United States
U. S. Securities and Exchange Commission
Washington, D.C. 20549
Form 10-SB12G Amendment No. 2
GENERAL FORM FOR REGISTRATION OF
SECURITIES OF SMALL BUSINESS ISSUERS
Under Section 12(b) or (g) of the Securities Exchange Act of 1934
Blini Hut, Inc.
Formerly "Bargain Products, Inc."
(Exact name of registrant as specified in its charter)
Nevada 88-0335902
________________________________ ________________
(State or other jurisdiction of (I.R.S. employer identification
incorporation or organization) number)
2920 North Green Valley Parkway, Building 3, Suite 321 Henderson, Nevada 89014
(Address of principal executive offices)
Issuer's Telephone Number: (702) 458-4153
Securities to be registered under Section 12(b) of the Act:
Title of each class to be so registered: n/a
Name of exchange on which each class is to be registered: n/a
Securities to be registered under Section 12(g) of the Act:
Common Stock, par value $.03 per share
INFORMATION REQUIRED IN REGISTRATION STATEMENT
ITEM 1 - DESCRIPTION OF BUSINESS
GENERAL
Blini Hut, Inc., formerly Bargain Products, Inc. (the "Company") was
organized as a Nevada corporation on April 6, 1995. The Company was engaged in
the business of selling low cost consumer products at the retail level through
its wholly owned subsidiary, Dollar Mania, Inc., from June 1995 through
September 1996. Dollar Mania was unable to financially support its rapid
expansion and in order to protect its assets filed chapter 11 bankruptcy
on March 28, 1996.Because the company's obligations were far in excess of its
assets, after a number of months of review, examination, and discussions
between major creditors, the bankruptcy trustee, the company's bankruptcy
counsel, and its corporate counsel, the company decided to spin off its wholly
owned subsidiary, Dollar Mania, by transferring all of the issued and
outstanding common stock of Dollar Mania to the Bankruptcy Trustee.
The Chapter 7 Bankruptcy proceedings are still pending, therefore, no final
disposition of the bankruptcy proceedings exist.
The Company has been inactive without operations since September 1996, but on
May 18, 1999 the Company changed its name to Blini Hut, Inc., and now
intends to engage in the marketing and distribution of various specialty
Eastern/European fast food restaurants. The Company proposes to develop
specialty Eastern/European fast foods restaurants through creating company
owned restaurants and through franchising. The Company has no current
operations in the marketing and development of specialty foods or fast food
restaurants, and current management has no experience in this line of
business.
PRINCIPAL MARKETS AND PRODUCTS
The principal market at this time is proposed to be in the New York
Metropolitan area. The products are specialty Eastern/European foods which
will be sold through fast food restaurants. The Company has no existing
committments related to opening new restaurants nor has the Company sought to
market its proposed business to potential franchisees at this time. The Company
hopes to be able to open restaurants and/or engage in franchising efforts during
the first quarter of 2000.
METHODS OF DISTRIBUTION
The Company proposes to expand through development of company owned
stores and franchising in ethnic quick serve restaurants. The Company has no
existing commitments relating to opening new restaurants, nor has the Company
sought to market its proposed business to potential franchises.
SUPPLIERS
The Company will be supplied by food wholesalers in the New York
Metropolitan area.
COMPETITION
The market for the establishment of specialty Eastern/European fast food
restaurant operations is expanding. The company will be at a disadvantage with
other companies having larger technical staffs, established market shares and
greater financial and operational resources than the company. There can be no
assurance that the Company will be able to successfully compete.
YEAR 2000 ISSUES AND DISCLOSURE
Management has determined that the issues/problems associated with the
'Year 2000' computer bug will not have a material effect on the Company's
business, results of operations, or financial condition. The Company does not
own, lease, or operate any equipment at this time. Management will use
precaution in the future when purchasing equipment to make sure it meets any and
all compliance standards. Although management deems it highly improbable, a
risk associated with the Y2K issue would be that vendors who supply products to
the Company could be affected, and thereby could affect its operations.
Although The company is not currently operating, it plans to commence operations
in the first quarter of 2000. Transportation could be affected which could cause
us to receive supplies late, and could cease or slow operations, resulting in a
detrimental effect on the Company.
SEASONALITY
The Company is not measurably affected by a seasonal trend.
EMPLOYEES
The Company has no employees at this time. Upon initial operations, the
Company anticipates that it will need five employees to develop menus, find and
secure site locations, negotiate leases, design layout of restaurants, set up
operational procedures and develop training guidelines for future
employees.
The Company proposes to have five employees upon initial operation and
expects that it will require eight to ten employees per restaurant. The
company plans to open five restaurants during the year 2000.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
GENERAL
Blini Hut, Inc, formerly Bargain Products, Inc., (the "Company") was
organized as a Nevada corporation on April 6, 1995. The Company was engaged in
the business of selling low cost consumer products at the retail level through
its wholly owned subsidiary of Dollar Mania from June 1995 through
September 1996. The Company has been inactive without operations since
September 1996. May 18, 1999 the Company changed its name to Blini Hut, Inc.,
and now intends to engage in the marketing and distribution of various
Eastern/European specialty food through fast food restaurants. The Company has
entered into an agreement to acquire Troika Food, Inc., a Delaware
Corporation ("Troika") which currently has no business operations but plans
to market and distribute various specialty foods through fast food
restaurants.
ACQUISITION
On April 10, 1999, the Company entered into an agreement with the
shareholders of Troika to issue them 6,000,000 shares of common stock in
exchange for all the outstanding shares of common stock of Troika, which made
Troika a wholly owned subsidiary of the Company. Troika has no business
operations at this time but plans to open and operate specialty fast food
restaurants focusing on Eastern/European menus.
The Blini Hut/Troika acquisition was negotiated
by the shareholders of Troika and the management of Blini Hut and their
counsel. The consideration of stock issued was negotiated by the above
parties based upon an arrangement whereby six Bargain Products shares were
issued for each of the Troika shares. The Troika shares were valued higher
based on the management expertise of Troika in the Eastern European fast food
business. With regards to the issuance of these shares, Blini Hut is relying on
the exemptions of Regulation D and Section 4(2) of the Securities Act of 1933.
Blini Hut has not had any revenues from operations in each of the last two
fiscal years. The Company plans to open 5 restaurants during the year 2000, at a
cost of approximately $200,000 per restaurant, which amount is anticipated to be
expended in the following manner:
Initial Lease Payments...................$40,000
(including 3mo. security dep.)
Leasehold Improvements...................$50,000
Equipment................................$80,000
Inventory................................$10,000
Advertising/Promotions...................$20,000
==========
TOTAL...................$200,000
The cost of opening a restaurant may vary depending on location, price of rent,
condition of structure and existing equiment. The company does not have
sufficient capital at this time to open any restaurants, but anticipates raising
capital for its restaurant operations through public and/or private financing
either through stock offerings or loans from private parties. There is no
assurance that the Company will be successful in raising capital for its
restaurant operations. The Company may also consider leasing its restaurant
equipment. The Company may also consider acquiring other quick serve operations
and convert them to Eastern Euorpean fast food specialty restaurants.
Acquisitions may be made through a combination of stock and cash. The Company
has no agreements to acquire other quick serve restaurants at this time.
ITEM 3-DESCRIPTION OF PROPERTY
The Company does not own or lease any property at this time but is using
without charge the office address of its President for mailing purposes only.
Using the address has no intrinsic value and is done as a convenience to the
President of the Company. The mailing address is 4739 49th St., telephone no.
