0001165527-12-001016.txt : 20120926 0001165527-12-001016.hdr.sgml : 20120926 20120926153802 ACCESSION NUMBER: 0001165527-12-001016 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20120924 ITEM INFORMATION: Entry into a Material Definitive Agreement ITEM INFORMATION: Completion of Acquisition or Disposition of Assets ITEM INFORMATION: Unregistered Sales of Equity Securities ITEM INFORMATION: Changes in Registrant's Certifying Accountant ITEM INFORMATION: Changes in Control of Registrant ITEM INFORMATION: Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year ITEM INFORMATION: Change in Shell Company Status ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20120926 DATE AS OF CHANGE: 20120926 FILER: COMPANY DATA: COMPANY CONFORMED NAME: WINECOM INC. CENTRAL INDEX KEY: 0001491471 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-BUSINESS SERVICES, NEC [7389] IRS NUMBER: 262944840 FISCAL YEAR END: 0801 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 000-54221 FILM NUMBER: 121111049 BUSINESS ADDRESS: STREET 1: 1222 SE 47TH STREET CITY: CAPE CORAL STATE: FL ZIP: 33904 BUSINESS PHONE: (239) 699-9082 MAIL ADDRESS: STREET 1: 1222 SE 47TH STREET CITY: CAPE CORAL STATE: FL ZIP: 33904 8-K 1 g6284.txt CURRENT REPORT DATED 9-24-12 UNITED STATES 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 of 1934 Date of Report (Date of earliest event reported) September 24, 2012 WINECOM, INC. (Exact name of registrant as specified in its charter) Nevada 000-54221 26-2944840 (State or other jurisdiction (Commission (IRS Employer of incorporation) File Number) Identification No.) 1222 SE 47th Street, Cape Coral, FL 33904 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code (239) 829-4372 N/A (Former name or former address, if changed since last report.) Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions: [ ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) [ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) [ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) [ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) ITEM 1.01 ENTRY INTO MATERIAL DEFINITIVE AGREEMENT ......................... 3 ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS ............... 3 ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES .......................... 3 Description of Business .................................................... 4 Description of Property .................................................... 13 Financial Information ...................................................... 13 Security Ownership of Certain Beneficial Owners and Management ............. 17 Directors and Executive Officers ........................................... 19 Executive Compensation ..................................................... 22 Certain Relationships and Related Transactions, and Director Independence ............................................................... 22 Legal Proceedings .......................................................... 22 Market Price of and Dividends on the Registrant's Common Equity and Related Stockholder Matters ................................................ 23 Recent Sales of Unregistered Securities .................................... 23 Description of Registrant's Securities to be Registered .................... 23 Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ....................................................... 24 Indemnification of Directors and Officers .................................. 24 ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT .................... 26 ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT ................................. 26 ITEM 5.03 AMENDMENTS TO CERTIFICATE ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR ................................. 27 ITEM 5.06 CHANGE IN SHELL COMPANY STATUS ................................... 27 ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS ................................ 27 2 ITEM 1.01 ENTRY INTO MATERIAL DEFINITIVE AGREEMENT ITEM 2.01 COMPLETION OF ACQUISITION OR DISPOSITION OF ASSETS ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES Interpretation: As used in this Current Report on Form 8-K, unless otherwise stated, all references to the "Winecom," "Company," "we," "our" and "us" refer to Winecom, Inc. On August 15, 2012, our Board of Directors and the holders of a majority of our outstanding shares approved, among other amendments, a split of our current issued and outstanding common shares on the basis of 20 new common shares for 1 old common share. We filed a Preliminary and a Definitive Information statement in respect of the amendment on August 17 and August 28, 2012, respectively, in accordance with Rule 14c and the provisions of Chapter 78 of the Nevada Revised Statutes. Although, as at the date of this prospectus, the amendments remains subject to approval by the Nevada Secretary of State and FINRA, all descriptions of our common stock contained in this report contemplate completion of the 20 new common shares for 1 old common share split of our common stock. On September 26, 2012, we entered into and closed a Share Exchange Agreement (the "Exchange Agreement") dated September 26, 2012 among Winecom, Green Hygienics, Inc. ("Green Hygienics"), a Florida corporation, and Bruce Harmon, the sole shareholder of Green Hygienics. Pursuant to the Exchange Agreement we received 100% of the issued and outstanding securities of Green Hygienics in exchange for the issuance to Mr. Harmon of 49,500,000 shares of our common stock and the concurrent cancellation of 79,500,000 shares of our common stock held by Mordechai David and Shamir Benita, our former directors and officers. The unregistered common shares issued to Mr. Harmon were issued in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act of 1933 and upon Rule 506 of Regulation D of the Securities Act of 1933. Upon closing of the Exchange Agreement, we had 70,000,000 common shares issued and outstanding. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating us to issue any additional shares of our common stock. As a result of the transaction, Green Hygienics became our wholly-owned subsidiary and we have adopted the business of Green Hygienics. Green Hygienics is a Florida corporation formed on August 1, 2012. Green Hygienics is in the business of importing and distributing bamboo-based hygienic products in North America through a licensing agreement with American Hygienics Corporation ("AHC"), a privately-owned corporation in the People's Republic of China. Green Hygienics entered into a contract on August 1, 2012 to license AHC's proprietary bamboo-based products which the Company will market to retail establishments worldwide with an emphasis in the United States and Canada. Because we have adopted the business of Green Hygienics, all references in this report to "Winecom," the "Company,, "we,, "us," "our" and similar terms refer collectively to Winecom and Green Hygienics. Additionally, the consolidated financial statements in this report include the accounts of Winecom and Green Hygienics, for which we are the primary beneficiary. All inter-company accounts and transactions have been eliminated in consolidation. FORM 10 INFORMATION DISCLOSURE As disclosed in this report, on September 26, 2012, we acquired Green Hygienics, a Florida corporation, in the business of importing and distributing bamboo-based hygienic products. Item 2.01(f) of Form 8-K states that if the registrant was a shell company, as we were immediately before the acquisition of assets under Item 2.01, then the registrant must disclose the information that would be required if the registrant were filing a general form for registration of securities on Form 10. Accordingly, we are providing below the information that would be included in a Form 10 if we were to file a Form 10. Please note that the information provided below relates to the combined enterprises after the acquisition of Green Hygienics except that information relating to periods prior to the date of the acquisition of Green Hygienics only relate to Winecom, Inc., unless otherwise specifically indicated. 3 ACCOUNTING TREATMENT The Share Exchange among our Company, Green Hygienics, and Bruce Harmon, the sole shareholder of Green Hygienics, is being accounted for as a "reverse merger," since the Mr. Harmon owns a majority of the outstanding shares of the our common stock immediately following the closing of the Exchange Agreement. Green Hygienics is deemed to be the acquirer in the reverse merger. Consequently, the assets and liabilities and the historical operations that will be reflected in the financial statements prior to the Share Exchange will be those of Green Hygienics and will be recorded at the historical cost basis of Green Hygienics, and the financial statements after completion of the Exchange Agreement will include the assets and liabilities of Winecom and Green Hygienics, historical operations of Green Hygienics, and operations of our company from the closing date of the Share Exchange. DESCRIPTION OF BUSINESS FORWARD-LOOKING STATEMENTS This Current Report on Form 8-K contains forward-looking statements. To the extent that any statements made in this report contain information that is not historical, these statements are essentially forward-looking. Forward-looking statements can be identified by the use of words such as "expects," "plans," "may," "anticipates," "believes," "should," "intends," "estimates," and other words of similar meaning. These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements. Such risks and uncertainties include, without limitation, marketability of our products; legal and regulatory risks associated with the share exchange our ability to raise additional capital to finance our activities; the effectiveness, profitability and; the future trading of our common stock; our ability to operate as a public company; our ability to protect our proprietary information; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and research and development staff; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the "SEC"), or otherwise. Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not undertake any obligation to publicly update any forward-looking statements. As a result, investors should not place undue reliance on these forward-looking statements. OVERVIEW We were incorporated in the State of Nevada on July 1, 2008. We are a development stage company and have not generated any revenues to date. From our inception on July 1, 2008 to October 2008, we focused primarily on organizational matters. Due to the continuing financial crisis in 2008, we suspended our operations in October 2008, resuming them in September 2009. From September 2009 through August 2012, we were engaged in the development and operation of our website, www.winecom.ning.com, a social networking website that caters to wine lovers. Though www.winecom.ning.com is currently accessible by the public, we have not completed its development or publicly launched the website. To date, we have not secured sufficient financing to complete or publicly launch our website. As described in item 5.01, and elsewhere in this report, we have experienced a change of control resulting from our acquisition of Green Hygienics pursuant to a Share Exchange Agreement dated September 26, 2012. Green Hygienics is a Florida corporation seeking to import, sell and distribute bamboo-based hygienic products. Consequently, we will no longer pursue our business plan related to www.winecom.ning.com and will pursue the business of Green Hygienics. We maintain our executive offices at 1222 SE 47th Street, Cape Coral, Florida 33904. Our telephone number is (239) 829-4372. 4 GREEN HYGIENICS, INC. Green Hygienics is a Florida corporation in the importation, sale, and distribution of hygienic and household products made of bamboo-based paper. On August 1, 2012, Green Hygienics entered into a Licensing Agreement with AHC, a corporation domiciled in the People's Republic of China, pursuant to we acquired the exclusive right for a period of 5 years to import and distribute AHC's proprietary bamboo pulp-based hygiene products. AHC is the world's largest manufacturer of bamboo-based wet wipes, is internationally certified (ISO 9001:2008, BRC-CP, EPA, Nordic swan, cGMP and GMP) and a member of the world Private Label Manufacturers Association. Exporting to over 45 countries, AHC supplies a number of Multi-National brands and retailers on all continents including customers such as 3M, Carrefour, Tesco, Walmart, and Goodyear. The Licensing Agreement contemplates the distribution of generic, private label, and Green Hygienics branded products, described below. Subject to the below described sales targets being met, the exclusive distribution license will be renewable for an additional period of 5 years. BAMBOO PULP-BASED HYGIENE AND HOUSEHOLD PRODUCTS The exclusive distribution rights granted to us pursuant to the Licensing Agreement are for the following bamboo pulp based products: * Biodegradable diapers of 100% bamboo pulp; * Chlorine Free bamboo pulp based plates and cups; * Produce platters and absorbents made from bamboo pulp; * Nursing Pads made from bamboo pulp; * Dryer sheet pads made from bamboo viscous fiber; * Under arm absorbing pads made from bamboo pulp; * Various stationary made from 100% tree free bamboo pulp; * Female Sanitary Pads made from bamboo pulp; and * Panty Liners made from bamboo pulp. Our agreement with AHC also gives us the non-exclusive North American distribution rights (for retail and institutional distribution only) for AHC products, such as toilet paper and facial tissues. SALES TARGETS In order to renew our Licensing Agreement with AHC for an additional 5 year term, we must achieve the following sales targets during the initial 5 year term: * $150,000 in sales of absorbent pad based products, including diapers, panty liners and sanitary pads during the first year followed by a 25% increase during each subsequent year; * $100,000 in sales of plates and cups, produce platters, dryer sheets, and stationary during the first year followed by a 25% increase during each subsequent year; and * $150,000 in sales of miscellaneous branded products, followed by a 25% increase during each subsequent year. Branded products include products marketed under the Green Hygienics brand and related marks, including "Premium Formulation," Clearly Herbal and Green & Soft. . COMPETITION We are a company engaged in the sale and distribution of hygienic and household bamboo-based paper products. Currently, our target market is limited to North America, including Canada, the United States, and Mexico. We intend to compete with other manufacturers and distributors of hygienic and household paper products, including products made of traditional wood-pulp based paper, bamboo-pulp based paper, or other recycled or novel paper materials. We will also compete with traditional manufactures of non-paper based diapers, female sanitary pads, disposable plates and cups, and produce platters. 5 Many of the companies with whom we intend to compete have greater financial resources, production capabilities, and distribution networks than we do. These competitors may be able to benefit from greater economies of scale than our Company. In addition, they may be able to afford more expertise in design and manufacturing of their products. This competition could result in competitors having products of greater quality and interest to prospective customers and investors. This competition could adversely impact on our ability to finance further development and to achieve the financing necessary for us to develop our business. INTELLECTUAL PROPERTY We assert common law copyright in the contents of our website, greenhygienics.com and common law trademark rights in our business name and related product labels, including "Clearly Herbal" and "Green & Soft". We have not registered for the protection of any copyright, trademark, patent or design, although we may do so in the future as we deem necessary to protect our business. We have registered for protection of our domain name, www.greenhygienics.com. Through our Licensing Agreement dated August 1, 2012 with AHC, we hold the exclusive North American distribution rights to certain proprietary technology of American Hygienics for the manufacture of bamboo pulp-based paper products, described elsewhere in this report. Our exclusive rights are enforceable for a minimum term of 5 years from August 1, 2012, and are subject to an additional 5 year renewal provided we meet certain sales quotas during the initial terms. The terms of our agreement with Green Hygienics are discussed in the section of this report entitled "Description of Business." RESEARCH AND DEVELOPMENT We did not incur any research and development expenses since our inception on August 1, 2012 (inception). We do anticipate that we will spend any significant resources on research and development during the next 12 months. REPORTS TO SECURITY HOLDERS We intend to furnish our shareholders annual reports containing financial statements audited by our independent registered public accounting firm and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year. We file Quarterly Reports on Form 10-Q, Annual Reports on Form 10-K and Current Reports on Form 8-K with the Securities and Exchange Commission in order to meet our timely and continuous disclosure requirements. We may also file additional documents with the Commission if they become necessary in the course of our company's operations. The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC. The address of that site is www.sec.gov. GOVERNMENT REGULATIONS As distributors and importers of hygienic and household paper products, including products used for food packaging and storage, we are regulated by the U.S. Food and Drug Administration. We believe that the products we intend to distribute are in compliance, in all material respects, with the laws and regulations administered by the U.S. Food and Drug Administration. We believe that we are and will continue to be in compliance in all material respects with applicable statutes and the regulations passed in the United States. There are no current orders or directions relating to our company with respect to the foregoing laws and regulations. 6 ENVIRONMENTAL REGULATIONS We do not believe that we are or will become subject to any environmental laws or regulations of the United States. While our intended products and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our products or potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our results of operations. EMPLOYEES Currently, we do not have any employees. Additionally, we have not entered into any consulting or employment agreements with any director of our Company or with our chief executive officer, secretary, chief financial officer and treasurer , Bruce Harmon. Our directors, executive officer and certain contracted individuals play an important role in our business. We do not expect any material changes in the number of employees over the next 12 month period. We do and will intend to outsource contract employment as needed until such time as we require and our able to sustain the employment of dedicated employees. SUBSIDIARIES After the transaction described within this filing, we have one wholly-owned subsidiary, Green Hygienics. RISK FACTORS You should carefully consider the risks described below together with all of the other information included in this report before making an investment decision with regard to our securities. The statements contained in or incorporated into this offering that are not historic facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. If any of the following risks actually occurs, our business, financial condition or results of operations could be harmed. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. RISKS RELATED TO OUR OVERALL BUSINESS OPERATIONS WE HAVE A LIMITED OPERATING HISTORY AND EXPECT TO INCUR SIGNIFICANT LOSSES. We have yet to establish any history of profitable operations. We have only nominal assets, and have not generated any revenues since our inception. Given the early stage of our business development we are unable to determine whether our revenues will be sufficient to sustain our operations for the foreseeable future, and we expect to incur significant losses in establishing our operations. Our profitability will require the successful exploitation of our distribution rights. We may not be able to successfully exploit our distribution rights or ever become profitable. THERE IS DOUBT ABOUT OUR ABILITY TO CONTINUE AS A GOING CONCERN DUE TO OUR LACK OF OPERATIONS AND INSUFFICIENT CASH RESOURCES YO MEET OUR BUSINESS OBJECTIVES, ALL OF WHICH MEANS THAT WE MAY NOT BE ABLE TO CONTINUE OPERATIONS. Our independent auditors have added an explanatory paragraph to their audit opinion issued in connection with the financial statements dated August 1, with respect to their doubt about our ability to continue as a going concern. As discussed in Note 1 to our financial statements for August 1, 2012, discussed in the footnotes to the financial statements, we have not generated revenue and have not established operations which raise substantial doubt about its ability to continue as a going concern. WE MAY NOT BE ABLE TO SECURE ADDITIONAL FINANCING TO MEET OUR FUTURE CAPITAL NEEDS. We anticipate needing significant capital to conduct establish our operations, distribution network and customer base. We may use capital more rapidly than anticipated and incur higher operating expenses than expected, and will be 7 depend on external financing to satisfy our operating and capital needs. Any sustained weakness in the general economic conditions and/or financial markets in the United States or globally could adversely affect our ability to raise capital on favorable terms or at all. We may also rely in the future, on access to financial markets as a source of liquidity to satisfy working capital requirements and for general corporate purposes. We may be unable to secure debt or equity financing on terms acceptable to us, or at all, at the time when we need such funding. If we do raise funds by issuing additional equity or convertible debt securities, the ownership percentages of existing stockholders would be reduced, and the securities that we issue may have rights, preferences or privileges senior to those of the holders of our common stock or may be issued at a discount to the market price of our common stock which would result in dilution to our existing stockholders. If we raise additional funds by issuing debt, we may be subject to debt covenants, which could place limitations on our operations including our ability to declare and pay dividends. Our inability to raise additional funds on a timely basis would make it difficult for us to achieve our business objectives and would have a negative impact on our business, financial condition and results of operations. OUR BUSINESS AND OPERATING RESULTS COULD BE HARMED IF WE FAIL TO MANAGE OUR GROWTH OR CHANGE. Our business may experience periods of rapid change and/or growth that could place significant demands on our personnel and financial resources. To manage possible growth and change, we must locate and retain skilled sales people, marketers, management, and other personnel, and solicit and obtain adequate funds in a timely manner. If we fail to effectively manage our human or financial resources during the growth of our business, our business may fail which would cause you to lose your investment. WE MAY NOT HAVE ACCESS TO THE PRODUCT SUPPLY NECESSARY TO SUPPORT OUR BUSINESS, WHICH COULD CAUSE DELAYS OR SUSPENSION OF OUR OPERATIONS. Competitive demands for supply of products could result in the disruption of planned sales and distribution activities. Because we will rely on third party manufacturers to produce the products that we intend to sell, we may experience difficulty in securing a reliable supply of quality products at a competitive price. Although we believe that we have secured a suitable supplier of quality products at a competitive price, if our product supply is compromised for any reason, we may have to suspend some or all of our operations, which could significantly harm our business. WE DEPEND ON THE PRODUCTS OF AMERICAN HYGIENICS CORPORATION. The Company has a Licensing Agreement with AHC and the stability of AHC, along with its ability to continue to supply its products to the Company at a price that will afford the Company to meet its goals and objectives is imperative to the stability and viability of the Company. ATTRACTION AND RETENTION OF QUALIFIED PERSONNEL IS NECESSARY TO IMPLEMENT AND CONDUCT OUR SALES AND MARKETING EFFORTS. Our future success will depend largely upon the continued services of our Board members, executive officers, sales personnel, and other key personnel. Our success will also depend on our ability to continue to attract and retain qualified personnel with sales, marketing and distribution experience. Key personnel represent a significant asset for us, and the competition for qualified personnel is intense in the paper product industry. We may have particular difficulty attracting and retaining key personnel in regards to the sales and marketing aspect of the Company. We do not have key-person life insurance coverage on any of our personnel. The loss of one or more of our key people or our inability to attract, retain and motivate other qualified personnel could negatively impact our ability to develop or to sustain our operations. WE ARE EXPOSED TO RISKS ASSOCIATED WITH THE ONGOING FINANCIAL CRISIS AND WEAKENING GLOBAL ECONOMY, WHICH INCREASE THE UNCERTAINTY OF CONSUMERS PURCHASING PRODUCTS. 