SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act
November 29, 1999
Date of Report
(Date of Earliest Event Reported)
GOURMET'S CHOICE COFFEE CO., INC.
(Exact Name of Registrant as Specified in its Charter)
8 West 38th Street
9th Floor
New York, New York 10018
(Address of Principal Executive Offices)
212/398-7833
212/398-8695 (fax)
(Registrant's Telephone Number)
Aterian Corporation
1504 R Street N.W.
Washington, D.C. 20009
(Former Name and Former Address)
Nevada 000-26409 74-2822381
(State or other (Commission (IRS Employer
jurisdiction of incorporation File Number) Identification No.)
ITEM 1. CHANGES IN CONTROL OF REGISTRANT
(a) Pursuant to an Agreement and Plan of Reorganization
(the "Agreement") effective November 29, 1999 Gourmet's Choice
Coffee Co., Inc., a Nevada corporation ("Gourmet's Choice" or the
"Company"), acquired all the outstanding shares of Aterian
Corporation ("Aterian") from the shareholders thereof in a pro rata
exchange for an aggregate of 250,000 shares of common stock of
Gourmet's Choice (the "Reorganization"). As a result, Aterian
became a wholly-owned subsidiary of Gourmet's Choice.
The Reorganization was approved by the unanimous consent of
the Board of Directors of Gourmet's Choice on November 23, 1999.
The Reorganization is intended to qualify as a reorganization within
the meaning of Section 368(a)(1)(B) of the Internal Revenue Code of
1986, as amended.
Prior to the Reorganization, Gourmet's Choice had 92,271,128
shares of common stock issued and outstanding and 92,521,128 shares
issued and outstanding following the Reorganization. Gourmet's
Choice was incorporated in the State of Nevada on February 20, 1997.
Upon effectiveness of the Reorganization, pursuant to Rule
12g-3(a) of the General Rules and Regulations of the Securities and
Exchange Commission, Gourmet's Choice became the successor issuer to
Aterian Corporation for reporting purposes under the Securities
Exchange Act of 1934 and elects to report under the Act effective
November 29, 1999.
A copy of the Agreement is filed as an exhibit to this Form
8-K and is incorporated in its entirety herein. The foregoing
description is modified by such reference.
(b) The following table contains information regarding the
shareholdings of the Company's current directors and executive
officers and those persons or entities who beneficially own more
than 5% of the Company's common stock:
NAME AMOUNT OF COMMON STOCK PERCENT OF COMMON STOCK
BENEFICIALLY OWNED (1) BENEFICIALLY OWNED
James A. Tilton 42,000,000 (2) 45.40%
President, Director
Jane Zheng 6,000,000 (3) 6.49%
Secretary, Treasurer and
Director
All directors and executive
officers as a group 42,000,000 (2)(3) 45.40%
(2 persons)
International Beverage
Development Corp. 36,000,000 (4) 38.91%
8 West 38th Street
9th Floor
New York, New York 10018
Calder Investments 6,000,000 6.49%
Omar Hodge building
Eickham Cay Road
Tortola Town
British Virgin Islands
Southeast Asia Industries
Limited 5,432,000 5.87%
c/o Gerland L. Jenson
1675 Broadway
Suite 1030
Denver, Colorado 80202
Victoria Beverage Company
Limited 6,000,000 (5) 6.49%
3 Athol Street
Douglas, Isle of Man
1M1 1LD Great Britain
(1) Based upon 92,521,128 outstanding shares of common stock
following theReorganization.
(2) Includes 36,000,000 shares owned by International Beverage
Development Corp., a company of which Mr. Tilton is the sole
shareholder, president and director, and 6,000,000 shares
owned by Victoria Beverage Company Limited, a company that
is a subsidiary of China Food and Beverage Company, of which
Mr. Tilton is president, a director and shareholder and his
wife, Jane Zheng, is secretary, treasurer and a director.
Mr. Tilton may be deemed to be the beneficial owner of the
shares owned by International Beverage Development Corp. and
Victoria Beverage Company Limited.
