BIOXYTRAN, INC - Annual Report: 2010 (Form 10-K)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x Annual Report Pursuant to Section 13 or 15(D) of the Securities Exchange Act of 1934
for the fiscal year ended December 31, 2010
o Transition Report Under Section 13 or 15(D) of the Securities Exchange Act of 1934
for the transition period from _______________ to _______________
Commission File Number: 333-154912
U.S. NATURAL NUTRIENTS AND MINERALS, INC.
(formerly known as America’s Driving Ranges, Inc.)
(Exact name of small Business Issuer as specified in its charter)
|
Nevada
|
26-2797630
|
|
|
(State or other jurisdiction of incorporation or organization)
|
(IRS Employer Identification No.)
|
|
|
|
|
|
|
6460 Medical Center St. Ste 230
|
|
|
|
Las Vegas, NV
|
89148
|
|
|
(Address of principal executive offices)
|
(Zip Code)
|
Issuer's telephone number, including area code: (702) 888-1450, ext 281
n/a
Former address if changed since last report
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Common Stock, par value $0.001 per share
Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [X] No [ ]
Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-K contained in this form, and no disclosure will be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. [ ]
1
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
|
Large Accelerated Filer o
|
Accelerated Filer o
|
Non-Accelerated Filer o
(Do not check if a smaller reporting company)
|
Smaller Reporting Company þ
|
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). [ ] Yes [X] No
Registrant’s revenues for its most recent fiscal year: $16,132.00
As of March 25, 2011, the aggregate market value of voting Common Stock held by non-affiliates of the registrant was approximately $5,947,105 and there are 0 shares of preferred stock issued and there are 21,239,661 shares of common stock issued.
2
TABLE OF CONTENTS
|
PART I
|
||
|
ITEM 1
|
BUSINESS
|
4
|
|
ITEM 1A
|
RISK FACTORS
|
5
|
|
ITEM 1B
|
UNRESOLVED STAFF COMMENTS
|
5
|
|
ITEM 2
|
PROPERTIES
|
5
|
|
ITEM 3
|
LEGAL PROCEEDINGS
|
5
|
|
ITEM 4
|
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
|
5
|
|
PART II
|
||
|
ITEM 5.
|
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES
|
6
|
|
ITEM 6.
|
SELECTED FINANCIAL DATA
|
9
|
|
ITEM 7
|
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION
|
9
|
|
ITEM 7A
|
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|
12
|
|
ITEM 8
|
FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
|
12
|
|
ITEM 9
|
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
|
13
|
|
ITEM 9A(T).
|
CONTROLS AND PROCEDURES
|
13
|
|
ITEM 9B
|
OTHER INFORMATION
|
14
|
|
PART III
|
||
|
ITEM 10
|
DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
|
15
|
|
ITEM 11.
|
EXECUTIVE COMPENSATION
|
16
|
|
ITEM 12.
|
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
|
17
|
|
ITEM 13
|
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
|
17
|
|
ITEM 14
|
PRINCIPAL ACCOUNTANT FEES AND SERVICES
|
18
|
|
PART IV
|
||
|
ITEM 15.
|
EXHIBITS, FINANCIAL STATEMENT SCHEDULES
|
19
|
|
SIGNATURES
|
20
|
3
FORWARD LOOKING STATEMENTS
This Annual Report on Form 10-K (the “Report”), including ”Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 regarding future events and the future results of U. S. Natural Nutrients & Minerals, Inc. and its consolidated subsidiaries (the “Company”) that are based on management’s current expectations, estimates, projections and assumptions about the Company’s business. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “sees,” “estimates” and variations of such words and similar expressions are intended to identify such forward-looking statements. These statements are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in such forward-looking statements due to numerous factors, including, but not limited to, those discussed in the “Risk Factors” section in Item 1A, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Item 7 and elsewhere in this Report as well as those discussed from time to time in the Company’s other Securities and Exchange Commission filings and reports. In addition, such statements could be affected by general industry and market conditions. Such forward-looking statements speak only as of the date of this Report or, in the case of any document incorporated by reference, the date of that document, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Report. If we update or correct one or more forward-looking statements, investors and others should not conclude that we will make additional updates or corrections with respect to other forward-looking statements.