8 The recent severe tightening of the credit markets, turmoil in the financial markets, and weakening global economy are contributing to a decrease in consumer confidence. If these economic conditions are prolonged or deteriorate further, the market for our products will decrease accordingly. RISKS ASSOCIATED WITH OUR INDUSTRY WE FACE SIGNIFICANT COMPETITION IN THE HYGIENIC AND HOUSEHOLD PAPER PRODUCT INDUSTRY. We intend to compete with other manufacturers and distributors of hygienic and household paper products, including products made of traditional wood-pulp based paper, bamboo-pulp based paper, or other recycled or novel paper materials. We will also compete with traditional manufactures of non-paper based diapers, female sanitary pads, disposable plates and cups, and produce platters. Many of the companies with whom we intend to compete have greater financial resources, production capabilities, and distribution capacity than we do. These competitors may be able to benefit from greater economies of scale than our Company. In addition, they may be able to afford more expertise in design and manufacturing of their products. This competition could result in competitors having products of greater quality and interest to prospective customers and investors, which could adversely impact on our ability to develop or sustain our operations. EXISTING REGULATIONS, AND CHANGES TO SUCH REGULATIONS, MAY PRESENT TECHNICAL, REGULATORY AND ECONOMIC BARRIERS TO THE USE OF OUR PRODUCTS, WHICH MAY SIGNIFICANTLY REDUCE DEMAND FOR OUR PRODUCTS. Our products are subject to various regulatory and economic barriers which could have an adverse effect on the Company. OUR BUSINESS DEPENDS ON THE PRODUCTS OF OUR SUPPLIER, AMERICAN HYGIENICS CORPORATION. AHC is considered to be a stable company with many years of experience in the industry. Its stability, or lack thereof, could create various issues related to our products. Other suppliers are viable alternatives but, without the special products of AHC, the product line that the Company offers could be adversely affected. OUR COMPANY IS PROJECTED TO EXPERIENCE RAPID GROWTH IN OPERATIONS, WHICH WILL PLACE SIGNIFICANT DEMANDS ON ITS MANAGEMENT, OPERATIONAL AND FINANCIAL INFRASTRUCTURE. If the Company does not effectively manage its growth, the quality of its products could suffer, which could negatively affect the Company's brand and operating results. To effectively manage this growth, the Company will need to continue to improve its operational, financial and management controls and its reporting systems and procedures. Failure to implement these improvements could hurt the Company's ability to manage its growth and financial position. THE COMPANY TREATS ITS PROPRIETARY INFORMATION AS CONFIDENTIAL AND RELIES ON INTERNAL NONDISCLOSURE SAFEGUARDS AND ON LAWS PROTECTING TRADE SECRETS, ALL TO PROTECT ITS PROPRIETARY INFORMATION. There can be no assurance that these measures will adequately protect the confidentiality of the Company's proprietary information or that others will not independently develop products or technology that are equivalent or superior to those of the Company. The Company's patents, trademarks, trade secrets, copyrights and/or other intellectual property rights are important assets to the Company. Various events outside of the Company's control pose a threat to its intellectual property rights as well as to the Company's products and services. Although the Company seeks to obtain patent protection for its systems, it is possible that the Company may not be able to protect some of these innovations. There is always the possibility, despite the Company's efforts, that the scope of the protection gained will be insufficient or that an issued patent may be deemed invalid or unenforceable. 9 RISKS RELATED TO THE MARKET FOR OUR STOCK THE MARKET PRICE OF OUR COMMON STOCK CAN BECOME VOLATILE, LEADING TO THE POSSIBILITY OF ITS VALUE BEING DEPRESSED AT A TIME WHEN YOU MAY WANT TO SELL YOUR HOLDINGS. The market price of our common stock can become volatile. Numerous factors, many of which are beyond our control, may cause the market price of our common stock to fluctuate significantly. These factors include: our earnings releases, actual or anticipated changes in our earnings, fluctuations in our operating results or our failure to meet the expectations of financial market analysts and investors; changes in financial estimates by us or by any securities analysts who might cover our stock; speculation about our business in the press or the investment community; significant developments relating to our relationships with our customers or suppliers; stock market price and volume fluctuations of other publicly traded companies and, in particular, those that are in our industry; customer demand for our products; investor perceptions of our industry in general and our Company in particular; the operating and stock performance of comparable companies; general economic conditions and trends; announcements by us or our competitors of new products, significant acquisitions, strategic partnerships or divestitures; changes in accounting standards, policies, guidance, interpretation or principles; loss of external funding sources; sales of our common stock, including sales by our directors, officers or significant stockholders; and additions or departures of key personnel. Securities class action litigation is often instituted against companies following periods of volatility in their stock price. Should this type of litigation be instituted against us, it could result in substantial costs to us and divert our management's attention and resources. Moreover, securities markets may from time to time experience significant price and volume fluctuations for reasons unrelated to the operating performance of particular companies. These market fluctuations may adversely affect the price of our common stock and other interests in our Company at a time when you want to sell your interest in us. We do not intend to pay dividends on shares of our common stock for the foreseeable future. WE HAVE NEVER DECLARED OR PAID ANY CASH DIVIDENDS ON SHARES OF OUR COMMON STOCK. We intend to retain any future earnings to fund the operation and expansion of our business and, therefore, we do not anticipate paying cash dividends on shares of our common stock in the foreseeable future. WE MAY BE SUBJECT TO PENNY STOCK REGULATIONS AND RESTRICTIONS AND YOU MAY HAVE DIFFICULTY SELLING SHARES OF OUR COMMON STOCK. The SEC has adopted regulations which generally define so-called "penny stocks" to be an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. If our common stock becomes a "penny stock," we may become subject to Rule 15g-9 under the Exchange Act, or the Penny Stock Rule. This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and "accredited investors" (generally, individuals with a net worth in excess of $1,000,000 or annual incomes exceeding $200,000, or $300,000 together with their spouses). For transactions covered by the Penny Stock Rule, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser's written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell our securities and may affect the ability of purchasers to sell any of our securities in the secondary market. For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure is also required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock. 10 There can be no assurance that our common stock will qualify for exemption from the Penny Stock Rule. In any event, even if our common stock were exempt from the Penny Stock Rule, we would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock, if the SEC finds that such a restriction would be in the public interest. WE ARE NOT LIKELY TO PAY CASH DIVIDENDS IN THE FORESEEABLE FUTURE. We intend to retain any future earnings for use in the operation and expansion of our business. We do not expect to pay any cash dividends in the foreseeable future but will review this policy as circumstances dictate. Should we decide in the future to do so, as a holding company, our ability to pay dividends and meet other obligations depends upon the receipt of dividends or other payments from our operating subsidiaries. In addition, our operating subsidiaries, from time to time, may be subject to restrictions on their ability to make distributions to us, including restrictions on the conversion of local currency into U.S. dollars or other hard currency and other regulatory restrictions. OUR COMMON STOCK IS ILLIQUID AND SUBJECT TO PRICE VOLATILITY UNRELATED TO OUR OPERATIONS. If a market for our common stock does develop, its market price could fluctuate substantially due to a variety of factors, including market perception of our ability to achieve our planned growth, quarterly operating results of other companies in the same industry, trading volume in our common stock, changes in general conditions in the economy and the financial markets or other developments affecting us or our competitors. In addition, the stock market itself is subject to extreme price and volume fluctuations. This volatility has had a significant effect on the market price of securities issued by many companies for reasons unrelated to their operating performance and could have the same effect on our common stock. A LARGE NUMBER OF SHARES MAY BE ELIGIBLE FOR FUTURE SALE AND MAY DEPRESS OUR STOCK PRICE. We may be required, under terms of future financing arrangements, to offer a large number of common shares to the public, or to register for sale by future private investors a large number of shares sold in private sales to them. Sales of substantial amounts of common stock, or a perception that such sales could occur, and the existence of options or warrants to purchase shares of common stock at prices that may be below the then-current market price of our common stock, could adversely affect the market price of our common stock and could impair our ability to raise capital through the sale of our equity securities, either of which would decrease the value of any earlier investment in our common stock. IF WE FAIL TO ESTABLISH AND MAINTAIN AN EFFECTIVE SYSTEM OF INTERNAL CONTROL, WE MAY NOT BE ABLE TO REPORT OUR FINANCIAL RESULTS ACCURATELY OR TO PREVENT FRAUD. ANY INABILITY TO REPORT AND FILE OUR FINANCIAL RESULTS ACCURATELY AND TIMELY COULD HARM OUR REPUTATION AND ADVERSELY IMPACT THE TRADING PRICE OF OUR COMMON STOCK. It may be time consuming, difficult and costly for us to develop and implement the internal controls and reporting procedures required by the Sarbanes-Oxley Act. We may need to hire additional financial reporting, internal controls and other finance personnel in order to develop and implement appropriate internal controls and reporting procedures. Effective internal control is necessary for us to provide reliable financial reports and prevent fraud. If we cannot provide reliable financial reports or prevent fraud, we may not be able to manage our business as effectively as we would if an effective control environment existed, and our business and reputation with investors may be harmed. In addition, if we are unable to comply with the internal controls requirements of the Sarbanes-Oxley Act, then we may not be able to obtain the independent accountant certifications required by such act, which may preclude us from keeping our filings with the SEC current and may adversely affect any market for, and the liquidity of, our common stock. PUBLIC COMPANY COMPLIANCE MAY MAKE IT MORE DIFFICULT FOR US TO ATTRACT AND RETAIN OFFICERS AND DIRECTORS. 11 The Sarbanes-Oxley Act and new rules subsequently implemented by the SEC have required changes in corporate governance practices of public companies. As a public company, we expect these new rules and regulations to increase our compliance costs and to make certain activities more time consuming and costly. As a public company, we also expect that these new rules and regulations may make it more difficult and expensive for us to obtain director and officer liability insurance in the future and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors or as executive officers. OUR STOCK PRICE MAY BE VOLATILE. The market price of our common stock is likely to be highly volatile and could fluctuate widely in price in response to various factors, many of which are beyond our control, including the following: * changes in our industry; * competitive pricing pressures; * Our ability to obtain working capital financing; * additions or departures of key personnel; * limited "public float" in the hands of a small number of persons whose sales or lack of sales could result in positive or negative pricing pressure on the market price for our common stock; * sales of our common stock; * our ability to execute our business plan; * operating results that fall below expectations; * loss of any strategic relationship; * regulatory developments; * economic and other external factors; and * period-to-period fluctuations in our financial results. In addition, the securities markets have from time to time experienced significant price and volume fluctuations that are unrelated to the operating performance of particular companies. These market fluctuations may also materially and adversely affect the market price of our common stock. OFFERS OR AVAILABILITY FOR SALE OF A SUBSTANTIAL NUMBER OF SHARES OF OUR COMMON STOCK MAY CAUSE THE PRICE OF OUR COMMON STOCK TO DECLINE. If our stockholders sell substantial amounts of our common stock in the public market, or upon the expiration of any statutory holding period under Rule 144, or issued upon the exercise of outstanding options or warrants, it could create a circumstance commonly referred to as an "overhang" and in anticipation of which the market price of our common stock could fall. The existence of an overhang, whether or not sales have occurred or are occurring, also could make more difficult our ability to raise additional financing through the sale of equity or equity-related securities in the future at a time and price that we deem reasonable or appropriate. BRUCE HARMON, OUR CHIEF EXECUTIVE OFFICER, CHIEF FINANCIAL OFFICER AND DIRECTORS, BENEFICIALLY OWNS A SUBSTANTIAL PORTION OF OUR OUTSTANDING COMMON STOCK, WHICH ENABLES HIM TO INFLUENCE MANY SIGNIFICANT CORPORATE ACTIONS AND IN CERTAIN CIRCUMSTANCES MAY PREVENT A CHANGE IN CONTROL THAT WOULD OTHERWISE BE BENEFICIAL TO OUR STOCKHOLDERS. Bruce Harmon beneficially owns approximately 70.71% of our outstanding shares of common stock. As such, he has a substantial impact on matters requiring the vote of the stockholders, including the election of our directors and most of our corporate actions. This control could delay, defer, or prevent others from initiating a potential merger, takeover or other change in our control, even if these actions would benefit our stockholders and us. This control could 12 adversely affect the voting and other rights of our other stockholders and could depress the market price of our common stock. DESCRIPTION OF PROPERTY We maintain our executive offices at 1222 SE 47th Street, Cape Coral, Florida 33904. Our telephone number is (239) 829-4372. The office totals approximately 100 square feet in area and is leased at a cost of approximately $100 per month on a month-to-month term. The space is suitable for our current administrative needs, although we anticipate that we will require additional space in order to support the planned expansion of our workforce in sales, marketing and administration. FINANCIAL INFORMATION MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion should be read in conjunction with the financial statements including the notes thereto, appearing elsewhere in this report. The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future. All references to currency in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" section are to U.S. dollars, unless otherwise noted. FORWARD-LOOKING STATEMENTS Statements in this Current Report on Form 8-K and other written reports made from time to time by us that are not historical facts constitute so-called "forward-looking statements," all of which are subject to risks and uncertainties. Forward-looking statements can be identified by the use of words such as "expects," "plans," "will," "forecasts," "projects," "intends," "estimates," and other words of similar meaning. Forward-looking statements are likely to address our growth strategy, financial results and product and development programs, among other things. One must carefully consider any such statement and should understand that many factors could cause actual results to differ from our forward-looking statements. Such risks and uncertainties include but are not limited to those outlined in the section entitled "Risk Factors" and other risks detailed from time to time in our filings with the SEC or otherwise. These factors may include inaccurate assumptions and a broad variety of other risks and uncertainties, including some that are known and some that are not. No forward-looking statement can be guaranteed and actual future results may vary materially. Information regarding market and industry statistics contained in this Report is included based on information available to us that we believe is accurate. It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis. We have not reviewed or included data from all sources, and cannot assure investors of the accuracy or completeness of the data included in this Report. Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services. We do not assume any obligation to update any forward-looking statement. As a result, investors should not place undue reliance on these forward-looking statements. RESULTS OF OPERATIONS, LIQUIDITY AND CAPITAL RESOURCES AS AT AUGUST 1, 2012 (DATE OF INCEPTION) RESULTS OF OPERATIONS AS AT AUGUST 1, 2012 (DATE OF INCEPTION) As at August 1, 2012 (date of inception) we had not started our proposed business operations and had incurred no losses. To the extent that we are able, subject to our ability to secure additional financing, and if market conditions allow, we expect to begin operations by October 2012. 13 As at August 1, 2012 (date of inception), we had sold 50,000 shares of common stock to our sole officer for $50. We had not earned any revenues as at August 1, 2012 (date of inception) and have not subsequently earned any revenues. RESULTS OF OPERATIONS AS AT AUGUST 1, 2012 (DATE OF INCEPTION) AUGUST 1, 2012 (DATE OF INCEPTION) We had incurred no losses or expenses as at August 1, 2012 (date of inception), and had generated no revenues. LIQUIDITY AND CAPITAL RESOURCES AS AT AUGUST 1, 2012 (DATE OF INCEPTION) As at August 1, 2012 (date of inception), we had assets of $50 consisting of cash, no liabilities, working capital of $50, and stockholder's equity of $50. ..CASH FLOWS FROM OPERATING ACTIVITIES We had not used or generated any cash flow from operating activities as at August 1, 2012 (date of inception). CASH FLOWS FROM FINANCING ACTIVITIES As at August 1, 2012 our operations had been nominal and funded primarily from advances from our sole officer. Going forward, we intend to finance our business with advances from our officers and directors, or by the issuance of equity and debt instruments. As at August 1, 2012, we had used no cash in financing activities and generated $50 net cash from financing activities. PLAN OF OPERATION AND FUNDING We expect that working capital requirements will continue to be funded through a combination of our existing funds and further issuances of securities. Our working capital requirements are expected to increase in line with the growth of our business. We estimate that our expenses over the next 12 months (beginning August 2012) will be approximately $330,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources. Estimated Estimated Description Completion Date Expenses ----------- --------------- -------- Legal and accounting fees 12 months $ 50,000 Marketing and advertising 12 months 50,000 Investor relations and capital raising 12 months 10,000 Travel expenses 12 months 60,000 Salaries and consulting fees 12 months 120,000 General and administrative expenses 12 months 40,000 -------- TOTAL $330,000 ======== 14 We have no lines of credit or other bank financing arrangements. We do have purchase order financing and accounts receivable factoring in place. Generally, we intend to finance operations through the proceeds of the private placement of equity and debt instruments, although, as of the date of this report, we have no definitive arrangements in place to secure such financing. We will need to raise additional capital to meet our short-term operating requirements and must generate revenues to meet our long-term operating requirements. Additional issuances of equity or convertible debt securities will result in dilution to our current shareholders. Further, such securities might have rights, preferences or privileges senior to our common stock. Additional financing may not be available upon acceptable terms, or at all. If adequate funds are not available or are not available on acceptable terms, we may not be able to take advantage of prospective new business endeavors or opportunities, which could significantly and materially restrict our business operations. We currently do not have a specific plan of how we will obtain such funding; however, we anticipate that additional funding will be in the form of equity financing from the sale of our common stock. We will seek to obtain short-term loans from our directors, although no future arrangement for additional loans has been made. We do not have any agreements with our directors concerning these loans. We do not have any arrangements in place for any future equity financing. OFF-BALANCE SHEET ARRANGEMENTS We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders. INFLATION The effect of inflation on our revenues and operating results has not been significant. CRITICAL ACCOUNTING POLICIES Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation. A complete listing of these policies is included in Note 1 of the notes to our financial statements dated August 1, 2012. We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and loans the carrying amounts approximate fair value due to their short maturities. We adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: 15 Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. REVENUE RECOGNITION AND COST OF GOODS SOLD The Company recognizes revenue on our products in accordance with ASC 605-10, "Revenue Recognition in Financial Statements." Under these guidelines, revenue is recognized on sales transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of product has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company's sales are either FOB shipping point or FOB destination, dependent on the customer. Revenues are therefore recognized at point of ownership transfer, accordingly. The Company has several revenue streams as follows: * Sale of merchandise to a retail establishment. * Sale of merchandise to a wholesaler. * Licensing revenues which are recognized when reports are received from licensees. The Company follows the guidance of ASC 605-50-25, "Revenue Recognition, Customer Payments" Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products included in inventories. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales. FINANCIAL STATEMENTS The audited financial statements of Green Hygienics Inc. dated August 1, 2012 follow beginning on page F-1 of this Current Report. 16 DRAKE & KLEIN CPAS A PCAOB REGISTERED ACCOUNTING FIRM REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Board of Directors and Stockholders of Green Hygienics, Inc. We have audited the accompanying initial balance sheet of Green Hygienics, Inc. as of August 1, 2012 (date of inception) and the accompanying statement of stockholder's equity as of August 1, 2012. The management of Green Hygienics, Inc. is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company's internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. In our opinion, the financial statement referred to above present fairly, in all material respects, the financial position of Green Hygienics, Inc. as of August 1, 2012 in conformity with accounting principles generally accepted in the United States of America. The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in the footnotes to the financial statements, the Company has not generated revenue and has not established operations which raise substantial doubt about its ability to continue as a going concern. Management's plans concerning these matters are also described in the notes. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. /s/ Drake & Klein CPAs -------------------------------- Drake & Klein CPAs Clearwater, Florida August 28, 2012 PO Box 2493 2451 McMullen Booth Rd. Dunedin, FL 34697-2493 Suite 210 727-512-2743 Clearwater, FL 33759-1362 F-1 GREEN HYGIENICS, INC. Balance Sheets August 1, 2012 -------- ASSETS Current assets: Cash $ 50 -------- Total current assets 50 -------- Total assets $ 50 ======== LIABILITIES AND STOCKHOLDERS' EQUITY Total liabilities $ -- Stockholders' equity: Common stock, $.001 par value, 100,000,000 shares authorized, 50,000 shares issued and outstanding at August 1, 2012 50 Retained earnings -- -------- Total stockholders' equity 50 -------- Total liabilities and stockholders' equity $ 50 ======== See accompanying notes to financial statements. F-2 Green Hygienics, Inc. Statement of Shareholders' Deficiency August 1, 2012
Common Stock Additional ------------------ Paid In Accumulated Shares Amount Capital Deficit Total ------ ------ ------- ------- ----- Balance at August 1, 2012 -- $ -- $ -- $ -- $ -- Sale of common stock 50,000 50 -- -- 50 Net income (loss) for the period ended August 20, 2012 -- -- -- -- -- -------- -------- -------- -------- -------- Balance at August 20, 2012 50,000 $ 50 $ -- $ -- $ 50 ======== ======== ======== ======== ========