(718) 784-3344.
ITEM 4-SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The following tables sets forth, as of the March 15, 1999 Offering
Memorandum, the outstanding shares of common Stock of the company owned of
record or beneficially by each person who owned of record, or was known by
the Company to own beneficially, more than 5% of the Company's Common Stock,
and the name and share holding of each officer and director and all officers
and directors as a group.
Title of
Class Name & Address Amount & Nature Percent of Class
of Beneficial Owner(1) of Beneficial Owner(1)
______ ____________________ ______________________ _____________
Common Simon Kublanov 1,800,000 20%
2675 York Ave. #1614
NYC,NY 10128
Common Leonid Kuvykin 4,200,000 46.6%
1222 Ave. Y
Brooklyn, NY 11235
Common Dimitri Gratchev 500,000 5.5%
42A Altvfevskoe Shsse#74
Moscow, Russia 127566
Common Max Tanner 496,000 5.5%
2950 E. Flamingo Rd. Ste.G
Las Vegas, Nevada 89121
CHANGES IN CONTROL
Now that the agreement to acquire Troika Foods, Inc. has been consumated,
Mr. Simon Kublanov, a principle shareholder of Troika, owns 1,800,000 shares
or 20% of Blini Hut and Leonid Kuvykin, also a principle shareholder of Troika
owns 4,200,000 shares of Blini Hut, or 46.6%.
ITEM 5-DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS
The following table sets forth certain information with respect to each
of the Directors, Executive Officers of the Company, their ages, and all
positions with the Company.
Name Age Position
___________________________ _______ ______________________________
Simon Kublanov (1) 58 President & CEO
2675 York Ave. #1614
NYC,NY 10128
Leonid Kuvykin (1) 49 Secretary/Treasurer
1222 Ave. Y
Brooklyn, NY 11235
____________________
Simon Kublanov, age 58, is president of Blini Hut and co-founder of the
Troika Food, Inc. Mr Kublanov obtained a B.S. degree in economics and in Russian
cuisine from the University of Food Industry and Trade, St. Petersburg, Russia,
in 1962. From 1993 to present, Mr. Kublanov was the founder of Da Pie, Russian
Chef, and Rush'n Express all of which have focused on Russian fast food. From
1984 to 1987, Mr. Kublanov founded "k's Fried Chicken". From 1962 to 1984 Mr.
Kublanov worked in a number of restaurants both in the U.S. and Russia in
management and chef capacities.
Leonid Kuvykin, age 49, is secretary, treasurer, director of Blini Hut and a
co-founder of Troika Food,Inc. Mr. Kuvykin received a B.S. in business
administration and an associates degree in Economics from the college of trade
and marketing, Ukraine. From October of 1997 to the present, Mr. Kuvykin also
serves as a member of the board to Russian Chef, Inc. Mr. Kuvykin from 1979
until 1987 has been involved with several transportation businesses most of
which were franchise based. In 1979, Mr. Kuvykin immigrated to the United States
from Odessa, Ukraine where from 1971 until 1978 he held several management
positions in government owned food businesses.
FAMILY RELATIONSHIPS
Not applicable.
INVOLVEMENT IN CERTAIN LEGAL PROCEEDINGS
To the best of management's knowledge, during the past five years, no
present or former director or executive officer of the company:
(1) Has filed a petition under federal bankruptcy laws or any state
insolvency law, had a receiver, fiscal agent or similar officer appointed by a
court for the business or property of such person, or any partnership in which
he was a general partner at or within two years before the time of such filing,
or any corporation or business association of which he was an executive officer
at or within two years before the time of such filing;
(2) Was convicted in a criminal proceeding or named the subject of a
pending criminal proceeding (excluding traffic violations and other minor
offences);
(3) Was the subject of any order judgment or decree, not subsequently
reversed, suspended or vacated, of any court of competent jurisdiction,
permanently or temporarily enjoining him from otherwise limiting his
involvement in any type of business, securities or banking activities; or
(4) Was found by a court of competent jurisdiction in a civil action,
by the Securities and Exchange Commodity Futures Trading Commission
to have violated any federal or state securities law.
ITEM 6-EXECUTIVE COMPENSATION
Any compensation received by officers or directors of the Company will be
determined from time to time by the board of Directors.
Name and Principal All other
Position Compensation Year
________________________ ___________ ________
Simon Kublanov - (1) 0 1999
Leonid Kuvykin -(2) 0 1999
________________
OPTION/SAR GRANTS
None
AGGREGATE OPTIONS/SAR EXERCISES AND FISCAL YEAR END OPTION/SAR
VALUE TABLE
None
LONG TERM INCENTIVE PLANS
None
COMPENSATION OF DIRECTORS
None
EMPLOYMENT CONTRACTS AND TERMINATION OF EMPLOYMENT AND
CHANGE OF CONTROL ARRANGEMENTS
None
ITEM 7 - CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Each of the officers and directors of the Company are engaged in other
businesses, either individually or through partnerships and corporations in
which they have an interest, hold an office or serve on boards of directors.
Certain conflicts of interest may arise between the Company and its
officers and directors. Messrs Kublanov and Kuvykin are the owners and operators
of Russian Chef, a privately owned company which makes and distributes private
labeled food for gourmet food stores in New York City. Upon completing the
acquisition of Troika, there may be potential conflicts with Russian Chef in
supplying food to gourmet food stores as well as to Blini Hut's restaurants
particularly should there be a shortage of some food items. There may also be a
conflict with the time in which messrs Kublanov and Kuvykin have to devote to
the Company as a result of their time committment to Russian Chef.
The Company has retained one of the shareholders, Max C. Tanner, as
legal counsel in connection with the preparation of the offering memorandum for
the May, 1995 securities offering and paid him $24,000 for those services and
$5,000 for other legal services rendered to the Company. The Company retained
Max C. Tanner as legal counsel in connection with the on going legal services
required by the Company. The total amount due for those services was $21,561
for the years 1995 and 1996. In December of 1996, the Company issued to Mr.
Tanner 1,000,000 shares of common stock as payment for those services. Those
services were valued at $.021561 per share or $21,561.
The Company retained one of its shareholders, again Mr. Max Tanner, as legal
counsel in connection with a proposed securities offering and other legal
matters during 1998. The proposed securities offering was abandoned. The legal
fees incurred by the Company of $49,500 for preparation of the offering
memorandum and other legal services was paid by issuing 495,000 shares of its
common stock for these services which were valued at $.10 per share or $49,500.
The Company will attempt to resolve any such conflicts of interest in
favor of the Company. An attempt will be made to resolve any conflicts by
bringing such conflicts to the attention of independent board members or
advisors. In addition, any such conflicts may be raised at any annual or
special meeting of the Shareholders.
The officers and directors of the company are accountable to it and its
shareholders as fiduciaries, which requires that such officers and directors
exercise good faith and integrity in handling the Company's affairs. A
Shareholder may be able to institute legal action on behalf of the Company
or on behalf of itself and all other similarly situated shareholders to
recover damages or for other relief in cases of the resolution of conflicts
in any manner prejudicial to the Company.
TRANSACTIONS BETWEEN THE COMPANY AND MANAGEMENT
None
ITEM 8-LEGAL PROCEEDINGS
The Company is not a party to any material pending legal proceedings
and, to the best of its knowledge, no such action by or against the Company
has been threatened. None of the Company's officers, directors, or
beneficial owners of 5% or more of the Company's outstanding securities is a
party adverse to the Company nor do any of the foregoing individuals have
a material interest adverse to the Company.