PART I
ITEM 1. BUSINESS
Overview
U.S. Natural Nutrients and Minerals, Inc. (the “Company”), was organized on June 9, 2008. The Company’s focus is on sales and distribution of certain products derived from the Company’s mining activities relating to natural mineral deposits commonly known as Calcium Montmorillonite. These activities will be carried out through a web-based and distributor-based sales program directed at agricultural, animal and human uses of the product. The Company commenced its mining activities in 2009, the Company entered into an agreement with M Strata, LLC whereby M Strata granted the Company permission and consent to mine certain mining claims owned or controlled by M Strata located land located in the southwestern part of southern Nevada not far from the town of Panaca.
The Company has commenced a sales and marketing program of the product extracted in the mining process under the name “Excelerite”. Engineers employed by the Company estimate that the claims, which are the subject of the M Strata Agreement may contain one hundred million tons of Calcium Montmorillonite material. The Company believes that Excelerite may have broad applications for plants, animals and humans. Specifically, the Company believes that by adding Excelerite back into the soil, household and commercial farmers are replacing what has been lost by the use of man-made fertilizers over hundreds of years. Farmers using Excelerite are seeing higher yields and larger and more nutritious crops. In addition, studies suggest that animals whose feed is supplemented with Excelerite grow healthier and produce more. The naturally chelated nutrients and minerals in Exceleritemay enhance the production of enzymes. Without enzymes living things cannot build protein and other vital processes. Micro “Excelerite", a supplement form of Excelerite, is believed to rejuvenate the health of the human body in many ways. In addition to its natural supply of 78 essential nutrients and minerals, its ionic charge removes toxins as it works through the digestive tract.
4
The Company intends to market the product through various channels including but not limited to direct distribution, sales through third-party distributors and sales through the Company’s website. The Company has also undertaken to develop a network of distributors, both in the United States and internationally. Two of the Company’s directors, Paul Hait and Dennis Cullison, have been marketing the product to agricultural customers in Oregon. Mr. Cullison has also devoted substantial focus on the marketing of a human supplement utilizing the product named “Micro-Excelerite”. The human supplement business was transferred into a wholly owned subsidiary called Bio-Multimin, Inc. in 2010.
The Company’s wholly owned subsidiary “Bio Multimin, Inc.” (a Nevada corporation) was formed on July 31, 2010. Bio Multimin, Inc. has the same address and the same Officers and Directors as its parent company USNNM. Its’ e-commerce website is: www.biomultimin.com.
Employees
As of December 31, 2010, the Company had two employees.
Item 1A. Risk Factors.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 1B. Unresolved Staff Comments.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 2. Description of Property.
The Company rents office space at 6460 Medical Center St., Suite 230, Las Vegas, Nevada 89148
Item 3. Legal Proceedings.
To the best knowledge of our officers and directors, the Company is not a party to any legal proceeding or litigation.
Item 4. Submission of Matters to a Vote of Security Holders.
None.
5
PART II
Item 5. Market for Common Equity, Related Stockholder Matters and Small Business Issuer Purchases of Equity Securities.
Common Stock
Our Articles of Incorporation authorizes the issuance of up to 300,000,000 shares of common stock, par value $0.001 per share (the “Common Stock”). The Common Stock trades over the counter pink sheets. As of December 31, 2010, there were 11,474,779 shares outstanding.
Preferred Stock
Our Certificate of Incorporation authorizes the issuance of up to 50,000,000 shares of preferred stock, par value $0.001 per share (the “Preferred Stock”). The Company has not yet issued any of its preferred stock.
Dividend Policy
The Company has not declared or paid any cash dividends on its common stock and does not intend to declare or pay any cash dividend in the foreseeable future. The payment of dividends, if any, is within the discretion of the Board of Directors and will depend on the Company’s earnings, if any, its capital requirements and financial condition and such other factors as the Board of Directors may consider.
Securities Authorized for Issuance under Equity Compensation Plans
On January 19, 2010, the Company established a 2010 Employee, Director and Consultant Stock Plan (the “2010 Plan”). The 2010 Plan was approved by the Company’s board of directors and the consent of the majority of its outstanding shareholders. The material features of the 2010 Plan are described below.
Administration
A designated Administrator, or in the absence of such, our Board of Directors, Compensation Committee or both, in the sole discretion of our Board, administers the 2010 Plan, which was approved by the Company’s Board of Directors on January 19, 2010. The Board, subject to the provisions of the 2010 Plan, has the authority to determine and designate officers, employees, directors and consultants to whom awards shall be made and the terms, conditions and restrictions applicable to each award (including, but not limited to, the option price, any restriction or limitation, any vesting schedule or acceleration thereof, and any forfeiture restrictions). The Board may, in its sole discretion, accelerate the vesting of awards. The Board of Directors must approve all grants of Options and Stock Awards issued to our officers or directors.