See accompanying notes to the financial statements. F-3 Green Hygienics, Inc. Notes to Financial Statements August 1, 2012 NOTE 1 - NATURE OF OPERATIONS AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ORGANIZATION AND NATURE OF OPERATIONS Green Hygienics, Inc. (the "Company," "we," "us," "our" or "Green Hygienics") is a Florida corporation formed on August 1, 2012. The Company is in the business of importing and distribution of bamboo-based hygienic products in North America through a licensing agreement with American Hygienics Corporation ("AHC"), a privately-owned corporation in the People's Republic of China. The Company entered into a contract on August 1, 2012 to license AHC's products holding Intellectual Passport on bamboo products which the Company will market to retail establishments worldwide with an emphasis in the United States and Canada. USE OF ESTIMATES The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires 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 revenues and expenses during the reporting period. Actual results could differ from those estimates. CASH AND CASH EQUIVALENTS The Company considers all highly liquid investments with an original maturity of three months or less when purchased to be cash equivalents. FAIR VALUE OF FINANCIAL INSTRUMENTS The Company measures its financial assets and liabilities in accordance with generally accepted accounting principles. For certain of our financial instruments, including cash and loans the carrying amounts approximate fair value due to their short maturities. We adopted accounting guidance for financial and non-financial assets and liabilities. The adoption did not have a material impact on our results of operations, financial position or liquidity. This standard defines fair value, provides guidance for measuring fair value and requires certain disclosures. This standard does not require any new fair value measurements, but rather applies to all other accounting pronouncements that require or permit fair value measurements. This guidance does not apply to measurements related to share-based payments. This guidance discusses valuation techniques, such as the market approach (comparable market prices), the income approach (present value of future income or cash flow), and the cost approach (cost to replace the service capacity of an asset or replacement cost). The guidance utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value into three broad levels. The following is a brief description of those three levels: Level 1: Observable inputs such as quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs other than quoted prices that are observable, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets and quoted prices for identical or similar assets or liabilities in markets that are not active. Level 3: Unobservable inputs in which little or no market data exists, therefore developed using estimates and assumptions developed by us, which reflect those that a market participant would use. F-4 Green Hygienics, Inc. Notes to Financial Statements August 1, 2012 REVENUE RECOGNITION AND COST OF GOODS SOLD The Company recognizes revenue on our products in accordance with ASC 605-10, "Revenue Recognition in Financial Statements." Under these guidelines, revenue is recognized on sales transactions when all of the following exist: persuasive evidence of an arrangement did exist, delivery of product has occurred, the sales price to the buyer is fixed or determinable and collectability is reasonably assured. The Company's sales are either FOB shipping point or FOB destination, dependent on the customer. Revenues are therefore recognized at point of ownership transfer, accordingly. The Company has several revenue streams as follows: * Sale of merchandise to a retail establishment. * Sale of merchandise from the Company's website directly to consumers. * Sale of merchandise to a wholesaler. * Licensing revenues which are recognized when reports are received from licensees. The Company follows the guidance of ASC 605-50-25, "Revenue Recognition, Customer Payments" Accordingly, any incentives received from vendors are recognized as a reduction of the cost of products included in inventories. Promotional products or samples given to customers or potential customers are recognized as a cost of goods sold. Cash incentives provided to our customers are recognized as a reduction of the related sale price, and, therefore, are a reduction in sales. STOCK-BASED COMPENSATION The Company accounts for stock-based instruments issued to employees in accordance with ASC Topic 718. ASC Topic 718 requires companies to recognize in the statement of operations the grant-date fair value of stock options and other equity based compensation issued to employees. The value of the portion of an employee award that is ultimately expected to vest is recognized as an expense over the requisite service periods using the straight-line attribution method. The Company accounts for non-employee share-based awards in accordance with the measurement and recognition criteria of ASC Topic 505-50, "Equity-Based Payments to Non-Employees." The Company estimates the fair value of each option at the grant date by using the Black-Scholes option-pricing model. INCOME TAXES The Company accounts for income taxes under the asset and liability method. Deferred income tax assets and liabilities are determined based on differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates and laws that will be in effect when the differences are expected to be reversed. The Company uses a two-step approach to recognizing and measuring uncertain tax positions. The first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates it is more likely than not, that the position will be sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount, which is more than 50% (fifty percent) likely of being realized upon ultimate settlement. The Company considers many factors when evaluating and estimating our tax positions and tax benefits, which may require periodic adjustments. At December 31, 2011 and 2010, respectively, the Company did not record any liabilities for uncertain tax positions. The Company adopted the provisions of ASC 740-10, "Accounting for Uncertain Income Tax Positions." When tax returns are filed, it is highly certain that some positions taken would be sustained upon examination by the taxing authorities, while others are subject to uncertainty about the merits of the position taken or the amount of the position that would be ultimately sustained. In accordance with the guidance of ASC 740-10, the benefit of a tax position is recognized in the financial statements in the period during which, based on all available evidence, management believes it is more likely than not that the F-5 Green Hygienics, Inc. Notes to Financial Statements August 1, 2012 position will be sustained upon examination, including the resolution of appeals or litigation processes, if any. Tax positions taken are not offset or aggregated with other positions. Tax positions that meet the more-likely-than-not recognition threshold are measured as the largest amount of tax benefit that is more than 50 percent likely of being realized upon settlement with the applicable taxing authority. The portion of the benefits associated with tax positions taken that exceeds the amount measured as described above should be reflected as a liability for unrecognized tax benefits in the accompanying balance sheets along with any associated interest and penalties that would be payable to the taxing authorities upon examination. The Company believes its tax positions are all highly certain of being upheld upon examination. As such, the Company has not recorded a liability for unrecognized tax benefits. The Company has not filed any federal or state income tax returns since its inception. As this is an opening balance audit, the 2012 tax year remains open for IRS audit. The Company has received no notice of audit or any notifications from the IRS for any of the open tax years or unfiled returns. The Company adopted ASC 740-10, "Definition of Settlement in FASB Interpretation No. 48", ("ASC 740-10"), which was issued on May 2, 2007. ASC 740-10 amends FIN 48 to provide guidance on how an entity should determine whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The term "effectively settled" replaces the term "ultimately settled" when used to describe recognition, and the terms "settlement" or "settled" replace the terms "ultimate settlement" or "ultimately settled" when used to describe measurement of a tax position under ASC 740-10. ASC 740-10 clarifies that a tax position can be effectively settled upon the completion of an examination by a taxing authority without being legally extinguished. For tax positions considered effectively settled, an entity would recognize the full amount of tax benefit, even if the tax position is not considered more likely than not to be sustained based solely on the basis of its technical merits and the statute of limitations remains open. The adoption of ASC 740-10 did not have an impact on the accompanying financial statements. NET EARNINGS (LOSS) PER SHARE In accordance with ASC 260-10, "Earnings Per Share", basic net earnings (loss) per common share is computed by dividing the net earnings (loss) for the period by the weighted average number of common shares outstanding during the period. Diluted earnings (loss) per share are computed using the weighted average number of common and dilutive common stock equivalent shares outstanding during the period. As of December 31, 2011, there are no dilutive securities. SEGMENT INFORMATION In accordance with the provisions of ASC 280-10, "Disclosures about Segments of an Enterprise and Related Information", the Company is required to report financial and descriptive information about its reportable operating segments. The Company does not have any operating segments as of December 31, 2011. RECENT ACCOUNTING PRONOUNCEMENTS In May 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update (ASU) No. 2011-04, "Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs". ASU No. 2011-4 does not require additional fair value measurements and is not intended to establish valuation standards or affect valuation practices outside of financial reporting. The ASU is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU No. 2011-04 effective January 1, 2012 and it did not affect the Company's results of operations, financial condition or liquidity. In June 2011, the FASB issued ASU No. 2011-05, "Presentation of Comprehensive Income". The ASU eliminates the option to present the components of other comprehensive income as part of the statement of changes in shareholders' equity, and instead requires consecutive presentation of the statement of net income and other comprehensive income either in a continuous statement of F-6 Green Hygienics, Inc. Notes to Financial Statements August 1, 2012 comprehensive income or in two separate but consecutive statements. ASU No. 2011-5 is effective for interim and annual periods beginning after December 15, 2011. The Company adopted ASU 2011-05 effective January 1, 2012 and it did not affect the Company's results of operations, financial condition or liquidity. In September 2011, the FASB issued ASU 2011-08, "Testing Goodwill for Impairment", an update to existing guidance on the assessment of goodwill impairment. This update simplifies the assessment of goodwill for impairment by allowing companies to consider qualitative factors to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount before performing the two step impairment review process. It also amends the examples of events or circumstances that would be considered in a goodwill impairment evaluation. The amendments are effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011. The Company adopted ASU 2011-08 effective January 1, 2012. We do not believe that the adoption of this new accounting guidance will have a significant effect on our goodwill impairment assessments in the future. In December 2011, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") No. 2011-11, "Balance Sheet (Topic 210): Disclosures about Offsetting Assets and Liabilities." This ASU requires an entity to disclose information about offsetting and related arrangements to enable users of its financial statements to understand the effect of those arrangements on its financial position. ASU No. 2011-11 will be applied retrospectively and is effective for annual and interim reporting periods beginning on or after January 1, 2013. The Company does not expect adoption of this standard to have a material impact on its results of operations, financial condition, or liquidity. Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the Securities Exchange Commission (the "SEC") did not or are not believed by management to have a material impact on the Company's present or future financial statements. NOTE 2 - GOING CONCERN 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 this is an opening balance audit, the Company has no activity as of August 1, 2012. These factors raise substantial doubt about the ability of the Company to continue as a going concern for a reasonable period of time. The Company's continuation as a going concern is dependent upon its ability to generate revenues and its ability to continue receiving investment capital and loans from a related party to sustain its current level of operations. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. NOTE 3 - COMMITMENTS AND CONTINGENCIES LEGAL From time to time, we may be involved in litigation relating to claims arising out of our operations in the normal course of business. As of August 1, 2012, there were no pending or threatened lawsuits that could reasonably be expected to have a material effect on the results of our operations, except as noted. F-7 Green Hygienics, Inc. Notes to Financial Statements August 1, 2012 COMMITMENTS As of August 1, 2012, the Company has a month-to-month lease for office space for $100 per month. On August 1, 2012, the Company entered into a Licensing Agreement with American Hygienics Corporation, a corporation domiciled in the People's Republic of China, to market its bamboo-based hygienic products, which has various required milestones over the term of the contract. The Company has not placed a value on the contract as of August 1, 2012. NOTE 4 - RELATED PARTIES As of August 1, 2012, there were no related party transactions. NOTE 5 - STOCKHOLDERS' EQUITY COMMON STOCK On August 1, 2012, Bruce Harmon, the Company's CEO and founder, contracted to purchase 50,000 shares of common stock for $50, as reflected on the financial statements. NOTE 6 - CONCENTRATIONS CONCENTRATION OF CREDIT RISK Financial instruments, which potentially subject the Company to a concentration of credit risk, consist principally of temporary cash investments. The Company places its temporary cash investments with financial institutions insured by the FDIC. No amounts exceeded federally insured limits as of August 1, 2012. There have been no losses in these accounts through August 1, 2012. NOTE 7 - SUBSEQUENT EVENTS During August 2012, the Company has committed to marketing expenses to introduce the product at US tradeshows. F-8 SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth the ownership, as of September 26, 2012, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of September 26, 2012, there were 70,000,000 shares of our common stock issued and outstanding. All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Form 8-K. Except as otherwise indicated, the address of each of the stockholders listed below is 1222 SE 47th Street, Cape Coral, FL 33904. Amount of Shares Percent of Title Name of Beneficially Beneficially of Class Beneficial Owner Owned (1) Owned (1)(2) -------- ---------------- --------- ------------ Common Stock Bruce Harmon (3) 49,500,000 70.71% Common Stock Mordechay David (4) 250,000 0.36% Common Stock Shamir Benita (4) 250,000 0.36% All Officers and Directors as a Group (3 persons) 50,000,000 71.42% All 5%+ Shareholders as a Group Nil 0% ---------- (1) Shares of common stock beneficially owned and the respective percentages of beneficial ownership of common stock assumes the exercise of all options, warrants, and other securities convertible into common stock beneficially owned by such person or entity currently exercisable or exercisable within 60 days of September 26, 2012. Shares issuable pursuant to the exercise of stock options and warrants exercisable within 60 days are deemed outstanding and held by the holder of such options or warrants for computing the percentage of outstanding common stock beneficially owned by such person, but are not deemed outstanding for computing the percentage of outstanding common stock beneficially owned by any other person. (2) Based on 70,000,000 issued and outstanding shares of our common stock (includes the assumption of the exercise of all securities) as of September 26, 2012. (3) Bruce Harmon is our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director. (4) Director. CHANGES IN CONTROL As of September 26, 2012 we had no arrangements, the operation of which could, at a subsequent date, result in a change of control of our company. DIRECTORS AND EXECUTIVE OFFICERS DIRECTORS AND OFFICERS Our Articles state that our authorized number of directors shall be not less than one and shall be set by resolution of our Board of Directors. Our Board of Directors has fixed the number of directors at three, and we currently have three director. 17 Our current directors and sole officer are: Name Age Position ---- --- -------- Bruce Harmon 54 President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Treasurer, and Director Mordechai David 58 Director Shamir Benita 31 Director Our Directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified. Officers hold their positions at the will of our Board of Directors. There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs. BIOGRAPHIES BRUCE HARMON Mr. Harmon has extensive experience with Fortune 500 and startup companies. From 2005 to 2008, he was the interim chief financial officer and director of Accelerated Building Concepts Corporation (ABCC.OB), a construction company located in Orlando, Florida, the interim chief financial officer and director of Alternative Construction Technologies, Inc. (ACCY.OB), a manufacturer located in Melbourne, Florida, and the interim chief financial officer and director of Organa Technologies Group, Inc. (OGTG.PK), a technology company located in Melbourne, Florida. From 2009 to 2011, he was the interim chief financial officer and director of Winwheel Bullion, Inc. (WWBU.OB), a public shell, located in Newport Beach, California. As a chief financial officer and director to these companies, he was responsible for the financial aspects of the companies and the respective SEC matters. Currently, Mr. Harmon owns and operates Lakeport Business Services, Inc. and serves as a corporate consultant to various companies. Under Lakeport Business Services, Inc., he was appointed as chief financial officer in August 2009, as director in November 2009, and as chairman in December 2011 of eLayaway, Inc. (ELAY.OB), a company that allows customers to purchase products and services online through manageable monthly payments, as the chief financial officer and director of Omni Ventures, Inc. (OMVE.OB), a holding company specializing in the apparel industry, in December 2011 and August 2012, respectively, and as the chief financial officer of Immunovative, Inc. (IMUN.OB), a pharmaceutical company currently in clinical trials for the treatment of cancer, in September 2012. He holds a B.S. degree in Accounting from Missouri State University. We appointed Mr. Harmon as an officer and director of our company because of his experience and success with startup companies. MR. MORDECHAY DAVID Mr. David served as our President from July 1, 2008 until August 15, 2012 and as has served on our Board of Directors since July 1, 2008. Since November 1988, Mr. David has been employed at the Binyamina Winery in Israel, where he has been responsible for identifying aromas and flavors in wines, for recommending treatments to improve wine quality and for achieving wine flavor profiles which meet marketing needs. At Binyamina, Mr. David has also been responsible for various aspects of the wine production and cellaring process, including management of grapes, juices and wines, chemical and ingredient additions, racks, transfers, clarification, blends, shipping and final preparation for bottling. 18 MR. SHAMIR BENITA Mr. Benita served as our Treasurer, Secretary from June 1, 2008 until August 15, 2012, and has served on our Board of Directors since July 1, 2008. Since July of 2005 Mr. Benita has been employed by the Micheal Project, a supplemental addition to the Israeli education system supported by the Israeli Ministry of Education and implemented in Junior High Schools and High Schools in the Jewish, Arab, Druze and Bedouin educational sectors. Mr. Benita has been responsible for managing the logistical aspects of the Micheal Project. In addition, since August of 2007, Mr. Benita has been a consultant to small businesses in the area of marketing and sales. Mr. Benita has consulted for fit2media.com which is website development and management company, Tamar Ziv, a clothing designer and well as Harbarzel 1, a restaurant in Tel-Aviv during this time. We believe Mr. Benita's qualifications to sit on our board of directors include his years of experience as a consultant to small businesses such as ours in the area of marketing and sales, as well as his understanding of social networking websites gained while consulting for fit2media.com. Our board of directors consists of Bruce Harmon, Mordechay David, and Shamir Benita. With the exception of the Share Exchange Agreement dated September 26, 2012 among our Company, Green Hygienics Inc., and Mr. Harmon, there have been no transactions between our company and any of our officers and directors since August 1, 2012 (date of inception) which would be required to be reported herein. There are no family relationships among our directors or executive officers. EXECUTIVE COMPENSATION We have not paid since our inception, nor do we owe, any compensation to our executive officers, Messrs. Harmon, David and Benita. There are no arrangements or employment agreements with our executive officers or directors pursuant to which they will be compensated now in the future for any services provided as an executive officer, and we do not anticipate entering into any such arrangements or agreements with them in the foreseeable future. OPTION GRANTS As of the date of this report we had not granted any options or stock appreciation rights to our named executive officers or directors. COMPENSATION OF DIRECTORS Our directors did not receive any compensation for their services as directors from our inception to the date of this report. We have no formal plan for compensating our directors for their services in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established. PENSION, RETIREMENT OR SIMILAR BENEFIT PLANS There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers. We have no material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that stock options may be granted at the discretion of the Board of Directors or a committee thereof. OTHER DIRECTORSHIPS Other than as disclosed above, during the last 5 years, none of our directors held any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940. 19 BOARD OF DIRECTORS AND DIRECTOR NOMINEES Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination. The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted. Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee's qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders. If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission. The letter should be accompanied by a resume supporting the nominee's qualifications to serve on the Board, as well as a list of references. The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders. Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation. If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board. CONFLICTS OF INTEREST Our directors and officers are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct. In general, officers and directors of a corporation are required to present business opportunities to the corporation if: * the corporation could financially undertake the opportunity; * the opportunity is within the corporation's line of business; and * it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation. We have adopted a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent. SIGNIFICANT EMPLOYEES Other than as described above, we do not expect any other individuals to make a significant contribution to our business. LEGAL PROCEEDINGS To the best of our knowledge, none of our directors or executive officers has, during the past ten years: 20 * been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences); * had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time; * been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity; * been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated; * been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or * been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member. Except as set forth in our discussion below in "Certain Relationships and Related Transactions, and Director Independence - Transactions with Related Persons," none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC. AUDIT COMMITTEE AND CHARTER We do not currently have an audit committee and have not adopted an audit committee charter. DIRECTORS' AND OFFICERS' LIABILITY INSURANCE The Company does not have directors' and officers' liability insurance insuring our directors and officers against liability for acts or omissions in their capacities as directors or officers. COMPENSATION COMMITTEE We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions. The Board of Directors as a whole participates in the consideration of executive officer and director compensation. 