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): February 11, 2004
BRAVO! FOODS INTERNATIONAL CORP.
(Exact name of registrant as specified in its amended charter)
Delaware 0-20549 62-1681831
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
11300 US Highway 1, Suite 202
North Palm Beach, Florida 33408 USA
(Address of principal executive offices)
(561) 625-1411
Registrant's telephone number
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(Former name or former address if changed since last report)
Item 5. Other Events and Regulation FD Disclosure
License to Use Intellectual Property of Marvel Enterprises, Inc.
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On February 11, 2003, the Company received a fully executed license
agreement with Marvel Enterprises, Inc. to use Marvel's Super Heroes(R)
intellectual property to promote the Company's branded milk products in the
United States and internationally. The license with Marvel gives the
Company the exclusive right to use Marvel's characters such as Spider-
Man(TM), Wolverine(TM), the Incredible Hulk(TM), Daredevil(TM) and Captain
America(TM) on aseptic flavored milk drinks. The material terms of the
license are as follows:
* The license has an effective date of January 1, 2004
* The characters licensed for use with flavored UHT milk based
beverages consist of the following groups:
Spider-Man, Peter Parker, Aunt May, Mary Jane Watson Parker, J.
Jonah Jameson, Green Goblin, Venom, Black Cat, Kraven the
Hunter.
Beast, Colossus, Cyclops, Gambit, Archangel, Jean Grey,
Professor X, Psylocke, Rogue, Storm, Wolverine, Iceman, Bishop
and Cable, Juggernaut, Magneto, Sabretooth, Sentinels, Blob,
Apocalypse, Mystique and Toad.
Mr. Fantastic, The Thing, The Human Torch, The Invisible Woman,
Dr. Doom and Mole Man.
The Incredible Hulk, Abomination, The Leader.
Captain America, Iron Man
Daredevil, Elektra and Kingpin.
Spider-Man and Friends (for kids), including: Spider-Man,
Spider-Girl, Storm, Wolverine, Hulk and Captain America
* The license has a term of one year, renewable upon meeting
performance threshold
* Payment for license in form of royalty based upon wholesale sales
in US and sales of "kits" to third party dairy processors in
international markets. Kits consist of production rights to
manufacture, sell and promote the Company's products, plus proprietary
flavor ingredients with vitamins included.
* The Company is obligated to pay a minimum royalty guaranty payable
in full by March 1, 2004
* The initial territorial scope of license includes the United States
and its territories Saudi Arabia, Kuwait; Bahrain; Qatar; Oman; United
Arab Emirates; Lebanon; Egypt; Jordan and Syria.
* The Company has a right of first negotiation for additional foreign
countries
* Marvel has agreed to assist Bravo! in promotion and marketing of
finished products in exchange for 750,000 shares of the Company's
common stock (restricted) and warrants for a like number of common
shares (restricted) priced at $0.10 per share for one year and $0.14
per share for a second warrant exercise year.
Transition Away from Warner Bros. License Relationships
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As of the end of the third calendar quarter 2003, the Company held
five licenses for Looney Tunes(TM) characters and names from Warner Bros.
Each license was structured to provide for the payment of guaranteed royalty
payments to Warner Bros., which the Company accounts as debt and the
licensing rights as assets. The following is a summary of expiration dates
and guaranteed royalty payments due to Warner Bros. as of September 30,
2003:
Amount Expiration
License Guaranty Balance Due Past Due Date
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U.S. License $500,000 $ - $ - 12/31/03
U.S. TAZ $250,000 $ - $ - N/A
China $400,000 $147,115 $147,115 06/30/03
Mexico $145,000 $ $ 05/31/04
Canada $ 32,720 $ - $ - 03/31/04
The China license had been extended to October 29, 2003 by agreement
of the parties and, as announced in our Form 10QSB for the period ended
September 30, 2003, the Company did not seek another license from Warner
Bros. for China. This decision was based upon the lack of sales in the
Company's China markets and what the Company perceives to be the licensor's
continuing overall lack of brand support in China. The Company and Warner
Bros. dispute the contractual necessity of the payment of the balance owed
on the China license as a result of the above circumstances.