Types of Awards
The 2010 Plan is designed to enable us to offer certain officers, employees, directors and consultants of us and our subsidiaries equity interests in us and other incentive awards in order to attract, retain and reward such individuals and to strengthen the mutuality of interests between such individuals and our stockholders. In furtherance of this purpose, the 2010 Plan contains provisions for granting incentive and non-statutory stock options, stock wards and stock appreciation rights.
Stock Options. A "stock option" is a contractual right to purchase a number of shares of Common Stock at a price determined on the date the option is granted. The option price per share of Common Stock purchasable upon exercise of a stock option and the time or times at which such options shall be exercisable shall be determined by the Board at the time of grant. Such option price shall not be less than 100% of the fair market value of the Common Stock on the date of grant. The option price must be paid in cash, money order, check or Common Stock of the Company. The Options may also contain at the time of grant, at the discretion of the Board, certain other cashless exercise provisions.
6
Options shall be exercisable at the times and subject to the conditions determined by the Board at the date of grant, but no option may be exercisable more than ten years after the date it is granted. If the Optionee ceases to be an employee of our company for any reason other than death, any option granted as an Incentive Stock Option exercisable on the date of the termination of employment may be exercised for a period of thirty days or until the expiration of the stated term of the option, whichever period is shorter. In the event of the Optionee’s death, any granted Incentive Stock Option exercisable at the date of death may be exercised by the legal heirs of the Optionee from the date of death until the expiration of the stated term of the option or six months from the date of death, whichever event first occurs. In the event of disability of the Optionee, any granted Incentive Stock Options shall expire on the stated date that the Option would otherwise have expired or 12 months from the date of disability, whichever event first occurs. The termination and other provisions of a non-statutory stock option shall be fixed by the Board of Directors at the date of grant of each respective option.
Common Stock Award. “Common Stock Award” is shares of Common Stock that will be issued to a recipient at the end of a restriction period, if any, specified by the Board if he or she continues to be an employee, director or consultant of us. If the recipient remains an employee, director or consultant at the end of the restriction period, the applicable restrictions will lapse and we will issue a stock certificate representing such shares of Common Stock to the participant. If the recipient ceases to be an employee, director or consultant of us for any reason (including death, disability or retirement) before the end of the restriction period unless otherwise determined by the Board, the restricted stock award will be terminated.
Eligibility
The Company’s officers, employees, directors and consultants of U.S. Natural Nutrients and Minerals, Inc. and its subsidiaries are eligible to be granted stock options, and Common Stock Awards. Eligibility shall be determined by the Board; however, all Options and Stock Awards granted to officers and directors must be approved by the Board.
Termination or Amendment of the 2010 Plan
The Board may at any time amend, discontinue, or terminate all or any part of the 2010 Plan, provided, however, that unless otherwise required by law, the rights of a participant may not be impaired without his or her consent, and provided that we will seek the approval of our stockholders for any amendment if such approval is necessary to comply with any applicable federal or state securities laws or rules or regulations.
Awards
As of December 31, 2010, four awards, totaling 510,000 shares, had been made under the 2010 Plan.
Shares Subject to the 2010 Plan
Subject to adjustment, the aggregate number of shares of Stock which may be delivered under the 2010 Plan shall not exceed a number equal to 15% of the total number of shares of Stock outstanding immediately following the Effective Time, assuming for this purpose the conversion into Stock of all outstanding securities that are convertible by their terms (directly or indirectly) into Stock; provided, however, that, as of January 1 of each calendar year, commencing with the year 2011, the maximum number of shares of Stock which may be delivered under the 2010 Plan shall automatically increase by a number sufficient to cause the number of shares of Stock covered by the 2010 Plan to equal 15% of the total number of shares of Stock then outstanding, assuming for this purpose the conversion into Stock of all outstanding securities that are convertible by their terms (directly or indirectly) into Stock.
Federal Tax Consequences
The Federal income tax discussion set forth below is intended for general information only. State and local income tax consequences are not discussed, and may vary from locality to locality.
