Colorado
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5812
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38-3750924
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(State
or jurisdiction of
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(Primary
Standard Industrial
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(I.R.S.
Employer
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incorporation
or organization)
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Classification
Code Number)
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Identification
No.)
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Title
of each class of securities to be registered
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Amount to be
registered (1)
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Proposed maximum
offering price per share
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Proposed maximum
aggregate offering Price
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Amount of
registration
fee
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||||||||||||
Common
stock, par value $0.001 per share, issuable upon conversion of
Series A
Variable Rate Convertible Preferred Stock
|
7,050,000
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(2) |
|
$
|
1.32
|
(3) |
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$
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9,306,000
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(3) |
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$
|
365.73
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|||
Common
stock, par value $0.001 per share, issuable upon exercise of
fixed-price
warrants
|
5,287,500
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$
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1.60
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(4) |
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$
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8,460,000
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(4) |
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$
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332.48
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|||||
Common
stock, par value $0.001 per share, issuable as dividends on Series
A
Variable Rate Convertible Preferred Stock
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881,250
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(5) |
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$
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1.32
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(3) |
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$
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1,163,250
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(3) |
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$
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45.72
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|||
Total
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13,218,750
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$
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18,691,313
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$
|
743.93
|
|
(1)
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Pursuant
to Rule 416 (“Rule 416”) under the Securities Act of 1933, as amended
(“Securities Act”), the shares of common stock being registered hereunder
include such indeterminate number of shares of common stock as
may be
issuable with respect to the shares of common stock being registered
hereunder as a result of stock splits, stock dividends or similar
transactions. The shares of common stock being registered hereunder
do not
include additional shares of common stock issuable as a result
of changes
in market price of the common stock, issuance by the registrant
of shares
of equity securities below a certain price or other anti-dilutive
adjustments or variables not covered by Rule
416.
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(2)
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Represents
that number of shares of common stock issuable upon conversion
in full of
currently outstanding Series A Variable Rate Convertible Preferred
Stock
(“Series A Preferred Stock”).
|
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(3)
|
Estimated
solely for the purpose of calculating the registration fee under
Rule
457(c) under the Securities Act based upon the average of the
high and low
sale prices of the common stock on January 14,
2008.
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(4)
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Calculated
in accordance with Rule 457(g)(1) under the Securities
Act.
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(5)
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Based
on the dividend payment formula prescribed by the Certificate
of
Designation for the Series A Preferred Stock, calculated by multiplying
the stated value of all of the outstanding shares of Series A
Preferred
Stock, $5,992,500, by a 5% dividend for two years and by a 7.5%
dividend
for one year, which is equal to aggregate dividends of $1,048,688,
then
dividing the cash value of the aggregate dividends by $1.19,
which is 90%
of the average of the volume weighted average prices of the common
stock
for the 20 trading days prior to January 4, 2008. The shares
of common
stock being registered hereunder do not include additional shares
of
common stock issuable as a result of changes in market price
of the common
stock, issuance by the registrant of shares of equity securities
below a
certain price or other anti-dilutive adjustments or variables
not covered
by Rule 416.
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Prospectus
Summary
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1
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Risk
Factors
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3
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Note
Regarding Forward-Looking Statements
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10
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Use
of Proceeds
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11
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Selling
Shareholders
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11
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Plan
of Distribution
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13
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Legal
Proceedings
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15
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Directors,
Executive Officers, Promoters, Control Persons
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15
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Security
Ownership of Certain Beneficial Owners and Management
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17
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Description
of Securities
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19
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||||
Legal
Matters
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20
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||||
Experts
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20
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||||
Disclosure
of Commission Position on Indemnification for Securities Act
Liabilities
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20
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||||
Description
of Business
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21
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Management's
Discussion and Analysis of Financial Condition
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24
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Description
of Property
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35
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|
||||
Certain
Relationships and Related Transactions
|
35
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||||
Executive
Compensation
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36
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|
||||
Changes
in and Disagreements with Accountants on Accounting and Financial
Disclosure
|
38
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|
||||
Market
For Common Equity and Related Stockholder Matters
|
38
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|
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Where
You Can Find More Information
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38
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|
||||
Financial
Information
|
F-1
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The
Company
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|
We
formed in 2003 as Spicy Pickle Franchising, LLC. On September
8, 2006, we
converted from a Colorado limited liability company to a Colorado
corporation and changed our name to Spicy Pickle Franchising,
Inc. to
reflect our legal structure.
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Our
executive offices are located at 90 Madison Street, Suite 700,
Denver,
Colorado 80206, and our telephone number is (303) 297-1902. Our
Internet
site is www.spicypickle.com.
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|
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Capital
Structure
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|
We
are authorized to issue 200,000,000 shares of common stock, with
a par
value of $0.001 per share, and 20,000,000 shares of preferred
stock, with
a par value of $0.001 per share. As of January 14, 2008, we had
47,634,053
shares of common stock outstanding and 705 shares of Series A
Preferred
Stock outstanding. At their initial conversion price, the outstanding
shares of Series A Preferred Stock convert, at the option of
the holders,
to a maximum of 7,050,000 shares of our common stock. In connection
with
the issuance of the Series A Preferred Stock, we issued warrants
to
purchase up to a maximum of 5,287,500 shares of our common stock.
We also
have reserved 7,662,500 shares of our common stock that may be
issued at
our option for the payment of dividends on the Series A Preferred
Stock in
lieu of cash. We also have issued 4,060,000 stock options to
officers,
employees and directors for the purchase of our common
stock.
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The
Offering
|
|
The
selling shareholders are offering: (a) 7,050,000 shares of common
stock
issuable upon conversion of currently outstanding Series A Preferred
Stock, (b) 5,287,500 shares of common stock issuable upon exercise
of
currently outstanding common stock purchase warrants, and (c)
881,250
shares of common stock issuable upon payment of dividends on
the Series A
Preferred Stock in shares in lieu of cash through December 14,
2010.
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Trading
Market
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OTCBB
under the symbol “SPKL”
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Offering
Period
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We
are registering the selling shareholders’ shares under a shelf
registration to allow the selling shareholders the opportunity
to sell
their shares. The shares of common stock being registered include
such
indeterminate number of shares of common stock as may be issuable
with
respect to the shares of common stock being registered hereunder
as a
result of stock splits, stock dividends or similar transactions.
The
shares of common stock being registered and do not include
additional
shares of common stock issuable as a result of changes in market
price of
the common stock, issuance by us of shares of equity securities
below a
certain price or other anti-dilutive adjustments or variables
not covered
by Rule 416 (“Rule 416”) under the Securities Act of 1933, as amended
(“Securities Act”).
|
Risk
Factors
|
|
The
shares being offered are speculative and involve very high risks,
including those listed in "Risk Factors."
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Net
Proceeds
|
|
We
will not receive any proceeds from the sale of any shares by
selling
shareholders. However, we may receive up to an aggregate of $8,460,000
from the exercise by selling shareholders of warrants to purchase
the
common stock we are registering under this registration
statement.
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Use
of Proceeds
|
|
We
expect to use any cash proceeds we receive from the exercise
of warrants
by selling shareholders for general working capital
purposes.
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Statement
of Operations Data
|
Year
Ended
December
31,
|
Nine Months Ended September 30,
(unaudited)
|
|||||||||||
|
2006
|
2005
|
2007
|
2006
|
|||||||||
Revenues
|
$
|
892,009
|
$
|
858,713
|
$
|
803,226
|
$
|
803,224
|
|||||
Operating
expenses
|
$
|
2,305,536
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$
|
1,287,400
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$
|
3,183,955
|
$
|
1,724,471
|
|||||
Net
income (loss)
|
$
|
(1,382,985
|
)
|
$
|
(431,540
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)
|
$
|
(2,342,907
|
)
|
$
|
(906,584
|
)
|
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Weighted
average shares outstanding
|
36,514,512
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31,536,149
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43,209,297
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35,018,531
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|||||||||
Net
income (loss) per common share basic
and fully diluted
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$
|
(.04
|
)
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$
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(0.01
|
)
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
|
|
|||||||||||||
Cash
flow used in operations
|
$
|
(590,640
|
)
|
$
|
(188,401
|
)
|
$
|
(1,897,735
|
)
|
$
|
(176,709
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)
|
|
|
|||||||||||||
Cash
and cash equivalents (end of period)
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$
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1,198,982
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$
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29,882
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$
|
842,223
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$
|
1,709,339
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|||||
Balance
Sheet Data
|
|||||||||||||
Total
current assets
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$
|
1,323,719
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$
|
105,990
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$
|
1,242,118
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|||||||
Total
assets
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$
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1,481,808
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$
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147,488
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$
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1,472,124
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|||||||
Total
current liabilities
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$
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889,963
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$
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324,804
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$
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1,105,852
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|||||||
Total
stock holders equity (deficit)
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$
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591,845
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$
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(207,316
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)
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$
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366,272
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·
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continue
to expand the number of franchise and corporate
locations;
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·
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attract
and maintain customer loyalty;
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·
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continue
to establish and increase brand
awareness;
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·
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provide
products to customers at attractive
prices;
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·
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establish
and maintain relationships with strategic partners and
affiliates;
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·
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rapidly
respond to competitive
developments;
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·
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build
an operations and customer service structure to support our business;
and
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·
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attract,
retain and motivate qualified
personnel.
