHEREAS, pursuant to such Lease, Landlord leased to Assignor and Assignor leased from Landlord that certain property at that resort commonly known as the Wyndham Sea Gardens (“Resort”), which property consisted of restaurant space at the Resort known as the “Breezeway Cafe”, and as is more specifically provided in the Lease (“Leased Premises”); and

 

WHEREAS, as of the Effective Date of this Assignment, with the consent of Landlord, Assignor desires to assign all of its rights, title, interests and obligations as Tenant under the Lease to Assignee and Assignee desires to assume all of the same; and

 

NOW, THEREFORE, for the sum of Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

 

1.                Assignment . Assignor does hereby absolutely and unconditionally grant, transfer, bargain, assign and convey to Assignee all of the right, title, interest and obligation of Assignor in, to and under the Lease, together with all benefits, advantages, rights, powers, privileges, options and other benefits of Assignor as Tenant arising thereunder. From and after the Effective Date, all of the rights and obligations of the Assignor as Tenant under the Lease shall be deemed to be the rights and obligations of the Assignee, and the same will inure to the benefit of and be binding upon the Assignee. Any and all obligations of Assignor arising prior to the Effective Date shall remain the obligations of Assignor.

 

2.                Assumption . Assignee hereby accepts and assumes the assignment of all of Assignor’s right, title, interest and obligation of Assignor in, to and under the Lease, and Assignee shall be entitled to receive, collect, use and enjoy all benefits, advantages, rights, powers, privileges, options and other benefits of Assignor as Tenant thereunder. From and after the Effective Date, Assignee shall hereby undertake and obligate itself to perform and fulfill all of the terms, covenants, conditions and obligations required of Assignor under the Lease, including without limitation or exception the making of all payments due to or payable to Landlord under the Lease as they become due and payable. Assignee further agrees to indemnify and hold the Assignor harmless from and against any breach of the Assignee’s duties under the Lease.

 

3.                  Consent . Landlord hereby consents, pursuant to paragraph 37 of the Lease, to the assignment of the Lease to Assignee on the terms and conditions stated herein, provided however no assignment hereunder shall be made effective unless or until Assignor brings current all of its outstanding financial obligations to Landlord. Notwithstanding Landlord’s consent hereunder, nothing herein contained shall be deemed to be the acceptance or consent of Landlord to any further assignment of the Lease and Landlord expressly reserves the right to withhold its consent to any future assignment or sublet, whether in whole or in part, for any reason or no reason.

 

4.                  Possession . Assignor hereby agrees to transfer possession of the Leased Premises to the Assignee on the Effective Date. Assignee understands and agrees that Landlord shall not have any liability for the failure of Assignor to promptly deliver the Leased Premises, and Assignee’s sole recourse shall be against Assignor. Further, no delay in delivery of the Leased Premises shall excuse Assignee from the payment of rent or from its other obligations as Tenant under the Lease from and after the Effective Date.

 

5.                  Representations . Assignor represents, warrants, covenants and agrees that (i) it has good right and authority to make this Assignment, (ii) it has not executed or granted any amendment or modification to the Lease, either oral or written, and Exhibit “A” is a true and complete copy of the Lease, (iii) it has fully performed all of the terms, covenants and conditions required of it under the Lease through the Effective Date, (iv) as of the Effective Date Assignor will be current on all Rent due to Landlord under the Lease and will not be in default of the Lease, and (v) Landlord has fully performed all of its obligations under the Lease through the Effective Date and Assignor knows of no default now existing under the Lease by Landlord.

 

6.                  Indemnification. Notwithstanding anything to the contrary stated in this Assignment, Assignor hereby agrees to indemnify, protect, defend and hold Landlord and Assignee, jointly and severally, harmless from and against any and all claims, actions, losses, damages, costs and expenses (including without limitation attorney fees and costs), whether or now yet known, arising out of, in connection with or accruing under the Lease from any direct or indirect act or omission of Assignor occurring at any time prior to the Effective Date.