21 BOARD COMMITTEES We expect our board of directors, in the future, to appoint an audit committee, nominating committee and compensation committee, and to adopt charters relative to each such committee. We intend to appoint such persons to committees of the board of directors as are expected to be required to meet the corporate governance requirements imposed by a national securities exchange, although we are not required to comply with such requirements until we elect to seek a listing on a national securities exchange. CODE OF ETHICS We intend to adopt a code of ethics that applies to our officers, directors and employees, including our principal executive officer and principal accounting officer, but have not done so to date due to our relatively small size. We intend to adopt a written code of ethics in the near future. FAMILY RELATIONSHIPS There are no family relationships among our officers, directors, or persons nominated for such positions. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE On September 26, 2012 we entered into and closed a Share Exchange Agreement (the "Exchange Agreement") dated September 26, 2012 among Winecom, Green Hygienics, Inc., a Florida corporation, and Bruce Harmon, our sole officer, director and the sole shareholder of Green Hygienics. Pursuant to the Exchange Agreement we received 100% of the issued and outstanding securities of Green Hygienics in exchange for the issuance to Mr. Harmon of 49,500,000 shares of our common stock and the concurrent cancellation of 79,500,000 shares of our common stock held by Mordechai David and Shamir Benita, our former directors and officers. Upon closing of the Exchange Agreement we had 70,000,000 common shares issued and outstanding. There are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating us to issue any additional shares of our common stock. As of August 1, 2012 and during the subsequent period there have been no other transactions a or proposed transactions in which we are, or plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest. DIRECTOR INDEPENDENCE Our securities are quoted on the OTC Bulletin Board which does not have any director independence requirements. Once we engage further directors and officers, we plan to develop a definition of independence and scrutinize our Board of Directors with regard to this definition. LEGAL PROCEEDINGS We are not aware of any material pending legal proceedings to which we are a party or of which our property is the subject. We also know of no proceedings to which any of our directors, officers or affiliates, or any registered or beneficial holders of more than 5% of any class of our securities, or any associate of any such director, officer, affiliate or security holder are an adverse party or have a material interest adverse to us. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS MARKET INFORMATION Our common stock is not traded on any exchange. Our common stock is quoted on OTC Bulletin Board, under the trading symbol "WNCM". To date, there have been no 22 trades of our common stock, and we cannot assure you that there will be a market in the future for our common stock. OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange. HOLDERS As of the date of this report there were 13 holders of record of our common stock. DIVIDENDS To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors. EQUITY COMPENSATION PLANS As of the date of this report we did not have any equity compensation plans. RECENT SALES OF UNREGISTERED SECURITIES During the last three years, we completed the following sales of unregistered securities: On September 26, 2012 we entered into and closed a Share Exchange Agreement (the "Exchange Agreement") dated September 26, 2012 among Winecom, Green Hygienics, Inc., a Florida corporation, and Bruce Harmon, our sole officer, director and the sole shareholder of Green Hygienics. Pursuant to the Exchange Agreement we received 100% of the issued and outstanding securities of Green Hygienics in exchange for the issuance to Mr. Harmon of 49,500,000 shares of our common stock and the concurrent cancellation of 79,500,000 shares of our common stock held by Mordechai David and Shamir Benita, our former directors and officers. The unregistered common shares issued to Mr. Harmon were issued in reliance on the exemptions from registration provided by Section 4(2) of the Securities Act of 1933 and upon Rule 506 of Regulation D of the Securities Act of 193. We have not sold or issued any securities during the last three fiscal years without registration under the Securities Act of 1933, as amended (the "Securities Act"), in reliance on exemption(s) from such registration requirements. Since our inception we have made no purchases of our equity securities. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED On August 15, 2012 our Board of Directors and the holders of a majority of our outstanding common stock approved the following amendments to our Article of Incorporation and capital structure: 1. an amendment to our Articles of Incorporation to change our name from Winecom, Inc., to Green Innovations Ltd.; 2. an amendment to our Articles of Incorporation to increase the authorized number of shares of our common stock from 100,000,000 shares to 150,000,000 shares, par value of $0.0001 per share; and 3. a split of our current issued and outstanding common shares on the basis of 20 new common shares for 1 old common share. 23 We filed a Preliminary and a Definitive Information statement in respect of the amendments on August 17 and August 28, 2012, respectively, in accordance with Rule 14c and the provisions of Chapter 78 of the Nevada Revised Statutes. As at the date of this current report, the amendments remain subject to approval by the Nevada Secretary of State and by FINRA. All descriptions of our common stock contained in this report contemplate completion of the 20 new common shares for 1 old common share split of our common stock. Our authorized capital stock consists of 150,000,000 (post 20 for 1 forward split) shares of common stock, $0.0001 par value. COMMON STOCK As of the date of this report we had 70,000,000 (post 20 for 1 forward split) shares of our common stock issued and outstanding. Holders of our common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights. Our common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions. All shares of our common stock are entitled to share equally in dividends from sources legally available, when, as and if declared by our Board of Directors, and upon our liquidation or dissolution, whether voluntary or involuntary, to share equally in our assets available for distribution to our security holders. Our Board of Directors is authorized to issue additional shares of our common stock not to exceed the amount authorized by our Articles of Incorporation, on such terms and conditions and for such consideration as our Board may deem appropriate without further security holder action. VOTING RIGHTS Each holder of our common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote. Since the shares of our common stock do not have cumulative voting rights, the holders of more than 50% of the shares voting for the election of directors can elect all the directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to our Board of Directors. DIVIDEND POLICY Holders of our common stock are entitled to dividends if declared by our Board of Directors out of funds legally available for the payment of dividends. From our inception to September 26, 2012 we did not declare any dividends. We do not intend to issue any cash dividends in the future. We intend to retain earnings, if any, to finance the development and expansion of our business. However, it is possible that our management may decide to declare a stock dividend in the future. Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, our capital requirements, general business conditions and other factors. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Subject to the disclosure in Section 4.01 below, we have not had any changes in, or disagreements with, our accountants since our inception. INDEMNIFICATION OF DIRECTORS AND OFFICERS The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of us is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows: * Chapter 78 of the Nevada Revised Statutes (the "NRS"). 24 NEVADA REVISED STATUTES Section 78.138 of the NRS provides for immunity of directors from monetary liability, except in certain enumerated circumstances, as follows: "Except as otherwise provided in NRS 35.230, 90.660, 91.250, 452.200, 452.270, 668.045 and 694A.030, or unless the Articles of Incorporation or an amendment thereto, in each case filed on or after October 1, 2003, provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that: (a) his act or failure to act constituted a breach of his fiduciary duties as a director or officer; and (b) his breach of those duties involved intentional misconduct, fraud or a knowing violation of law." Section 78.5702 of the NRS provides as follows: 1. 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, 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: (a) is not liable pursuant to NRS 78.138; or (b) 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. 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: (a) is not liable pursuant to NRS 78.138; or (b) 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. 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. 25 ITEM 4.01 CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT (a) Previous independent registered public accounting firm (i) On September 24, 2012, we formally informed Weinberg & Baer LLC of their dismissal as our independent registered public accounting firm. (ii) The reports of Weinberg & Baer LLC on our financial statements as of and for the fiscal years ended December 31, 2011 and December 31, 2010 contained no adverse opinion or disclaimer of opinion and were not qualified or modified as to uncertainty, audit scope or accounting principle except to indicate that there was substantial doubt about the Company ability to continue as a going concern. (iii)Our Board of Directors participated in and approved the decision to change independent registered public accounting firms. (iv) During the fiscal years ended December 31, 2010, December 21, 2011, and through each subsequent period, there have been no disagreements with Weinberg & Baer LLC on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements if not resolved to the satisfaction of Weinberg & Baer LLC would have caused them to make reference thereto in connection with their report on the financial statements for such years. (v) We have requested that Weinberg & Baer LLC furnish it with a letter addressed to the SEC stating whether or not it agrees with the above statements. A copy of the letter provided by Weinberg & Baer LLC is filed as Exhibit 16.1 to this Form 8-K. (b) New independent registered public accounting firm On September 24, 2012, we engaged Drake & Klein CPAs as our new independent registered public accounting firm. Drake & Klein CPAs completed the audit for the period as of August 1, 2012 for Green Hygienics Inc. During the two most recent fiscal years and each subsequent period, we had not consulted with Drake & Klein CPAs regarding any of the following: (i) The application of accounting principles to a specific transaction, either completed or proposed; (ii) The type of audit opinion that might be rendered on our consolidated financial statements, and none of the following was provided to us: (a) a written report, or (b) oral advice that Drake & Klein CPAs concluded was an important factor considered by us in reaching a decision as to accounting, auditing or financial reporting issue; or (iii)Any matter that was subject of a disagreement, as that term is defined in Item 304(a)(1)(iv) of Regulation S-K. ITEM 5.01 CHANGES IN CONTROL OF REGISTRANT Reference is made to the disclosure set forth under Item 1.01, 2.01, and 3.02 of this Current Report on Form 8-K, which disclosure is incorporated into this item 5.01 by reference. In connection with our acquisition of Green Hygienics Inc. and the corresponding issuance of our common shares to Bruce Harmon, our director and sole officer, as of the date of this Current Report, Mr. Harmon owns 49,500,000 shares of our common stock, or 70.71% of our voting securities and our board of directors together owns approximately 71.42% of our issued and outstanding common shares. 26 ITEM 5.03 AMENDMENTS TO CERTIFICATE ARTICLES OF INCORPORATION OR BYLAWS; CHANGE IN FISCAL YEAR Information set forth in Item 2.01 of this Current Report on Form 8-K is incorporated by reference into this Item 5.03. Prior to the transaction described in Item 2.01 our fiscal year end was December 31, 2012. As a result of the accounting treatment described in Item 2.01 our financial information is reflected as of August 1, 2012. ITEM 5.06 CHANGE IN SHELL COMPANY STATUS As a result of the consummation of the Share Exchange Transaction described in Item 1.01 of this Current Report on Form 8-K, we believe that we are no longer a "shell company," as that term is defined in Rule 405 under the Securities Act and Rule 12b-2 under the Exchange Act. ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS (a) Financial Statements of Businesses Acquired. In accordance with Item 9.01(a), our audited financial statements for August 1, 2012 (date of inception) are incorporated into this Current Report starting on page F-1 of this Current Report. (d) Exhibits. The exhibits listed in the following Exhibit Index are filed as part of this Current Report on Form 8-K: Exhibit No. Description ----------- ----------- 3.1 Articles of Incorporation (incorporated by reference from our Registration Statement on Form S-1 filed on June 1, 2010) 3.2 By-laws (incorporated by reference from our Registration Statement on Form S-1 filed on June 1, 2010) 10.1 Share Exchange Agreement dated September 26, 2012 with Green Hygienics, Inc. and the Selling Shareholder of Green Hygienics, Inc. * 10.2 License Agreement dated August 1, 2012 with American Hygienics Corporation * 16.1 Letter from Weinberg & Baer LLC * ---------- * filed herewith 27 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. WINECOM INC. /s/ Bruce Harmon ------------------------------------ Bruce Harmon Chief Executive Officer and Director Date: September 26, 2012 28 EX-10.1 2 ex10-1.txt SHARE EXCHANGE AGREEMENT Exhibit 10.1 SHARE EXCHANGE AGREEMENT THIS AGREEMENT is made effective as of the 26th day of September, 2012. AMONG: WINECOM INC., a Nevada corporation with an office at 1222 SE 47th Street, Cape Coral, FL, 33904 ("Pubco") AND: GREEN HYGIENICS, INC., a Florida corporation with an office at 1222 SE 47th Street, Cape Coral, FL, 33904 ("Priveco") AND: BRUCE HARMON, of 1222 SE 47th Street, Cape Coral, FL, 33904. (the "Selling Shareholder") WHEREAS: A. The Selling Shareholder is the registered and beneficial owner of all 50,000,000 issued and outstanding common shares in the capital of Priveco; B. Pubco has undertaken a forward split of its issued and outstanding shares on a 20 new for 1 old basis as well as a name change to Green Innovations Ltd. All references to Pubco shares in this Agreement reference post split share numbers; C. Pubco has agreed to issue 49,500,000 common shares in the capital of Pubco as of the Closing Date (as defined herein) to the Selling Shareholder as consideration for the purchase by Pubco of all of the issued and outstanding common shares of Priveco held by the Selling Shareholder; and D. Upon the terms and subject to the conditions set forth in this Agreement, the Selling Shareholder hasagreed to sell all of the issued and outstanding common shares of Priveco held by the Selling Shareholder to Pubco in exchange for common shares of Pubco. THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration (the receipt and sufficiency of which are hereby acknowledged), the parties covenant and agree as follows: 1. DEFINITIONS 1.1 Definitions. The following terms have the following meanings, unless the context indicates otherwise: (a) "AGREEMENT" shall mean this Agreement, and all the exhibits, schedules and other documents attached to or referred to in this Agreement, and all amendments and supplements, if any, to this Agreement; (b) "CLOSING" shall mean the completion of the Transaction, in accordance with Section 7 hereof, at which the Closing Documents shall be exchanged by the parties, except for those documents or other items specifically required to be exchanged at a later time; (c) "CLOSING DATE" shall mean a date mutually agreed upon by the parties hereto in writing and in accordance with Section 10.6 following the satisfaction or waiver by Pubco and Priveco of the conditions precedent set out in Sections 5.1 and 5.2 respectively; (d) "CLOSING DOCUMENTS" shall mean the papers, instruments and documents required to be executed and delivered at the Closing pursuant to this Agreement; (e) "EXCHANGE ACT" shall mean the United States Securities Exchange Act of 1934, as amended; (f) "LIABILITIES" shall include any direct or indirect indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, fixed or unfixed, known or unknown, asserted choate or inchoate, liquidated or unliquidated, secured or unsecured; (g) "PRIVECO ACCOUNTING DATE" shall mean August 1, 2012; (h) "PRIVECO FINANCIAL STATEMENTS" shall mean the balance sheet of Priveco dated as of August 1, 2012, together with related statements of income, cash flows, and changes in shareholder's equity for the period ended August 1, 2012; (i) "PRIVECO SHARES" shall mean the 50,000 common shares of Priveco held by the Selling Shareholder, being all of the issued and outstanding common shares of Priveco beneficially held, either directly or indirectly, by the Selling Shareholder; (j) "PUBCO SECURITIES" shall mean the Pubco Shares; (k) "PUBCO SHARES" shall mean the 49,000,000 fully paid and non-assessable common shares of Pubco, to be issued to the Selling Shareholder by Pubco on the Closing Date; (l) "SEC" shall mean the Securities and Exchange Commission; (m) "SECURITIES ACT" shall mean the United States Securities Act of 1933, as amended; (n) "TAXES" shall include international, federal, state, provincial and local income taxes, capital gains tax, value-added taxes, franchise, personal property and real property taxes, levies, assessments, tariffs, duties (including any customs duty), business license or other fees, sales, use and any other taxes relating to the assets of the designated party or the business of the designated party for all periods up to and including the Closing Date, together with any related charge or amount, including interest, fines, penalties and additions to tax, if any, arising out of tax assessments; and 2 (o) "TRANSACTION" shall mean the purchase of the Priveco Shares by Pubco from the Selling Shareholder in consideration for the issuance of the Pubco Securities. 1.2 Schedules. The following schedules are attached to and form part of this Agreement: Schedule 1 - Selling Shareholder Schedule 2 - Certificate of U.S. Shareholder Schedule 3 - Directors and Officers of Priveco Schedule 4 - Directors and Officers of Pubco Schedule 5 - Priveco Material Leases, Subleases, Claims, Capital Expenditures, Taxes and Other Property Interests Schedule 6 - Priveco Intellectual Property Schedule 7 - Priveco Material Contracts Schedule 8 - Priveco Employment Agreements and Arrangements Schedule 9 - Subsidiaries 1.3 Currency. All references to currency referred to in this Agreement are in United States Dollars (US$), unless expressly stated otherwise. 2. THE OFFER, PURCHASE AND SALE OF SHARES 2.1 Offer, Purchase and Sale of Shares. Subject to the terms and conditions of this Agreement, the Selling Shareholder hereby covenants and agrees to sell, assign and transfer to Pubco, and Pubco hereby covenants and agrees to purchase from the Selling Shareholder all of the Priveco Shares held by the Selling Shareholder. 2.2 Consideration. As consideration for the sale of the Priveco Shares by the Selling Shareholder to Pubco, Pubco shall allot and issue the Pubco Securities to the Selling Shareholder or their nominees in the amount set out opposite each Selling Shareholder's name in Schedule 1 on the basis of 990 Pubco Shares for each Priveco Share held by each Selling Shareholder. The Selling Shareholder acknowledges and agrees that the Pubco Securities are being issued pursuant to an exemption from the prospectus and registration requirements of the Securities Act. As required by applicable securities law, the Selling Shareholder agree to abide by all applicable resale restrictions and hold periods imposed by all applicable securities legislation. All certificates representing the Pubco Securities issued on Closing will be endorsed with the following legend pursuant to the Securities Act in order to reflect the fact that the Pubco Securities will be issued to the Selling Shareholder pursuant to an exemption from the registration requirements of the Securities Act: "NONE OF THE SECURITIES REPRESENTED HEREBY HAVE BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE "1933 ACT"), OR ANY U.S. STATE SECURITIES LAWS, AND, UNLESS SO REGISTERED, MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, IN THE UNITED STATES (AS DEFINED HEREIN) OR TO U.S. PERSONS EXCEPT IN ACCORDANCE WITH THE PROVISIONS OF REGULATION S UNDER THE 1933 ACT, PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE 1933 ACT, OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE 1933 ACT 3 AND IN EACH CASE ONLY IN ACCORDANCE WITH APPLICABLE STATE SECURITIES LAWS. IN ADDITION, HEDGING TRANSACTIONS INVOLVING THE SECURITIES MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT. "UNITED STATES" AND "U.S. PERSON" ARE AS DEFINED BY REGULATION S UNDER THE 1933 ACT." 2.3 Share Exchange Procedure. Each Selling Shareholder may exchange his, her or its certificate representing the Priveco Shares by delivering such certificate to Pubco duly executed and endorsed in blank (or accompanied by duly executed stock powers duly endorsed in blank), in each case in proper form for transfer, with signatures guaranteed, and, if applicable, with all stock transfer and any other required documentary stamps affixed thereto and with appropriate instructions to allow the transfer agent to issue certificates for the Pubco Shares to the holder thereof, together with a Certificate of U.S. Shareholder (the "CERTIFICATE OF U.S. SHAREHOLDER"), a copy of which is set out in Schedule 2. 2.4 Fractional Shares/Warrants. Notwithstanding any other provision of this Agreement, no certificate for fractional shares or warrants of the Pubco Securities will be issued in the Transaction. In lieu of any such fractional shares or warrants the Selling Shareholder would otherwise be entitled to receive upon surrender of certificates representing the Priveco Shares for exchange pursuant to this Agreement, the Selling Shareholder will be entitled to have such fraction rounded up to the nearest whole number of Pubco Shares and will receive from Pubco a stock certificate and warrant certificate representing same. 2.5 Closing Date. The Closing will take place, subject to the terms and conditions of this Agreement, on the Closing Date. 2.6 Restricted Securities. The Selling Shareholder acknowledges that the Pubco Securities issued pursuant to the terms and conditions set forth in this Agreement will have such hold periods as are required under applicable securities laws and as a result may not be sold, transferred or otherwise disposed, except pursuant to an effective registration statement under the Securities Act, or pursuant to an exemption from, or in a transaction not subject to, the registration requirements of the Securities Act and in each case only in accordance with all applicable securities laws. 3. REPRESENTATIONS AND WARRANTIES OF PRIVECO AND THE SELLING SHAREHOLDER Priveco and the Selling Shareholder, jointly and severally, represent and warrant to Pubco, and acknowledge that Pubco is relying upon such representations and warranties, in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Pubco, as follows: 3.1 Organization and Good Standing. Priveco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted. Priveco is duly qualified to do business and is in good standing as a corporation in each of the jurisdictions in which Priveco owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a material adverse effect on the business of Priveco taken as a whole. 3.2 Authority. Priveco has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the "PRIVECO DOCUMENTS") to be signed by Priveco and to perform its obligations hereunder and to consummate the 4 transactions contemplated hereby. The execution and delivery of each of the Priveco Documents by Priveco and the consummation of the transactions contemplated hereby have been duly authorized by Priveco's board of directors. No other corporate or shareholder proceedings on the part of Priveco is necessary to authorize such documents or to consummate the transactions contemplated hereby. This Agreement has been, and the other Priveco Documents when executed and delivered by Priveco as contemplated by this Agreement will be, duly executed and delivered by Priveco and this Agreement is, and the other Priveco Documents when executed and delivered by Priveco as contemplated hereby will be, valid and binding obligations of Priveco enforceable in accordance with their respective terms except: (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally; (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and (c) as limited by public policy. 