7
Incentive Stock Options. Incentive stock options granted under the 2010 Plan are designed to qualify for the special tax treatment for incentive stock options provided for in the Internal Revenue Code (the “Code”). Under the provisions of the Code, an optionee who at all times from the date of grant until three months before the date of exercise is an employee of the Company, and who holds the shares of Common Stock obtained upon exercise of his incentive stock option for two years after the date of grant and one year after exercise, will recognize no taxable income on either the grant or exercise of such option and will recognize capital gain or loss on the sale of the shares. If such shares are held by the optionee for the required holding period, the Company will not be entitled to any tax deduction with respect to the grant or exercise of the option. If such shares are sold by the optionee prior to the expiration of the holding periods described above, the optionee will recognize ordinary income upon such disposition. Upon the exercise of an incentive stock option, the optionee will incur an item of tax preference equal to the excess of the fair market value of the shares at the time of exercise over the exercise price, which may subject the optionee to the alternative minimum tax.
Non-Qualified Options. Under present Treasury regulations, an optionee who is granted a non-qualified option will not realize taxable income at the time the option is granted. In general, an optionee will be subject to tax for the year of exercise on an amount of ordinary income equal to the excess of the fair market value of the shares on the date of exercise over the option price, and the Company will receive a corresponding deduction. Income tax withholding requirements apply upon exercise. The optionee's basis in the shares so acquired will be equal to the option price plus the amount of ordinary income upon which he is taxed. Upon subsequent disposition of the shares, the optionee will realize capital gain or loss, long-term or short-term, depending upon the length of time the shares are held after the option is exercised.
Common Stock Awards. Recipients of shares of restricted Common Stock that are not "transferable" and are subject to "substantial risk of forfeiture" at the time of grant will not be subject to Federal income taxes until lapse or release of the restrictions on the shares. The recipient's income and the Company's deduction will be equal to the fair market value of the shares on the date of lapse or release of such restrictions.
The issuance of any of our common or preferred stock is within the discretion of our Board of Directors, which has the power to issue any or all of our authorized but unissued shares without stockholder approval.
Recent Sales of Unregistered Securities
During the the year ended 2010, 4,970,000 shares were issued for services valued at $0.04 per share for a total of $198,500.
Issuer Purchases of Equity Securities
None.
Item 6. Selected Financial Data.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operation
The following discussion should be read in conjunction with our audited financial statements and the notes thereto.
8
Forward-Looking Statements
This annual report contains forward-looking statements and information relating to us that are based on the beliefs of our management as well as assumptions made by, and information currently available to, our management. When used in this report, the words "believe," "anticipate," "expect," "estimate," “intend”, “plan” and similar expressions, as they relate to us or our management, are intended to identify forward-looking statements. These statements reflect management's current view of us concerning future events and are subject to certain risks, uncertainties and assumptions, including among many others: a general economic downturn; a downturn in the securities markets; federal or state laws or regulations having an adverse effect on proposed transactions that we desire to effect; Securities and Exchange Commission regulations which affect trading in the securities of "penny stocks," and other risks and uncertainties. Should any of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in this report as anticipated, estimated or expected. All forward-looking statements attributable to us are expressly qualified in their entirety by the foregoing cautionary statement.
RESULTS OF OPERATIONS
U.S. Natural Nutrients and Minerals, Inc. was incorporated on June 9, 2008, and as such has no meaningful results of operations for the period ended December 31, 2010.
The following table shows the financial data of the consolidated statements of operations of the Company and its subsidiaries for the year ended December 31, 2010 and December 31, 2009. The data should be read in conjunction with the audited consolidated financial statements of the Company and related notes thereto.
YEAR ENDED DECEMBER 31, 2010 COMPARED TO YEAR ENDED DECEMBER 31, 2009.
|
December 31,
|
December 31,
|
|||||||||||||||
|
Results of Operations
|
2010
|
2009
|
$ Change
|
% Change
|
||||||||||||
|
Revenue
|
$ | 16,132 | $ | - | $ | 16,132 | 100 | % | ||||||||
|
Cost of sales
|
(4,034 | ) | - | (4,034 | ) | (100 | %) | |||||||||
| 12,098 | - | 12,098 | 100 | % | ||||||||||||
|
General and administrative expenses
|
(341,130 | ) | (272,149 | ) | (208,019 | ) | (25 | %) | ||||||||
|
Operating loss
|
$ | (329,033 | ) | $ | (272,149 | ) | $ | (86,883 | ) | (21 | %) | |||||
During the year ended December 31, 2010, we recognized expenses of $341,130 an increase of 25% from the year ended December 31, 2009. The jump in expenses is a direct result of becoming a public company. Professional and legal fees of approximately $195,883 were incurred in relation to the preparation, review, and filing of our financial statements with the Securities and Exchange Commission. Other professional fees consisted of clerical and start-up fees necessary to develop our business and investigate new business plans which resulted in our change of focus in October 2009. During the year ended December 31, 2009, we have incurred approximately $22,700 in advertising expenses and $25,000 for the purchase of the website costs associated with Herb Vita, Inc.