ITEM 9-MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTER
MARKET INFORMATION
The Company's common stock is traded on the Pink Sheets under the symbol
"BHUT". The 52 week high is 6 1/2 and the 52 week low is 1/32. The approximate
last 90 day period from Aug 17, 1999 to November 10,1999 has a high of 6 1/2
and a low of 4 3/4.
STOCKHOLDERS
The Company's transfer agent, Silver State Registrar and Transfer
Corporation, confirms that as of September 9, 1999, there are approximately
300 shareholders of record for the Company including those shares held in
street name.
DIVIDENDS
The payment by the company of dividends, if any in the future, rests
within the discretion of its Board of Directors and will depend among other
things, upon the Company's earning, its capital requirements and its financial
condition, as well as other relevant factors. The company has not paid or
declared any dividends to date due to its present financial status.
ITEM 10 - RECENT SALES OF UNREGISTERED SECURITIES
On March 25, 1999, the company sold three million shares of common stock to
approximately thirty shareholders at $.03 per share pursuant to an Offering
Memorandum dated March 25, 1999. The shares were offered pursuant to an
exemption from Registration under Regulation D Rule 504.
The following is a list of shareholders who purchased in this offering:
Shareholder Date Type of Number of
Security Shares
_____________________________________________________________________________
Alexandre Bardeev 4/6/99 Common Stock 76,666
Natalia Belogourova 4/6/99 Common Stock 103,333
Nataliy Bobkova 4/6/99 Common Stock 70,000
Lidiy Butova 4/6/99 Common Stock 42,667
Dana Fedrova 4/6/99 Common Stock 33,333
Nataliya Gerasina 4/6/99 Common Stock 60,000
Tanya Gerosimeko 4/6/99 Common Stock 53,333
Irina Goncharova 4/6/99 Common Stock 116,667
Vadim Gratchev 4/6/99 Common Stock 16,666
Tamara Gratcheva 4/6/99 Common Stock 116,000
Viatchesiav, Ivanov 4/6/99 Common Stock 79,000
Andrey Kagramanov 4/6/99 Common Stock 100,000
Andrey Kuvichinsky 4/6/99 Common Stock 93,333
Maria Kuznetsova 4/6/99 Common Stock 65,666
Tatiana Lapina 4/6/99 Common Stock 116,667
Maxim Lavrov 4/6/99 Common Stock 38,333
Dimitry Nazarov 4/6/99 Common Stock 63,333
Alexandr Obukov 4/6/99 Common Stock 96,666
Margo Petrunina 4/6/99 Common Stock 53,333
Galina Ratner 4/6/99 Common Stock 63,666
Mark Ratner 4/6/99 Common Stock 70,000
Irina Romanova 4/6/99 Common Stock 83,333
Kapitolina Smirnova 4/6/99 Common Stock 75,000
Max Tanner 4/6/99 Common Stock 495,000
Viarkov Valeriy 4/6/99 Common Stock 80,000
Total Number of Investors: 25
On September 1, 1997, the Company sold Kristine Gornichec 50,000 shares
of common stock at $.01 per share pursuant to an exemption from Registration
under Section 4(2) of the Securities Act of 1933. After taking into account a
1 for 10 reverse stock split on April 10, 1998, these 50,000 shares are
currently only 5,000 shares.
ITEM 11-DESCRIPTION OF SECURITIES
The authorized capital stock of the Company consists of 10,000,000 Shares
of Common Stock. The holders of Common Stock (i) have equal ratable rights to
dividends from funds legally available therefore, when, as and if declared
by the Board of Directors of the Company; (ii) are entitled to share ratably
in all of the assets of the Company available for distribution or winding up
of the affairs of the Company; (iii) do not have preemptive subscription or
conversion rights and there are no redemption or sinking fund applicable
thereto; and (iv) are entitled to one non-cumulative vote per share, on all
matters which shareholders may vote on at all meetings of shareholders.
NON-CUMULATIVE VOTING
Holders of Shares of Common Stock of the Company do not have cumulative
voting rights which means that the holders of more than 50% of such outstanding
Shares, voting for the election of directors, can elect all of the directors
to be elected, if they so choose, and, in such event, the holders of the
remaining Shares will not be able to elect any of the Company's directors.
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
A. Indemnification provided by statute:
Sections 78.037, 78.295, 78.300, 78.7502, 78.751 and 78.752 of the Nevada
Revised Statutes offer limitation of liability protection for officers and
directors and/or indemnification protection of officers, directors, employees
and agents of the Company, and provide as follows:
NRS 78.037. Articles of incorporation: Optional provision. The articles of
incorporation may also contain:
1. A provision eliminating or limiting the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, but such a provision must
not eliminate or limit the liability of a director or officer for:
(a) Acts or omissions which involve intentional misconduct, fraud or
a knowing violation of the law; or
(b) The payment of distributions in violation of NRS 78.300.
2. Any provision, not contrary to the laws of this state, for the
management of the business and for the conduct of the affairs of the
corporation, and any provision creating, defining, limiting or regulating the
powers of the corporation or the rights, powers or duties of the directors, and
the stockholders, or any class of the stockholders, or the holders of bonds or
other obligations of the corporation, or governing the distribution or division
of the profits of the corporation.
NRS 78.295. Liability of directors for declaration of distributions. A director
is fully protected in relying in good faith upon the books of account of the
corporation or statements prepared by any of its officials as to the value and
other facts pertinent to the existence and amount of money from which
distributions may properly be declared.
NRS 78.300. Liability of directors for unlawful distributions.
1. The directors of a corporation shall not make distributions to
stockholders except as provided by this chapter.
2. In case of any willful or grossly negligent violation of the provisions
of this section, the directors under whose administration the violation
occurred, except those who caused their dissent to be entered upon the minutes
of the meeting of the directors at the time, or who not then being present
caused their dissent to be entered on learning of such action, are jointly and
severally liable, at any time within 3 years after each violation, to the
corporation, and, in the event of its dissolution or insolvency, to its
creditors at the time of the violation, or any of them, to the lesser of the
full amount of the distribution made or of any loss sustained by the
corporation by reason of the distribution to stockholders.
NRS 78.7502. Discretionary and mandatory indemnification of officers,
directors, employees and agents: General provisions.
1. A corporation may indemnify any person who was or is a party of is
threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative,
except an action by or in the right of the corporation, by reason of the fact
that he is or was a director, officer, employee or agent of the corporation,
or is or was serving at the request of the corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, against expenses,including attorneys fees, judgments, fines
and amounts paid in settlement actually and reasonably incurred by him in
connection with the action, suit or proceeding if he acted in good faith and in
a manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his conduct was unlawful. The
termination of any action, suit or proceeding by judgment, order, settlement,
conviction or upon a plea of nolo contendere or its equivalent, does not, of
itself, create a presumption that the person did not act in good faith and in a
manner which he reasonably believed to be in or not opposed to the best
interests of the corporation, and that, with respect to any criminal action or
proceeding, he had reasonable cause to believe that his conduct was unlawful.
2. A corporation may indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed action
or suit by or in the right of the corporation to procure a judgment in its
favor by reason of the fact that he is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the
corporation as a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against expenses,
including amounts paid in settlement and attorneys fees actually and
reasonably incurred by him in connection with the defense or settlement of
the action or suit if he acted in good faith and in a manner which he
reasonably believed to be in or not opposed to the best interests of the
corporation. Indemnification may not be made for any claim, issue of matter
as to which such a person has been adjudged by a court of competent
jurisdiction, after exhaustion of all appeals therefrom, to be liable to
the corporation or for amounts paid in settlement to the corporation,
unless and only to the extent that the court in which the action or suit
was brought or other court of competent jurisdiction determines upon
application that in view of all the circumstances of the case, the person
is fairly and reasonably entitled to indemnity for such expenses as the
court deems proper.