3.3 Capitalization of Priveco. The entire authorized capital stock and other equity securities of Priveco consists of 100,000,000 common shares with $0.001 par value of (the "PRIVECO COMMON STOCK"). As of the date of this Agreement, there are 50,000 shares of Priveco Common Stock issued and outstanding. All of the issued and outstanding shares of Priveco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with the laws of the State of Florida. There are no outstanding options, warrants, subscriptions, conversion rights, or other rights, agreements, or commitments obligating Priveco to issue any additional common shares of Priveco Common Stock, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Priveco any common shares of Priveco Common Stock. There are no agreements purporting to restrict the transfer of the Priveco Common Stock, no voting agreements, shareholders' agreements, voting trusts, or other arrangements restricting or affecting the voting of the Priveco Common Stock. 3.4 Title and Authority of Selling Shareholder. The Selling Shareholder is and will be as of the Closing, the registered and beneficial owner of and will have good and marketable title to all of the Priveco Common Stock held by it and will hold such free and clear of all liens, charges and encumbrances whatsoever; and such Priveco Common Stock held by the Selling Shareholder have been duly and validly issued and are outstanding as fully paid and non-assessable common shares in the capital of Priveco. The Selling Shareholder has due and sufficient right and authority to enter into this Agreement on the terms and conditions herein set forth and to transfer the registered, legal and beneficial title and ownership of the Priveco Common Stock held by it. 3.5 Shareholders of Priveco Common Stock. Schedule 1 contains a true and complete list of the holders of all issued and outstanding shares of the Priveco Common Stock including each holder's name, address and number of Priveco Shares held. 3.6 Directors and Officers of Priveco. The duly elected or appointed directors and the duly appointed officers of Priveco are as set out in Schedule 2. 3.7 Corporate Records of Priveco. The corporate records of Priveco, as required to be maintained by it pursuant to all applicable laws, are accurate, complete and current in all material respects, and the minute book of Priveco is, in all material respects, correct and contains all records 5 required by all applicable laws, as applicable, in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Priveco. 3.8 Non-Contravention. Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will: (a) conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Priveco or any of its subsidiaries under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Priveco or any of its subsidiaries, or any of their respective material property or assets; (b) violate any provision of the constating documents of Priveco, any of its subsidiaries or any applicable laws; or (c) violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Priveco, any of its subsidiaries or any of their respective material property or assets. 3.9 Actions and Proceedings. To the best knowledge of Priveco, there is no basis for and there is no action, suit, judgment, claim, demand or proceeding outstanding or pending, or threatened against or affecting Priveco, any of its subsidiaries or which involves any of the business, or the properties or assets of Priveco or any of its subsidiaries that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects, or conditions of Priveco and its subsidiaries taken as a whole (a "PRIVECO MATERIAL ADVERSE EFFECT"). There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Priveco Material Adverse Effect. 3.10 Compliance. (a) To the best knowledge of Priveco, Priveco and each of its subsidiaries is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of Priveco and its subsidiaries; (b) To the best knowledge of Priveco, neither Priveco nor any of its subsidiaries is subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a Priveco Material Adverse Effect; (c) Each of Priveco and its subsidiaries has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement. All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Priveco, threatened, and none of them will be adversely affected by the consummation of the Transaction; and 6 (d) Each of Priveco and its subsidiaries has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. Neither Priveco nor any of its subsidiaries has received any notice of any violation thereof, nor is Priveco aware of any valid basis therefore. 3.11 Filings, Consents and Approvals. No filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Priveco or any of its subsidiaries of the Transaction contemplated by this Agreement or to enable Pubco to continue to conduct Priveco's business after the Closing Date in a manner which is consistent with that in which the business is presently conducted. 3.12 Absence of Undisclosed Liabilities. Neither Priveco nor any of its subsidiaries has any material Liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise that exceed $5,000, which: (a) will not be set forth in the Priveco Financial Statements or have not heretofore been paid or discharged; (b) did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in writing to Pubco; or (c) have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business since the date of the last Priveco Financial Statements 3.13 Tax Matters. (a) As of the date hereof: (i) each of Priveco and its subsidiaries has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to Priveco or its subsidiaries, and (ii) all such returns are true and correct in all material respects; (b) each of Priveco and its subsidiaries has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof, and has established an adequate reserve therefore on its balance sheets for those Taxes not yet due and payable, except for any Taxes the non-payment of which will not have a Priveco Material Adverse Effect; (c) neither Priveco nor any of its subsidiaries is presently under or has received notice of, any contemplated investigation or audit by regulatory or governmental agency of body or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof; (d) all Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes have been properly withheld and, if required on or prior to the date hereof, have been deposited with the appropriate governmental agency; and 7 (e) to the best knowledge of Priveco, the Priveco Financial Statements will contain full provision for all Taxes including any deferred Taxes that may be assessed to Priveco or its subsidiaries for the accounting period ended on the Priveco Accounting Date or for any prior period in respect of any transaction, event or omission occurring, or any profit earned, on or prior to the Priveco Accounting Date or for any profit earned by Priveco on or prior to the Priveco Accounting Date or for which Priveco is accountable up to such date and all contingent Liabilities for Taxes have been provided for or disclosed in the Priveco Financial Statements. 3.14 Absence of Changes. Since the Priveco Accounting Date, neither Priveco or any of its subsidiaries has: (a) incurred any Liabilities, other than Liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties; (b) sold, encumbered, assigned or transferred any material fixed assets or properties except for ordinary course business transactions consistent with past practice; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or properties of Priveco or its subsidiaries to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever; (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business; (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares or equity securities; (f) suffered any damage, destruction or loss, whether or not covered by insurance, that materially and adversely effects its business, operations, assets, properties or prospects; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labour trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $5,000; 8 (j) other than in the ordinary course of business, increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or directors or made any increase in, or any addition to, other benefits to which any of its employees or directors may be entitled; (k) entered into any transaction other than in the ordinary course of business consistent with past practice; or (l) agreed, whether in writing or orally, to do any of the foregoing. 3.15 Absence of Certain Changes or Events. Since the Priveco Accounting Date, there will have not been: (a) a Priveco Material Adverse Effect; or (b) any material change by Priveco in its accounting methods, principles or practices. 3.16 Subsidiaries. Except as set forth on Schedule 8, Priveco does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations. Each subsidiary of Priveco is a corporation duly organized, validly existing and in good standing under the laws of its jurisdiction of incorporation and has the requisite corporate power and authority to own, lease and to carry on its business as now being conducted. Each subsidiary of Priveco is duly qualified to do business and is in good standing as a corporation in each of the jurisdictions in which Priveco owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a material adverse effect on the business of Priveco and its subsidiaries taken as a whole. Priveco owns all of the shares of each subsidiary of Priveco and there are no outstanding options, warrants, subscriptions, conversion rights, or other rights, agreements, or commitments obligating any subsidiary of Priveco to issue any additional common shares of such subsidiary, or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from any subsidiary of Priveco any shares of such subsidiary. 3.17 Personal Property. Each of Priveco and its subsidiaries possesses, and has good and marketable title of all property necessary for the continued operation of the business of Priveco and its subsidiaries as presently conducted and as represented to Pubco. All such property is used in the business of Priveco and its subsidiaries. All such property is in reasonably good operating condition (normal wear and tear excepted), and is reasonably fit for the purposes for which such property is presently used. All material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Priveco and its subsidiaries is owned by Priveco or its subsidiaries free and clear of all liens, security interests, charges, encumbrances, and other adverse claims, except as disclosed in Schedule 4. 3.18 Intellectual Property (a) Intellectual Property Assets. Priveco and its subsidiaries own or hold an interest in all intellectual property assets necessary for the operation of the business of Priveco and its subsidiaries as it is currently conducted (collectively, the "INTELLECTUAL PROPERTY ASSETS"), including: (i) all functional business names, trading names, registered and unregistered trademarks, service marks, and applications (collectively, the "MARKS"); 9 (ii) all patents, patent applications, and inventions, methods, processes and discoveries that may be patentable (collectively, the "PATENTS"); (iii)all copyrights in both published works and unpublished works (collectively, the "COPYRIGHTS"); and (iv) all know-how, trade secrets, confidential information, customer lists, software, technical information, data, process technology, plans, drawings, and blue prints owned, used, or licensed by Priveco and its subsidiaries as licensee or licensor (collectively, the "TRADE SECRETS"). (b) Agreements. Schedule 5 contains a complete and accurate list and summary description, including any royalties paid or received by Priveco and its subsidiaries, of all contracts and agreements relating to the Intellectual Property Assets to which Priveco and its subsidiaries is a party or by which Priveco and its subsidiaries is bound, except for any license implied by the sale of a product and perpetual, paid-up licenses for commonly available software programs with a value of less than $500 under which Priveco or its subsidiaries is the licensee. To the best knowledge of Priveco, there are no outstanding or threatened disputes or disagreements with respect to any such agreement. (c) Intellectual Property and Know-How Necessary for the Business. Except as set forth in Schedule 5, Priveco and its subsidiaries is the owner of all right, title, and interest in and to each of the Intellectual Property Assets, free and clear of all liens, security interests, charges, encumbrances, and other adverse claims, and has the right to use without payment to a third party of all the Intellectual Property Assets. Except as set forth in Schedule 5, all former and current employees and contractors of Priveco and its subsidiaries have executed written contracts, agreements or other undertakings with Priveco and its subsidiaries that assign all rights to any inventions, improvements, discoveries, or information relating to the business of Priveco and its subsidiaries. No employee, director, officer or shareholder of Priveco or any of its subsidiaries owns directly or indirectly in whole or in part, any Intellectual Property Asset which Priveco or any of its subsidiaries is presently using or which is necessary for the conduct of its business. To the best knowledge of Priveco, no employee or contractor of Priveco or its subsidiaries has entered into any contract or agreement that restricts or limits in any way the scope or type of work in which the employee may be engaged or requires the employee to transfer, assign, or disclose information concerning his work to anyone other than Priveco or its subsidiaries. (d) Patents. Except as set out in Schedule 5, neither Priveco nor any of its subsidiaries holds any right, title or interest in and to any Patent and Priveco has not filed any patent application with any third party. To the best knowledge of Priveco, none of the products manufactured and sold, nor any process or know-how used, by Priveco or any of its subsidiaries infringes or is alleged to infringe any patent or other proprietary night of any other person or entity. (e) Trademarks. Except as set out in Schedule 5, neither Priveco nor any of its subsidiaries holds any right, title or interest in and to any Mark and Priveco has not registered or filed any application to register any Mark with any third party. To the best knowledge of Priveco, none of the Marks, if any, used by Priveco or any of its subsidiaries infringes or is alleged to infringe any trade name, trademark, or service mark of any third party. 10 (f) Copyrights. Schedule 5 contains a complete and accurate list and summary description of all Copyrights. Priveco and its subsidiaries is the owner of all right, title, and interest in and to each of the Copyrights, free and clear of all liens, security interests, charges, encumbrances, and other adverse claims. If applicable, all registered Copyrights are currently in compliance with formal legal requirements, are valid and enforceable, and are not subject to any maintenance fees or taxes or actions falling due within ninety days after the Closing Date. To the best knowledge of Priveco, no Copyright is infringed or has been challenged or threatened in any way and none of the subject matter of any of the Copyrights infringes or is alleged to infringe any copyright of any third party or is a derivative work based on the work of a third party. All works encompassed by the Copyrights have been marked with the proper copyright notice. (g) Trade Secrets. Each of Priveco and its subsidiaries has taken all reasonable precautions to protect the secrecy, confidentiality, and value of its Trade Secrets. Each of Priveco and its subsidiaries has good title and an absolute right to use the Trade Secrets. The Trade Secrets are not part of the public knowledge or literature, and to the best knowledge of Priveco, have not been used, divulged, or appropriated either for the benefit of any person or entity or to the detriment of Priveco or any of its subsidiaries. No Trade Secret is subject to any adverse claim or has been challenged or threatened in any way. 3.19 Insurance. The products sold by and the assets owned by Priveco and its subsidiaries are insured under various policies of general product liability and other forms of insurance consistent with prudent business practices. All such policies are in full force and effect in accordance with their terms, no notice of cancellation has been received, and there is no existing default by Priveco, its subsidiaries or any event which, with the giving of notice, the lapse of time or both, would constitute a default thereunder. All premiums to date have been paid in full. 3.20 Employees and Consultants. All employees and consultants of Priveco and its subsidiaries have been paid all salaries, wages, income and any other sum due and owing to them by Priveco or its subsidiaries, as at the end of the most recent completed pay period. Neither Priveco nor any of its subsidiaries is aware of any labor conflict with any employees that might reasonably be expected to have a Priveco Material Adverse Effect. To the best knowledge of Priveco, no employee of Priveco or any of its subsidiaries is in violation of any term of any employment contract, non-disclosure agreement, non-competition agreement or any other contract or agreement relating to the relationship of such employee with Priveco or its subsidiaries or any other nature of the business conducted or to be conducted by Priveco its subsidiaries. 3.21 Real Property. Neither Priveco nor any of its subsidiaries owns any real property. Each of the material leases, subleases, claims or other real property interests (collectively, the "LEASES") to which Priveco or any of its subsidiaries is a party or is bound, as set out in Schedule 4, is legal, valid, binding, enforceable and in full force and effect in all material respects. All rental and other payments required to be paid by Priveco and its subsidiaries pursuant to any such Leases have been duly paid and no event has occurred which, upon the passing of time, the giving of notice, or both, would constitute a breach or default by any party under any of the Leases. The Leases will continue to be legal, valid, binding, enforceable and in full force and effect on identical terms following the Closing Date. Neither Priveco nor any of its subsidiaries has assigned, transferred, conveyed, mortgaged, deeded in trust, or encumbered any interest in the Leases or the leasehold property pursuant thereto. 3.22 Material Contracts and Transactions. Schedule 6 attached hereto lists each material contract, agreement, license, permit, arrangement, commitment, instrument or contract to which Priveco or any of its subsidiaries is a party (each, a 11 "CONTRACT"). Each Contract is in full force and effect, and there exists no material breach or violation of or default by Priveco or any of its subsidiaries under any Contract, or any event that with notice or the lapse of time, or both, will create a material breach or violation thereof or default under any Contract by Priveco or any of its subsidiaries. The continuation, validity, and effectiveness of each Contract will in no way be affected by the consummation of the Transaction contemplated by this Agreement. There exists no actual or threatened termination, cancellation, or limitation of, or any amendment, modification, or change to any Contract. 3.23 Certain Transactions. Neither Priveco nor any of its subsidiaries is a guarantor or indemnitor of any indebtedness of any third party, including any person, firm or corporation. 3.24 No Brokers. Neither Priveco nor any of its subsidiaries has incurred any independent obligation or liability to any party for any brokerage fees, agent's commissions, or finder's fees in connection with the Transaction contemplated by this Agreement. 3.25 Completeness of Disclosure. No representation or warranty by Priveco in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Pubco pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading. Notwithstanding section 10.1 hereof, the representations and warranties contained in this section shall survive Closing indefinitely. 4. REPRESENTATIONS AND WARRANTIES OF PUBCO Pubco represents and warrants to Priveco and the Selling Shareholder and acknowledges that Priveco and the Selling Shareholder are relying upon such representations and warranties in connection with the execution, delivery and performance of this Agreement, notwithstanding any investigation made by or on behalf of Priveco or the Selling Shareholder, as follows: 4.1 Organization and Good Standing. Pubco is duly incorporated, organized, validly existing and in good standing under the laws of the State of Nevada and has all requisite corporate power and authority to own, lease and to carry on its business as now being conducted. Pubco is qualified to do business and is in good standing as a foreign corporation in each of the jurisdictions in which it owns property, leases property, does business, or is otherwise required to do so, where the failure to be so qualified would have a material adverse effect on the businesses, operations, or financial condition of Pubco. 4.2 Authority. Pubco has all requisite corporate power and authority to execute and deliver this Agreement and any other document contemplated by this Agreement (collectively, the "PUBCO DOCUMENTS") to be signed by Pubco and to perform its obligations hereunder and to consummate the transactions contemplated hereby. The execution and delivery of each of the Pubco Documents by Pubco and the consummation by Pubco of the transactions contemplated hereby have been duly authorized by its board of directors and no other corporate or shareholder proceedings on the part of Pubco is necessary to authorize such documents or to consummate the transactions contemplated hereby. This Agreement has been, and the other Pubco Documents when executed and delivered by Pubco as contemplated by this Agreement will be, duly executed and delivered by Pubco and this Agreement is, and the 12 other Pubco Documents when executed and delivered by Pubco, as contemplated hereby will be, valid and binding obligations of Pubco enforceable in accordance with their respective terms, except: (a) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of general application affecting enforcement of creditors' rights generally; (b) as limited by laws relating to the availability of specific performance, injunctive relief, or other equitable remedies; and (c) as limited by public policy. 4.3 Capitalization of Pubco. The entire authorized capital stock and other equity securities of Pubco consists of 150,000,000 shares of common stock with a par value of $0.0001 (the "PUBCO COMMON STOCK"). As of the date of this Agreement, there are 100,000,000 shares of Pubco Common Stock issued and outstanding. All of the issued and outstanding shares of Pubco Common Stock have been duly authorized, are validly issued, were not issued in violation of any pre-emptive rights and are fully paid and non-assessable, are not subject to pre-emptive rights and were issued in full compliance with all federal, state, and local laws, rules and regulations. Except as contemplated by this Agreement, there are no outstanding options, warrants, subscriptions, phantom shares, conversion rights, or other rights, agreements, or commitments obligating Pubco to issue any additional shares of Pubco Common Stock, other than a share exchange agreement to be entered into among Pubco and The Carriage Group, Inc., or any other securities convertible into, exchangeable for, or evidencing the right to subscribe for or acquire from Pubco any shares of Pubco Common Stock as of the date of this Agreement. There are no agreements purporting to restrict the transfer of the Pubco Common Stock, no voting agreements, voting trusts, or other arrangements restricting or affecting the voting of the Pubco Common Stock. 4.4 Directors and Officers of Pubco. The duly elected or appointed directors and the duly appointed officers of Pubco are as listed on Schedule 3. 4.5 Corporate Records of Pubco. The corporate records of Pubco, as required to be maintained by it pursuant to the laws of the State of Delaware, are accurate, complete and current in all material respects, and the minute book of Pubco is, in all material respects, correct and contains all material records required by the law of the State of Delaware in regards to all proceedings, consents, actions and meetings of the shareholders and the board of directors of Pubco. 4.6 Non-Contravention. Neither the execution, delivery and performance of this Agreement, nor the consummation of the Transaction, will: (a) conflict with, result in a violation of, cause a default under (with or without notice, lapse of time or both) or give rise to a right of termination, amendment, cancellation or acceleration of any obligation contained in or the loss of any material benefit under, or result in the creation of any lien, security interest, charge or encumbrance upon any of the material properties or assets of Pubco under any term, condition or provision of any loan or credit agreement, note, debenture, bond, mortgage, indenture, lease or other agreement, instrument, permit, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to Pubco or any of its material property or assets; (b) violate any provision of the applicable incorporation or charter documents of Pubco; or 13 (c) violate any order, writ, injunction, decree, statute, rule, or regulation of any court or governmental or regulatory authority applicable to Pubco or any of its material property or assets. 4.7 Validity of Pubco Common Stock Issuable upon the Transaction. The Pubco Shares to be issued to the Selling Shareholder upon consummation of the Transaction in accordance with this Agreement will, upon issuance, have been duly and validly authorized and, when so issued in accordance with the terms of this Agreement, will be duly and validly issued, fully paid and non-assessable. 