(3) Includes 6,000,000 shares owned by Victoria Beverage Company
Limited, a company that is a subsidiary of China Food and
Beverage Company, of which Ms. Zheng is secretary, treasurer
and a director.
(4) International Beverage Development Corporation is a company
of which Mr. Tilton is the sole shareholder, president and
director.
(5) Victoria Beverage Company is a subsidiary of China Food and
Beverage Company, a company of which Mr. Tilton is
president, a director and shareholder and his wife, Jane
Zheng, is secretary, treasurer and a director.
BUSINESS
Gourmet's Choice was formed to produce and market premium
quality blended coffees and other beverages to restaurants, hotels,
airlines, supermarkets and other retail outlets and to serve as a
holding company for domestic and international companies to be
acquired that will complement its intended business. In 1998,
Gourmet's Choice acquired a Vietnamese company which operates a
mineral water company in a joint venture with Quang Tri Beer
Factory. Prior to the acquisition of Aterian Corporation, Gourmet's
Choice had two subsidiaries: Gourmet's Choice Franchise, Inc. which
has not yet commenced operations, and AmViet Mineral Water Co.,
which operates the bottled water and mineral water operations.
Gourmet's Choice operates at a loss and has not received
revenues from operations sufficient to maintain its operations.
Gourmet's Choice has raised funds for operations through the sale of
its securities. See "RISK FACTORS".
COFFEE BUSINESS
For nearly 30 years until 1983, an unaffiliated corporation,
owning the trademark "Gourmet's Choice", supplied gourmet coffees
internationally to a customer base of airlines, gourmet shops,
hotels and restaurants. The Company acquired the rights to the
trademark "Gourmet's Choice" in 1998 and is attempting to
re-establish the brand name and its products. The Company currently
offers its coffee products over the Internet at its Web site,
http://www.gmch.net, and at a Web store on http://www.imall.com.
From April 1999 through November 1999, the Company sales of its
coffee products through the Internet were approximately $8,000. The
Company is currently designing a new sales Web site and intends to
begin a marketing program for its coffees.
The Company maintains an inventory of its coffee to supply
those orders that it receives. The Company purchases its coffee
from distributors in Portland, Oregon, which is then blended and
roasted to make the Company's brands and flavors. The coffee is
packaged at an order fulfillment center near Indianapolis, Indiana,
run by outside vendors, and shipped to customers on demand.
The Gourmet's Choice coffee brands include "Gourmet's
Choice," "Golden Choice," "Gourmet's Delight," "Rainforest Blend,"
"Espresso Bellissimo," and "French Roast." The coffee can be
purchased as ground coffee and whole beans in both regular and
decaffeinated versions.
VIETNAMESE WATER BUSINESS
On September 30, 1998, Gourmet's Choice acquired as a
wholly-owned subsidiary, AmViet Development Corporation, a Bahamian
corporation, which owns 70% of the AmViet Mineral Water Co. On
September 24, 1994, the AmViet Mineral Water Co. was issued a
license to operate a bottled water and mineral water operation in a
joint venture with Quang Tri Beer Factory. The joint venture is
owned 70% by AmViet Development Corp. and is 30% by Quang Tri Beer
Co. Subsequently, the license was amended to include soft drinks.
From February 1, 1999 to November 15, 1999, the Company received
$53,000 in gross revenues from its water bottling operations.
Well water is pumped from wells near Quang Tri, in central
Viet Nam near Hue, bottled at the Company's plant near Quang Tri and
marketed to approximately 20 distributors throughout Viet Nam. The
Company owns the plant equipment, but the land and structure are
owned by the Vietnamese communist government. The plant has the
capacity to product approximately 250,000 liters of bottled water
per month, assuming 8-hour production days. However, production has
been halted numerous times since inception in February 1999 because
of particulate contamination in the well water, and because of
weather conditions such as typhoons.
TRADEMARKS AND PATENTS
The Company owns the trademark "Gourmet's Choice". The
Company uses certain other brand names for its products, but has not
applied for trademarks with respect to them.
EMPLOYEES
Gourmet's Choice has 20 employees. Two of the employees are
located in New York, purchasing and marketing coffee. The remaining
18 employees are in Viet Nam, managing and operating the water
bottling operations and delivering the products to its distributors.