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·
|
our
ability to establish and strengthen brand
awareness;
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·
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our
success, and the success of our strategic partners, in promoting
our
products;
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·
|
the
overall market demand for food products of the type offered by
us and in
general;
|
·
|
pricing
changes for food products as a result of competition or other
factors;
|
·
|
the
amount and timing of the costs relating to our marketing efforts
or other
initiatives;
|
·
|
the
timing of contracts with strategic partners and other
parties;
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·
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our
ability to compete in a highly competitive market, and the introduction
of
new products by us; and
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·
|
economic
conditions specific to the food industry and general economic
conditions.
|
·
|
the
nature, timing and sufficiency of disclosures to franchisees upon
the
initiation of the franchisor-potential franchisee
relationship;
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·
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our
conduct during the franchisor-franchisee relationship;
and
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·
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renewals
and terminations of franchises.
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·
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conversion
of our Series A Preferred Stock and exercise of our warrants and
the sale
of their underlying common stock;
|
·
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changes
in market valuations of similar companies and stock market price
and
volume fluctuations generally;
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·
|
economic
conditions specific to the industries within which we
operate;
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·
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announcements
by us or our competitors of new franchises, food products or marketing
partnerships;
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·
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actual
or anticipated fluctuations in our operating
results;
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·
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changes
in the number of our franchises;
and
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·
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loss
of key employees.
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·
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the
risk of failing to sell sufficient Spicy Pickle
franchises;
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·
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the
risk of failing to locate appropriate store locations for franchisees;
and
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·
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the
risk of lack of customer and market acceptance of Spicy Pickle
restaurant
offerings.
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Name
of Selling Shareholder
|
Number of
Shares Owned
Before Offering
|
Number of Shares
Being Offered (1)
|
Number of Shares
Owned
After Offering (2)
|
Percent of
Shares
Owned After
Offering (3)
|
|||||||||
Enable
Growth Partners LP (4)
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6,393,750
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6,393,750
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-
|
-
|
|||||||||
Enable
Opportunity Partners LP (4)
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1,106,250
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1,106,250
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-
|
-
|
|||||||||
Pierce
Diversified Strategy Master Fund LLC, ena (4)
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225,000
|
225,000
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-
|
-
|
|||||||||
Presley
Reed and Patricia Stacey Reed (5)
|
5,015,986
|
2,250,000
|
2,765,986
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4.54
|
%
|
||||||||
Steven
and Judith Combs (6)
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605,707
|
225,000
|
380,707
|
*
|
|||||||||
MarketByte
LLC Defined Benefit Plan Trust (7)
|
415,000
|
225,000
|
190,000
|
*
|
|||||||||
Marilyn
D. Herter Trust (8)
|
425,000
|
225,000
|
200,000
|
*
|
|||||||||
Desert
Lake Advisors Inc. Defined Benefit Plan (9)
|
325,000
|
225,000
|
100,000
|
*
|
|||||||||
David
Andrew Piper and Deborah Cooke-Smith (10)
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243,000
|
225,000
|
18,000
|
*
|
|||||||||
Raymond
J. BonAnno and Joan E. BonAnno (11)
|
2,660,445
|
225,000
|
2,435,445
|
4.00
|
%
|
||||||||
Keith
and Angela Oxenreider (12)
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225,000
|
225,000
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-
|
-
|
|||||||||
R.
James BonAnno, Jr. (13)
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225,000
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225,000
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-
|
-
|
|||||||||
Mark
Abdou (14)
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385,606
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318,750
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66,856
|
*
|
|||||||||
Bristol
Investment Fund, Ltd. (15)
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1,125,000
|
1,125,000
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-
|
-
|
|||||||||
19,375,744
|
13,218,750
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6,156,994
|
(1)
|
Except
as otherwise indicated, 53.33% of such shares represent shares
issuable
upon conversion of the selling shareholder’s Series A Preferred Stock at
the initial conversion price of $0.85 per share, 40.00% of such
shares
represent shares issuable upon exercise of such shareholder’s warrants,
and 6.67% of such shares represent shares issuable as dividends
on such
shareholder’s Series A Preferred Stock in lieu of cash through December
14, 2010.
|
(2)
|
Assumes
that all of the shares offered under this prospectus by the selling
shareholders are sold and that shares owned by such shareholder
before
this offering but not offered by this prospectus are not
sold.
|
(3)
|
All
percentages of shares outstanding after the offering are based
on
47,634,053 shares of common stock outstanding as of January 14,
2008, plus
13,218,750 additional shares of common stock outstanding assuming
conversion of all shares of the Series A Preferred Stock, exercise
of all
warrants held by the selling shareholders, and the payment of future
dividends on the Series A Preferred Stock in shares of common stock
in
lieu of cash through December 14, 2010, and all other shares of
common
stock subject to options, warrants and convertible securities within
60
days of the date hereof are deemed to be outstanding for computing
the
percentage of the person holding such options, warrants or convertible
securities but are not deemed to be outstanding for computing the
percentage of any other person.
|
(4)
|
Mitch
Levine has voting and investment power over the shares registered
in the
name of Enable Growth Partners LP, Enable Opportunity Partners
LP and
Pierce Diversified Strategy Master Fund LLC, ena. These selling
shareholders have contractually agreed to restrict their ability
to
convert their Series A Preferred Stock or exercise their warrants
and
receive shares of our common stock such that the number of shares
of
common stock held by them and their affiliates in the aggregate
after such
conversion or exercise does not exceed 4.99% of the then issued
and
outstanding shares of common stock as determined in accordance
with
Section 13(d) of the Exchange Act. In light of that restriction,
the
number of shares of common stock set forth in the table for these
selling
shareholders exceeds the number of shares of common stock that
they could
own beneficially at any one time through their ownership of the
Series A
Preferred Stock and the warrants.
|
(5)
|
Presley
Reed is a director of the Company. Includes 1,544,578 shares owned
jointly
by Presley and Patricia Reed, 1,146,408 shares owned by the Presley
Reed
1999 Family Trust, of which Patricia Reed is the beneficiary, 1,200,000
shares based on conversion of Series A Preferred Stock owned jointly
by
Mr. Reed and his wife, 900,000 shares based on exercise of warrants
jointly owned by Mr. Reed and his wife, 150,000 shares based on
payment of
dividends in shares in lieu of cash through December 14, 2010 on
Series A
Preferred Stock owned jointly by Mr. Reed and his wife, and 75,000
shares
based on options exercisable within 60 days owned by Mr.
Reed.
|
(6)
|
Includes
380,707 shares owned jointly by Steven and Judith Combs, 120,000
shares
based on conversion of Series A Preferred Stock jointly owned by
Steven
and Judith Combs, 90,000 shares based on exercise of warrants jointly
owned by Steven and Judith Combs, and 15,000 shares based on payment
of
dividends in shares in lieu of cash through December 14, 2010 on
Series A
Preferred Stock jointly owned by Steven and Judith
Combs.
|
(7)
|
Lawrence
D. Isen has voting and investment power over the shares registered
in the
name of the MarketByte LLC Defined Benefit Plan Trust. Includes
190,000
owned by the MarketByte LLC Defined Benefit Plan Trust, 120,000
shares based on conversion of Series A Preferred Stock owned by
the
MarketByte LLC Defined Benefit Plan Trust, 90,000 shares based
on exercise
of warrants owned by the MarketByte LLC Defined Benefit Plan Trust,
and
15,000 shares based on payment of dividends in shares in lieu of
cash
through December 14, 2010 on Series A Preferred Stock owned by
the
MarketByte LLC Defined Benefit Plan
Trust.
|
(8)
|
Marilyn
D. Veigel has voting and investment power over the shares registered
in
the name of the Marilyn D. Herter Trust. Includes 200,000 shares
owned by
the Marilyn D. Herter Trust, 120,000 shares based on conversion
of Series
A Preferred Stock owned by the Marilyn D. Herter Trust, 90,000
shares
based on exercise of warrants owned by the Marilyn D. Herter Trust,
and
15,000 shares based on payment of dividends in shares in lieu of
cash
through December 14, 2010 on Series A Preferred Stock owned by
the Marilyn
D. Herter Trust.
|
(9)
|
Thomas
P. Dobron has voting and investment power over the shares registered
in
the name of the Desert Lake Advisors Inc. Defined Benefit Plan.
Includes
100,000 owned by the Desert Lake Advisors Inc. Defined Benefit
Plan,
120,000 shares based on conversion of Series A Preferred Stock
owned by
the Desert Lake Advisors Inc. Defined Benefit Plan, 90,000 shares
based on
exercise of warrants owned by the Desert Lake Advisors Inc. Defined
Benefit Plan, and 15,000 shares based on payment of dividends in
shares in
lieu of cash through December 14, 2010 owned by the Desert Lake
Advisors Inc. Defined Benefit Plan.
|
(10)
|
Includes
18,000 shares owned by Deborah Cooke-Smith, 120,000 shares based
on
conversion of Series A Preferred Stock jointly owned by David Andrew
Piper
and Deborah Cooke-Smith, 90,000 shares based on exercise of warrants
jointly owned by David Andrew Piper and Deborah Cooke-Smith, and
15,000
shares based on payment of dividends in shares in lieu of cash
through
December 14, 2010 on Series A Preferred Stock jointly owned by
David
Andrew Piper and Deborah
Cooke-Smith.
|
(11)
|
Raymond
BonAnno is a director of the Company. Includes 2,360,445 shares
owned of
record by the BonAnno Family Partnership, over which Raymond BonAnno
has
voting and dispositive power, 120,000 shares based on conversion
of Series
A Preferred Stock jointly owned by Raymond J. and Joan E. BonAnno,
90,000
shares based on exercise of warrants jointly owned by Raymond J.
and Joan
E. BonAnno, 15,000 shares based on payment of dividends in shares
in lieu
of cash through December 14, 2010 on Series A Preferred Stock jointly
owned by Raymond J. and Joan E. BonAnno, and 75,000 shares based
on
options exercisable within 60 days owned by Mr.