 

7.                  Attorneys Fees . In the event of any dispute under this Assignment between the parties, the non-prevailing party shall pay the reasonable attorney fees and court costs of the prevailing party arising in connection with such dispute.

 

8.                  Counterparts . This Assignment may be executed in any number of counterparts, each of which individually shall be considered to be an original, but all of which taken together shall constitute one and the same instrument. This Assignment may be executed and delivered by facsimile or email transmission of a file in “.pdf” or similar format and, upon such delivery, each signature shall be deemed to have the same effect as if the original signature had been delivered to the other Party hereto.

 

9.        Entire Agreement . This Assignment shall constitute the entire understanding of the parties, shall be binding upon and inure to the benefit of the Assignor and Assignee and their respective successors and assigns shall be governed by and in accordance with the laws of the state of Florida, and may not be modified or amended in any manner other than by written agreement signed by the parties. Whenever possible, each provision of this Assignment shall be interpreted in such a manner as to be effective and valid under applicable law. However, if any provision of this Assignment shall be prohibited by or invalid under such law, it shall be deemed modified to conform to the minimum requirements of such law, or, if for any reason it is not deemed so modified, it shall be prohibited or invalidated only to the extent of such prohibition or invalidity without the remainder thereof or any other provision of this Assignment being prohibited or invalidated.

 

IN WITNESS WHEREOF, the parties hereto have executed this Assignment as of the date first written above.

 

ASSIGNOR: ASSIGNEE:
   
Paradigm Holdings, Inc. Kisses From Italy, Inc.
   
____________________ ____________________
Name: Name:
Title: Title:

 

Consent

 

 

Palm Vacation Group, as the Landlord under the Lease, hereby acknowledges and consents to
this Assignment of Lease from Paradigm Holdings, Inc. to Kisses From Italy, Inc. subject to the
conditions hereinabove provided.

 

LANDLORD:

 

Sea Gardens Beach and Tennis Resort, Inc.

  

By:__________________

          Name:
          Title:

 

 

  1  

 

 

EXHIBIT “A” – COPY OF LEASE AGREEMENT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  2  

 

 

DELI LEASE AGREEMENT

 

THIS LEASE AGREEMENT ( this " Lease ") is made and entered into as of the 1st day Of August 2014 (" Effective Date "), by and between SEA GARDENS BEACH AND TENNIS REORT, INC ., a Florida corporation (" Landlord "), having an address at 615 N. Ocean Boulevard, Pompano Beach, FL 33062, and PARADIGM HOLDINGS, INC ., a Florida corporation ("Tenant"), having an address at 925 NE 123 rd Street, North Miami, FL 33161. (Hereinafter, Landlord and Tenant are sometimes referred to individually as a "Party" or collectively as the " Parties ").

 

WITNESSETH

 

WHEREAS, Landlord is the owner of those certain premises consisting of approximately six hundred (600) square feet of interior commercial deli space adjacent to the lobby and administration area, to be known as the "Breezeway Cafe" (" Leased Premises ") located at the Sea Gardens Beach and Tennis Resort in Pompano Beach, Florida (the " Resort "); and

 

WHEREAS, Tenant desires to lease the Leased Premises from Landlord and Landlord desires to lease the Leased Premises to Tenant on the terms, conditions, covenants and conditions more fully set forth in this Lease.

 

NOW, THEREFORE, for and in consideration of the mutual covenants and conditions contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:

 

1.             RECITALS . All of the foregoing recitals are true and correct and are hereby incorporated herein by this reference.

 

2.             LEASED PREMISES . Landlord hereby leases to Tenant and Tenant does hereby lease from Landlord, upon the terms, conditions and covenants contained in this Lease, those certain Leased Premises, which is more fully described on Exhibit "A", attached hereto and made a part hereof by this reference.