3. To the extent that a director, officer, employee or agent of a
corporation has been successful on the merits or otherwise in defense of any
action, suit or proceeding referred to in subsections 1 and 2, or in defense of
any claim, issue or matter therein, the corporation shall indemnify him against
expenses, including attorneys fees, actually and reasonably incurred by him
in connection with the defense.
NRS 78.751. Authorization required for discretionary indemnification;
advancement of expenses; limitation on indemnification and advancement of
expenses.
1. Any discretionary indemnification under NRS 78.7502 unless ordered by
a court or advanced pursuant to subsection 2, may be made by the corporation
only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances. The determination must be made:
(a) By the stockholders;
(b) By the board of directors by majority vote of a quorum
consisting of directors who were not parties to the action, suit
or proceeding;
(c) If a majority vote of a quorum consisting of directors
who were not parties to the action, suit or proceeding so orders, by
independent legal counsel in a written opinion; or
(d) If a quorum consisting of directors who were not
parties to the action, suit or proceeding cannot be obtained, by
independent legal counsel in a written opinion.
2. The articles of incorporation, the bylaws or an agreement made by the
corporation may provide that the expenses of officers and directors incurred
in defending a civil or criminal action, suit or proceeding must be paid by
the corporation as they are incurred and in advance of the final disposition
of the action, suit or proceeding, upon receipt of an undertaking by or on
behalf of the director or officer to repay the amount if it is ultimately
determined by a court of competent jurisdiction that he is not entitled to
be indemnified by the corporation. The provisions of this subsection do not
affect any rights to advancement of expenses to which corporate personnel
other than directors or officers may be entitled under any contract or
otherwise by law.
3. The indemnification and advancement of expenses authorized in or
ordered by a court pursuant to this section:
(a) Does not exclude any other rights to which a person
seeking indemnification or advancement of expenses may be entitled
under the articles of incorporation or any bylaw, agreement, vote of
stockholders or disinterested directors or otherwise, for either an
action in his official capacity or an action in another capacity
while holding his office, except that indemnification, unless ordered
by a court pursuant to NRS 78.7502 or for the advancement of expenses
made pursuant to subsection 2, may not be made to or on behalf of
any director or officer if a final adjudication establishes that his
acts or omissions involved intentional misconduct, fraud or a knowing
violation of the law and was material to the cause of action.
(b) Continues for a person who has ceased to be a director,
officer, employee or agent and inures to the benefit of the heirs,
executors and administrators of such a person.
NRS 78.752. Insurance and other financial arrangements against liability of
directors, officers, employees and agents.
1. A corporation may purchase and maintain insurance or make other
financial arrangements on behalf of any person who is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise for
any liability asserted against him and liability and expenses incurred by him
in his capacity as a director, officer, employee or agent, or arising out of
his status as such, whether or not the corporation has the authority to
indemnify him against such liability and expenses.
2. The other financial arrangements made by the corporation pursuant to
subsection 1 may include the following:
(a) The creation of a trust fund.
(b) The establishment of a program of self-insurance.
(c) The securing of its obligation of indemnification by
granting a security interest or other lien on any assets of the
corporation.
(d) The establishment of a letter of credit, guaranty or
surety.
No financial arrangement made pursuant to this subsection may provide
protection for a person adjudged by a court of competent jurisdiction,
after exhaustion of all appeals therefrom, to be liable for intentional
misconduct, fraud or a knowing violation of law, except with respect to
the advancement of expenses or indemnification ordered by a court.
3. Any insurance or other financial arrangement made on behalf of a person
pursuant to this section may be provided by the corporation or any other person
approved by the Board of Directors, even if all or part of the other person
stock or other securities is owned by the corporation.
4. In the absence of fraud:
(a) The decision of the board of directors as to the
propriety of the terms and conditions of any insurance or other
financial arrangement made pursuant to this section and the choice of
the person to provide the insurance or other financial arrangement is
conclusive; and
(b) The insurance or other financial arrangement:
(1) Is not void or voidable; and
(2) Does not subject any director approving it to
personal liability for his action, even if a director approving
the insurance or other financial arrangement is a beneficiary of
the insurance or other financial arrangement.
5. A corporation or its subsidiary which provides self-insurance for
itself or for another affiliated corporation pursuant to this section is not
subject to the provisions of Title 57 of NRS.
B. Indemnification provided by the Articles of Incorporation
The NINTH article of the Company's Articles of Incorporation limits the
liability exposure of officers and directors of the Company for damages. It
provides as follows: No director or officer of the Corporation shall be
personally liable to the Corporation or any of its stockholders for damages
for breach of fiduciary duty as a director or officer involving any act or
omission of any such director of officer; provided however, that the foregoing
provision shall not eliminate or limit the liability or a director or officer
(i) for acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law, or (ii) the payment of dividends in violation of
Section 78.300 of the Nevada Revised Statutes. Any repeal or modification of
this Article by the stockholders of the Corporation shall be prospective only
and shall not adversely affect any limitation on the personal liability of a
director or officer of the Corporation for acts of omissions prior to such
repeal or modification.
C. Indemnification provided by the By-Laws of the Company
Article VII, INDEMNIFICATION, of the Company's By-Laws provides for the
following indemnification protections: Except as hereinafter stated
otherwise, the Corporation shall indemnify all of its officers and directors,
past, present and future, against any and all expenses incurred by them, and
each of them including but not limited to legal fees, judgments and penalties
which may be incurred, rendered or levied in any legal action brought against
any or all of them for or on account of any act or omission alleged to have
been committed while acting within the scope of their duties as officers or
directors of this Corporation.
As of the date hereof, the Company has no contracts in effect providing any
indemnitee with any specific rights of indemnification although the Company's
bylaws authorize its Board of Directors to enter into and deliver such
contracts to provide an indemnitee with specific rights of indemnification in
addition to the rights provided in the Articles and Bylaws to the fullest
extent provided under Nevada law. The Company has no special insurance
against liability although the Company's Bylaws provide that the Company may,
unless prohibited by Nevada law, maintain such insurance.
ITEM 13. FINANCIAL STATEMENTS
<PAGE>
AUDITED FINANCIAL STATEMENTS
BLINI HUT, INC.
INDEX
-----
PAGE
INDEPENDENT AUDITORS' REPORT F2
BALANCE SHEETS F3
STATEMENTS OF OPERATIONS F4
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY F5
STATEMENTS OF CASH FLOWS F6-F7
NOTES TO FINANCIAL STATEMENTS F8-F15
F1
<PAGE>
KEMPISTY & COMPANY
CERTIFIED PUBLIC ACCOUNTANTS, P.C.
15 MAIDEN LANE - SUITE 1003 - NEW YORK, NY 10038 - TEL (212) 406-7272 - FAX
(212) 513-1930
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Blini Hut, Inc.