BonAnno.
|
(12)
|
Keith
and Angela Oxenreider are the son-in-law and daughter, respectively,
of
Raymond BonAnno.
|
(13)
|
R.
James BonAnno, Jr. is the son of Raymond
BonAnno.
|
(14)
|
Mark
Abdou is a partner of the law firm Richardson & Patel LLP, our legal
counsel. Includes 8,705 shares owned by Mr. Abdou, 58,151 shares
owned by
Richardson and Patel LLP, 170,000 shares based on conversion of
Series A
Preferred Stock owned by Mr. Abdou, 127,500 shares based on exercise
of
warrants owned by Mr. Abdou, and 21,250 shares based on payment
of
dividends in shares in lieu of cash through December 14, 2010 on
Series A
Preferred Stock owned by Mr. Abdou.
|
(15)
|
Paul
Kessler has voting and investment power over the shares registered
in the
name of Bristol Investment Fund,
Ltd.
|
·
|
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 shareholders 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.
|
Name
|
|
Age
|
|
Position
|
Marc
N. Geman
|
|
62
|
|
Chairman
and Chief Executive Officer
|
Anthony
S. Walker
|
|
36
|
|
Director
and Chief Operating Officer
|
Kevin
Morrison
|
|
42
|
|
Chief
Culinary Officer
|
Arnold
Tinter
|
|
62
|
|
Chief
Financial Officer
|
Mark
Maximovich
|
|
44
|
|
Vice
President of Operations
|
Raymond
BonAnno
|
|
67
|
|
Director
|
Presley
Reed
|
|
61
|
|
Director
|
L.
Kelly Jones
|
|
54
|
|
Director
|
(a)
|
had
any bankruptcy petition filed by or against any business of which
such
person was a general partner or executive officer either at the
time of
the bankruptcy or within two years prior to that time;
|
(b)
|
been
convicted in a criminal proceeding or subject to a pending criminal
proceeding;
|
(c)
|
been
subject to any order, judgment, or decree, not subsequently reversed,
suspended or vacated, of any court of competent jurisdiction, permanently
or temporarily enjoining, barring, suspending or otherwise limiting
his
involvement in any type of business, securities, futures, commodities
or
banking activities; and
|
(d)
|
been
found by a court of competent jurisdiction (in a civil action),
the SEC or
the Commodity Futures Trading Commission to have violated a federal
or
state securities or commodities law, and the judgment has not been
reversed, suspended, or vacated.
|
Title
of Class
|
Name and Address of Beneficial Owner
|
Amount and Nature of
Beneficial Ownership
|
Percent of Class
|
|||||||
Common
Stock
|
Marc
Geman (1)
|
|
6,685,917
|
13.89
|
%
|
|||||
Common
Stock
|
Anthony
Walker (2)
|
|
6,485,712
|
13.53
|
%
|
|||||
Common
Stock
|
Kevin
Morrison (3)
|
|
5,921,038
|
12.35
|
%
|
|||||
Common
Stock
|
L.
Kelly Jones (4)
|
|
644,500
|
1.35
|
%
|
|||||
Common
Stock
|
Raymond
BonAnno (5)
|
|
2,645,445
|
5.52
|
%
|
|||||
Common
Stock
|
Presley
Reed (6)
|
|
4,865,986
|
9.77
|
%
|
|||||
Common
Stock
|
Arnold
Tinter (7)
|
|
525,000
|
1.09
|
||||||
Common
Stock
|
Mark
Maximovich (8)
|
|
50,000
|
*
|
||||||
Common
Stock
|
EWM
Investments (9)
|
|
4,122,300
|
8.65
|
%
|
|||||
Common
Stock
|
All
Directors and Executive Officers as a Group (8 persons)
|
|
27,823,598
|
53.67
|
%
|
|||||
Preferred
Stock
|
Raymond
BonAnno
|
12
|
1.70
|
%
|
||||||
Preferred
Stock
|
Presley
Reed
|
120
|
17.02
|
%
|
(1)
|
Includes
500,000 shares based on options exercisable within 60
days.
|
(2)
|
Includes
300,000 shares based on options exercisable within 60
days.
|
(3)
|
Includes
300,000 shares based on options exercisable within 60
days.
|
(4)
|
Includes
50,000 shares owned by Jones and Cannon, a law firm in which Mr.
Jones is
a partner, and 75,000 shares based on options exercisable within
60
days.
|
(5)
|
Includes
2,360,445 shares owned of record by the BonAnno Family Partnership;
Raymond BonAnno has voting and dispositive power over such
shares,
120,000 shares based on conversion of Series A Preferred Stock
owned
jointly by Mr. BonAnno and his wife, 90,000 shares based on exercise
of
warrants jointly owned by Mr. BonAnno and his wife, and 75,000
shares
based on options exercisable within 60
days.
|
(6)
|
Includes
1,544,578 shares owned jointly by Presley and Patricia Reed, 1,146,408
shares owned by the Presley Reed 1999 Family Trust, of which Patricia
Reed, Mr. Reed’s wife, is the beneficiary, 1,200,000 shares based on
conversion of Series A Preferred Stock owned jointly by Mr. Reed
and his
wife, 900,000 shares based on exercise of warrants jointly owned
by Mr.
Reed and his wife, and 75,000 shares based on options exercisable
within
60 days.
|
(7)
|
Includes
525,000 shares based on options exercisable within 60
days.
|
(8)
|
Includes
50,000 shares based on options exercisable within 60
days.
|
(9)
|
Ernest
Moody has sole voting and dispositive power over the shares owned
of
record by EWM Investments.
|
Location
|
Restaurants
Operating
|
Under
Construction
|
In Lease
Negotiation
|
|||
Denver,
Colorado
|
5
|
2
|
||||
Boulder,
Colorado
|
2
|
|||||
Ft.
Collins, Colorado
|
1
|
1
|
||||
Aurora,
Colorado
|
1
|
|||||
Littleton,
Colorado
|
1
|
|||||
Centennial,
Colorado
|
1
|
|||||
Lone
Tree, Colorado
|
1
|
|||||
Greenwood
Village, Colorado
|
1
|
|||||
Federal
Heights, Colorado
|
1
|
|||||
Johnstown,
Colorado
|
1
|
|||||
Colorado
Springs, Colorado
|
2
|
|||||
Louisville,
Colorado
|
1
|
|||||
Englewood,
Colorado
|
1
|
|||||
Ashburn,
Virginia
|
1
|
|||||
Sioux
Falls, South Dakota
|
1
|
|||||
Portland,
Oregon
|
2
|
|||||
Poway,
California
|
1
|
|||||
Sacramento,
California
|
1
|
|||||
Henderson,
Nevada
|
1
|
|||||
Reno,
Nevada
|
2
|
|||||
Chicago,
Illinois
|
1
|
|||||
Cincinnati,
Ohio
|
1
|
1
|
||||
Austin,
Texas
|
2
|
1
|
||||
San
Diego, California
|
1
|
2
|
||||
Indianapolis,
Indiana
|
2
|
1
|
||||
Chandler,
Arizona
|
1
|
|||||
Brooklyn,
New York
|
1
|
|||||
Hattiesburg,
Mississippi
|
1
|
|||||
Edmond,
Oklahoma
|
2
|
|||||
Pender,
Virginia
|
1
|
|||||
Ocala,
Florida
|
1
|
|||||
Cedar
Park, Texas
|
1
|
|||||
36
|
3
|
12
|
Location
|
Restaurants
Operating |
Under
Construction |
In
Lease
Negotiation |
|||||||
Denver,
Colorado
|
5
|
2
|
||||||||
Boulder,
Colorado
|
2
|
|||||||||
Ft.