 

3.             TERM. This Lease shall commence on the Effective Date and shall continue in full force and effect for a period of one (1) year (the "Initial Term"). Upon expiration of the Initial Term, this Lease shall automatically renew for additional successive one (1) year periods ("Extension Term"), unless one Party provides the other Party written notice of its intent not to renew this Lease at least sixty (60) days prior to the expiration of the then current term. Upon the expiration or earlier termination of the Initial Term or, if applicable, any Extension Term, Tenant shall surrender the Leased Premises in as good condition as when delivered, reasonable wear and tear excepted. Notwithstanding anything to the contrary set forth in this Lease, either Party may terminate this Lease at any time, for any or no reason, upon not less than ninety (90) days prior written notice to the other Party.

 

4.              RENT AND ADDITIONAL RENT . Tenant shall pay to Landlord base rent ("Rent") in the amount of Six Thousand and 00/100 Dollars ($6,000.00) per year, payable in equal monthly installments of Five Hundred and 00/100 Dollars ($500.00) per month. The Rent due hereunder shall be due and payable in advance in equal monthly installments due on or before the first (r) day of each and every month for the term of this Lease, including any Extension Term (if applicable). Commencing on the first Extension Term, and each Extension Term thereafter (if any), the annual Rent due hereunder shall be increased by three percent (3%) of the previous period's Rent.

 

Additionally, Tenant agrees to promptly pay, on or before the first (1 st ) day of each successive month billed, unless otherwise requested, any and all additional costs or expenses that may arise under this Lease ("Additional Rent"). All payments of Rent and Additional Rent due hereunder shall be made payable to Landlord and sent to Wyndham Vacation Resorts, Inc., 615 North Ocean Boulevard, Pompano Beach, FL 33062, Attn: Accounting.

 

5.             LATE CHARGES . Tenant agrees to promptly pay all Rent and Additional Rent when due, and Tenant acknowledges that such agreement is a material inducement for Landlord to enter into this Lease. If any Rent or Additional Rent remains unpaid for ten (10) days after it becomes due and payable, Landlord will bill and Tenant shall pay a late charge equal to five percent (5%) of the amount due. Further, any unpaid Rent or Additional Rent shall accrue interest at the greater of (i) eighteen (18%) percent per annum or (ii) the highest amount permissible at law, which interest charge shall be applied against any and all amounts due and shall accrue on a per diem basis from the original date payment was due through and including the date when such amounts are received in full by Landlord. All late charges and interest due hereunder shall be deemed Additional Rent and shall be immediately due and payable.

 

 

 

  3  

 

 

Regardless of the number of times of Landlord's prior acceptance of late payments and/or late charges, if Landlord notifies Tenant twice in any six (6) month period that any payment of Rent or Additional Rent has not been paid as provided herein, any further late payment within such six (6) month period will constitute a default under this Agreement and shall entitle Landlord to terminate this Lease on three (3) days notice, as well as seek any other remedies available hereunder or at law.

 

6.            SECURITY DEPOSIT. [Intentionally Omitted.]

 

7.             USE OF THE LEASED PREMISES . Tenant agrees to use the Leased Premises as a deli and grill to serve breakfast and lunch food items, snacks, and non-alcoholic beverages to owners and guests at the Resort, to be known as "Breezeway Cafe", and for no other purpose.

 

Tenant understands and agrees that Landlord shall have no obligation hereunder to supply any equipment, inventory or supplies necessary for conducting Tenant's business except as specifically provided herein, and Landlord expressly makes no representation or warranty as to the fitness of the Leased Premises for the purposes herein intended.