9
LIQUIDITY AND CAPITAL RESOURCES
|
December 31, 2010
|
December 31, 2009
|
$ Change
|
% Change
|
|||||||||||||
|
Cash
|
$ | 22,755 | $ | 5,727 | $ | 17,028 | 297 | % | ||||||||
|
Accounts payable and accrued expenses
|
$ | 69,615 | $ | 65,768 | $ | 3,847 | 6 | % | ||||||||
|
Total current liabilities
|
$ | 109,615 | $ | 120,144 | $ | (10,529 | ) | (9 | %) | |||||||
|
Cash proceeds from the sale of
common stock
|
$ | 136,900 | $ | 117,400 | $ | 27,000 | 23 | % | ||||||||
As of December 31, 2010, cash totaled $22,755. This cash position was the result of net cash provided by financing activities in the amount of $146,532, offsetting by net cash used in operating activities in the amount of $75,804.
We believe that the level of financial resources is a significant factor for our future development, and accordingly we may choose at any time to raise capital through private debt or equity financing to strengthen our financial position, facilitate growth and provide us with additional flexibility to take advantage of business opportunities. The Company is in the process of an offering of shares of preferred stock to be designated by the Company. There is no guarantee that this offering will be completed, and if completed, the specific terms and conditions. We do not have immediate plans to have a public offering of our common stock and there is no guarantee that any such offering would be successful or be completed on terms which are beneficial to the Company.
CRITICAL ACCOUNTING POLICIES
In presenting our financial statements in conformity with generally accepted accounting principles, we are required to make estimates and assumptions that affect the amounts reported therein. Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events. However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions. If there is a significant unfavorable change to current conditions, it could result in a material adverse impact to our consolidated results of operations, financial position and liquidity. We believe that the estimates and assumptions we used when preparing our financial statements were the most appropriate at that time. Presented below are those accounting policies that we believe require subjective and complex judgments that could potentially affect reported results. However, the majority of our business operates in environments where we pay a fee for a service performed, and therefore the results of the majority of our recurring operations are recorded in our financial statements using accounting policies that are not particularly subjective, nor complex.
Stock Based Compensation
Stock based compensation is accounted for using the Equity-Based Payments to Non-Employee Topic of the FASB ASC, which establishes standards for the accounting for transactions in which an entity exchanges its equity instruments for goods or services. It also addresses transactions in which an entity incurs liabilities in exchange for goods or services that are based on the fair value of the entity’s equity instruments or that may be settled by the issuance of those equity instruments. We determine the value of stock issued at the date of grant. We also determine at the date of grant the value of stock at fair market value or the value of services rendered (based on contract or otherwise) whichever is more readily determinable.
10
Shares issued to employees are expensed upon issuance.
Stock based compensation for employees is account for using the Stock Based Compensation Topic of the FASB ASC. We use the fair value method for equity instruments granted to employees and will use the Black Scholes model for measuring the fair value of options, if issued. The stock based fair value compensation is determined as of the date of the grant or the date at which the performance of the services is completed (measurement date) and is recognized over the vesting periods.
Going Concern
The Company’s consolidated financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenues sufficient to cover its operational costs and allow it to continue as a going concern.
The accompanying consolidated financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. To date, the Company generated minimal revenue, is considered a development stage company, has experienced recurring net operating losses, had a net loss of $336,470 for the year ended December 31, 2010, and a working capital deficiency of $60,337 at December 31, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. We will need to raise funds or implement our business plan to continue operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital from management and significant shareholders sufficient to meet its minimal operating expenses and seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually secure other sources of financing and attain profitable operations. The accompanying consolidated financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Balance Sheet Arrangements
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.
Contractual Obligations
We have two long-term promissory notes due in 2012 with an aggregate principal balance of $27,132.
The Company has a contractual obligation appertaining to its mining activities on mining claims owned by M Strata, LLC ,whose principal owners are Paul Hait and Dennis Cullison. Paul Hait and Dennis Cullison are directors of the Company.
11
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
As a “smaller reporting company” as defined by Item 10 of Regulation S-K, the Company is not required to provide this information.
Item 8. Financial Statements and Supplementary Data.
Audited financial statements begin on the following page of this report.
12
(formerly known as AMERICA’S DRIVING RANGES, INC.)