We have audited the consolidated balance sheets of Blini Hut, Inc. as of
December 31, 1999 and 1998 and the related statements of operations,
shareholders' equity and cash flows for the years then ended. These financial
statements are the responsibility of the Company's management.Our
responsibility is to express an opinion on these finnancial statements based
on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Blini Hut, Inc. as of
December 31, 1999 and 1998 and the results of its' operations and cash flows
for the years then ended in conformity with generally accepted accounting
principles.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 11 conditions
exist which raise substantial doubt about the Company's ability to continue as
a going concern unless it is able to generate sufficient cash flows to meet
its obligations and sustain its operations. Management's plan regarding these
matters is also described in Note 11. The financial statements do not include
any adjustments that might result from the outcome of this uncertainty.
/s/ Kempisty & Company
Certified Public Accountants PC
New York, New York
March 30, 2000
F2
<PAGE>
BLINI HUT, INC.
BALANCE SHEETS
December 31, December 31,
1999 1998
ASSETS
Current Assets
Cash $ 3,896 $ 7,540
Accounts receivable (Note 4) 45,000 4,613
Inventory (Note 5) 30,000 20,000
Total Current Assets 78,896 32,153
Plant Property and Equipment-at cost 314,063 285,203
Less: Accumulated Depreciation (Note 6) 97,416 56,924
216,647 228,279
Other Assets
Security deposit 49,660 784
TOTAL ASSETS $ 345,203 $ 261,216
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
8% Demand note payable $ 50,000 $ -
Current portion of equipment loan (Note 7) 2,918 2,438
Current portion of capital leases payable 21,842 9,404
Accounts payable and accrued expenses 80,175 27,092
Payroll tax payable 2,095 3,701
Total Current Liabilities 157,030 42,635
Commitments and contingencies (Note 10) - -
Long Term Liabilities
Equipment loan less current portion (Note 7 6,282 9,200
Capitalized leases less current portion 25,786 16,847
TOTAL LIABILITIES 189,098 68,682
Stockholders' Equity
Capital stock (10,000,000 shares authorized, $0.01 par value,
9,508,461 and 508,461 issued and outstanding,
respectively) (Note 9) 95,085 5,085
Capital in excess of par value 773,288 603,488
Deficit (712,268) (416,039)
Total Stockholders' Equity 156,105 192,534
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 345,203 $ 261,216
See Notes to Financial Statements.
F3
<PAGE>
BLINI HUT, INC.
STATEMENTS OF OPERATIONS
For the Year Ended
December 31,
1999 1998
Sales revenues $ 674,094 $ 452,586
Cost of sales 529,843 199,590
Gross profit 144,251 252,996
General selling and administrative expenses 440,480 353,053
Loss from operations (296,229) (100,057)
Other income and expenses - -
Loss before income tax (296,229) (100,057)
Provision for income tax (Note 8) - -
Net loss $ (296,229)$ (100,057)
Basic and diluted loss per common share $ (0.09)$ (0.41)
Basic and diluted weighted average shares
outstanding 3,294,762 242,653
See Notes to Financial Statements.
F4
<PAGE>
BLINI HUT, INC.
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Common Stock Capital In
($0.01) Par Value Excess Of
Shares Amount Par Value Deficit Total
Balance January 1, 1998 13,461 $ 135 $ 558,938 $ (315,982)$ 243,091
Shares issued for legal
services to Related Party 495,000 4,950 44,550 - 49,500
Loss for year ended
December 31, 1998 - - - (100,057) (100,057)
Balance December 31, 1998 508,461 5,085 603,488 (416,039) 192,534
Sale of common stock 3,000,000 30,000 60,000 - 90,000
Offering cost - - (10,200) - (10,200)
Shares issued for merger with
Troika Food, Inc. 6,000,000 60,000 120,000 - 180,000
Loss for year ended
December 31, 1999 - - - (296,229) (296,229)
Balance December 31, 1999 9,508,461$ 95,085 $ 773,288 $ (712,268)$ 156,105
See Notes to Financial Statements.
F5
<PAGE>
BLINI HUT, INC.
STATEMENTS OF CASH FLOWS
For the Year Ended
December 31,
1999 1998
Operating Activities
Net (loss) $ (296,229)$ (100,057)
Adjustments to reconcile net loss
to net cash provided (used) by operating activities:
Depreciation and amortization 40,492 36,499
Expenses not requiring the use of cash 168,605 10,863
Common stock issued for services-related party - 49,500
(Increase) decrease in accounts receivable (40,387) 6,595
(Increase) in inventory (10,000) (5,000)
Increase in accounts payable and accruals 51,477 7,765
Net cash provided (used) by operating activitie (86,042) 6,165
Investing Activities
Purchase of fixed assets (28,860) (27,056)
(Increase) in security deposits (48,876) (784)
Net cash (used) by investing activities (77,736) (27,840)
Financing Activities
Increase in capitalized leases 28,860 26,936
Sale of common stock 90,000 -
Increase in demand notes payable 50,000 -
(Payment) for equipment loans (2,438) (2,036)
(Payment) for capitalized leases (6,288) (685)
Net cash provided by financing activities 160,134 24,215
Increase (decrease) in cash (3,644) 2,540
Cash at beginning of period 7,540 5,000
Cash at end of period $ 3,896 $ 7,540
Supplemental Disclosures of Cash Flow Information:
Cash paid during year for:
Interest $ 10,569 $ 3,045
Income taxes $ 2,073 $ -
See Notes to Financial Statements.
F6
<PAGE>
BLINI HUT, INC.
STATEMENTS OF CASH FLOWS (continued)
For the Year Ended
December 31,
1999 1998
Supplemental Disclosures of Cash Flow Information
Non-cash investing and financing activities:
Issuance of common stock to a shareholder
for legal services $ - $ 49,500
Issuance of common stock for Troika Food, I$ 180,000 $ -
See Notes to Financial Statements.
F7
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 1- ORGANIZATION AND OPERATIONS
The Company was incorporated as Bargain Products, Inc. in the State
of Nevada on April 6, 1995. The Company was engaged in the business of
selling low cost consumer products at the retail level through a wholly owned
subsidiary until September, 1996. On March 28, 1996 the wholly owned
subsidiary filed for the protection of Chapter 11 of the Bankruptcy Code. In
September, 1996 the Company off its wholly owned subsidiary to the wholly
owned subsidiary's creditors as part of the bankruptcy settlement.
On May 18, 1999 the Company changed its name to Blini Hut, Inc.
On December 2, 1999 the Company merged with Troika Food, Inc.
("Troika") in exchange for 6,000,000 shares of the Company's common stock.
Troika Food, Inc. operates a wholesale Eastern European food
preparation business selling to gourmet food stores and delicatessens.
In January, 2000 the Company opened a quick serve restaurant to sell
its Eastern European foods.
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The consolidated financial statements include the accounts of the
Company and its subsidiary, Troika Food, Inc. All significant intercompany
transactions and balances have been eliminated in consolidation.
For accounting purposes, the acquisition has been treated as an
acquisition of the Company by Troika and as a recapitalization of Troika. The
historical financial statements prior to December 2, 1999 are those of Troika
giving effect to the acquisition as if the acquisition took place on May 1,
1997.
Revenue Recognition
Revenues are recorded at the time of shipment of products or
performance of services.
Reverse Stock Split
The Company's Board of Directors effected a 1 for 10 reverse stock
split of its common stock $0.01 par value on April 10, 1998. All shares and
per share amounts in the accompanying financial statements have been
retroactively adjusted to reflect the stock splits.
F8
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Cash and Cash Equivalents
For purposes of the statement of cash flows, the Company considers
all highly liquid investments with a maturity of three months or less at
acquisition to be cash equivalents.
Inventories
Inventories are stated at the lower of cost determined by the FIFO
method, or market.