PROPERTY
Gourmet's Choice maintains its administrative offices at 8
West 38th Street, 9th Floor, New York, N.Y. 10018. The Company does
not lease its own space and pays no rent. The offices are leased by
other companies affiliated with the Company's president and the
office space and all office services are shared. The telephone is
answered by a receptionist working for several companies and does
not respond in the name of Gourmet's Choice unless a caller asks for
information with respect to Gourmet's Choice.
The Company pays no rent for its water bottling plant in
Quang Tri, Viet Nam. Because the Company contributed the plant's
equipment, no rent is paid for use of the space.
LITIGATION
There is no outstanding litigation in which the Company is
involved and the Company is unaware of any pending actions or claims
against it.
DESCRIPTION OF SECURITIES
The Company has an authorized capitalization of 200,000,000
shares of common stock, $.01 par value per share and no authorized
preferred stock. Following the Reorganization, the Company had
issued and outstanding 92,521,128 shares.
MARKET FOR GOURMET'S CHOICE SECURITIES
Gourmet's Choice has been a non-reporting publicly traded
company with certain of its securities exempt from registration
under the Securities Act of 1933 pursuant to Rule 504 of Regulation
D of the General Rules and Regulations of the Securities and
Exchange Commission. Gourmet's Choice's common stock is traded on
the NASD OTC Bulletin Board under the symbol GMCH. The Nasdaq Stock
Market has implemented a change in its rules requiring all companies
trading securities on the NASD OTC Bulletin Board to become
reporting companies under the Securities Exchange Act of 1934.
The Company was required to become a reporting company by
the close of business on December 1, 1999. Gourmet's Choice
acquired all the outstanding shares of Aterian to become successor
issuer to it pursuant to Rule 12g-3 in order to comply with the
reporting company requirements implemented by the Nasdaq Stock Market.
The following table represents the average prices on the
Nasdaq Bulletin Board for the Company's common stock for the
following periods:
Open High Low Closing
Quarter Ended Price Price Price Price
December, 1998 .040 .070 .000 .020
March, 1999 .025 .800 .000 .395
June, 1999 .400 .510 .190 .220
September, 1999 .210 .220 .081 .081
MANAGEMENT
Name Age Title
James A. Tilton 38 President, Chief
Executive Officer and Director
Jane Zheng 37 Secretary, Treasurer and Director
James A. Tilton serves as President, Chief Executive Officer
and a director of the Company and is also the president and sole
director of its wholly-owned subsidiary, Aterian Corporation. Mr.
Tilton was appointed President, Chief Executive Officer and a
director of the Company in October, 1998. Since July 1995, Mr.
Tilton has also been President and a director of Tianrong Building
Material Holdings, Ltd., an OTC Bulletin Board listed holding
company (trading symbol TNRG) with business in China and southeast
Asia. Since November 1995, Mr. Tilton has also been the President
and a director of China Food and Beverage Company, an OTC Bulletin
Board listed holding company (trading symbol CHIF) primarily for a
beer production company in China. Since July 1998, Mr. Tilton has
also been President and a director of Tianrong Internet Products and
Services, Inc., an OTC Bulletin Board listed holding company
(trading symbol TIPS) primarily for Internet related companies. See
"Other Non-Reporting OTC Bulletin Board Companies". Mr. Tilton is
also sole shareholder, sole officer and sole director of
International Beverage Development Corp., a shareholder of the
Company. Mr. Tilton is expected to continue in such positions.
Mr. Tilton is the husband of Jane Zheng, secretary, treasurer and a
director of the Company.
Jane Zheng serves as Secretary, Treasurer and a director of
the Company. Ms. Zheng was appointed as Secretary, Treasurer and
Director of the Company in October 1998. Since July 1995, Ms. Zheng
has also been secretary, treasurer and a director of Tianrong
Building Material Holdings, Ltd. Since November 1995, Ms. Zheng has
also been secretary, treasurer and a director of China Food and
Beverage Company. Since July 1998, Ms. Zheng has also been
secretary, treasurer and a director of Tianrong Internet Products
and Services, Inc. Ms. Zheng is expected to continue in such
positions. In 1986, Ms. Zheng received her degree in engineering
from Shanghai University, Shanghai, China. In 1994, Ms. Zheng
received a Masters of Business Administration degree in Finance from
Adelphi University, Garden City, New York. Ms. Zheng is the wife of
James A. Tilton.