4.8 Actions and Proceedings. To the best knowledge of Pubco, there is no claim, charge, arbitration, grievance, action, suit, investigation or proceeding by or before any court, arbiter, administrative agency or other governmental authority now pending or, to the best knowledge of Pubco, threatened against Pubco which involves any of the business, or the properties or assets of Pubco that, if adversely resolved or determined, would have a material adverse effect on the business, operations, assets, properties, prospects or conditions of Pubco taken as a whole (a "PUBCO MATERIAL ADVERSE Effect"). There is no reasonable basis for any claim or action that, based upon the likelihood of its being asserted and its success if asserted, would have such a Pubco Material Adverse Effect. 4.9 Compliance. (a) To the best knowledge of Pubco, Pubco is in compliance with, is not in default or violation in any material respect under, and has not been charged with or received any notice at any time of any material violation of any statute, law, ordinance, regulation, rule, decree or other applicable regulation to the business or operations of Pubco; (b) To the best knowledge of Pubco, Pubco is not subject to any judgment, order or decree entered in any lawsuit or proceeding applicable to its business and operations that would constitute a Pubco Material Adverse Effect; (c) Pubco has duly filed all reports and returns required to be filed by it with governmental authorities and has obtained all governmental permits and other governmental consents, except as may be required after the execution of this Agreement. All of such permits and consents are in full force and effect, and no proceedings for the suspension or cancellation of any of them, and no investigation relating to any of them, is pending or to the best knowledge of Pubco, threatened, and none of them will be affected in a material adverse manner by the consummation of the Transaction; and (d) Pubco has operated in material compliance with all laws, rules, statutes, ordinances, orders and regulations applicable to its business. Pubco has not received any notice of any violation thereof, nor is Pubco aware of any valid basis therefore. 4.10 Filings, Consents and Approvals. No filing or registration with, no notice to and no permit, authorization, consent, or approval of any public or governmental body or authority or other person or entity is necessary for the consummation by Pubco of the Transaction contemplated by this Agreement to continue to conduct its business after the Closing Date in a manner which is consistent with that in which it is presently conducted. 4.11 Absence of Undisclosed Liabilities. Pubco has no material Liabilities or obligations either direct or indirect, matured or unmatured, absolute, contingent or otherwise, which: 14 (a) did not arise in the regular and ordinary course of business under any agreement, contract, commitment, lease or plan specifically disclosed in writing to Priveco; or (b) have not been incurred in amounts and pursuant to practices consistent with past business practice, in or as a result of the regular and ordinary course of its business. 4.12 Tax Matters. (a) As of the date hereof: (i) Pubco has timely filed all tax returns in connection with any Taxes which are required to be filed on or prior to the date hereof, taking into account any extensions of the filing deadlines which have been validly granted to them, and (ii) all such returns are true and correct in all material respects; (b) Pubco has paid all Taxes that have become or are due with respect to any period ended on or prior to the date hereof; (c) Pubco is not presently under and has not received notice of, any contemplated investigation or audit by the Internal Revenue Service or any foreign or state taxing authority concerning any fiscal year or period ended prior to the date hereof; and (d) All Taxes required to be withheld on or prior to the date hereof from employees for income Taxes, social security Taxes, unemployment Taxes and other similar withholding Taxes have been properly withheld and, if required on or prior to the date hereof, have been deposited with the appropriate governmental agency. 4.13 Absence of Changes. Except as contemplated in this Agreement, Pubco has not: (a) incurred any Liabilities, other than Liabilities incurred in the ordinary course of business consistent with past practice, or discharged or satisfied any lien or encumbrance, or paid any Liabilities, other than in the ordinary course of business consistent with past practice, or failed to pay or discharge when due any Liabilities of which the failure to pay or discharge has caused or will cause any material damage or risk of material loss to it or any of its assets or properties; (b) sold, encumbered, assigned or transferred any material fixed assets or properties; (c) created, incurred, assumed or guaranteed any indebtedness for money borrowed, or mortgaged, pledged or subjected any of the material assets or properties of Pubco to any mortgage, lien, pledge, security interest, conditional sales contract or other encumbrance of any nature whatsoever; (d) made or suffered any amendment or termination of any material agreement, contract, commitment, lease or plan to which it is a party or by which it is bound, or cancelled, modified or waived any substantial debts or claims held by it or waived any rights of substantial value, other than in the ordinary course of business; 15 (e) declared, set aside or paid any dividend or made or agreed to make any other distribution or payment in respect of its capital shares or redeemed, purchased or otherwise acquired or agreed to redeem, purchase or acquire any of its capital shares or equity securities; (f) suffered any damage, destruction or loss, whether or not covered by insurance, that materially and adversely effects its business, operations, assets, properties or prospects; (g) suffered any material adverse change in its business, operations, assets, properties, prospects or condition (financial or otherwise); (h) received notice or had knowledge of any actual or threatened labor trouble, termination, resignation, strike or other occurrence, event or condition of any similar character which has had or might have an adverse effect on its business, operations, assets, properties or prospects; (i) made commitments or agreements for capital expenditures or capital additions or betterments exceeding in the aggregate $5,000; (j) other than in the ordinary course of business, increased the salaries or other compensation of, or made any advance (excluding advances for ordinary and necessary business expenses) or loan to, any of its employees or directors or made any increase in, or any addition to, other benefits to which any of its employees or directors may be entitled; (k) entered into any transaction other than in the ordinary course of business consistent with past practice; or (l) agreed, whether in writing or orally, to do any of the foregoing. 4.14 Absence of Certain Changes or Events. There has not been: (a) a Pubco Material Adverse Effect; or (b) any material change by Pubco in its accounting methods, principles or practices. 4.15 Subsidiaries. Except as disclosed in this Agreement, Pubco does not have any subsidiaries or agreements of any nature to acquire any subsidiary or to acquire or lease any other business operations. 4.16 Personal Property. There are no material equipment, furniture, fixtures and other tangible personal property and assets owned or leased by Pubco. 4.17 Employees and Consultants. Pubco does not have any employees or consultants. 4.18 Material Contracts and Transactions. Other than as expressly contemplated by this Agreement, there are no material contracts, agreements, licenses, permits, arrangements, commitments, instruments, understandings or contracts, whether written or oral, express or implied, contingent, fixed or otherwise, to which Pubco is a party except as disclosed in writing to Priveco. 4.19 No Brokers. Pubco has not incurred any obligation or liability to any party for any brokerage fees, agent's commissions, or finder's fees in connection with the Transaction contemplated by this Agreement. 16 4.20 Completeness of Disclosure. No representation or warranty by Pubco in this Agreement nor any certificate, schedule, statement, document or instrument furnished or to be furnished to Priveco pursuant hereto contains or will contain any untrue statement of a material fact or omits or will omit to state a material fact required to be stated herein or therein or necessary to make any statement herein or therein not materially misleading. 5. CLOSING CONDITIONS 5.1 Conditions Precedent to Closing by Pubco. The obligation of Pubco to consummate the Transaction is subject to the satisfaction or written waiver of the conditions set forth below by a date mutually agreed upon by the parties hereto in writing and in accordance with Section 10.6. The Closing of the Transaction contemplated by this Agreement will be deemed to mean a waiver of all conditions to Closing. These conditions precedent are for the benefit of Pubco and may be waived by Pubco in its sole discretion. (a) Representations and Warranties. The representations and warranties of Priveco and the Selling Shareholder set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Priveco will have delivered to Pubco a certificate dated as of the Closing Date, to the effect that the representations and warranties made by Priveco in this Agreement are true and correct. (b) Performance. All of the covenants and obligations that Priveco and the Selling Shareholder are required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. (c) Transaction Documents. This Agreement, the Priveco Documents, the Priveco Financial Statements and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Pubco, will have been executed and delivered to Pubco. (d) Third Party Consents. Pubco will have received duly executed copies of all third party consents and approvals contemplated by this Agreement, in form and substance reasonably satisfactory to Pubco. (e) No Material Adverse Change. No Priveco Material Adverse Effect will have occurred since the date of this Agreement. (f) No Action. No suit, action, or proceeding will be pending or threatened which would: (i) prevent the consummation of any of the transactions contemplated by this Agreement; or (ii) cause the Transaction to be rescinded following consummation. (g) Outstanding Shares. Priveco will have no more than 50,000 shares of Priveco Common Stock issued and outstanding on the Closing Date. (h) Due Diligence Review of Financial Statements. Pubco and its accountants will be reasonably satisfied with their due diligence investigation and review of the Priveco Financial Statements. 17 (i) Due Diligence Generally. Pubco and its solicitors will be reasonably satisfied with their due diligence investigation of Priveco that is reasonable and customary in a transaction of a similar nature to that contemplated by the Transaction, including: (i) materials, documents and information in the possession and control of Priveco and the Selling Shareholder which are reasonably germane to the Transaction; (ii) a physical inspection of the assets of Priveco by Pubco or its representatives; and (iii) title to the material assets of Priveco. (j) Compliance with Securities Laws. Pubco will have received evidence satisfactory to Pubco that the Pubco Securities issuable in the Transaction will be issuable without registration pursuant to the Securities Act in reliance on an exemption from the registration requirements of the Securities Act provided by Regulation S and/or Regulation D. In order to establish the availability of the safe harbor from the registration requirements of the Securities Act for the issuance of Pubco Securities to each Selling Shareholder or their nominees, Priveco will deliver to Pubco on Closing, the applicable Certificate duly executed by each Selling Shareholder. 5.2 Conditions Precedent to Closing by Priveco. The obligation of Priveco and the Selling Shareholder to consummate the Transaction is subject to the satisfaction or written waiver of the conditions set forth below by a date mutually agreed upon by the parties hereto in writing and in accordance with Section 10.6. The Closing of the Transaction will be deemed to mean a waiver of all conditions to Closing. These conditions precedent are for the benefit of Priveco and the Selling Shareholder and may be waived by Priveco and the Selling Shareholder in their discretion. (a) Representations and Warranties. The representations and warranties of Pubco set forth in this Agreement will be true, correct and complete in all respects as of the Closing Date, as though made on and as of the Closing Date and Pubco will have delivered to Priveco a certificate dated the Closing Date, to the effect that the representations and warranties made by Pubco in this Agreement are true and correct. (b) Performance. All of the covenants and obligations that Pubco are required to perform or to comply with pursuant to this Agreement at or prior to the Closing must have been performed and complied with in all material respects. Pubco must have delivered each of the documents required to be delivered by it pursuant to this Agreement. (c) Transaction Documents. This Agreement, the Pubco Documents and all other documents necessary or reasonably required to consummate the Transaction, all in form and substance reasonably satisfactory to Priveco, will have been executed and delivered by Pubco. (d) No Material Adverse Change. No Pubco Material Adverse Effect will have occurred since the date of this Agreement. (e) Share Cancellations. Mordechay David and Shamir Benita will each cancel 39,750,000 shares of the Company's common stock held in their name simultaneously with the Closing. 18 (f) Outstanding Shares. Pubco will have no more than 20,500,000 shares of Pubco Common Stock issued and outstanding at the Closing. (g) No Action. No suit, action, or proceeding will be pending or threatened before any governmental or regulatory authority wherein an unfavorable judgment, order, decree, stipulation, injunction or charge would: (i) prevent the consummation of any of the transactions contemplated by this Agreement; or (ii) cause the Transaction to be rescinded following consummation. (h) Due Diligence Generally. Priveco will be reasonably satisfied with their due diligence investigation of Pubco that is reasonable and customary in a transaction of a similar nature to that contemplated by the Transaction. 6. ADDITIONAL COVENANTS OF THE PARTIES 6.1 Notification of Financial Liabilities. Priveco will immediately notify Pubco in accordance with Section 10.6 hereof, if Priveco receives any advice or notification from its independent certified public accounts that Priveco has used any improper accounting practice that would have the effect of not reflecting or incorrectly reflecting in the books, records, and accounts of Priveco, any properties, assets, Liabilities, revenues, or expenses. Notwithstanding any statement to the contrary in this Agreement, this covenant will survive Closing and continue in full force and effect. 6.2 Access and Investigation. Between the date of this Agreement and the Closing Date, Priveco, on the one hand, and Pubco, on the other hand, will, and will cause each of their respective representatives to: (a) afford the other and its representatives full and free access to its personnel, properties, assets, contracts, books and records, and other documents and data; (b) furnish the other and its representatives with copies of all such contracts, books and records, and other existing documents and data as required by this Agreement and as the other may otherwise reasonably request; and (c) furnish the other and its representatives with such additional financial, operating, and other data and information as the other may reasonably request. All of such access, investigation and communication by a party and its representatives will be conducted during normal business hours and in a manner designed not to interfere unduly with the normal business operations of the other party. Each party will instruct its auditors to co-operate with the other party and its representatives in connection with such investigations. 6.3 Confidentiality. All information regarding the business of Priveco including, without limitation, financial information that Priveco provides to Pubco during Pubco's due diligence investigation of Priveco will be kept in strict confidence by Pubco and will not be used (except in connection with due diligence), dealt with, exploited or commercialized by Pubco or disclosed to any third party (other than Pubco's professional accounting and legal advisors) without the prior written consent of Priveco. If the Transaction contemplated by this Agreement does not proceed for any reason, 19 then upon receipt of a written request from Priveco, Pubco will immediately return to Priveco (or as directed by Priveco) any information received regarding Priveco's business. Likewise, all information regarding the business of Pubco including, without limitation, financial information that Pubco provides to Priveco during its due diligence investigation of Pubco will be kept in strict confidence by Priveco and will not be used (except in connection with due diligence), dealt with, exploited or commercialized by Priveco or disclosed to any third party (other than Priveco's professional accounting and legal advisors) without Pubco's prior written consent. If the Transaction contemplated by this Agreement does not proceed for any reason, then upon receipt of a written request from Pubco, Priveco will immediately return to Pubco (or as directed by Pubco) any information received regarding Pubco's business. 6.4 Notification. Between the date of this Agreement and the Closing Date, each of the parties to this Agreement will promptly notify the other parties in writing if it becomes aware of any fact or condition that causes or constitutes a material breach of any of its representations and warranties as of the date of this Agreement, if it becomes aware of the occurrence after the date of this Agreement of any fact or condition that would cause or constitute a material breach of any such representation or warranty had such representation or warranty been made as of the time of occurrence or discovery of such fact or condition. Should any such fact or condition require any change in the Schedules relating to such party, such party will promptly deliver to the other parties a supplement to the Schedules specifying such change. During the same period, each party will promptly notify the other parties of the occurrence of any material breach of any of its covenants in this Agreement or of the occurrence of any event that may make the satisfaction of such conditions impossible or unlikely. 6.5 Exclusivity. Until such time, if any, as this Agreement is terminated pursuant to this Agreement, Priveco and Pubco will not, directly or indirectly, solicit, initiate, entertain or accept any inquiries or proposals from, discuss or negotiate with, provide any non-public information to, or consider the merits of any unsolicited inquiries or proposals from, any person or entity relating to any transaction involving the sale of the business or assets (other than in the ordinary course of business), or any of the capital stock of Priveco or Pubco, as applicable, or any merger, consolidation, business combination, or similar transaction other than as contemplated by this Agreement. 6.6 Conduct of Priveco and Pubco Business Prior to Closing. From the date of this Agreement to the Closing Date, and except to the extent that Pubco otherwise consents in writing, Priveco will operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it. Likewise, from the date of this Agreement to the Closing Date, and except to the extent that Priveco otherwise consents in writing, Pubco will operate its business substantially as presently operated and only in the ordinary course and in compliance with all applicable laws, and use its best efforts to preserve intact its good reputation and present business organization and to preserve its relationships with persons having business dealings with it. 6.7 Certain Acts Prohibited - Priveco. Except as expressly contemplated by this Agreement or for purposes in furtherance of this Agreement, between the date of this Agreement and the Closing Date, Priveco will not, without the prior written consent of Pubco: (a) amend its Certificate of Incorporation, Articles of Incorporation or other incorporation documents; 20 (b) incur any liability or obligation other than in the ordinary course of business or encumber or permit the encumbrance of any properties or assets of Priveco except in the ordinary course of business; (c) dispose of or contract to dispose of any Priveco property or assets, including the Intellectual Property Assets, except in the ordinary course of business consistent with past practice; (d) issue, deliver, sell, pledge or otherwise encumber or subject to any lien any shares of the Priveco Common Stock, or any rights, warrants or options to acquire, any such shares, voting securities or convertible securities; (e) not: (i) declare, set aside or pay any dividends on, or make any other distributions in respect of the Priveco Common Stock, or (ii) split, combine or reclassify any Priveco Common Stock or issue or authorize the issuance of any other securities in respect of, in lieu of or in substitution for shares of Priveco Common Stock; or (f) not materially increase benefits or compensation expenses of Priveco, other than as contemplated by the terms of any employment agreement in existence on the date of this Agreement, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount not required by a plan or arrangement as in effect on the date of this Agreement to any such person. 6.8 Certain Acts Prohibited - Pubco. Except as expressly contemplated by this Agreement, between the date of this Agreement and the Closing Date, Pubco will not, without the prior written consent of Priveco: (a) incur any liability or obligation or encumber or permit the encumbrance of any properties or assets of Pubco except in the ordinary course of business consistent with past practice; (b) dispose of or contract to dispose of any Pubco property or assets except in the ordinary course of business consistent with past practice; (c) declare, set aside or pay any dividends on, or make any other distributions in respect of the Pubco Common Stock other than pursuant to the share exchange agreement to be entered into among Pubco and The Carriage Group, Inc.; or (d) materially increase benefits or compensation expenses of Pubco, increase the cash compensation of any director, executive officer or other key employee or pay any benefit or amount to any such person. 6.9 Public Announcements. Pubco and Priveco each agree that they will not release or issue any reports or statements or make any public announcements relating to this Agreement or the Transaction contemplated herein without the prior written consent of the other party, except as may be required upon written advice of counsel to comply with applicable laws or regulatory requirements after consulting with the other party hereto and seeking their reasonable consent to such announcement. 21 6.10 Employment Agreements. Between the date of this Agreement and the Closing Date, Priveco will have made necessary arrangements to employ all of the hourly and salaried employees of Priveco reasonably necessary to operate such business substantially as presently operated. Priveco agrees to provide copies of all such agreements and arrangements that evidence such employment at or prior to Closing. 7. CLOSING 7.1 Closing. The Closing shall take place on the Closing Date at the offices of the lawyers for Pubco or at such other location as agreed to by the parties. Notwithstanding the location of the Closing, each party agrees that the Closing may be completed by the exchange of undertakings between the respective legal counsel for Priveco and Pubco, provided such undertakings are satisfactory to each party's respective legal counsel. 7.2 Closing Deliveries of Priveco and the Selling Shareholder. At Closing, Priveco and the Selling Shareholder will deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to Pubco: (a) copies of all resolutions and/or consent actions adopted by or on behalf of the board of directors of Priveco evidencing approval of this Agreement and the Transaction; (b) if the Selling Shareholder appoints any person, by power of attorney or equivalent, to execute this Agreement or any other agreement, document, instrument or certificate contemplated by this agreement, on behalf of the Selling Shareholder, a valid and binding power of attorney or equivalent from such Selling Shareholder; (c) share certificates, if issued, representing the Priveco Shares as required by Section 2.3 of this Agreement; (d) all certificates and other documents required by Sections 2.3 and 5.1 of this Agreement; (e) the Priveco Documents and any other necessary documents, each duly executed by Priveco, as required to give effect to the Transaction; and (f) copies of all agreements and arrangements required by Section 6.10 of this Agreement. 7.3 Closing Deliveries of Pubco. At Closing, Pubco will deliver or cause to be delivered the following, fully executed and in the form and substance reasonably satisfactory to Priveco: (a) copies of all resolutions and/or consent actions adopted by or on behalf of the board of directors of Pubco evidencing approval of this Agreement and the Transaction; (b) all certificates and other documents required by Section 5.2 of this Agreement; (c) all certificates, stock powers, and other documents required for the cancellation or consolidation of 79,500,000 shares of Pubco; (d) resolutions required to effect the changes in officers stipulated by Section 6.10 of this Agreement; (e) the Pubco Documents and any other necessary documents, each duly executed by Pubco, as required to give effect to the Transaction. 