Depreciation and Amortization
The cost of furniture and equipment and capitalized leased assets is
depreciated over the estimated useful lives of the related assets. The cost
of leasehold improvements is amortized over the lesser of the length of the
related lease (10 years) or the estimated useful life of the assets.
Depreciation is computed on a straight line basis (7 years) for financial
reporting purposes and on an accelerated basis for income tax purposes. For
income tax purposes, leasehold improvements are amortized in accordance with
Internal Revenue Service regulations.
Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Company's management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses
during the reporting period. Actual results could differ from those estimates.
Fair Value of Financial Instruments
Cash and cash equivalents, accounts receivable, demand notes payable,
accounts payable and accrued liabilities are reflected in the financial
statements at fair value because of the short-term maturity of these
instruments.
Comprehensive Income
Effective January 1, 1998 the Company adopted Statement of Financial
Accounting Standards No. 130, "Reporting Comprehensive Income" ("SFAS No.
130"). SFAS No. 130 requires an entity to report comprehensive income and its
components and increases financial reporting disclosures. This standard has no
impact on the Company's financial position, cash flows or results of
operations since the Company's comprehensive income is the same as its
reported net income for 1999 and 1998.
F9
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
Income Taxes
The Company previously adopted Statement of Financial Accounting
StandardsNo. 109, "Accounting for Income Taxes", ("SFAS No.109") which
requires the assetand liability method of accounting for income taxes.
Enacted statutory tax rates are applied to temporary differences arising from
the differences in financial statement carrying amounts and the tax basis of
existing assets and liabilities. Due to the uncertainty of the realization of
income tax benefits, (Note 8), the adoption of SFAS No. 109 had no effect on
the financial statements of the Company.
Concentration of Credit Risk
Financial instruments that potentially subject the Company to
concentration of credit risk consist primarily of cash and cash equivalents,
most of which are maintained in high-quality financial institutions. The
Company extends credit to various customers and establishes an allowance for
doubtful accounts for specific customers that it determines to have
significant credit risk. The Company provides allowances for potential credit
losses when necessary.
Net (Loss) Per Share
During 1998 the Company adopted SFAS No. 128, "Earnings Per Share",
which requires the reporting of both basic and diluted earnings per share.
Net income per share-basic is computed by dividing income available to common
shareholders by the weighted average number of common shares outstanding for
the period. Fully diluted loss per share has not been disclosed as it is
anti-dilutive. The weighted average number of common shares outstanding used
in the computation of net loss per share has been adjusted to give effect for
the 1 for 10 reverse stock split of April 10, 1998.
Note 3- RELATED PARTY TRANSACTIONS
The Company rents space from a corporation owned by the officers of
the Company. The rent was $102,000 for 1999 and $102,000 for 1998.
In 1998, the Company issued 495,000 shares of its common stock $0.01
par value per share for legal services to a shareholder. The value of the
common stock issued was $49,500.
In 1999, the Company paid $35,200 to a shareholder for legal services
of which $10,200 was charged to offering cost which is a reduction of capital
in excess of par value.
F10
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 4- ACCOUNTS RECEIVABLE December 31,
1999 1998
Trade receivables $ 47,647 $ 4,613
Less allowance for uncollectable accoun 2,647 -
$ 45,000 $ 4,613
Note 5- INVENTORY
December 31,
1999 1998
Work in progress $ - $ -
Raw materials 6,409 4,145
Finished goods 36,295 24,425
42,704 28,570
Provision for obsolete inventory (12,704) (8,570)
$ 30,000 $ 20,000
Note 6- PROPERTY AND EQUIPMENT
Equipment and leasehold consists of the following:
December 31,
1999 1998
Equipment $ 181,738 $ 181,738
Capitalized leases 55,916 27,056
Leasehold improvements 76,409 76,409
314,063 285,203
Less: Accumulated depreciation and amortization:
Equipment 70,457 43,531
Capitalized leases 7,859 1,933
Leasehold improvements 19,100 11,460
97,416 56,924
$ 216,647 $ 228,279
Note 7- EQUIPMENT LOANS - LONG TERM
Long term debt consists of the following:
December 31,
1999
Installment loan $ 9,200
Less current portion 2,918
$ 6,282
F11
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 7- EQUIPMENT LOAN - LONG TERM (continued)
The installment loan payable to a finance company is secured by
equipment and is payable in monthly installments of $360, which
include principal and interest through September 2004. The interest
rate on the loan is 17.4%.
As of December 31, 1999 the maturities for long term debt are as
follows:
Year Amount
2000 $ 2,918
2001 3,492
2002 2,790
$ 9,200
Note 8- INCOME TAXES
The provision (benefit) for income taxes consists of the following:
Year ended December 31,
1999 1998
Current:
Federal tax expense $ (56,800) $ (11,600)
State tax expense (8,400) (1,700)
Deferred:
Federal tax expense 56,800 11,600
State tax expense 8,400 1,700
$ 0 $ 0
A reconciliation of differences between the statutory U.S. federal
income tax rate and the Company's effective tax rate are as follows:
Year ended December 31,
1999 1998
Statutory federal income tax 34% 34%
State income tax-net of federal benefit 5% 5%
Valuation allowance -39% -39%
0% 0%
The components of deferred tax assets and liabilities were as follows:
December 31,
1999 1998
Deferred tax assets:
Net operating loss carryforward $ 55,400 $ 0
Total deferred tax assets 55,400 0
Valuation allowance (55,400) 0
Net deferred tax assets $ 0 $ 0
F12
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 8- INCOME TAXES (continued)
SFAS No. 109 requires a valuation allowance to be recorded when it is
more likely than not that some or all of the deferred tax assets will not be
realized. At December 31, 1999, a valuation allowance for the full amount of
the net deferred tax asset was recorded because of continuing losses and
uncertainties regarding the amount of taxable income that would be generated
in future years.
The Company recognized losses for the years December 31, 1999 and
1998. The amount of available net operating loss carryforwards is
approximately $138,000 for 1999. If the net operating loss carryforwards are
not utilized, they will expire in the year 2014. The use of these
carryforwards is subject to limitations imposed by the Internal Revenue
Service in the event of a change in control of the Company.
Note 9- COMMON STOCK
On April 10, 1998, the Company effected a one for ten reverse stock
split of its $.001 par value common stock, decreasing the authorized common
stock from 10,000,000 shares, to 1,000,000 shares and changed the par value of
the common stock from $.001 per share to $.10 per share. All references to
number of shares, and to per share information in the financial statements
have been adjusted to reflect the stock split.
On May 2, 1998, the Company increased the authorized common stock
$.10 par value to 10,000,000 shares. On March 24, 1999, the Company amended
its articles of incorporation to change the par value of its common stock from
$0.10 to $0.01 per share.
During 1998, the Company issued 495,000 shares of its common stock to
a shareholder for legal services in connection with the preparation of an
offering memorandum and other corporate matters. These shares were valued at
$.10 per share for a total of $49,500 that was charged to operations.
On March 25, 1999, the Company sold to unrelated third parties, under
Rule 504 of the Securities and Exchange Act of 1933, as amended, 3,000,000
shares of $.01 par value common stock for $.03 per share for net proceeds of
$90,000. The Company paid $10,200 to a shareholder for legal fee which was
charged to Capial in excess of par as offering cost.