Collins, Colorado
|
1
|
1
|
||||||||
Aurora,
Colorado
|
1
|
|||||||||
Littleton,
Colorado
|
1
|
|||||||||
Centennial,
Colorado
|
1
|
|||||||||
Lone
Tree, Colorado
|
1
|
|||||||||
Greenwood
Village, Colorado
|
1
|
|||||||||
Federal
Heights, Colorado
|
1
|
|||||||||
Johnstown,
Colorado
|
1
|
|||||||||
Colorado
Springs, Colorado
|
2
|
|||||||||
Louisville,
Colorado
|
1
|
|||||||||
Englewood,
Colorado
|
1
|
|||||||||
Ashburn,
Virginia
|
1
|
|||||||||
Sioux
Falls, South Dakota
|
1
|
|||||||||
Portland,
Oregon
|
2
|
|||||||||
Poway,
California
|
1
|
|||||||||
Sacramento,
California
|
1
|
|||||||||
Henderson,
Nevada
|
1
|
|||||||||
Reno,
Nevada
|
2
|
|||||||||
Chicago,
Illinois
|
1
|
|||||||||
Cincinnati,
Ohio
|
1
|
1
|
||||||||
Austin,
Texas
|
2
|
1
|
||||||||
San
Diego, California
|
|
1
|
2
|
|||||||
Indianapolis,
Indiana
|
2
|
1
|
||||||||
Chandler,
Arizona
|
1
|
|
||||||||
Brooklyn,
New York
|
|
1
|
||||||||
Hattiesburg,
Mississippi
|
1
|
|
||||||||
Oklahoma
City, Oklahoma
|
2
|
|||||||||
Pender,
Virginia
|
1
|
|||||||||
Ocala,
Florida
|
1
|
|||||||||
Cedar
Park, Texas
|
1
|
0
|
||||||||
36
|
3
|
12
|
2007
|
2006
|
||||||||||||
|
Amount
|
As
a
Percentage of Total Revenue |
Amount
|
As
a
Percentage of Total Revenue |
|||||||||
Revenues:
|
|||||||||||||
Restaurant
sales
|
$
|
-
|
-
|
$
|
360,947
|
44.94
|
%
|
||||||
Franchise
fees and royalties
|
803,226
|
100.00
|
%
|
442,277
|
55.06
|
%
|
|||||||
Total
revenue
|
803,226
|
100.00
|
%
|
803,224
|
100.00
|
%
|
|
As
a
Percentage of Restaurant Sales |
As
a
Percentage of Restaurant Sales |
|||||||||||
Restaurant:
|
|||||||||||||
Cost
of sales
|
-
|
-
|
142,005
|
39.34
|
%
|
||||||||
Labor
|
-
|
-
|
138,523
|
38.38
|
%
|
||||||||
Occupancy
|
-
|
-
|
58,787
|
16.29
|
%
|
||||||||
Other
operating cost
|
-
|
-
|
50,351
|
13.95
|
%
|
||||||||
Total
restaurant operating expenses
|
-
|
-
|
389,666
|
107.96
|
%
|
|
As
a
Percentage of Franchise Fees
and
Royalties |
As
a
Percentage of Franchise Fees and Royalties |
|||||||||||
Franchise
and general:
|
|||||||||||||
Cost
of sales
|
20,185
|
2.51
|
%
|
70,376
|
15.91
|
%
|
|||||||
General
and administrative
|
3,144,726
|
391.51
|
%
|
1,251,429
|
282.95
|
%
|
|||||||
Depreciation
|
19,044
|
2.37
|
%
|
13,000
|
2.94
|
%
|
|||||||
Total
franchise and general expenses
|
3,183,955
|
396.39
|
%
|
1,334,805
|
301.80
|
%
|
|
As
a
Percentage of Total Revenue |
As
a
Percentage of Total Revenue |
|||||||||||
Total
operating costs and expenses
|
3,183,955
|
396.39
|
%
|
1,724,471
|
214.69
|
%
|
|||||||
(Loss)
from operations
|
(2,380,729
|
)
|
(296.40
|
)%
|
(921,247
|
)
|
(114.69
|
)%
|
|||||
Other
income and (expense):
|
|||||||||||||
Other
income
|
105
|
-
|
-
|
-
|
|||||||||
Interest
income (expense)
|
37,717
|
4.70
|
%
|
14,663
|
1.83
|
%
|
|||||||
Total
other income and (expense)
|
37,822
|
4.71
|
%
|
14,663
|
1.83
|
%
|
|||||||
Net
(loss)
|
$
|
(2,342,907
|
)
|
(291.69
|
)%
|
$
|
(906,584
|
)
|
(112.87
|
)%
|
2007
|
2006
|
Difference
|
||||||||
Personnel
cost
|
$
|
1,323,513
|
$
|
496,870
|
$
|
826,643
|
||||
Stock
options (fair value)
|
278,544
|
-
|
278,544
|
|||||||
Professional
fees
|
200,238
|
355,132
|
(154,894
|
)
|
||||||
Travel
and entertainment
|
285,218
|
157,023
|
128,195
|
|||||||
Marketing,
advertising, promotion
|
146,512
|
18,444
|
128,068
|
|||||||
Investor
relations
|
346,032
|
-
|
346,032
|
|||||||
Rent
|
108,404
|
46,972
|
61,432
|
|||||||
Office
supplies and expenses
|
68,322
|
25,619
|
42,703
|
|||||||
Communication
|
98,246
|
28,136
|
70,110
|
|||||||
MIS/IT
|
70,732
|
19,232
|
51,500
|
|||||||
Other
general and administrative expenses
|
218,965
|
104,001
|
114,964
|
|||||||
Total
general and administrative expenses
|
$
|
3,144,726
|
$
|
1,251,429
|
$
|
1,893,297
|
2006
|
2005
|
||||||||||||
|
Amount
|
As
a
Percentage of Total Revenue |
Amount
|
As
a
Percentage of Total Revenue |
|||||||||
Revenues:
|
|||||||||||||
Restaurant
sales
|
409,018
|
45.85
|
%
|
485,708
|
56.56
|
%
|
|||||||
Franchise
fees and royalties
|
482,991
|
54.15
|
%
|
373,005
|
43.44
|
%
|
|||||||
Total
revenue
|
892,009
|
100.00
|
%
|
858,713
|
100.00
|
%
|
|
As
a
Percentage of Restaurant Sales |
As
a
Percentage of Restaurant Sales |
|||||||||||
Restaurant:
|
|||||||||||||
Cost
of sales
|
160,728
|
39.30
|
%
|
184,913
|
38.07
|
%
|
|||||||
Labor
|
154,619
|
37.80
|
%
|
164,689
|
33.91
|
%
|
|||||||
Occupancy
|
67,951
|
16.61
|
%
|
67,840
|
13.97
|
%
|
|||||||
Other
operating cost
|
50,582
|
12.37
|
%
|
50,724
|
10.44
|
%
|
|||||||
Total
restaurant operating expenses
|
433,880
|
106.08
|
%
|
468,166
|
96.39
|
%
|
|
As
a
Percentage of Franchise Fees and Royalties |
As
a
Percentage of Franchise Fees and Royalties |
|||||||||||
Franchise
and general:
|
|||||||||||||
Cost
of sales
|
18,510
|
3.83
|
%
|
42,487
|
11.39
|
%
|
|||||||
General
and administrative
|
1,834,571
|
379.84
|
%
|
764,657
|
205.00
|
%
|
|||||||
Depreciation
|
18,575
|
3.85
|
%
|
12,090
|
3.24
|
%
|
|||||||
Total
franchise and general expenses
|
1,871,656
|
387.52
|
%
|
819,234
|
219.63
|
%
|
|
As
a
Percentage of Total Revenue |
As
a
Percentage of Total Revenue |
|||||||||||
Total
operating costs and expenses
|
2,305,536
|
258.47
|
%
|
1,287,400
|
149.92
|
%
|
|||||||
(Loss)
from operations
|
(1,413,527
|
)
|
-158.47
|
%
|
(428,687
|
)
|
-49.92
|
%
|
|||||
Other
income and (expense):
|
|||||||||||||
Other
income
|
29,556
|
3.31
|
%
|
(2,853
|
)
|
-0.33
|
%
|
||||||
Interest
income (expense)
|
986
|
0.11
|
%
|
0
|
0.00
|
%
|
|||||||
Total
other income and (expense)
|
30,542
|
3.42
|
%
|
(2,853
|
)
|
-0.33
|
%
|
||||||
Net
income (loss)
|
(1,382,985
|
)
|
-155.04
|
%
|
(431,540
|
)
|
-50.25
|
%
|
2006
|
2005
|
Difference
|
||||||||
Personnel
cost
|
$
|
800,722
|
$
|
196,212
|
$
|
604,510
|
||||
Stock
options (fair value)
|
7,595
|
-
|
7,595
|
|||||||
Professional
fees
|
444,512
|
117,492
|
327,020
|
|||||||
Travel
and entertainment
|
211,039
|
86,542
|
124,497
|
|||||||
Marketing,
advertising, promotion
|
107,532
|
261,552
|
(154,020
|
)
|
||||||
MIS/IT
|
32,812
|
12,738
|
20,074
|
|||||||
Rent
|
60,349
|
50,441
|
9,908
|
|||||||
Office
supplies and expenses
|
44,194
|
32,413
|
11,781
|
|||||||
Communication
|
38,919
|
26,574
|
12,345
|
|||||||
Other
general and administrative expenses
|
86,897
|
56,096
|
30,801
|
|||||||
Total
general and administrative expenses
|
$
|
1,834,571
|
$
|
840,060
|
$
|
994,511
|
2008
|
$
|
192,476
|
||
2009
|
212,377
|
|||
2010
|
217,034
|
|||
2011
|
221,765
|
|||
2012
|
203,868
|
|||
Later
years
|
647,853
|
|||
$
|
1,695,373
|
Name
and
Principle Position |
Year
|
Salary
($) |
Bonus
($) |
Stock
Awards
($)
|
Option
award
($) |
Non equity
incentive
plan compensation ($) |
Nonqualified
deferred compensation earnings
($)
|
All
other compensation ($)
|
Total
($) |
|||||||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
(i)
|
(j)
|
|||||||||||||||||||
Marc
Geman
Chief
Executive Officer
|
2007
2006
|
150,000
79,500
|
73,000
90,000
|
-
-
|
95,561
-
|
-
-
|
-
-
|
-
-
|
318,561
169,500
|
|||||||||||||||||||
Arnold
Tinter
Chief
Financial Officer
|
2007
2006
|
135,000
15,000
|
25,000
-
|
25,000
|
101,837
-
|
-
-
|
-
-
|
-
-
|
261,837
40,000
|
|||||||||||||||||||
Anthony
Walker
Chief
Operating Officer
|
2007
2006
|
100,000
63,433
|
10,000
-
|
-
-
|
48,843
-
|
-
-
|
-
-
|
-
-
|
158,843
63,433
|
(1)
|
In
August 2006, Mr. Geman received an increase in his salary to $150,000
per
annum. Under Mr. Geman’s employment agreement, an increase to $360,000 per
annum has been implemented. Bonuses awarded in 2006 and 2007
were granted by the compensation committee of the Board of Directors.