OTHER NON-REPORTING OTC BULLETIN BOARD COMPANIES
Mr. Tilton and Ms. Zheng serve as officers and directors of
other companies with securities admitted to quotation on the OTC
Bulletin Board. Tianrong Building Material Holdings, Ltd., is a
Utah company trading on the OTC Bulletin Board under the symbol
TNRG. Tianrong Building Material is a holding company for a variety
of companies, with its largest company a real estate company with
1998 revenues of approximately $2,000,000. Tianrong Building
Material owns a professional basketball team in the United States
Basketball League and owns 90% of Tianrong Internet Products and
Services, Inc. Mr. Tilton owns approximately 20% of the outstanding
shares of Tianrong Building Material.
Tianrong Internet Products and Services, Inc. trades on the
OTC Bulletin Board under the symbol TIPS. Tianrong Internet is a
holding company for four operating Internet and Internet related
companies.
China Food and Beverage Company trades on the OTC Bulletin
Board under the symbol CHIF and is a holding company for a beer
production company operating in China.
EXECUTIVE COMPENSATION
Ms. Zheng is not currently receiving any salary or other
remuneration from the Company. Mr. Tilton is not currently
receiving any salary or other remuneration from the Company.
All directors of the Company hold office until the next
annual meeting of shareholders or until their successors are elected
and qualified. Currently, there are two directors of the Company.
The by-laws permit the Board of Director to fill any vacancy and such
director may serve until the next annual meeting of shareholders or
until his successor is elected and qualified. Officers serve at the
discretion of the Board of Directors.
RELATED TRANSACTIONS
Mr. Tilton effected a $100,000 unsecured loan from the
Company in March 1999. The loan bears 12% interest and all
principal and accrued interest is due March 26, 2000. The Company
does not have a policy on the maximum amount that it may lend to an
officer or director or the terms by which any such loan must be repaid.
RISK FACTORS
GOURMET'S CHOICE IS CURRENTLY OPERATING AT A LOSS. For the
fiscal year ended June 30, 1998, the Company had a net loss of
$678,238. For the three-month period ended September 30, 1998, the
Company had a net loss of $52,387. Gourmet's Choice has only been
able to maintain operations by a private placement of $922,925 of
its common stock pursuant to Rule 504 of Regulation D under the
Securities Act of 1933, as amended, between November 1998 and March
1999. If losses continue, Gourmet's Choice may need to raise
additional capital through the placement of its securities or from
other debt or equity financing. If the Company is not able to raise
such financing or obtain alternative sources of funding, management
will be required to curtail operations. There is no assurance that
the Company will be able to continue to operate if additional sales
of its securities cannot be generated or other sources of financing
located.
MANAGEMENT AND AFFILIATES OWN ENOUGH SHARES TO CONTROL
SHAREHOLDER VOTE. James A. Tilton, President of Gourmet's Choice,
beneficially controls 45% of the outstanding common stock of the
Company. The only other director and officer of the Company is the
spouse of Mr. Tilton. The by-laws provide that the board of
directors may issue securities of the Company at its discretion and
the board could issue additional securities to Mr. Tilton which
would allow him to control a majority of the outstanding shares of
the Company.
THE COMPANY HAS NOT BEEN AUDITED BY INDEPENDENT CERTIFIED
PUBLIC ACCOUNTANTS. Although the Company is required to file
audited financial statements no later than 60 days from the date
that this report is required to be filed, no such audited financial
statements have been prepared or are available for inspection as of
the date hereof. Consequently, there can be no assurance that any
representations as to the financial condition or assets of the
Company are as stated herein.
CONFLICT OF INTEREST WITH OTHER SIMILAR COMPANIES. Mr.