On December 2, 1999, the Company exchanged 6,000,000 shares of its
common stock, $0.01 par value for 100% of the common stock of Troika Food,
Inc. The Company valued the 6,000,000 shares of its common stock at $0.03 per
share. Troika business assets and liabilities were recorded at carryover basis
except that equipment and leasehold improvements as well as accumulated
depreciation and amortization were restated. The value of the common stock
was based upon both current market prices at the time the shares were issued
and whether the shares were restricted. (No discount for restricted common
stock was taken).
F13
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 10-COMMITMENTS AND CONTINGENCIES
In 1998, the Company entered into a lease agreement with a related
party for office, warehouse and kitchen space which expires in the year 2004.
In addition in 1999 the Company entered into a store lease agreement which
expires in the year 2010. Rent expense for the Company for both leases for
1999 and 1998 was approximately $110,000 and $102,000, respectively.
The Company entered into capitalized leases in 1999 and 1998 which
require future minimum lease payments.
The remaining commitments under the operating and capitalized leases
are approximately as follows:
The Company entered into capitalized leases in 1999 and 1998 which
require future minimum lease payments.
Capitalized
Operating Equipment
Year Leases Leases
2000 $ 204,000 $ 10,000
2001 207,000 13,000
2002 210,000 13,000
2003 213,000 4,000
2004 220,000 2,000
Next five years 628,000 -
Balance to maturity 22,000 -
$ 1,704,000 $ 42,000
Note 11-GOING CONCERN MATTERS
The accompanying financial statements have been prepared on a going
concern basis, which contemplates the realization of assets and the
satisfaction of liabilities in the normal course of business. As shown in the
financial statements for the years ended December 31, 1999 and 1998, the
Company incurred losses of $296,229 and $100,057, respectively, and has not
made a profit in any year since its inception. These factors among others may
indicate that the Company will be unable to continue as a going concern for a
reasonable period of time.
The financial statements do not include any adjustments relating to
the recoverability and classification of liabilities that might be necessary
should the Company be unable to continue as a going concern. The Company's
continuation as a going concern is dependent upon its ability to generate
sufficient cash flow to its obligations on a timely basis and to obtain
additional financing as may be required to ultimately attain profitability.
The Company is also actively pursuing additional equity financing through
stock sales. (See Note 12)
F14
<PAGE>
BLINI HUT, INC.
NOTES TO FINANCIAL STATEMENTS
December 31, 1999 and 1998
Note 12-SUBSEQUENT EVENTS
In January 2000, the Company and a private investor entered into a
stock subscription agreement whereby the investor will purchase 235,294
restricted shares of the Company's $.01 par value common stock for a total of
$1,000,000 or approximately $4.25 per share. In January, 2000 the Company
received the initial deposit of $100,000 required by the agreement. The balance
is due December, 2000. The common shares sold will be held in escrow until the
transaction is closed upon the receipt of the additional $900,000 due the
Company.
On January 24, 2000, the Company opened its first quick-serve
Eastern/European restaurant in New York City.
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
FINANCIAL STATEMENTS
December 31, 1998
<PAGE>
TABLE OF CONTENTS
Page Number
-----------
ACCOUNTANT'S REPORT........................................1
FINANCIAL STATEMENT:
Balance Sheet.........................................2
Statement of Operations and Deficit
Accumulated During the Development Stage..............3
Statement of Changes in Stockholders' Equity..........4
Statement of Cash Flows...............................5
Notes to the Financial Statements....................6-8
<PAGE>
DAVID E. COFFEY 3651 Lindell Rd. - Suite H Las Vegas, NV 89103
CERTIFIED PUBLIC ACCOUNTANT (702) 871-3979
To the Board of Directors and Stockholders of
Bargain Products, Inc.
Las Vegas, Nevada
I have audited the accompanying balance sheet of Bargain Products, Inc.
(a development stage company) as of December 31, 1998 and the related
statements of operations, changes in stockholders' equity and cash flows
for the period from April 6, 1995 (date of inception) to December 31, 1998.
These financial statements are the responsibility of Bargain Products Inc.'s
management. My responsibility is to express an opinion on these financial
statements based on my audit.
I conducted my audit in accordance with generally accepted
audited standards. Those standards require that I plan and perform
the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements. An audit also
includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall
financial statement presentation. I believe that my audit of the
financial statements provide a reasonable basis for my opnion.
In my opinion, the accompanying financial statements present fairly, in
all material respects, the financial position of Bargain Products, Inc. as of
December 31, 1998 and the results of operations, cash flows and changes in
stockholders' equity for the year then ended in conformity with generally
accepted accounting principles.
/s/ DAVID COFFEY C.P.A.
David Coffey C.P.A.
Las Vegas, Nevada
June 2, 1999
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEET
December 31, 1998
ASSETS
Cash $ 100
Organizational costs less accumulated
amortization of $375 125
-----
Total Assets $ 225
=====
LIABILITIES & STOCKHOLDERS' EQUITY
Accounts payable $ 100
-----
Total Liabilities 100
Stockholders' Equity
Common stock, authorized 10,000,000 shares
at $.10 par value, issued and outstanding
508,461 shares 50,843
Additional paid-in capital 1,629,676
Deficit accumulated during the
development stage (1,680,394)
-----
Total Stockholders' Equity 125
Total Liabilities and Stockholders' Equity $ 225
=====
The accompanying notes are an integral part of
these financial statements.
-2-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF OPERATIONS AND DEFICIT
ACCUMULATED DURING THE DEVELOPMENT STAGE
FOR THE YEAR ENDED December 31, 1998
(With Cumulative Figures From Inception)
From Inception
January 1, 1998 April 6, 1995
To December 31, 1998 To Dec. 31, 1998
----------------- ----------------
Income $ 0 $ 0
Expenses
Amortization 100 375
Bank Charges 258 1,278
Consulting 0 216,200
Licenses 0 85
Legal 49,500 93,477
Travel 0 500
Write off of investment in
wholly owned subsidiary;
stock 0 4,828
capital contributions 0 1,363,651
----- --- -----
Total expenses 49,858 1,680,394
Net loss (49,858)
------
net loss (49,858)
Retained earnings,
beginning of period (1,630,536)
----------
Deficit accumulated during
the development state $(1,680,394)
===========
The accompanying notes are an integral part of these financial statements.
-3-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
PERIOD FROM April 6, 1995 (Date of Inception)
To December 31, 1998
Additional
Common Stock Paid-in
Shares Amount Capital Total
---------- ------ ------- -----
Issuance of common
stock for cash 100,000 $ 100 $ 0 $ 100
Issuance of common
stock for cash 2,500,000 2,500 147,500 150,000
Issuance of common
stock for stock 4,828,571 4,828 0 4,828
Contributed capital 0 0 1,255,600 1,255,600
Less offering costs 0 0 (30,070) (30,070)
Net loss 0 0 0 (1,386,670)
--------- ----- --------- ---------
December 31, 1993 7,428, 571 7,428 1,373,030 (6,212)
Issuance of common
stock for services 1,000,000 1,000 20,561 21,561
Contributed capital 0 0 224,000 224,000
Less net loss 0 0 0 (238,573)
--------- ------ ------- -------
Balance,
December 31, 1996 8,428,571 8,428 1,617,591 776
Reverse stock split
100 to 1 (8,344,276) 0 0 0
Issuance of common
stock for cash 50,000 5,000 0 5,000
Net loss 0 0 (5,293)
-------- ----- ----- -----
Balance,
December 31, 1997 134,295 13,428 1,617,591 483
Reverse stock split
10 to 1 (120,834) (12,085) 12,085 0
Issuance for common
stock for services 495,000 49,500 0 0
Net loss 0 0 0 (49,858)
--------- ----- ----- -----
Balance,
December 31, 1998 508,461 $ 50,843 $ 1,629,676 $ 125
======= ====== ========= ===
The accompanying notes are an integral part of
these financial statements.