 

Tenant will not commit waste upon the Leased Premises or the Resort, nor do or permit to be done in or about the Leased Premises or the Resort, nor bring or keep or permit to be brought to or kept therein, anything prohibited by or which in any way will conflict with any law, statute, ordinance or governmental rule or regulation now in force or which may hereafter be enacted or promulgated, or which is prohibited by the standard for fire or other insurance upon the Leased Premises or any of its contents, nor cause a cancellation of any insurance policy covering the Leased Premises or any part thereof or any of its contents. Tenant shall not do or permit anything to be done in or about the Leased Premises or the Resort which will in any way obstruct or interfere with the normal operation of the Resort or its HVAC, plumbing, or other mechanical or electrical systems. Further, Tenant shall not alter the appearance of the exterior or interior of the Resort or any portion of the Leased Premises, nor shall it interfere with the rights of guests or other Tenants or invitees of the Leased Premises, or injure or annoy them, or use or allow the Leased Premises to be used for any improper, immoral, unlawful or objectionable purpose. Tenant further represents and warrants that it shall not cause, maintain or permit any nuisance in, on or about the Leased Premises or commit or suffer to be committed any waste in, on or about the Leased Premises or the Resort.

 

8.             QUALITY OF SERVICES . Tenant warrants and covenants that it shall at all times operate a first class eatery, and shall maintain high quality food and beverage, service, and operation standards reasonably acceptable to Landlord at all times, such standards to be above and beyond any health department or governmental agency standards. These standards include, without limitation, maintaining a high degree of satisfaction among the owners, guests and invitees of the Resort as to: (i) service efficiency, effectiveness, friendliness and professionalism; (ii) food and beverage quality and presentation; and (iii) management effectiveness and efficiency.

 

9.             RESORT EVENTS . If requested by Landlord with reasonable notice to Tenant, Tenant shall provide food and beverage for the various sales, orientations, marketing and owner events held by Landlord or its agent for guests of the Resort. Any such events shall be subject to a mutually agreed upon schedule, menu and price. For any amounts due hereunder by Landlord, Tenant shall provide Landlord with a weekly invoice, which shall be paid by Landlord to Tenant not more than thirty (30) days after receipt of the same.

 

10.           PERMITS . Tenant shall at all times operate its businesses at the Leased Premises in compliance with applicable federal and territorial laws and regulations, and otherwise in accordance with the Governing Documents. Tenant shall, at its sole cost and expense be responsible for obtaining any and all required governmental permissions, permits, licenses or waivers that may be reasonable and necessary in connection with the operation of Tenant's business at the Leased Premises, including without limitation any applicable business licenses, health permits, and liquor permits. Tenant shall indemnify and hold Landlord harmless from and against any costs and expenses that may arise as a result of Tenant's failure to obtain any such permissions.

 

11.           EQUIPMENT . Tenant shall be permitted to use its own equipment at the Leased Premises, provided that any such equipment must be approved by Landlord prior to being installed in the Leased Premises. Any such equipment owned by Tenant shall be the sole property of Tenant (all Tenant's equipment shall hereinafter be referred to as "Tenant's Equipment"). Further, Tenant shall be responsible for and repair any and all damage caused by the installation or removal of any equipment belonging to Tenant. Upon the termination of this Lease, Tenant shall remove Tenant's Equipment from the Leased Premises. Any of Tenant's Equipment not removed from the Leased Premises within thirty (30) days from the expiration or termination of this Lease shall automatically become the property of Landlord, without the need for any further documentation or confirmation.

 

 

 

  4  

 

 

12.           ROOM CHARGES . During the term of this Lease, Tenant shall permit guests of the Resort to charge their room for meals provided to such guests by Tenant at the Leased Premises. Tenant shall bill Landlord for these charges on a nightly basis so that Landlord can timely adjust the guest folios to reflect meal charges for which payment is owed. Payment will be made to Tenant for said charges, minus five percent (5%) for processing costs, and Landlord will process and mail such payments to Tenant on a bi-weekly basis. Without having any obligation to do so, Landlord reserves the right, in its sole and absolute discretion, to apply any monies collected hereunder against any or all amounts owed by Tenant pursuant to this Lease.

 

13.           FOOD & BEVERAGE DISCOUNTS . During the term of this Lease, Tenant shall provide Landlord's management and staff with a thi