Mr.
Geman receives no compensation for his services as a
director.
|
(2)
|
From
September 2006 to July 2007, Mr. Tinter was compensated as an independent
contractor at the rate of $5,000 per month. Subsequent to July 1,
2007,
Mr. Tinter became a full-time employee of our Company and under a
verbal
agreement received $12,500 per month as compensation. The bonus awarded
in
2007 was granted by the compensation committee of the Board of
Directors.
|
(3)
|
In
September 2006, Mr. Walker’s salary increased to $109,000 per annum. Under
Mr. Walker’s employment agreement, an increase to $150,000 per annum has
been implemented. Mr. Walker receives no compensation for his services
as
a director.
|
Name
|
Number
of securities underlying unexercised options
(#)
exercisable
|
Number
of securities underlying unexercised options
(#)
unexercisable
|
Equity incentive
plan awards:
Number
of securities underlying unexercised
unearned options
(#)
|
Option
exercise price ($)
|
Option
expiration date |
|||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
|||||||||||
Marc
Geman
|
500,000
|
1 |
-
|
-
|
$
|
0.6325
|
9/20/12
|
|||||||||
|
-
|
500,000
|
2 |
$
|
1.2600
|
12/14/12
|
||||||||||
Arnold
Tinter
|
50,000
|
3 |
150,000
|
4 |
-
|
$
|
0.2500
|
1/25/12
|
||||||||
400,000
|
1 |
-
|
-
|
$
|
0.5750
|
9/20/12
|
||||||||||
|
- |
500,000
|
2 |
-
|
$
|
1.1500
|
12/14/12
|
|||||||||
Anthony
Walker
|
300,000
|
1 |
-
|
-
|
$
|
0.6325
|
9/20/12
|
(1) |
Options
vested September 29,
2007.
|
(2) |
100%
of the options vest June 14, 2008.
|
(3) |
Options
vested January 25, 2007.
|
(4) |
75,000
options vest January 25, 2008 and 75,000 options vest January 25,
2009.
|
Name
|
Fees
earned
or paid
in cash
($)
|
Stock
awards
($)
|
Option
awards
($)
|
Non-equity
incentive plan
compensation
($)
|
Nonqualified
deferred
compensation
earnings
($)
|
All other
compensation
($)
|
Total
($)
|
|||||||||||||||
(a)
|
(b)
|
(c)
|
(d)
|
(e)
|
(f)
|
(g)
|
(h)
|
|||||||||||||||
L.
Kelly Jones1
|
-
|
-
|
5,928
|
-
|
-
|
64,000
|
69,928
|
|||||||||||||||
Raymond
BonAnno 2
|
-
|
-
|
5,928
|
-
|
-
|
-
|
5,928
|
|||||||||||||||
Presley
Reed 3
|
-
|
-
|
5,928
|
-
|
-
|
-
|
5,928
|
(1)
|
During
the year ended December 31, 2007, Mr. Jones was awarded options to
purchase 100,000 shares of common stock, all of which were outstanding
at
December 31, 2007. The exercise price of the options is $.25 per
share. At
December 31, 2007, 50,000 options have vested, 25,000 will vest January
25, 2008 and 25,000 will vest January 25, 2009. The options expire
January
25, 2012. Other compensation represents fees paid to Jones and Cannon
PC
for legal services rendered in connection with real estate leases.
Mr.
Jones is a partner in the law firm.
|
(2)
|
During
the year ended December 31, 2007, Mr. BonAnno was awarded options
to
purchase 100,000 shares of common stock, all of which were outstanding
at
December 31, 2007. The exercise price of the options is $.25 per
share. At
December 31, 2007, 50,000 options have vested, 25,000 will vest January
25, 2008 and 20,000 will vest January 25, 2009. The options expire
January
25, 2012.
|
(3)
|
During
the year ended December 31, 2007, Mr. Reed was awarded options to
purchase
100,000 shares of common stock, all of which were outstanding at
December
31, 2007. The exercise price of the options is $.25 per share. At
December
31, 2007, 50,000 options have vested, 25,000 will vest January 25,
2008
and 25,000 will vest January 25, 2009. The options expire January
25,
2012.
|
Quarter
Ended
|
High
Bid
|
Low
Bid
|
|||||
December
31, 2007
|
$
|
2.02
|
$
|
0.92
|
|||
September
30, 2007
|
$
|
1.24
|
$
|
0.48
|
Page
|
||
Financial
Statements – Years Ended December 31, 2006 and 2005
|
|
|
Report
of Independent Registered Public Accounting Firm
|
F-1
|
|
Consolidated
Balance Sheets as of December 31, 2006 and 2005
|
F-2
|
|
Consolidated
Statements of Operations for the years ended December 31, 2006 and
2005
|
F-3
|
|
Consolidated
Statements of Equity (Deficit) for the years ended December 31, 2006
and
2005
|
F-4
|
|
Consolidated
Statements of Cash Flows for the years ended December 31, 2006 and
2005
|
F-5
|
|
Notes
to Consolidated Financial Statements
|
F-6
to F-15
|
|
Financial
Statements – Nine Months Ended September 30, 2007 and
2006
|
||
Condensed
Balance Sheets as of September 30, 2007 and December 31,
2006
|
FF-1
|
|
Condensed
Statements of Operations for the nine months ended September 30,
2007 and
2006
|
FF-2
|
|
Condensed
Statements of Equity for the period December 31, 2005 to September
30,
2007
|
FF-3
|
|
Condensed
Statements of Cash Flows for the nine months ended September 31,
2007 and
2006
|
FF-4
|
|
Notes
to Condensed Financial Statements
|
FF-5
to FF-8
|
Gordon, Hughes & Banks, LLP | |
Greenwood Village, Colorado | |
March 19, 2007 |
Spicy
Pickle Franchising, Inc.
|
|||
(formerly
- Spicy Pickle Franchising, LLC)
|
|||
Consolidated
Balance Sheets
|
|||
December
31, 2006 and 2005
|
2006
|
2005
|
||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
1,198,982
|
$
|
29,882
|
|||
Restricted
cash
|
-
|
6,245
|
|||||
Accounts
receivable, trade
|
63,597
|
30,993
|
|||||
Accounts
receivable, related party
|
-
|
1,750
|
|||||
Prepaid
expenses and other current assets
|
29,171
|
5,794
|
|||||
Inventories
|
31,969
|
31,326
|
|||||
Total
current assets
|
1,323,719
|
105,990
|
|||||
Property
and equipment, at cost, net of accumulated depreciation
|
127,982
|
32,793
|
|||||
Deposits
and other assets
|
30,107
|
8,705
|
|||||
Total
assets
|
$
|
1,481,808
|
$
|
147,488
|
|||
Liabilities
and Equity (Deficit)
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of notes payable to related parties
|
$
|
30,000
|
$
|
10,000
|
|||
Accounts
payable, trade
|
55,440
|
45,383
|
|||||
Accrued
expenses and compensation
|
63,298
|
13,477
|
|||||
Accounts
payable related parties
|
53,925
|
-
|
|||||
Deferred
franchise revenue
|
685,000
|
250,000
|
|||||
Other
|
2,300
|
5,944
|
|||||
Total
current liabilities
|
889,963
|
324,804
|
|||||
Long-term
debt
|
|||||||
Notes
payable to related parties, less current portion
|
-
|
30,000
|
|||||
889,963
|
354,804
|
||||||
Commitments
and contingencies
|
|||||||
Members'
equity (deficit):
|
|||||||
Contributed
capital
|
781,209
|
||||||
Retained
earnings (deficit)
|
(988,525
|
)
|
|||||
Total
members' equity (deficit)
|
(207,316
|
)
|
|||||
Shareholder's
equity:
|
|||||||
Preferred
stock, $.001 par value, 20,000,000 authorized, 0 issued and
outstanding
|
-
|
-
|
|||||
Common
stock, $.001 par value, 200,000,000 shares authorized, 40,996,455
and 0
shares issued and outstanding, respectively
|
40,996
|
-
|
|||||
Additional
paid in capital
|
1,161,516
|
-
|
|||||
Accumulated
(deficit)
|
(610,667
|
)
|
-
|
||||
Total
shareholders' equity
|
591,845
|
-
|
|||||
Total
liabilities and equity (deficit)
|
$
|
1,481,808
|
$
|
147,488
|
See
accompanying notes to consolidated financial
statements
|
Spicy
Pickle Franchising, Inc.