(A Development Stage Company)
FINANCIAL STATEMENTS
DECEMBER 31, 2010
DECEMBER 31, 2009
CONTENTS
|
Page
|
|
|
REPORT OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM ON THE CONSOLIDATED FINANCIAL STATEMENTS
|
F-1
|
|
CONSOLIDATED FINANCIAL STATEMENTS
|
|
|
Balance Sheets
|
F-2
|
|
Statements of Operations
|
F-3
|
|
Statement of Stockholders’ Deficit
|
F-3
|
|
Statements of Cash Flows
|
F-5
|
|
Notes to Financial Statements
|
F-7
|
Report of Independent Registered Public Accounting Firm
Board of Directors and Stockholders
We have audited the accompanying consolidated balance sheets of U.S. Natural Nutrients and Minerals, Inc. (formerly America’s Driving Range, Inc.) (a development stage company)and Subsidiary as of December 31, 2010 and 2009, and the related consolidated statements of operations, stockholders’ deficit and cash flows for the years then ended and for the period from inception, (June 9, 2008) to December 31, 2010. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits 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 audits 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. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as, evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of U.S. Natural Nutrients and Minerals, Inc. (formerly America’s Driving Range, Inc.) (a development stage company) and Subsidiary as of December 31, 2010 and 2009 and the consolidated results of its operations and its cash flows for the years ended December 31, 2010 and December 31, 2009 and for the period from inception (June 9, 2008) to December 31, 2010 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 Note 3 to the financial statements, the Company has incurred a loss since inception, has a net accumulated deficit and may be unable to raise further equity. These factors raise substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Paritz & Company, P.A.
Hackensack, New Jersey
March 29, 2011
F-1
U.S. NATURAL NUTRIENTS & MINERALS, INC.AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED BALANCE SHEETS
|
December 31,
|
December 31,
|
||||||||
|
2010
|
2009
|
||||||||
|
|
|
||||||||
|
ASSETS
|
|||||||||
|
CURRENT ASSETS
|
|||||||||
|
Cash
|
$ | 22,755 | $ | 5,727 | |||||
|
Note receivable
|
200 | 200 | |||||||
|
Notes receivable, related party including interest of $731
|
|||||||||
|
respectively.
|
- | 29,231 | |||||||
|
Prepaids
|
- | 18,408 | |||||||
|
Inventory
|
7,487 | 6,241 | |||||||
|
Total current assets
|
80,731 | 59,807 | |||||||
|
PROPERTY AND EQUIPMENT, net
|
50,289 | - | |||||||
|
Total assets
|
$ | 80,731 | $ | 59,807 | |||||
|
LIABILITIES AND STOCKHOLDERS' DEFICIT
|
|||||||||
|
CURRENT LIABILITIES
|
|||||||||
|
Accounts payable and accrued expenses
|
$ | 69,615 | $ | 65,768 | |||||
|
Loan payable, current
|
- | 5,100 | |||||||
|
10% Series A Senior (non-subordinated) debentures, net of $0
|
40,000 | 49,276 | |||||||
|
and $724 debt premium as of December 31, 2010 and December 31, 2009
|
|||||||||
|
Total current liabilities
|
109,615 | 120,144 | |||||||
|
Loans payable, long term
|
27,132 | 20,000 | |||||||
|
Convertible debt, long term
|
- | 20,119 | |||||||
|
Total liabilities
|
136,746 | 160,263 | |||||||
|
COMMITMENTS & CONTINGENCIES
|
- | - | |||||||
|
STOCKHOLDERS' DEFICIT
|
|||||||||
|
Preferred stock: $0.001 par value; authorized 50,000,000 shares;
|
|||||||||
|
issued and outstanding: none as of December 31, 2010
|
|||||||||
|
and December 31, 2009, respectively
|
- | - | |||||||
|
Common stock: $0.001 par value; authorized 300,000,000 shares;
|
|||||||||
|
issued and outstanding: 11,474,779 and 5,911,167
|
|||||||||
|
as of December 31, 2010 and December 31, 2009, respectively
|
11,474 | 5,911 | |||||||
|
Additional paid-in capital
|
569,649 | 169,302 | |||||||
|
Common stock payable
|
- | 25,000 | |||||||
|
Accumulated deficit during the development stage
|
(637,139 | ) | (300,669 | ) | |||||
|
Total stockholders' deficit
|
(56,016 | ) | (100,456 | ) | |||||
|
Total liabilities and stockholders' deficit
|
$ | 80,731 | $ | 59,807 | |||||
The accompanying notes are an integral part of these financial statements.