Similarly, the history of the Company with Warner Bros. licenses, as a
function of sales of the flavored milks, has not supported the guaranteed
royalty structure required by Warner Bros. for its licenses. In the third
quarter 2002, the Company decided to develop the Slammers(R) brand, with the
prospect of creating its own independent brand, which could be combined with
other third party "promotional" type licensed properties. The Company
officially launched a dual branded Slammers(R) and Looney Tunes(TM) product
in the first quarter 2003. In October 2003, the Company introduced its own
non-Looney Tunes(TM) Slammers(R) product, and has announced the execution of
a third party license with Marvel Enterprises, Inc. Based upon the above-
mentioned performance analysis, the Company has decided not to renew its
Warner Bros. license for the United States. The Company currently is in a
transitional sell off period under the original US Warner Bros license,
while it anticipates the launch of its Marvel line of branded products in
the second quarter 2004.
Intention to Close the China Operation.
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Based in large part on the failure of the Warner Bros. characters to
enjoy effective countrywide promotion, the decision not to seek another
China license and the difficulty in penetrating a market not accustomed to
premium branded food products, without the backing of significant entry
resources, the Company has decided to cease its current business operations
in China, commencing in the current quarter 2004. The Company will maintain
the existence of China Premium Food (Shanghai) Co. Ltd., its wholly owned
Chinese formed and registered
subsidiary, to wind up the subsidiary's current affairs and to explore the
possibility of other business opportunities in China. Personnel in the
United States, however, will manage the affairs of this Chinese subsidiary.
The Company has yet to determine the size of the reserve or the charges it
will take in connection with the closure of this business.
Special Meeting of Shareholders.
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On February 12, 2004, the Company held a special meeting of
shareholders to vote on a proposal to increase the Company's authorized
shares of common stock from 50,000,000 to 300,00,000, and to ratify
financing transactions requiring potential stock issuances in excess of the
pre meeting authorized capital stock.
In November 2003, the Company discovered that it could potentially
exceed its authorized shares of common stock. This discovery was made upon
the recalculation by the Company of its equity and equity equivalents using
a non "treasury method" calculation, which considered all equity
equivalents, irrespective of whether the exercise or conversion prices of
such equivalents were above the then current public trading prices of the
Company's common stock.
Upon discovery of this situation, the Company took affirmative steps
to correct the deficiency. Such steps included (i) ceasing to issue any new
common shares, (ii) conducting a complete review of all securities of the
Company currently outstanding, (iii) proceeding to seek shareholder approval
to increase the number of authorized shares so as to provide the shares that
may potentially be required to be issued should the holders of the Company's
options, warrants, convertible notes, preferred stock and other convertible
securities elect to exercise and/or convert such securities into common
stock, (iv) proceeding to seek shareholder ratification of the issuances of
securities that may cause the Company to exceed its authorized share limit,
(v) instituting controls and procedures to prevent the issuance of
securities in excess of its authorized capitalization and (vi) appointing an
individual responsible for ensuring that the Company does not issue
securities in excess of its capitalization in the future.
At the February 12, 2004 special meeting, 65.4% of the holders of the
Company's outstanding common stock voted to increase the Company's
authorized shares of common stock from 50,000,000 to 300,00,000, and to
ratify financing transactions requiring potential stock issuances in excess
of the pre meeting authorized capital stock.
Item 9.
See item 5.
Exhibits
3.1 Certificate of Amendment to Articles of Incorporation
99.1 Press Release Re: Marvel License Agreement
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.
Bravo! Foods International Corp.
Date: February 17, 2004 By: /s/ Roy G. Warren
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Roy G. Warren,
Chief Executive Officer