|
|||
(formerly
- Spicy Pickle Franchising, LLC)
|
|||
Consolidated
Statements of Operations
|
|||
Years
Ended December 31, 2006 and 2005
|
|
2006
|
2005
|
|||||
Revenues:
|
|||||||
Restaurant
sales
|
$
|
409,018
|
$
|
485,708
|
|||
Franchise
fees and royalties
|
482,991
|
373,005
|
|||||
Total
revenues
|
892,009
|
858,713
|
|||||
Operating
costs and expenses:
|
|||||||
Restaurant:
|
|||||||
Cost
of sales
|
160,728
|
184,913
|
|||||
Labor
|
154,619
|
164,689
|
|||||
Occupancy
|
67,951
|
67,840
|
|||||
Other
operating cost
|
50,582
|
50,724
|
|||||
Total
restaurant operating expenses
|
433,880
|
468,166
|
|||||
Franchise
and general:
|
|||||||
Cost
of sales
|
18,510
|
42,487
|
|||||
General
and administrative
|
1,834,571
|
764,657
|
|||||
Depreciation
|
18,575
|
12,090
|
|||||
Total
franchise and general expenses
|
1,871,656
|
819,234
|
|||||
Total
operating costs and expenses
|
2,305,536
|
1,287,400
|
|||||
(Loss)
from operations
|
(1,413,527
|
)
|
(428,687
|
)
|
|||
Other
expense:
|
|||||||
Interest
income (expense)
|
29,556
|
(2,853
|
)
|
||||
Other
|
986
|
-
|
|||||
30,542
|
(2,853
|
)
|
|||||
Net
(loss)
|
$
|
(1,382,985
|
)
|
$
|
(431,540
|
)
|
|
Per
unit information:
|
|||||||
Basic
and diluted (loss) per membership unit
|
$
|
-
|
$
|
(2.813
|
)
|
||
Basic
and diluted weighted average units outstanding
|
$
|
-
|
$
|
153,432
|
|||
Per
share information:
|
|||||||
(2005
pro forma based upon conversion from membership units to common
shares)
|
|||||||
Basic
and diluted (loss) per common share
|
$
|
(0.038
|
)
|
$
|
(0.014
|
)
|
|
Basic
and diluted weighted average shares outstanding (pro forma - Note
6)
|
36,514,512
|
31,536,149
|
See
accompanying notes to consolidated financial statements.
|
Spicy
Pickle Franchising, Inc.
|
||||||||
(formerly
- Spicy Pickle Franchising, LLC)
|
||||||||
Consolidated
Statements of Equity (Deficit)
|
||||||||
Years
Ended December 31, 2006 and 2005
|
Members' Equity
|
Shareholders' Equity
|
|
|||||||||||||||||||||||
Contributed Capital
|
Accumulated
|
|
Additional
|
Accumulated
|
|||||||||||||||||||||
Units
|
Amount
|
Deficit
|
Shares
|
Amount
|
Paid In Capital
|
Deficit
|
Total
|
||||||||||||||||||
Balances
January 1, 2005
|
149,274
|
$
|
573,542
|
$
|
(556,985
|
)
|
-
|
$
|
-
|
$
|
-
|
$
|
-
|
$
|
16,557
|
||||||||||
Membership
units issued for cash
|
15,572
|
432,500
|
-
|
-
|
-
|
-
|
-
|
432,500
|
|||||||||||||||||
Membership
units redeemed
|
(9,872
|
)
|
(197,500
|
)
|
-
|
-
|
-
|
-
|
-
|
(197,500
|
)
|
||||||||||||||
Assets
purchase price in excess of net assets acquired
|
(27,333
|
)
|
-
|
-
|
-
|
-
|
-
|
(27,333
|
)
|
||||||||||||||||
Net
(loss) for the year
|
-
|
-
|
(431,540
|
)
|
-
|
-
|
-
|
-
|
(431,540
|
)
|
|||||||||||||||
Balances
December 31, 2005
|
154,974
|
781,209
|
(988,525
|
)
|
-
|
-
|
-
|
-
|
(207,316
|
)
|
|||||||||||||||
Membership
units issued for cash, net of offering costs of $110,449
|
38,920
|
1,889,551
|
-
|
-
|
-
|
-
|
-
|
1,889,551
|
|||||||||||||||||
Membership
units issued for services
|
5,546
|
285,000
|
-
|
-
|
-
|
-
|
-
|
285,000
|
|||||||||||||||||
Net
(loss) for the period January 1, 2006 to September 8, 2006
|
-
|
-
|
(772,318
|
)
|
-
|
-
|
-
|
-
|
(772,318
|
)
|
|||||||||||||||
Conversion
of membership units to common shares
|
(199,440
|
)
|
(2,955,760
|
)
|
1,760,843
|
40,996,455
|
40,996
|
1,153,921
|
-
|
-
|
|||||||||||||||
Fair
value of options granted
|
-
|
-
|
-
|
-
|
-
|
7,595
|
-
|
7,595
|
|||||||||||||||||
Net
(loss) for the period September 9, 2006 to December 31,
2006
|
-
|
-
|
-
|
-
|
-
|
-
|
(610,667
|
)
|
(610,667
|
)
|
|||||||||||||||
Balances
December 31, 2006
|
-
|
$
|
-
|
$
|
-
|
40,996,455
|
$
|
40,996
|
$
|
1,161,516
|
$
|
(610,667
|
)
|
$
|
591,845
|
See
accompanying notes to consolidated financial statements.
|
Spicy
Pickle Franchising, Inc.
|
|||
(formerly
- Spicy Pickle Franchising, LLC)
|
|||
Consolidated
Statements of Cash Flows
|
|||
Years
Ended December 31, 2006 and 2005
|
2006
|
2005
|
||||||
Cash
flows from operations:
|
|||||||
Net
(loss)
|
$
|
(1,382,985
|
)
|
$
|
(431,540
|
)
|
|
Adjustments
to reconcile net (loss) to net cash (used) in operating
activities:
|
|||||||
Depreciation
|
24,622
|
19,235
|
|||||
Fair
value of membership units issued for services
|
285,000
|
42,000
|
|||||
Stock
based compensation expense
|
7,595
|
-
|
|||||
Changes
in operating assets and liabilities:
|
|||||||
Restricted
cash
|
6,245
|
(6,245
|
)
|
||||
Accounts
receivable , trade
|
(32,604
|
)
|
(11,044
|
)
|
|||
Accounts
receivable, related party
|
1,750
|
33,250
|
|||||
Prepaid
expenses and other
|
(23,377
|
)
|
(1,455
|
)
|
|||
Inventories
|
(643
|
)
|
(28,202
|
)
|
|||
Deposits
|
(21,402
|
)
|
(430
|
)
|
|||
Accounts
payable, trade
|
10,057
|
30,481
|
|||||
Accounts
payable, related parties
|
53,925
|
(9,256
|
)
|
||||
Accrued
expenses and compensation
|
49,821
|
8,861
|
|||||
Deferred
franchise revenue
|
435,000
|
160,000
|
|||||
Other
liabilities
|
(3,644
|
)
|
5,944
|
||||
Net
cash (used) by operating activities
|
(590,640
|
)
|
(188,401
|
)
|
|||
Cash
flows from investing activities:
|
|||||||
Acquisition
of property and equipment
|
(121,911
|
)
|
(12,886
|
)
|
|||
Proceeds
from the sale of property and equipment
|
2,100
|
-
|
|||||
Net
cash (used) by investing activities
|
(119,811
|
)
|
(12,886
|
)
|
|||
Cash
flows from financing activities :
|
|||||||
Proceeds
from issuance of membership units
|
1,889,551
|
432,500
|
|||||
Redemption
of membership units
|
-
|
(197,500
|
)
|
||||
Repayment
of debt
|
(10,000
|
)
|
-
|
||||
Checks
written in excess of deposits
|
-
|
(3,831
|
)
|
||||
Net
cash provided by financing activities
|
1,879,551
|
231,169
|
|||||
Net
increase in cash and cash equivalents
|
1,169,100
|
29,882
|
|||||
Cash
and cash equivalents, beginning of the period
|
29,882
|
-
|
|||||
Cash
and cash equivalents, end of the period
|
$
|
1,198,982
|
$
|
29,882
|
|||
Supplemental
cash flow information:
|
|||||||
Notes
payable issued for net assets acquired
|
$
|
-
|
$
|
40,000
|
See
accompanying notes to consolidated financial statements.