22 7.4 Additional Closing Delivery of Pubco. At Closing, Pubco will deliver or cause to be delivered the share certificates representing the Pubco Securities. 8. TERMINATION 8.1 Termination. This Agreement may be terminated at any time prior to the Closing Date contemplated hereby by: (a) mutual agreement of Pubco and Priveco; (b) Pubco, if there has been a material breach by Priveco or the Selling Shareholder of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Priveco or the Selling Shareholder that is not cured, to the reasonable satisfaction of Pubco, within ten business days after notice of such breach is given by Pubco (except that no cure period will be provided for a breach by Priveco or the Selling Shareholder that by its nature cannot be cured); (c) Priveco, if there has been a material breach by Pubco of any material representation, warranty, covenant or agreement set forth in this Agreement on the part of Pubco that is not cured by the breaching party, to the reasonable satisfaction of Priveco, within ten business days after notice of such breach is given by Priveco (except that no cure period will be provided for a breach by Pubco that by its nature cannot be cured); or (d) Pubco or Priveco if any permanent injunction or other order of a governmental entity of competent authority preventing the consummation of the Transaction contemplated by this Agreement has become final and non-appealable. 8.2 Effect of Termination. In the event of the termination of this Agreement as provided in Section 8.1, this Agreement will be of no further force or effect, provided, however, that no termination of this Agreement will relieve any party of liability for any breaches of this Agreement that are based on a wrongful refusal or failure to perform any obligations. 9. INDEMNIFICATION, REMEDIES, SURVIVAL 9.1 Certain Definitions. For the purposes of this Article 9, the terms "LOSS" and "LOSSES" mean any and all demands, claims, actions or causes of action, assessments, losses, damages, Liabilities, costs, and expenses, including without limitation, interest, penalties, fines and reasonable attorneys, accountants and other professional fees and expenses, but excluding any indirect, consequential or punitive damages suffered by Pubco or Priveco including damages for lost profits or lost business opportunities. 9.2 Agreement of Priveco to Indemnify. Priveco will indemnify, defend, and hold harmless, to the full extent of the law, Pubco and its shareholders from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Pubco and its shareholders by reason of, resulting from, based upon or arising out of: (a) the breach by Priveco of any representation or warranty of Priveco contained in or made pursuant to this Agreement, any Priveco Document or any certificate or other instrument delivered pursuant to this Agreement; or 23 (b) the breach or partial breach by Priveco of any covenant or agreement of Priveco made in or pursuant to this Agreement, any Priveco Document or any certificate or other instrument delivered pursuant to this Agreement. 9.3 Agreement of the Selling Shareholder to Indemnify. The Selling Shareholder will indemnify, defend, and hold harmless, to the full extent of the law, Pubco and its shareholders from, against, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Pubco and its shareholders by reason of, resulting from, based upon or arising out of: (a) any breach by the Selling Shareholder of Section 2.2 of this Agreement; or (b) any misstatement, misrepresentation or breach of the representations and warranties made by the Selling Shareholder contained in or made pursuant to the Certificate executed by each Selling Shareholder or their nominee as part of the share exchange procedure detailed in Section 2.3 of this Agreement. 9.4 Agreement of Pubco to Indemnify. Pubco will indemnify, defend, and hold harmless, to the full extent of the law, Priveco and the Selling Shareholder from, against, for, and in respect of any and all Losses asserted against, relating to, imposed upon, or incurred by Priveco and the Selling Shareholder by reason of, resulting from, based upon or arising out of: (a) the breach by Pubco of any representation or warranty of Pubco contained in or made pursuant to this Agreement, any Pubco Document or any certificate or other instrument delivered pursuant to this Agreement; or (b) the breach or partial breach by Pubco of any covenant or agreement of Pubco made in or pursuant to this Agreement, any Pubco Document or any certificate or other instrument delivered pursuant to this Agreement. 10. MISCELLANEOUS PROVISIONS 10.1 Effectiveness of Representations; Survival. Each party is entitled to rely on the representations, warranties and agreements of each of the other parties and all such representation, warranties and agreement will be effective regardless of any investigation that any party has undertaken or failed to undertake. Unless otherwise stated in this Agreement, and except for instances of fraud, the representations, warranties and agreements will survive the Closing Date and continue in full force and effect until one (1) year after the Closing Date. 10.2 Further Assurances. Each of the parties hereto will co-operate with the others and execute and deliver to the other parties hereto such other instruments and documents and take such other actions as may be reasonably requested from time to time by any other party hereto as necessary to carry out, evidence, and confirm the intended purposes of this Agreement. 10.3 Amendment. This Agreement may not be amended except by an instrument in writing signed by each of the parties. 10.4 Expenses. Pubco will bear all costs incurred in connection with the preparation, execution and performance of this Agreement and the Transaction contemplated hereby, including all fees and expenses of agents, representatives and accountants; provided that Pubco and Priveco will bear its respective legal, accounting and auditing costs incurred in connection with the preparation, execution and performance of this Agreement and the Transaction contemplated hereby. 24 10.5 Entire Agreement. This Agreement, the schedules attached hereto and the other documents in connection with this transaction contain the entire agreement between the parties with respect to the subject matter hereof and supersede all prior arrangements and understandings, both written and oral, expressed or implied, with respect thereto. Any preceding correspondence or offers are expressly superseded and terminated by this Agreement. 10.6 Notices. All notices and other communications required or permitted under to this Agreement must be in writing and will be deemed given if sent by personal delivery, faxed with electronic confirmation of delivery, internationally-recognized express courier or registered or certified mail (return receipt requested), postage prepaid, to the parties at the addresses (or at such other address for a party as will be specified by like notice) on the first page of this Agreement. All such notices and other communications will be deemed to have been received: (a) in the case of personal delivery, on the date of such delivery; (b) in the case of a fax, when the party sending such fax has received electronic confirmation of its delivery; (c) in the case of delivery by internationally-recognized express courier, on the business day following dispatch; and (d) in the case of mailing, on the fifth business day following mailing. 10.7 Headings. The headings contained in this Agreement are for convenience purposes only and will not affect in any way the meaning or interpretation of this Agreement. 10.8 Benefits. This Agreement is and will only be construed as for the benefit of or enforceable by those persons party to this Agreement. 10.9 Assignment. This Agreement may not be assigned (except by operation of law) by any party without the consent of the other parties. 10.10 Governing Law. This Agreement will be governed by and construed in accordance with the laws of the State of Nevada applicable to contracts made and to be performed therein. 10.11 Construction. The language used in this Agreement will be deemed to be the language chosen by the parties to express their mutual intent, and no rule of strict construction will be applied against any party. 10.12 Gender. All references to any party will be read with such changes in number and gender as the context or reference requires. 10.13 Business Days. If the last or appointed day for the taking of any action required or the expiration of any rights granted herein shall be a Saturday, Sunday or a legal holiday in the State of Nevada, then such action may be taken or right may be exercised on the next succeeding day which is not a Saturday, Sunday or such a legal holiday. 10.14 Counterparts. This Agreement may be executed in one or more counterparts, all of which will be considered one and the same agreement and will become effective when one or more counterparts have been signed by each of the parties and delivered to the other parties, it being understood that all parties need not sign the same counterpart. 25 10.15 Fax Execution. This Agreement may be executed by delivery of executed signature pages by fax and such fax execution will be effective for all purposes. 10.16 Schedules and Exhibits. The schedules and exhibits are attached to this Agreement and incorporated herein. IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the day and year first above written. WINECOM INC. Per: /s/ Bruce Harmon --------------------------------------- Authorized Signatory Name: Bruce Harmon Title: President GREEN HYGIENICS, INC. Per: /s/ Bruce Harmon --------------------------------------- Authorized Signatory Name: Bruce Harmon Title: President BRUCE HARMON /s/ Bruce Harmon ------------------------------------------- 26 SCHEDULE 1 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT THE SELLING SHAREHOLDER Total Number of Number of Priveco Pubco Shares to be Shares held before issued by Pubco on Name Closing Closing ---- ------- ------- Bruce Harmon 50,000 49,500,000 SCHEDULE 2 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT CERTIFICATE OF U.S. SHAREHOLDER In connection with the issuance of common stock ("Pubco Common Stock") of WINECOM INC., a company incorporated pursuant to the laws of the State of Nevada ("Pubco"), to the undersigned, pursuant to that certain Share Exchange Agreement dated September 26, 2012 (the "Agreement"), among Pubco, GREEN HYGIENICS, INC., a company incorporated pursuant to the laws of the State of Florida ("Priveco") and the shareholders of Priveco as set out in the Agreement (each, a "Selling Shareholder"), the undersigned hereby agrees, acknowledges, represents and warrants that: 1. Acquired Entirely for Own Account. The undersigned represents and warrants that he, she or it is acquiring the Pubco Common Stock solely for the undersigned's own account for investment and not with a view to or for sale or distribution of the Pubco Common Stock or any portion thereof and without any present intention of selling, offering to sell or otherwise disposing of or distributing the Pubco Common Stock or any portion thereof in any transaction other than a transaction complying with the registration requirements of the U.S. Securities Act of 1933, as amended (the "Securities Act"), and applicable state and provincial securities laws, or pursuant to an exemption therefrom. The undersigned also represents that the entire legal and beneficial interest of the Pubco Common Stock that he, she or it is acquiring is being acquired for, and will be held for, the undersigned's account only, and neither in whole nor in part for any other person or entity. 2. Information Concerning Pubco. The undersigned acknowledges that he, she or it has received all such information as the undersigned deems necessary and appropriate to enable him, her or it to evaluate the financial risk inherent in making an investment in the Pubco Common Stock. The undersigned further acknowledges that he, she or it has received satisfactory and complete information concerning the business and financial condition of Pubco in response to all inquiries in respect thereof. 3. Economic Risk and Suitability. The undersigned represents and warrants as follows: (a) the undersigned realizes that the Pubco Common Stock involves a high degree of risk and are a speculative investment, and that he, she or it is able, without impairing the undersigned's financial condition, to hold the Pubco Common Stock for an indefinite period of time; (b) the undersigned recognizes that there is no assurance of future profitable operations and that investment in Pubco involves substantial risks, and that the undersigned has taken full cognizance of and understands all of the risk factors related to the Pubco Common Stock; (c) the undersigned has carefully considered and has, to the extent the undersigned believes such discussion necessary, discussed with the undersigned's professional legal, tax and financial advisors the suitability of an investment in Pubco for the particular tax and financial situation of the undersigned and that the undersigned and/or the undersigned's advisors have determined that the Pubco Common Stock is a suitable investment for the undersigned; (d) the financial condition and investment of the undersigned are such that he, she or it is in a financial position to hold the Pubco Common Stock for an indefinite period of time and to bear the economic risk of, and withstand a complete loss of, the value of the Pubco Common Stock; (e) the undersigned alone, or with the assistance of professional advisors, has such knowledge and experience in financial and business matters that the undersigned is capable of evaluating the merits and risks of acquiring the Pubco Common Stock, or has a pre-existing personal or business relationship with Pubco or any of its officers, directors, or controlling persons of a duration and nature that enables the undersigned to be aware of the character, business acumen and general business and financial circumstances of Pubco or such other person; (f) if the undersigned is a partnership, trust, corporation or other entity: (1) it was not organized for the purpose of acquiring the Pubco Common Stock (or all of its equity owners are "accredited investors" as defined in Section 6 below); (2) it has the power and authority to execute this Certificate and the person executing said document on its behalf has the necessary power to do so; (3) its principal place of business and principal office are located within the state set forth in its address below; and (4) all of its trustees, partners and/or shareholders, whichever the case may be, are bona fide residents of said state; (g) the undersigned understands that neither Pubco nor any of its officers or directors has any obligation to register the Pubco Common Stock under any federal or other applicable securities act or law; (h) the undersigned has relied solely upon the advice of his or her representatives, if any, and independent investigations made by the undersigned and/or his or her the undersigned representatives, if any, in making the decision to acquire the Pubco Common Stock and acknowledges that no representations or agreements other than those set forth in the Share Exchange Agreement have been made to the undersigned in respect thereto; (i) all information which the undersigned has provided concerning the undersigned himself, herself or itself is correct and complete as of the date set forth below, and if there should be any material change in such information prior to the issuance of the Pubco Common Stock, he, she or it will immediately provide such information to Pubco; (j) the undersigned confirms that the undersigned has received no general solicitation or general advertisement and has attended no seminar or meeting (whose attendees have been invited by any general solicitation or general advertisement) and has received no advertisement in any newspaper, magazine, or similar media, broadcast on television or radio regarding acquiring the Pubco Common Stock; and (k) the undersigned is at least 21 years of age and is a citizen of the United States residing at the address indicated below. 2 4. Restricted Securities. The undersigned acknowledges that Pubco has hereby disclosed to the undersigned in writing: (a) the Pubco Common Stock that the undersigned is acquiring have not been registered under the Securities Act or the securities laws of any state of the United States, and such securities must be held indefinitely unless a transfer of them is subsequently registered under the Securities Act or an exemption from such registration is available; and (b) Pubco will make a notation in its records of the above described restrictions on transfer and of the legend described below. 5. Legends. The undersigned agrees that the Pubco Common Stock will bear the following legends: "THESE SHARES OF COMMON STOCK HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED ("1933 ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES AND MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED ONLY (I) TO THE COMPANY, (II) OUTSIDE THE UNITED STATES IN COMPLIANCE WITH RULE 904 OF REGULATION S UNDER THE 1933 ACT, (III) IN COMPLIANCE WITH THE EXEMPTION FROM REGISTRATION UNDER THE 1933 ACT PROVIDED BY RULE 144 THEREUNDER, OR (IV) IN COMPLIANCE WITH ANOTHER EXEMPTION FROM REGISTRATION, IN EACH CASE AFTER PROVIDING EVIDENCE SATISFACTORY TO THE COMPANY THAT SUCH TRANSFER MAY BE MADE WITHOUT REGISTRATION UNDER THE 1933 ACT. HEDGING TRANSACTIONS INVOLVING THE SECURITIES REPRESENTED HEREBY MAY NOT BE CONDUCTED UNLESS IN COMPLIANCE WITH THE 1933 ACT." 6. Suitable Investor. IN ORDER TO ESTABLISH THE QUALIFICATION OF THE UNDERSIGNED TO ACQUIRE THE PUBCO COMMON STOCK, THE INFORMATION REQUESTED IN EITHER SUBSECTION 6(A) OR (B) BELOW MUST BE SUPPLIED. (a) The undersigned is an "accredited investor," as defined in Securities and Exchange Commission (the "SEC") Rule 501. An "accredited investor" is one who meets any of the requirements set forth below. The undersigned represents and warrants that the undersigned falls within the category (or categories) marked. PLEASE INDICATE EACH CATEGORY OF ACCREDITED INVESTOR THAT YOU, THE UNDERSIGNED, SATISFY, BY PLACING AN "X" ON THE APPROPRIATE LINE BELOW. _____ Category 1. A bank, as defined in Section 3(a)(2) of the Securities Act, whether acting in its individual or fiduciary capacity; or _____ Category 2. A savings and loan association or other institution as defined in Section 3(a) (5) (A) of the Securities Act, whether acting in its individual or fiduciary capacity; or _____ Category 3. A broker or dealer registered pursuant to Section 15 of the Securities Exchange Act of 1934; or _____ Category 4. An insurance company as defined in Section 2(13) of the Securities Act; or 3 _____ Category 5. An investment company registered under the Investment Company Act of 1940; or _____ Category 6. A business development company as defined in Section 2(a) (48) of the Investment Company Act of 1940; or _____ Category 7. A small business investment company licensed by the U.S. Small Business Administration under Section 301(c) or (d) of the Small Business Investment Act of 1958; or _____ Category 8. A plan established and maintained by a state, its political subdivision or any agency or instrumentality of a state or its political subdivisions, for the benefit of its employees, with assets in excess of $5,000,000; or _____ Category 9. An employee benefit plan within the meaning of the Employee Retirement Income Security Act of 1974 in which the investment decision is made by a plan fiduciary, as defined in Section 3(21) of such Act, which is either a bank, savings and loan association, insurance company or registered investment advisor, or an employee benefit plan with total assets in excess of $5,000,000 or, if a self-directed plan, the investment decisions are made solely by persons who are accredited investors; or _____ Category 10. A private business development company as defined in Section 202(a) (22) or the Investment Advisers Act of 1940; or _____ Category 11. An organization described in Section 501(c)(3) of the Internal Revenue Code, a corporation, a Massachusetts or similar business trust, or a partnership, not formed for the specific purpose of acquiring the Interest, with total assets in excess of $5,000,000; or * Category 12. A director or executive officer of Pubco; or _____ _____ Category 13. A natural person whose individual net worth, or joint net worth with that person's spouse, not accounting for their primary residence, at the time of this purchase exceeds $1,000,000; or _____ Category 14. A natural person who had an individual income in excess of $200,000 in each of the two most recent years or joint income with that person's spouse in excess of $300,000 in each of those years and has a reasonable expectation of reaching the same income level in the current year; or _____ Category 15. A trust, with total assets in excess of $5,000,000, not formed for the specific purpose of acquiring the Interest, whose purchase is directed by a sophisticated person as described in SEC Rule 506(b)(2)(ii); or _____ Category 16. An entity in which all of the equity owners are accredited investors. (b) The undersigned is not an accredited investor and meets the requirements set forth below. PLEASE INDICATE THAT YOU, THE UNDERSIGNED, SATISFY THESE REQUIREMENTS BY PLACING AN "X" ON THE LINE BELOW. _____ The undersigned, either alone or with the undersigned's representative, has such knowledge, skill and experience in business, financial and investment matters so that the undersigned is capable of evaluating the merits and risks of an investment in the Pubco Common Stock. To the extent necessary, the undersigned has retained, at the undersigned's own expense, and relied upon, appropriate professional advice regarding 4 the investment, tax and legal merits and consequences of owning the Pubco Common Stock. In addition, the amount of the undersigned's investment in the Pubco Common Stock does not exceed ten percent (10%) of the undersigned's net worth. The undersigned agrees to furnish any additional information requested to assure compliance with applicable federal and state securities laws in connection with acquiring the Pubco Common Stock. 7. Understandings. The undersigned understands, acknowledges and agrees that: (a) no federal or state agency has made any finding or determination as to the accuracy or adequacy of the Disclosure Documents or as to the fairness of the terms of this offering for investment nor any recommendation or endorsement of the Pubco Common Stock; (b) this offering is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) of the Securities Act, which is in part dependent upon the truth, completeness and accuracy of the statements made by the undersigned herein; (c) the Pubco Common Stock are "restricted securities" in the U.S. under the Securities Act. There can be no assurance that the undersigned will be able to sell or dispose of the Pubco Common Stock. It is understood that in order not to jeopardize this offering's exempt status under Section 4(2) of the Act, any transferee may, at a minimum, be required to fulfill the investor suitability requirements thereunder; (d) the representations, warranties and agreements of the undersigned contained herein and in any other writing delivered in connection with the transactions contemplated hereby shall be true and correct in all respects on and as of the date the Pubco Common Stock is acquired as if made on and as of such date; and (e) THE PUBCO COMMON STOCK MAY NOT BE TRANSFERRED, RESOLD OR OTHERWISE DISPOSED OF EXCEPT AS PERMITTED UNDER THE SECURITIES ACT AND ANY OTHER APPLICABLE SECURITIES LAWS, PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE UNDERSIGNED SHOULD BE AWARE THAT THEY WILL BE REQUIRED TO BEAR THE FINANCIAL RISKS OF THIS INVESTMENT FOR AN INDEFINITE PERIOD OF TIME. IN WITNESS WHEREOF, I have executed this Certificate. /s/ Bruce Harmon Date: September 26, 2012 ------------------------------------- Signature Bruce Harmon ------------------------------------- Print Name Chief Executive Officer and Director ------------------------------------- Title (if applicable) ------------------------------------- Address 5 SCHEDULE 3 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT DIRECTORS AND OFFICERS OF PRIVECO Bruce Harmon, Sole Officer and Director SCHEDULE 4 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT DIRECTORS AND OFFICERS OF PUBCO Bruce Harmon: resident, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director. Shamir Benita: Director Mordechay David: Director SCHEDULE 5 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT PRIVECO MATERIAL LEASES, SUBLEASES, CLAIMS, CAPITAL EXPENDITURES, TAXES AND OTHER PROPERTY INTERESTS None SCHEDULE 6 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT PRIVECO INTELLECTUAL PROPERTY License Agreement dated August 1, 2012 with American Hygienics Corporation SCHEDULE 7 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT PRIVECO MATERIAL CONTRACTS License Agreement dated August 1, 2012 with American Hygienics Corporation SCHEDULE 8 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT PRIVECO EMPLOYMENT AGREEMENTS AND ARRANGEMENTS As of the date of this Agreement, the following hourly and salaried employees of Priveco are reasonably necessary to operate the business of Priveco as substantially presently operated: None SCHEDULE 9 TO THE SHARE EXCHANGE AGREEMENT AMONG WINECOM INC., GREEN HYGIENCS, INC. AND THE SELLING SHAREHOLDER AS SET OUT IN THE SHARE EXCHANGE AGREEMENT SUBSIDIARIES None EX-10.2 3 ex10-2.txt LICENSE AGREEMENT Exhibit 10.2 LICENSING AGREEMENT By and Among AMERICAN HYGIENICS CORPORATION A Privately-Owned Corporation Incorporated and Governed by the Republic of China, GREEN HYGIENICS, INC. A Corporation Incorporated in the State of Florida Dated as of August 1, 2012 1 LICENSING AGREEMENT THIS LICENSING AGREEMENT (this "Agreement") is entered into as of this 1st day of AUGUST, 2012 by and between GREEN HYGIENICS, INC. ("GHI"), a Florida Corporation; and AMERICAN HYGIENICS CORPORATION ("AHC"), a corporation domiciled in the People's Republic of China. Recitals WHEREAS, shareholders of AHC agree to license its products holding Intellectual Passport on bamboo pulp-based hygiene products manufacturing to GHI, in exchange for the fees as negotiated through a markup to the wholesale price. The initial list of products to be provided by AHC are disclosed on Exhibit A. WHEREAS, GHI will have a North American exclusive with AHC for the bamboo products listed in Exhibit A for a period of five (5) years. At the expiry of five years and the conditions set forth being met, there will be an automatic renewal for a minimum of five (5) years. This Agreement shall remain contracted with GHI and will not be assigned to the parent company post-Reverse Merger unless approved by both parties. Certain conditions, as stated in Exhibit A, including certain levels of annual sales for stated products, will be required for Agreement. Additionally, certain requirements related to each SKU are stated in Exhibit A. NOW THEREFORE, on the stated premises and for and in consideration of the mutual covenants and agreements hereinafter set forth and the mutual benefits to the parties to be derived here from, and intending to be legally bound hereby, it is hereby agreed as follows: I. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF GHI GHI hereby represents and warrants as follows: 1. Organization. GHI is a corporation duly organized, validly existing, and in good standing under the laws of the State of Florida and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. Included in the GHI due diligence materials previously submitted, are complete and correct copies of the articles of incorporation, and bylaws of GHI as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of GHI's articles of incorporation or bylaws. GHI has taken all actions required by law, its articles of incorporation, or otherwise to authorize the execution and delivery of this Agreement. GHI has full power, authority, and legal right and has taken all action required by law, its articles of incorporation, and otherwise to consummate the transactions herein contemplated. 2 2. Non-Compete. During the term of this Agreement, GHI will not compete with AHC and related entities. 3. Options or Warrants. There are no existing options, warrants, calls, or commitments of any character relating to the authorized and unissued stock of GHI. 4. Litigation and Proceedings. There are no actions, suits, proceedings, or investigations pending or, to the knowledge of GHI, threatened against GHI, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. GHI does not have any knowledge of any material default on its part with respect to any judgment, order, injunction, decree, award, rule, or regulation of any court, arbitrator, or governmental agency or instrumentality or of any circumstances which would result in the discovery of such a default. 5. No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not result in the material breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of any material indenture, mortgage, deed of trust, or other material agreement or instrument to which GHI is a party or to which any of its assets, properties or operations are subject. 6. Compliance With Laws and Regulations. To the best of its knowledge, GHI has complied with all applicable statutes and regulations of any federal, state, or other governmental entity or agency thereof, except to the extent that noncompliance would not materially and adversely affect the business, operations, properties, assets, or condition of GHI or except to the extent that noncompliance would not result in the occurrence of any material liability for GHI. This compliance includes, but is not limited to, the filing of all reports to date with federal and state securities authorities. 7. Approval of Agreement. The Board of Directors of GHI has authorized the execution and delivery of this Agreement by GHI and has approved this Agreement and the transactions contemplated hereby. This Agreement shall be subject to approval of GHI in accordance with the laws of the State of Florida, including any preemptive or dissenters rights under such State's laws. 8. Valid Obligation. This Agreement and all agreements and other documents executed by GHI in connection herewith constitute the valid and binding obligation of GHI, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought. 9. GHI will take charge of all sales and marketing within the territory of all the brands and products listed in exhibit A to its best capacity and will assume all the expenses incurred in regards to the sales of the products 3 II. REPRESENTATIONS, COVENANTS, AND WARRANTIES OF AHC AHC hereby represents and warrants as follows: 1. Organization. AHC is a corporation duly organized, validly existing, and in good standing under the laws of PEOPLE'S REPUBLIC OF CHINA and has the corporate power and is duly authorized under all applicable laws, regulations, ordinances, and orders of public authorities to carry on its business in all material respects as it is now being conducted. Included in the AHC due diligence materials submitted herewith, are complete and correct copies of the certificate of incorporation and bylaws of AHC as in effect on the date hereof. The execution and delivery of this Agreement does not, and the consummation of the transactions contemplated hereby will not, violate any provision of AHC's certificate of incorporation or bylaws. AHC has taken all action required by law, its certificate of incorporation, its bylaws, or otherwise to authorize the execution and delivery of this Agreement, and AHC has full power, authority, and legal right and has taken all action required by law, its certificate of incorporation, bylaws, or otherwise to consummate the transactions herein contemplated. 2. Not Used. 3. Not Used. 4. Information. The information concerning AHC provided in the due diligence materials and as set forth in this Agreement is complete and accurate in all material respects and does not contain any untrue statements of a material fact or omit to state a material fact required to make the statements made, in light of the circumstances under which they were made, not misleading. 5. Litigation and Proceeding. There are no actions, suits, or proceedings pending or, to the knowledge of AHC after reasonable investigation, threatened by or against AHC or affecting AHC or its properties, at law or in equity, before any court or other governmental agency or instrumentality, domestic or foreign, or before any arbitrator of any kind. AHC has no knowledge of any default on its part with respect to any judgment, order, writ, injunction, decree, award, rule or regulation of any court, arbitrator, or governmental agency or instrumentality or any circumstance, which after reasonable investigation would result in the discovery of such default. 6. Contracts. AHC is not a party to, and its assets, products, technology and properties are not bound by, any contract, franchise, license agreement, agreement, debt instrument or other commitments whether such agreement is in writing or oral which would impede or prevent entry into, performance of, or due enforcement of this Agreement. 7. No Conflict With Other Instruments. The execution of this Agreement and the consummation of the transactions contemplated by this Agreement will not 4 result in the breach of any term or provision of, constitute a default under, or terminate, accelerate or modify the terms of, any indenture, mortgage, deed of trust, or other material agreement or instrument to which AHC is a party or to which any of its assets, properties or operations are subject. 8. Compliance With Laws and Regulations. To the best of its knowledge, AHC has complied with all applicable statutes and regulations of federal, state, or other applicable governmental entity or agency thereof, relevant in its compliance to labeling and approvals of their products to be sold within the laws of the market its being sold to as this remains its obligation for branded and private label products. 9. Approval of Agreement. The Board of Directors of AHC has authorized the execution and delivery of this Agreement by AHC and has approved this Agreement and the transactions contemplated hereby. 10. Valid Obligation. This Agreement and all agreements and other documents executed by AHC in connection herewith constitute the valid and binding obligation of AHC, enforceable in accordance with its or their terms, except as may be limited by bankruptcy, insolvency, moratorium or other similar laws affecting the enforcement of creditors' rights generally and subject to the qualification that the availability of equitable remedies is subject to the discretion of the court before which any proceeding therefore may be brought. III. SPECIAL COVENANTS 1. Closing. The closing of the transactions contemplated by this Agreement (the "Closing") shall occur no later than August 5, 2012, or as otherwise mutually agreed to by the parties hereto. 2. Not Used. 3. Termination. This Agreement may be terminated by the Board of Directors of GHI only in the event that the conditions precedent set forth in this Agreement are not satisfied. This Agreement may be terminated by the Board of Directors of AHC only in the event that the conditions precedent set forth are not satisfied. If this Agreement is terminated there shall be of no further force or effect, and no obligation, right or liability shall arise hereunder. The termination is required to be provided by either party to the other party with a 90 days' written notice. Should either party terminate the Agreement for cause, the prevailing party shall have the rights to the customers and/or accounts of GHI. 4. Not Used 5. Third Party Consents and Certificates. AHC and GHI agree to cooperate with each other in order to obtain any required third party consents to this Agreement and the transactions herein contemplated. 5 6. Obligations of Both Parties. From and after the date of this Agreement until the termination of the Agreement and, except as expressly permitted or contemplated by this Agreement, AHC and GHI respectively, will each: i. carry on its business in substantially the same manner as it has heretofore; ii. maintain in full force and effect insurance comparable in amount and in scope of coverage to that now maintained by it; iii. use its best efforts to maintain and preserve its business organization intact, to retain its key employees, and to maintain its relationship with its material suppliers and customers; and iv. fully comply with and perform in all material respects all obligations and duties imposed on it by all federal and state laws and all rules, regulations, and orders imposed by federal or state governmental authorities. 7. Indemnification. GHI hereby agrees to indemnify AHC and each of the officers, agents and directors of AHC as of the date of execution of this Agreement against any loss, liability, claim, damage, or expense (including, but not limited to, any and all expense whatsoever reasonably incurred in investigating, preparing, or defending against any litigation, commenced or threatened, or any claim whatsoever) ("Loss"), to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentations made under Article I of this Agreement. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement for one year following the Closing. AHC hereby agrees to indemnify GHI and each of the officers, agents, and directors of GHI and the GHI Shareholders as of the date of execution of this Agreement against any Loss to which it or they may become subject arising out of or based on any inaccuracy appearing in or misrepresentation made under Article II of this Agreement. The indemnification provided for in this paragraph shall survive the Closing and consummation of the transactions contemplated hereby and termination of this Agreement for one year following the Closing. IV. CONDITIONS PRECEDENT TO OBLIGATIONS OF AHC The obligations of AHC under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions: 6 1. Accuracy of Representations and Performance of Covenants. The representations and warranties made by GHI and the GHI Shareholders in this Agreement shall be true in all material respects (other than representations and warranties which contain materiality standards, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date (except for changes therein permitted by this Agreement). GHI shall have performed or complied with, in all material respects, all covenants and conditions required by this Agreement to be performed or complied with by GHI prior to or at the Closing. AHC shall be furnished with a certificate, signed by a duly authorized executive officer of GHI and dated the Closing Date, to the foregoing effect. 2. Officer's Certificate. AHC shall have been furnished with a certificate dated the Closing Date and signed by a duly authorized officer of GHI to the effect that no litigation, proceeding, investigation, or inquiry is pending, or to the best knowledge of GHI threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement, or, which might result in any material adverse change in any of the assets, properties, business, or operations of GHI. 3. No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby. 4. Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of GHI after the Closing Date on the basis as presently operated shall have been obtained. V. CONDITIONS PRECEDENT TO OBLIGATIONS OF GHI The obligations of GHI under this Agreement are subject to the satisfaction, at or before the Closing Date, of the following conditions: 1. Accuracy of Representations and Performance of Covenants. The representations and warranties made by AHC in this Agreement shall be true in all material respects (other than representations and warranties which contain materiality standards, which representations and warranties shall be true and correct in all respects) at and as of the Closing Date. Additionally, AHC shall have performed and complied, in all material respects, with all covenants and conditions required by this Agreement to be performed or complied with by AHC. 2. Officer's Certificate. GHI shall have been furnished with certificates dated the Closing Date and signed by duly authorized executive officers of AHC, to the effect that no litigation, proceeding, investigation or inquiry is 7 pending, or to the best knowledge of AHC threatened, which might result in an action to enjoin or prevent the consummation of the transactions contemplated by this Agreement or, to the extent not disclosed in the AHC's filings with the Securities and Exchange Commission, by or against AHC, which might result in any material adverse change in any of the assets, properties or operations of AHC. 3. Good Standing. GHI shall have received a certificate of good standing from the Secretary of State of the State of Florida or other appropriate office, dated as of a date within ten days prior to the Closing Date certifying that GHI is in good standing as a corporation in the State of Florida and has filed all tax returns required to have been filed by it to date and has paid all taxes reported as due thereon. 4. No Governmental Prohibition. No order, statute, rule, regulation, executive order, injunction, stay, decree, judgment or restraining order shall have been enacted, entered, promulgated or enforced by any court or governmental or regulatory authority or instrumentality which prohibits the consummation of the transactions contemplated hereby. 5. Consents. All consents, approvals, waivers or amendments pursuant to all contracts, licenses, permits, trademarks and other intangibles in connection with the transactions contemplated herein, or for the continued operation of AHC after the Closing Date on the basis as presently operated shall have been obtained. VI. MISCELLANEOUS 1. Governing Law. This Agreement shall be governed by, enforced, and construed under and in accordance with the laws of Hong Kong. Venue for all matters shall be in Hong Kong, without giving effect to principles of conflicts of law thereunder. Each of the parties (a) irrevocably consents and agrees that any legal or equitable action or proceedings arising under or in connection with this Agreement shall be brought exclusively in by Hong Kong International Arbitration Center (HKIAC). By execution and delivery of this Agreement, each party hereto irrevocably submits to and accepts, with respect to any such action or proceeding, generally and unconditionally, the jurisdiction of the aforesaid court, and irrevocably waives any and all rights such party may now or hereafter have to object to such jurisdiction. 2. Notices. Any notice or other communications required or permitted hereunder shall be in writing and shall be sufficiently given if personally delivered to it or sent by telecopy, overnight courier or registered mail or certified mail, postage prepaid, addressed as follows: If to GHI: Bruce Harmon, Chief Executive Officer 1222 SE 47th St. Cape Coral, FL 33904 Telephone: (239) 699-9082 Email: harmon.bruce@gmail.com 8 With a copy to: If to AHC: American Hygienics Corporation Attn Neal Parmar No.6, Lane 3129, Shenzhuan Highway,Sheshan town,Songjiang,Shanghai, China Zip: 201602 Tel :+86 21 5766 9436 Neal@amhygienics.com With a copy to: For such other addresses as shall be furnished in writing by any party in the manner for giving notices hereunder, and any such notice or communication shall be deemed to have been given (i) upon receipt, if personally delivered, (ii) on the day after dispatch, if sent by overnight courier, (iii) upon dispatch, if transmitted by telecopy and receipt is confirmed by telephone and (iv) three (3) days after mailing, if sent by registered or certified mail. 3. Attorney's Fees. In the event that either party institutes any action or suit to enforce this Agreement or to secure relief from any default hereunder or breach hereof, the prevailing party shall be reimbursed by the losing party for all costs, including reasonable attorney's fees, incurred in connection therewith and in enforcing or collecting any judgment rendered therein. 4. Confidentiality. Each party hereto agrees with the other that, unless and until the transactions contemplated by this Agreement have been consummated, it and its representatives will hold in strict confidence all data and information obtained with respect to another party or any subsidiary thereof from any representative, officer, director or employee, or from any books or records or from personal inspection, of such other party, and shall not use such data or information or disclose the same to others, except (i) to the extent such data or information is published, is a matter of public knowledge, or is required by law to be published; or (ii) to the extent that such data or information must be used or disclosed in order to consummate the transactions contemplated by this Agreement. In the event of the termination of this Agreement, each party shall return to the other party all documents and other materials obtained by it or on its behalf and shall destroy all copies, digests, work papers, abstracts or other materials relating thereto, and each party will continue to comply with the confidentiality provisions set forth herein. 9 5. Third Party Beneficiaries. This contract is strictly between AHC and GHI, and, except as specifically provided, no director, officer, stockholder, employee, agent, independent contractor or any other person or entity shall be deemed to be a third party beneficiary of this Agreement. 6. Expenses. Subject to this Agreement, each of AHC and GHI will bear their own respective expenses, including legal, accounting and professional fees, incurred in connection with this transaction contemplated hereby. 7. Entire Agreement. This Agreement represents the entire agreement between the parties relating to the subject matter thereof and supersedes all prior agreements, understandings and negotiations, written or oral, with respect to such subject matter. 8. Survival; Termination. The representations, warranties, and covenants of the respective parties shall survive the Closing Date and the consummation of the transactions herein contemplated for a period of one year. 9. Counterparts. This Agreement may be executed in multiple counterparts, each of which shall be deemed an original and all of which taken together shall be but a single instrument. 10. Amendment or Waiver. Every right and remedy provided herein shall be cumulative with every other right and remedy, whether conferred herein, at law, or in equity, and may be enforced concurrently herewith, and no waiver by any party of the performance of any obligation by the other shall be construed as a waiver of the same or any other default then, theretofore, or thereafter occurring or existing. At any time prior to the Closing Date, this Agreement may by amended by a writing signed by all parties hereto, with respect to any of the terms contained herein, and any term or condition of this Agreement may be waived or the time for performance may be extended by a writing signed by the party or parties for whose benefit the provision is intended. 11. Best Efforts. Subject to the terms and conditions herein provided, each party shall use its best efforts to perform or fulfill all conditions and obligations to be performed or fulfilled by it under this Agreement so that the transactions contemplated hereby shall be consummated as soon as practicable. Each party also agrees that it shall use its best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary, proper or advisable under applicable laws and regulations to consummate and make effective this Agreement and the transactions contemplated herein. 10 IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective officers, hereunto duly authorized, as of the date first-above written. Green Hygienics, Inc., A Florida Corporation By: /s/ Bruce Harmon ----------------------------------------------- Name: Bruce Harmon Title: Chief Executive Officer American Hygienics Corporation, A People's Republic of China WOFE - wholly-owned Foreign entity By: /s/ Yogesh Parmar ----------------------------------------------- Name: Yogesh Parmar Title: President and Authorized signatory 11 EXHIBIT A The following products under this Agreement to be provided to GHI exclusively from AHC are as follows (additional products may be added from time to time and are not required to be added as an addendum to this Agreement) for the North American market only. * Female Sanitary Pads made from bamboo pulp * Panty Liners made from bamboo pulp * Biodegradable diapers of 100% bamboo pulp * TCF free bamboo pulp based plate and cups * Produce platters and absorbents made from bamboo pulp * Nursing pads made from bamboo pulp * Under arm absorbing pads made from bamboo pulp * Dryer sheet pads made from bamboo viscous fiber * Divers stationary 100% tree free Products transacted between GHI and AHC beyond this scope of Exhibit A may not be exclusive to GHI. All other products offered by AHC are available to GHI on a non-exclusive basis for the North American retail and institutional market only. GHI will only promote products made and/or sourced by AHC or its related entities in regards to products made containing pulp, paper, non-wovens, and/or surfactants. GHI can promote other products from other manufacturers not containing any of these components. Target Sales for the licensing requirements for bamboo pulp based hygiene product. Commencement of time starts upon clearance for marketing by AHC and submission to and receipt of samples by GHI. 1) Feminine Pads - US$150,000 for the first year, as defined within this contract, and 25% growth per year for the second year forward. a) Female Sanitary Pads made from bamboo Pulp b) Panty Liners made from bamboo pulp c) Diapers made from bamboo pulp 2) Miscellaneus products - US$100,000 for the first year, as defined within this contract, and 25% growth per year for the second year forward. a) TCF free bamboo pulp-based plate and cups b) Produce platters and absorbents made from bamboo pulp c) Nursing pads made from bamboo pulp d) Under arm absorbing pads made from bamboo pulp e) Dryer sheet pads made from bamboo viscous fiber f) Divers stationary 100% tree free 3) Miscellaneous branded products - US$150,000 for the first year, as defined within this contract, and 25% growth per year for the second year forward 12 a) All products with the trademark Premium Formulation b) All products with the trademark Clearly Herbal, contingent on AHI gaining exclusivity. c) All products with the trademark Green & Soft d) All products with the trademark GHI 13 EX-16.1 4 ex16-1.txt LETTER FROM FORMER AUDITOR Exhibit 16.1 Weinberg & Baer LLC 115 Sudbrook Lane, Baltimore, MD 21208 Phone (410) 702-5660 -------------------------------------------------------------------------------- Securities and Exchange Commission 450 - Fifth Street N.W. Washington, D.C. 20549 Gentlemen: We are the former independent registered accountant of Winecom, Inc. We have read the Company's Current Report on Form 8-K dated September 24, 2012, and are in agreement with the contents in regard to our firm. For the remainder of the Current Report on Form 8-K, we have no basis to agree or disagree with other statements of the Company contained therein. Respectfully submitted, /s/ Weinberg & Baer LLC --------------------------------- Weinberg & Baer LLC Baltimore, Maryland September 24, 2012