-4-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED December 31, 1998
(With Cumulative Figures Fom Inception)
From Inception,
Year ended April 6, 1995
December 31, 1998 To Dec. 31, 1998
----------------- ----------------
CASH FLOWS PROVIDED BY OPERATING ACTIVITIES
Net loss $ (49,858) $ (1,680,394)
Noncash expenses included in net loss
Amortization 100 375
Stock issued for legal services 49,500 76,061
Write off stock in
wholly owned subsidiary 0 4,828
Increase in accounts payable 100 100
------ ---------
NET CASH USED BY
OPERATING ACTIVITIES (158) (1,599,030)
CASH FLOWS USED BY INVESTING ACTIVITIES
Organizational costs 0 500
----- ---
NET CASH USED BY
INVESTING ACTIVITIES 0 5400
CASH FLOWS FROM FINANCING ACTIVITIES
Sale of common stock 0 2,600
Additional paid-in capital 0 1,627,100
Less offering costs 0 (30,070)
------ ------
NET CASH PROVIDED BY
FINANCING ACTIVITY 0 1,599,630
NET INCREASE IN CASH (158) $ 100
===
CASH AT BEGINNING OF PERIOD 258
---
CASH AT END OF PERIOD $ 100
===
Supplemental disclosures of cash flow information:
Issuance of common stock in exchange
for services 49,500 $ 71,061
====== ======
The accompanying notes are an integral part of
these financial statements.
-5-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE A SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The Company was incorporated on April 6, 1995 under
the laws of the state of Nevada. The business purpose of
Company is to engage in retail sales of low cost consumer
products at the retail level.
The Company will adopt accounting policies and procedures
based upon the nature of future transactions.
NOTE B ORGANIZATION COSTS
Organization costs are capitalized and amortized over 60
months.
NOTE C OFFERING COSTS
The offering costs which were incurred by the Company in
connection with the public stock offering were deducted
from the net proceeds of that offering.
NOTE D WHOLLY OWNED SUBSIDIARY
The Company entered into an agreement on June 20, 1995 to
exchange 4,828,571 shares of its common stock to acquire 25,000 shares
of common stock in Dollar Mania, Inc., a Nevada corporation. After
this exchange, Dollar Mania, Inc. became a wholly owned subsidiary of
Bargain Products, Inc. On March 28, 1996, the wholly owned subsidiary
filed for protection under the bankruptcy laws in the State of Nevada.
In December of 1996, the Company abandoned the 25,000 shares of common
stock in Dollar Mania, Inc., its wholly owned sdubsidiary, to the
trustees in the bankruptcy proceedings and there by disposed of the
wholly owned subsidiary. The cost of the stock was written off as an
extraordinary item in the amount of $4,828.
NOTE E PUBLIC STOCK OFFERING
In may of 1995, a public stock offering was made and the
net proceedws of that offering will be used for the purpose
of engaging in retail sales of low cost consumer products
at the retail level. The Company sold 2,500,000 shares of
the common stock for $150,000.
-6-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE F CAPITAL CONTRIBUTIONS TO WHOLLY OWNED SUBSIDIARY
On March 28, 1996 Dollar Mania, Inc. filed for protection
under the bankruptcy laws in the State of Nevada. All of
the capital contributions made in 1995 and 1996, in the
amount of $1,363,651 were written off as an extraordinary
item.
NOTE G RELATED PARTY TRANSACTIONS
The Company has retained one of the shareholders as legal
counsel in connection with the preparation of the offering
memorandum for the May, 1995 securities offering and paid
him $24,000 for those services and $5,000 for other legal
services rendered to the Company.
The Company retained one of its shareholders as legal
counsel in connection with the on going legal services
required by the Company. The total amount due for those
services was $21,561 for the years 1995 and 1996. In
December of 1996, the Company issued to its shareholder
1,000,000 shares of common stock as payment for those
services. Those services were valued at $.021561 per share
or $21,561.
The Company retained one of its shareholders as legal
counsel in connection with a proposed securities offering
and other legal matters during 1998. The proposed
securities offering was abandoned. The legal fees incurred
by the company of $49,500 for preparation of the offering
memorandum and other legal services was paid by issuing
495,000 shares of its common stock for these services which
were valued at $.10 per share of $49,500 in addition to the
$5,000 referenced above.
NOTE H REVERSE STOCK SPLIT
On July 15, 1997, the Company approved a one for one hundred
reverse stock split of the common stock, decreasing the
authorized common stock from 25,000,000 shares, $.001 par
value per share to 250,000 shares of common stock, $.10 par
value. There were 8,428,571 shares of common stock issued
and outstanding before the reverse stock split and 84,295
after the reverse stock split. The company raised the
authorized common stock to 10,000,000 shares effective July
29, 1997.
-7-
<PAGE>
BARGAIN PRODUCTS, INC.
(A DEVELOPMENT STAGE COMPANY)
NOTES TO THE FINANCIAL STATEMENTS
December 31, 1998
NOTE I PRIVATE STOCK PLACEMENT
In December of 1997, the Company sold 50,000 shares of its
common stock for $.10 per share or $5,000. The proceeds
were used to pay legal expenses of the Company.
NOTE J REVERSE STOCK SPLIT
On April 10, 1998 the Company approved a one for ten
reverse stock split of the common stock, decreasing the
authorized common stock from 10,000,000 shares, $.001 par
value per share to 1,000,000 shares of common stock, $.10
par value. There were 134,295 shares of common stock issued
and outstanding before the reverse stock split and 13,429
after the reverse stock split. The Company raised the
authorized common stock to 10,000,000 shares effective May
2, 1998.
On March 24, 1999, the company amended its articles of
incorporation to change the par value of its common
stock from $.10 to $.01 per share. In March of 1999, the
Company approved a securities offering of 3,000,000 shares
of its common stock to be sold at $.03 per share.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND
FINANCIAL DISCLOSURE
The Company changed accountants in March 2002 and has not had any
disagreements with said accountants.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
(a) The Company's financial statements for the period from inception to
December 31, 1999 are included herein under Item 13 of this Registration
Statement.
(b) The following exhibits are furnished as required by Item 601 of Regulation
S-B.
Exhibit No. Description
3.0 Certificate of Incorporation of Bargain Products, Incorporated
consisting of Articles of Incorporation filed with the Secretary
of State of the State of Nevada on April 6, 1995, filed with
SEC in this Registration Statement.
3.1 By-Laws of Bargain Products, Incorporated, dated April 6, 1995 ,
are attached hereto, filed with SEC in this Registration
Statement.
3.2 Amendment to the Articles of Incorporation, dated July 15, 1997.
3.3 Amendment to the Articles of Incorporation, dated April 16, 1998.
3.4 Amendment to the Articles of Incorporation, dated May 11, 1999.
4.0 Common Stock certificate, filed with SEC in this Registration
Statement.
10.0 Stock for Stock Agreement between Troika Food, Inc. & Blini Hut
27.0 Financial Data Schedule for the period ending 12/31/99, filed
with the SEC in this Registration Statement.
SIGNATURES
In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this registration statement to be signed on its behalf
by the undersigned, thereunto duly authorized.
Blini Hut, Inc.
(Registrant)
Date: May 25th, 2000 By: /s/Simon Kublanov
--------------------------------
Simon Kublanov
President and Director