Tilton and Ms. Zheng are the officers and directors of several other
companies including: Tianrong Building Material Holdings, Ltd.,
China Food and Beverage Company, and Tianrong Internet Products and
Services, Inc., Tilton and Ms. Zheng may be required to spend
significant time on the affairs of these companies which may serve
to decrease the time they can devote to the affairs of the Company.
In addition, certain business opportunities or developments may
arise which would cause a conflict in the interests or development
between the one or more of these companies and the Company.
RISK OF DOING BUSINESS IN VIET NAM. Viet Nam is a
developing country that is under a hostile dictatorship. Business
risks include, among others, internal political or civil unrest,
war, or government restrictions. These risks are dynamic and
difficult to quantify. The Company will be subject to the risks
normally associated with changes in general national economic
conditions or local market conditions, competition, patronage,
changes in market rates, and the need to periodically upgrade and
replace equipment to maintain desirability, and to pay the costs
thereof. Although many of the governments of the countries of
Southeast Asia have liberalized policies on international trade,
foreign ownership and development, investment, and currency
repatriation, increasing both international trade and investment
accordingly, such policies might change unexpectedly. The Company
will be affected by the rules and regulations regarding foreign
ownership of real and personal property, including manufacturing
plants and other property. Such rules may change quickly and
dramatically which may have an adverse impact on ownership and may
result in a loss without recourse of property or assets of the
Company. The likelihood of any foreign company successfully
prevailing in any dispute with the government or any private
litigant under the Vietnamese legal system is difficult to quantify
or predict.
THE COMPANY'S BOTTLED WATER MAY BE CONTAMINATED BY CHEMICALS
USED DURING THE VIET NAM WAR. The Company's bottled water
operations use well water from Quang Tri province. During the
American Viet Nam war, the area was located in or near the so-called
"Demilitarized Zone" or "DMZ." The DMZ was subjected to defoliants,
including Agent Orange, and other chemical and conventional weapons.
The use of these weapons could have left hazardous chemical
residues in the water table, that may still remain. These residues,
if any, could have unknown health consequences on persons who drink
the water, although none have been proven. These hazards, if any,
are largely unquantifiable, could persist for an indefinite period,
and could lead to substantial liabilities for the Company.
COMPETITION FROM LARGER AND MORE ESTABLISHED COMPANIES MAY
HAMPER MARKETABILITY. The coffee and beverage business is intensely
competitive, with storefront business being dominated by major
companies such as Starbucks, Seattle's Best Coffee and Chock Full O'
Nuts, and supermarket business being dominated by major distributors
such as Maxwell House, Folger's, Savarin, Medaglia D'Oro and General
Foods. Gourmet's Choice faces intense competition from similar,
more well-established competitors, including national, regional and
local companies possessing substantially greater financial,
marketing, personnel and other resources than Gourmet's Choice.
Gourmet's Choice may not be able to market or sell its products if
faced with direct product competition from these larger or more
established companies.
TRADEMARK PROTECTION AND PROPRIETARY MARKS. Gourmet's Choice
is a registered trademark. Notwithstanding the registration of
certain trade names with the United States Trademark Office, there
is no assurance that Gourmet's Choice will be able to prevent
competitors from using the same or similar names, marks, concepts or
appearances or that it will have the financial resources necessary
to protect its marks against infringing use.
ISSUANCE OF FUTURE SHARES MAY DILUTE INVESTORS' SHARE VALUE.
The Company's Articles of Incorporation, as amended, of Gourmet's
Choice authorizes the issuance of 200,000,000 shares of common
stock. The future issuance of all or part of the remaining
authorized common stock may result in substantial dilution in the
percentage of the Company's common stock held by its then existing
shareholders. Moreover, any common stock issued in the future may
be valued on an arbitrary basis by Gourmet's Choice. The issuance
of the Company's shares for future services or acquisitions or other
corporate actions may have the effect of diluting the value of the
shares held by investors, and might have an adverse effect on any
trading market, should a trading market develop for the Company's
common stock.