|
2006
|
2005
|
||||||
Computer
software and equipment
|
$
|
66,995
|
$
|
28,014
|
|||
Furniture
and fixtures
|
22,379
|
14,942
|
|||||
Office
equipment
|
23,022
|
7,465
|
|||||
Leasehold
improvements
|
-
|
4,728
|
|||||
Kitchen
equipment
|
3,796
|
7,774
|
|||||
Construction
in progress
|
53,345
|
-
|
|||||
169,537
|
62,923
|
||||||
Less:
accumulated depreciation
|
(41,555
|
)
|
(30,130
|
)
|
|||
$
|
127,982
|
$
|
32,793
|
2007
|
$
|
234,095
|
||
2008
|
239,539
|
|||
2009
|
221,516
|
|||
2010
|
159,481
|
|||
2011
|
161,874
|
|||
Later
years
|
630,047
|
|||
$
|
1,655,562
|
Current:
|
||||
Federal
|
$
|
-
|
||
State
|
-
|
|||
|
- | |||
Deferred:
|
||||
Federal
|
(198,000
|
)
|
||
State
|
(
28,300
|
)
|
||
Total
deferred
|
(226,300
|
)
|
||
Increase
in valuation allowance
|
226,300
|
|||
Total
provision
|
$
|
-
|
Income
tax provision at the federal statutory rate
|
34.00
|
%
|
||
Amount
of income attributed to members prior to conversion from a limited
liability company to a corporation ($772,318)
|
(19.00
|
)%
|
||
State
income taxes, net of federal benefit
|
(
4.63
|
)%
|
||
Effect
of net operating loss attributed to corporation ($610,667)
|
(10.37
|
)%
|
||
|
- |
Deferred
tax assets:
|
||||
Net
operating loss carryovers
|
$
|
226,300
|
||
Valuation
allowance
|
(226,300
|
)
|
||
$
|
-
|
Options
|
Weighted Average
Exercise Price
|
Weighted Average
Remaining
Contractual Term
(in
years)
|
Aggregate
Intrinsic Value
|
||||||||||
Outstanding
January 1, 2006
|
-
|
||||||||||||
Granted
|
100,000
|
||||||||||||
Exercised
|
-
|
||||||||||||
Cancelled
|
-
|
||||||||||||
Outstanding
December 31, 2006
|
100,000
|
$
|
.25
|
4.8
|
$
|
7,595
|
|||||||
Exercisable
December 31, 2006
|
100,000
|
$
|
.25
|
4.8
|
$
|
7,595
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||
Range of
Exercise Price
|
Number
Outstanding
|
Weighted
Average
Remaining
Contractual Life
|
Weighted
Average
Exercise Price
|
Number
Exercisable
|
Weighted
Average
Exercise
Price
|
|||||||||||
$.25
|
100,000
|
5
|
$
|
.25
|
100,000
|
$
|
.25
|
2006
|
2005
|
||||||
Number
of restaurants:
|
|||||||
Company-owned:
|
|||||||
Beginning
of period
|
1
|
-
|
|||||
Restaurants
closed
|
1
|
-
|
|||||
Restaurants
purchased from franchisee
|
-
|
1
|
|||||
End
of period
|
-
|
1
|
|||||
Franchise-operated:
|
|||||||
Beginning
of period
|
10
|
9
|
|||||
Restaurants
opened
|
6
|
3
|
|||||
Restaurant
sold to Company
|
-
|
(1
|
)
|
||||
Restaurants
closed
|
-
|
(1
|
)
|
||||
End
of period
|
16
|
10
|
|||||
System-wide:
|
|||||||
Beginning
of period
|
11
|
9
|
|||||
Restaurants
opened
|
6
|
3
|
|||||
Restaurants
closed
|
(1
|
)
|
(1
|
)
|
|||
End
of period
|
16
|
11
|
2006
|
2005
|
||||||
Revenues: | |||||||
Company
restaurant operations
|
$
|
409,018
|
$
|
485,708
|
|||
Franchise
operations
|
482,991
|
373,005
|
|||||
Total
Revenues
|
$
|
892,009
|
$
|
858,713
|
|||
Segment profit (loss): | |||||||
Company
restaurant operations
|
$
|
(33,174
|
)
|
$
|
17,542
|
||
Franchise
operations
|
(1,380,353
|
)
|
(446,229
|
)
|
|||
Total
segment profit (loss)
|
$
|
(1,413,527
|
)
|
$
|
(428,687
|
)
|
|
Depreciation
and amortization (included in segment profit (loss):
|
|||||||
Company
restaurant operations
|
$
|
6,047
|
$
|
7,145
|
|||
Franchise
operations
|
18,575
|
12,090
|
|||||
Total
depreciation and amortization
|
$
|
24,622
|
$
|
19,235
|
|||
Capital expenditures: | |||||||
Company
restaurant operations
|
$
|
44,639
|
$
|
40,000
|
|||
Corporate
administration
|
77,272
|
12,886
|
|||||
Total
capital expenditures
|
$
|
121,911
|
$
|
52,886
|
September 30,
2007
|
December 31,
2006
|
||||||
(Unaudited)
|
|||||||
Assets
|
|||||||
Current
assets:
|
|||||||
Cash
and cash equivalents
|
$
|
842,223
|
$
|
1,198,982
|
|||
Current
portion of notes receivable
|
65,000
|
-
|
|||||
Accounts
receivable, trade
|
110,341
|
63,597
|
|||||
Prepaid
expenses and other current assets
|
216,246
|
29,171
|
|||||
Inventories
|
8,308
|
31,969
|
|||||
Total
current assets
|
1,242,118
|
1,323,719
|
|||||
Notes
receivable, less current portion
|
40,000
|
-
|
|||||
Property
and equipment, at cost, net
|
160,640
|
127,982
|
|||||
Deposits
and other assets
|
29,366
|
30,107
|
|||||
Total
assets
|
$
|
1,472,124
|
$
|
1,481,808
|
|||
Liabilities
and Shareholders’ Equity
|
|||||||
Current
liabilities:
|
|||||||
Current
portion of notes payable to related parties
|
$
|
-
|
$
|
30,000
|
|||
Accounts
payable, trade
|
120,117
|
55,440
|
|||||
Accrued
expenses and compensation
|
113,435
|
63,298
|
|||||
Accounts
payable, related parties
|
-
|
53,925
|
|||||
Deferred
franchise revenue
|
870,000
|
685,000
|
|||||
Other
|
2,300
|
2,300
|
|||||
Total
current liabilities
|
1,105,852
|
889,963
|
|||||
Commitments
and contingencies
|
|||||||
Shareholders'
equity
|
|||||||
Preferred
stock, $.001 par value, 20,000,000 authorized, none issued or
outstanding
|
-
|
-
|
|||||
Common
stock, $.001 par value, 200,000,000 shares authorized, 47,634,053
and
40,996,455 shares issued and outstanding in 2007 and 2006,
respectively
|
47,634
|
40,996
|
|||||
Additional
paid in capital
|
4,143,503
|
1,161,516
|
|||||
Accumulated
deficit
|
(2,953,573
|
)
|
(610,667
|
)
|
|||
Deferred
compensation
|
(871,292
|
)
|
-
|
||||
Total
shareholders' equity
|
366,272
|
591,845
|
|||||
Total
liabilities and shareholders' equity
|
$
|
1,472,124
|
$
|
1,481,808
|
Nine Months Ended
|
|||||||
September 30,
|
|||||||
|
2007
|
2006
|
|||||
Revenues:
|
|||||||
Restaurant
sales
|
$
|
-
|
$
|
360,947
|
|||
Franchise
fees and royalties
|
803,226
|
442,277
|
|||||
Total
revenue
|
803,226
|
803,224
|
|||||
Operating
costs and expenses:
|
|||||||
Restaurant:
|
|||||||
Cost
of sales
|
-
|
142,005
|
|||||
Labor
|
-
|
138,523
|
|||||
Occupancy
|
-
|
58,787
|
|||||
Other
operating cost
|
-
|
50,351
|
|||||
Total
restaurant operating expenses
|
-
|
389,666
|
|||||
Franchise
and general:
|
|||||||
Cost
of sales
|
20,185
|
70,376
|
|||||
General
and administrative
|
3,144,726
|
1,251,429
|
|||||
Depreciation
|
19,044
|
13,000
|
|||||
Total
franchise and general expenses
|
3,183,955
|
1,334,805
|
|||||
Total
operating costs and expenses
|
3,183,955
|
1,724,471
|
|||||
(Loss)
from operations
|
(2,380,729
|
)
|
(921,247
|
)
|
|||
Other
income:
|
|||||||
Other
income (expense)
|
105
|
-
|
|||||
Interest
income
|
37,717
|
14,663
|
|||||
Total
other income and (expense)
|
37,822
|
14,663
|
|||||
Net
(loss)
|
$
|
(2,342,907
|
)
|
$
|
(906,584
|
)
|
|
Basic
and diluted (loss) per common share
|
$
|
(0.05
|
)
|
$
|
(0.03
|
)
|
|
Basic
and diluted weighted average shares outstanding
|
43,209,297
|
35,018,531
|
Members'
Equity
|
Shareholders'
Equity
|
|||||||||||||||||||||||||||
Contributed
Capital
|
|
Additional
|
|
|
||||||||||||||||||||||||
Units
|
Amount
|
Accumulated
Deficit |
Shares
|
Amount
|
Paid
In
Capital
|
Accumulated
Deficit |
Deferred
Compensation |
Total
|
||||||||||||||||||||
Balance
December 31, 2005
|
154,974
|
$
|
781,209
|
$
|
(988,525
|
)
|
$
|
(207,316
|
)
|
|||||||||||||||||||
Membership
units issued for cash, net of offering costs of $110,449
|
38,920
|
1,889,551
|
1,889,551
|
|||||||||||||||||||||||||
Membership
units issued for services
|
5,546
|
285,000
|
285,000
|
|||||||||||||||||||||||||
Net
(loss) for the prior January 1, 2005 to September 8, 2005
|
-
|
-
|
(772,318
|
)
|
(772,318
|
)
|
||||||||||||||||||||||
Conversion
of membership units to common shares
|
(199,440
|
)
|
(2,955,760
|
)
|
1,760,843
|
40,996,455
|
$
|
40,996
|
$
|
1,153,921
|
-
|
|||||||||||||||||
Fair
value of options granted
|
7,595
|
7,595
|
||||||||||||||||||||||||||
Net
(loss) for the prior September 9, 2005 to December 31,
2006
|
|
|
|
|
|
|
$
|
(610,667
|
)
|
(610,667
|
)
|
|||||||||||||||||
Balance
December 31, 2006
|
-
|
$
|
-
|
$
|
-
|
40,996,455
|
40,996
|
1,161,516
|
(610,667
|
)
|
591,845
|
|||||||||||||||||
Common
shares issued for cash, net of offering cost of $118,434
|
4,352,780
|
4,353
|
1,574,398
|
1,578,751
|
||||||||||||||||||||||||
Common
shares issued for services
|
2,284,818
|
2,285
|
1,109,142
|
1,111,427
|
||||||||||||||||||||||||
Fair
value of options granted
|
298,447
|
298,447
|
||||||||||||||||||||||||||
Deferred
compensation
|
$
|
(871,292
|
)
|
(871,292
|
)
|
|||||||||||||||||||||||
Net
(loss) for the period
|
|
|
|
(2,342,906
|
)
|
|
(2,342,906
|
)
|
||||||||||||||||||||
Balance
September 30, 2007
|
47,634,053
|
$
|
47,634
|
$
|
4,143,503
|
$
|
(2,953,573
|
)
|
$
|
(871,292
|
)
|
$
|
366,272
|
2007
|
2006
|
||||||
Net
cash (used in) operating activities
|
$
|
(1,897,735
|
)
|
$
|
(176,709
|
)
|
|
Cash
flows from investing activities:
|
|||||||
Acquisition
of property and equipment
|
(51,702
|
)
|
(36,661
|
)
|
|||
Net
cash (used in) investing activities
|
(51,702
|
)
|
(36,661
|
)
|
|||
Cash
flows from financing activities :
|
|||||||
Membership
units sold
|
-
|
2,000,000
|
|||||
Payment
of deferred offering cost
|
-
|
(97,173
|
)
|
||||
Common
stock issued
|
1,622,678
|
-
|
|||||
Repayment
of note payable to related party
|
(30,000
|
)
|
(10,000
|
)
|
|||
Net
cash provided by financing activities
|
1,592,678
|
1,892,827
|
|||||
Net