F-2
U.S. NATURAL NUTRIENTS & MINERALS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
|
December 31,
2010
|
December 31,
2009
|
From inception
June 9, 2008 to December 31, 2010
|
||||||||||
|
Revenues
|
$ | 16,132 | $ | - | $ | 16,132 | ||||||
|
Cost of goods sold
|
4,034 | - | 4,034 | |||||||||
| 12,098 | - | 12,098 | ||||||||||
|
General, selling and administrative expenses
|
341,130 | 272,149 | 634,083 | |||||||||
|
Operating loss
|
(329,033 | ) | (272,149 | ) | (621,985 | ) | ||||||
|
Other income (expense):
|
||||||||||||
|
Interest income
|
925 | 919 | 1,844 | |||||||||
|
Interest expense
|
(8,363 | ) | (5115 | ) | (13,586 | ) | ||||||
| (7,437 | ) | (4,196 | ) | (11,742 | ) | |||||||
|
Net Loss
|
$ | (336,470 | ) | $ | (276,345 | ) | $ | (637,149 | ) | |||
|
Net loss per common share
|
||||||||||||
|
- basic and diluted
|
$ | (0.04 | ) | $ | (0.04 | ) | ||||||
|
Weighted average number of common
|
||||||||||||
|
shares outstanding
|
9,014,611 | 4,270,000 | ||||||||||
The accompanying notes are an integral part of these financial statements.
F-3
U.S. NATURAL NUTRIENTS AND MINERALS, INC. AND SUBSIDIARY
(A Development Stage Company)
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' DEFICIT
For the period June 9, 2008 (date of inception) to December 31, 2010
|
Accumulated
|
||||||||||||||||||||||||
|
Deficit
|
||||||||||||||||||||||||
|
Additional
|
Common
|
During
|
||||||||||||||||||||||
|
Common Stock
|
Paid-In
|
Stock
|
Development
|
|||||||||||||||||||||
|
Shares
|
Amount
|
Capital
|
Payable
|
Stage
|
Total
|
|||||||||||||||||||
|
Balance June 9, 2008 (date of inception)
|
- | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||||||
|
Issuance of common stock for founders shares
|
4,270,000 | 4,270 | - | - | - | 4,270 | ||||||||||||||||||
|
Net loss at December 31, 2008
|
- | - | - | - | (24,324 | ) | (24,324 | ) | ||||||||||||||||
|
Balance December 31, 2008
|
4,270,000 | 4,270 | - | - | (24,324 | ) | (20,054 | ) | ||||||||||||||||
|
Issuance of common stock for cash
|
1,156,167 | 1,156 | 116,244 | - | - | 117,400 | ||||||||||||||||||
|
Issuance of common stock for services
|
235,000 | 235 | 9,900 | - | - | 10,135 | ||||||||||||||||||
|
Issuance of common stock for intangible asset
|
250,000 | 250 | 24,750 | - | - | 25,000 | ||||||||||||||||||
|
Stock payable for consulting for services
|
- | - | - | 25,000 | - | 25,000 | ||||||||||||||||||
|
Warrants issued for prepaid consulting services
|
- | 18,408 | - | - | 18,408 | |||||||||||||||||||
|
Net loss at December 31, 2009
|
- | - | - | - | (276,345 | ) | (276,345 | ) | ||||||||||||||||
|
Balance December 31, 2009
|
5,911,167 | 5,911 | 169,302 | 25,000 | (300,669 | ) | (100,456 | ) | ||||||||||||||||
|
Issuance of common stock for cash
|
510,498 | 511 | 136,389 | - | - | 136,900 | ||||||||||||||||||
|
Issuance of common stock for services
|
4,970,000 | 4,970 | 218,530 | (25,000 | ) | - | 198,500 | |||||||||||||||||
|
Issuance of common stock for equipment
|
26,666 | 27 | 7,473 | - | - | 7,500 | ||||||||||||||||||
|
Issuance of common stock for debt
|
56,448 | 56 | 31,457 | - | - | 31,513 | ||||||||||||||||||
|
Inventory contributed to Company by shareholder
|
6,498 | - | - | 6,498 | ||||||||||||||||||||
|
Net loss at December 31, 2010
|
- | - | - | - | (336,470 | ) | (336,470 | ) | ||||||||||||||||
|
Total Stockholders’ Deficit
|
11,474,779 | 11,474 | 569,649 | - | (637,139 | ) | 56,016 | |||||||||||||||||
The accompanying notes are an integral part of these financial statements.