PENNY STOCK REGULATION. Penny stocks generally are equity
securities with a price of less than $5.00 per share other than
securities registered on certain national securities exchanges or
quoted on the Nasdaq Stock Market, provided that current price and
volume information with respect to transactions in such securities
is provided by the exchange or system. The Company's securities may
be subject to "penny stock rules" that impose additional sales
practice requirements on broker-dealers who sell such securities to
persons other than established customers and accredited investors
(generally those with assets in excess of $1,000,000 or annual
income exceeding $200,000 or $300,000 together with their spouse).
For transactions covered by these rules, the broker-dealer must make
a special suitability determination for the purchase of such
securities and have received the purchaser's written consent tot he
transaction prior to the purchase. Additionally, for any
transaction involving a penny stock, unless exempt, the "penny stock
rules" require the delivery, prior to the transaction, of a
disclosure schedule prescribed by the Commission relating to the
penny stock market. The broker-dealer also must disclose the
commissions payable to both the broker-dealer and the registered
representative and current quotations for the securities. Finally,
monthly statements must be sent disclosing recent price information
on the limited market in penny stocks. Consequently, the "penny
stock rules" may restrict the ability of broker-dealers to sell the
Company's securities. The foregoing required penny stock
restrictions will not apply to the Company's securities if such
securities maintain a market price of $5.00 or greater. There can
be no assurance that the price of the Company's securities will
reach or maintain such a level.
COMPUTER SYSTEMS REDESIGNED FOR YEAR 2000. Many existing
computer programs use only two digits to identify a year in such
program's date field. These programs were designed and developed
without consideration of the impact of the change in the century for
which four digits will be required to accurately report the date.
If not corrected, many computer applications could fail or create
erroneous results by or following the year 2000 (the "Year 2000
problem"). Many of the computer programs containing such date
language problems have been corrected by the companies or
governments operative such programs. The Company does not know what steps,
if any, have been taken by any of its potential suppliers in regard to the
Year 2000 problems. It is impossible to predict if the basic
utilities serving the Company or suppliers will continue
uninterrupted. Year 2000 problems may impact the Company's business
in Viet Nam.
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Not Applicable.
ITEM 3. BANKRUPTCY OR RECEIVERSHIP
Not applicable.
ITEM 4. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
Not applicable
ITEM 5. OTHER EVENTS
Successor Issuer Election.
Pursuant to Rule 12g-3(a) of the General Rules and
Regulations of the Securities and Exchange Commission, upon
effectiveness of the Reorganization, the Company became the
successor issuer to Aterian Corporation for reporting purposes under
the Securities Exchange Act of 1934 and elects to report under the
Act effective November 29, 1999.
ITEM 6. RESIGNATIONS OF DIRECTORS AND EXECUTIVE OFFICERS
Not applicable.
ITEM 7. FINANCIAL STATEMENTS
No financial statements are filed herewith. The Registrant
is required to file financial statements by amendment hereto not
later than 60 days after the date that this Current Report on Form
8-K must be filed.
ITEM 8. CHANGE IN FISCAL YEAR
Gourmet's Choice has a June 30 fiscal year end. The fiscal
year of Aterian is December 31. The Company will file a
Transitional Report on Form 10-KSB, if required.
EXHIBITS
2.1 Agreement and Plan of Reorganization between TPG Capital
Corporation and Gourmet's Choice Coffee Co., Inc., dated
November 24, 1999
*3.1 Articles of Incorporation of Gourmet's Choice Coffee Co.,
Inc., as amended
*3.2 By-Laws of Gourmet's Choice Coffee Co., Inc.
21.1 List of Subsidiaries of Gourmet's Choice Coffee Co., Inc.
*24.1 Consent of accountants
*27.1 Financial Data Schedule
___________
*To be filed by amendment
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act
of 1934, the Registrant has duly caused this Current Report on Form
8-K to be signed on its behalf by the undersigned hereunto duly
authorized.
GOURMET'S CHOISE COFFEE CO., INC.
By /s/ James A. Tilton
President
Date: November 29, 1999
Exhibit 21.1
LIST OF SUBSIDIARIES OF GOURMET'S CHOICE COFFEE CO., INC.
Gourmet's Choice Franchise, Inc., a Nevada corporation
AmViet Development Corporation, a Bahamian corporation
Aterian Corporation, a Delaware corporation