increase in cash and cash equivalents
|
(356,759
|
)
|
1,679,457
|
||||
Cash
and cash equivalents, beginning of the period
|
1,198,982
|
29,882
|
|||||
Cash
and cash equivalents, end of the period
|
$
|
842,223
|
$
|
1,709,339
|
Options
|
Weighted
Average
Exercise
Price
|
Weighted
Average
Remaining
Contractual
Term (in years)
|
Aggregate
Intrinsic
Value
|
||||||||||
Outstanding
January 1, 2007
|
100,000
|
$
|
.25
|
||||||||||
Granted
|
2,280,000
|
$
|
.50
|
||||||||||
Exercised
|
-
|
-
|
|||||||||||
Cancelled
|
-
|
-
|
|||||||||||
Outstanding
September 30, 2007
|
2,380,000
|
$
|
.49
|
4.75
|
$
|
330,642
|
|||||||
Exercisable
September 30, 2007
|
1,890,000
|
$
|
.55
|
4.84
|
$
|
287,590
|
Options Outstanding
|
Options Exercisable
|
|||||||||||||||
Range of
Exercise Price
|
|
Number
Outstanding
|
|
Weighted
Average
Remaining
Contractual
Life
|
|
Weighted
Average
Exercise Price
|
|
Number
Exercisable
|
|
Weighted
Average
Exercise Price
|
|
|||||
$.25
- $.64
|
|
|
2,380,000
|
|
|
4.75
|
|
$
|
.49
|
|
|
1,890,000
|
|
$
|
.55
|
|
2007
|
2006
|
||||||
Revenues:
|
|||||||
Company
restaurants operations
|
$
|
-
|
$
|
360,947
|
|||
Franchise
operations
|
803,226
|
442,277
|
|||||
Total
Revenues
|
$
|
803,226
|
$
|
803,224
|
|||
Segment
(loss):
|
|||||||
Company
restaurants operations
|
$
|
-
|
$
|
(28,719
|
)
|
||
Franchise
operations
|
(2,380,729
|
)
|
(892,528
|
)
|
|||
Total
segment (loss)
|
(2,380,729
|
)
|
(921,247
|
)
|
|||
Other
income (expense)
|
105
|
-
|
|||||
Interest
income
|
37,717
|
14,663
|
|||||
Net
loss
|
$
|
(2,342,907
|
)
|
$
|
(906,584
|
)
|
|
Depreciation
(included in segment loss):
|
|||||||
Company
restaurant operations
|
$
|
-
|
$
|
4,399
|
|||
Franchise
operations
|
$
|
19,044
|
$
|
13,000
|
·
|
any
breach of the director’s duty of loyalty to us or our
shareholders;
|
·
|
any
act or omission not in good faith or that involves intentional misconduct
or a knowing violation of law;
|
·
|
any
act related to unlawful stock repurchases, redemptions or other
distributions or payments of dividends; or
|
·
|
any
transaction from which the director derived an improper personal
benefit.
|
·
|
we
may indemnify our directors, officers, and employees to the fullest
extent
permitted by the Colorado Business Corporation Act, subject to limited
exceptions;
|
·
|
we
may advance expenses to our directors, officers and employees in
connection with a legal proceeding to the fullest extent permitted
by the
Colorado Business Corporation Act, subject to limited exceptions;
and
|
·
|
the
rights provided in our Bylaws are not
exclusive.
|
$
|
1,000
|
|||
Legal
fees and expenses
|
25,000
|
|||
Accounting
fees and expenses
|
5,000
|
|||
Blue
sky fees and expenses
|
2,500
|
|||
Transfer
agent fees and expenses
|
1,000
|
|||
Printing
fees
|
2,000
|
|||
Miscellaneous
|
3,500
|
|||
Total
|
$
|
40,000
|
Exhibit
Number |
|
Exhibit
Description
|
3.1
|
|
Amended
Articles of Incorporation of the Registrant (1)
|
3.2
|
|
Bylaws
(2)
|
4.1
|
Certificate
of Designation of Series A Variable Rate Convertible Preferred
Stock
(3)
|
|
5.1
|
|
Opinion
of Richardson & Patel LLP (4)
|
10.1
|
|
Employment
Agreement - Marc Geman (2)
|
10.2
|
|
Employment
Agreement - Anthony Walker (2)
|
10.3
|
|
Employment
Agreement - Kevin Morrison (2)
|
10.4
|
|
2006
Stock Option Plan (2)
|
10.5
|
|
Promissory
Note to Spicy Pickle, LLC (2)
|
10.6
|
Securities
Purchase Agreement dated as of December 14, 2007 (5)
|
|
10.7
|
Form
of Warrant (6)
|
|
10.8
|
Registration
Rights Agreement dated as of December 14, 2007 (7)
|
|
10.9
|
Lock-Up
Agreement of Marc Geman (8)
|
|
10.10
|
Form
of Lock-Up Agreement executed by other officers and directors
(9)
|
|
21.1
|
List
of Subsidiaries (4)
|
|
23.1
|
|
Consent
of Gordon, Hughes & Banks LLP independent registered public accounting
firm (4)
|
23.2
|
|
Consent
of Richardson & Patel LLP (included in Exhibit 5.1)
|
24.1
|
|
Power
of Attorney (included in signature
page)
|
(1)
|
Incorporated
by reference to the exhibit of the same number to the registrant’s
Amendment No. 1 to Registration Statement on Form SB-2 filed
on December
12, 2006.
|
(2)
|
Incorporated
by reference to the exhibit of the same number to the registrant’s
Registration Statement on Form SB-2 filed on October 26,
2006.
|
(3)
|
Incorporated
by reference to the exhibit of the same number to the registrant’s Current
Report on Form 8-K filed on December 19,
2007.
|
(4)
|
Filed
herewith.
|
(5)
|
Incorporated
by reference to Exhibit 10.1 to the registrant’s Current Report on Form
8-K filed on December 19, 2007.
|
(6)
|
Incorporated
by reference to Exhibit 10.2 to the registrant’s Current Report on Form
8-K filed on December 19, 2007.
|
(7)
|
Incorporated
by reference to Exhibit 10.3 to the registrant’s Current Report on Form
8-K filed on December 19, 2007.
|
(8)
|
Incorporated
by reference to Exhibit 10.4 to the registrant’s Current Report on Form
8-K filed on December 19, 2007.
|
(9)
|
Incorporated
by reference to Exhibit 10.5 to the registrant’s Amendment No. 1 to
Current Report on Form 8-K filed on December 27,
2007.
|
(a)
|
The
undersigned registrant hereby
undertakes:
|
|
(1)
|
To
file, during any period in which offers or sales are being made,
a
post-effective amendment to this registration
statement:
|
|
(i)
|
To
include any prospectus required by Section 10(a)(3) of the Securities
Act;
|
|
(ii)
|
To
reflect in the prospectus any facts or events which, individually
or
together, represent a fundamental change in the information in
this
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 SEC
pursuant to
Rule 424(b) if, in the aggregate, the changes in volume and price
represent no more than a 20% change in the maximum aggregate
offering
price set forth in the “Calculation of Registration Fee” table in the
effective registration statement;
and
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(iii)
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To
include any additional or changed material information on the
plan of
distribution.
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(2)
|
For
purposes of determining liability under the Securities Act, to
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.
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(3)
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To
remove from registration by means of a post-effective amendment
any of the
securities being registered that remain unsold at the termination
of the
offering.
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(4)
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For
determining liability under the Securities Act to any purchaser,
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.
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(b)
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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 of 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.
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SPICY
PICKLE FRANCHISING, INC.
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||
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/s/
Marc Geman
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||
Marc
Geman
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||
Chairman
and Chief Executive Officer
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Signature
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|
Title
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|
Date
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|
|
|
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/s/
Marc Geman
|
|
Chief
Executive Officer and
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|
February
8, 2008
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Marc
Geman
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|
Chairman
of the Board
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(Principal
Executive Officer)
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/s/
Arnold Tinter
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Chief
Financial Officer
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February
8, 2008
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Arnold
Tinter
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(Principal
Accounting Officer)
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/s/
Anthony Walker
|
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Director
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February
8, 2008
|
Anthony
Walker
|
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/s/
Presley Reed
|
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Director
|
|
February
8, 2008
|
Presley
Reed
|
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/s/
Raymond BonAnno
|
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Director
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|
February
8, 2008
|
Raymond
BonAnno
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/s/
L. Kelly Jones
|
|
Director
|
|
February
8, 2008
|
L.
Kelly Jones
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