F-4
U.S. NATURAL NUTRIENTS & MINERALS, INC. AND SUBSIDIARY
(A DEVELOPMENT STAGE COMPANY)
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
|
From inception
|
||||||||||||
|
December 31,
|
December 31,
|
June 9, 2008 to
|
||||||||||
|
2010
|
2009
|
December 31, 2010
|
||||||||||
|
Cash Flows from Operating Activities:
|
||||||||||||
|
Net Loss
|
$ | (336,470 | ) | $ | (276,345 | ) | $ | (637,139 | ) | |||
|
Depreciation
|
3,411 | 3,411 | ||||||||||
|
Stock issued for services
|
198,500 | 60,135 | 262,905 | |||||||||
|
Accretion of debt premium and interest
|
724 | 2,145 | 2,869 | |||||||||
|
Contributed capital
|
690 | - | 690 | |||||||||
|
Expenses paid by stockholder capital contribution
|
5,807 | - | 5,807 | |||||||||
|
Adjustments to reconcile net loss to net cash used by operating activities:
|
||||||||||||
|
Changes in assets and liabilities:
|
||||||||||||
|
(Increase) decrease note receivable
|
29,231 | (29,231 | ) | - | ||||||||
|
(Increase) decrease prepaids
|
18,408 | (15,921 | ) | 2,487 | ||||||||
|
(Increase) decrease inventory
|
(1,246 | ) | (6,241 | ) | (7,487 | ) | ||||||
|
Increase (decrease) accounts payable and accrued expenses
|
5,141 | 62,993 | 84,630 | |||||||||
|
Net cash used in operating activities
|
(75,804 | ) | (202,465 | ) | (281,827 | ) | ||||||
|
Cash flows used in Investing Activities:
Capital expenditures
|
(46,200 | ) | - | (53,700 | ) | |||||||
|
Net cash used in investing activities
|
(46,200 | ) | (53,700 | ) | ||||||||
|
Cash flows from Financing Activities:
|
||||||||||||
|
Proceeds from Convertible debt
|
- | 15,000 | 15,000 | |||||||||
|
Proceeds from Series A Debentures
|
- | 52,250 | 52,250 | |||||||||
|
Payment of loan payable and debentures
|
(12,000 | ) | (12,000 | ) | ||||||||
|
Proceeds from Loans payable
|
- | 35,000 | 39,000 | |||||||||
|
Proceeds from Loan payable, related party
|
2,132 | - | 2,232 | |||||||||
|
Common stock issued for cash
|
136,900 | 117,400 | 261,800 | |||||||||
|
Net cash provided by financing activities
|
139,032 | 207,650 | 358,282 | |||||||||
|
Net increase (decrease) in cash
|
17,028 | 5,185 | 22,755 | |||||||||
|
Cash, beginning of year
|
5,727 | 542 | - | |||||||||
|
Cash, end of year
|
$ | 22,755 | $ | 5,727 | $ | 22,755 | ||||||
|
Cash paid for:
|
||||||||||||
|
Interest
|
$ | 1,008 | $ | 329 | $ | 1,337 | ||||||
|
Supplemental schedule of non-cash Investing and Financing Activities
|
||||||||||||
|
Loan payable, related party reclassified as loan payable
|
$ | - | $ | 100 | $ | 100 | ||||||
|
Loan reclassified to accounts payable
|
$ | 2,000 | $ | 2,000 | ||||||||
|
Loan receivable reclassified to accounts payable
|
$ | - | $ | 15,721 | $ | 15,721 | ||||||
|
Series A Debentures reclassified to Convertible Debenture
|
$ | - | $ | 5,000 | $ | 5,000 | ||||||
|
Common stock issued for intangible – customer list
|
$ | - | $ | - | $ | 25,000 | ||||||
|
Common stock issued for convertible debt, debentures
|
$ | 30,000 | $ | - | $ | 30,000 | ||||||
|
Common stock issued for equipment
|
$ | 7,500 | ||||||||||
|
Common stock issued for inventory
|
$ | 6,498 | ||||||||||
|
Warrants issued for prepaid consulting services
|
$ | - | $ | 18,408 | $ | 24,750 | ||||||
|
Stock payable issued (redeemed)
|
$ | (25,000 | ) | $ | - | $ | 25,000 | |||||
|
Contributed capital by shareholder, used to pay expenses
|
$ | 5,807 | $ | - | $ | 5,807 | ||||||
The accompanying notes are an integral part of these financial statements.
F-5
U.S. NATURAL NUTRIENTS AND MINERALS, INC.AND SUBSIDIARY
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation and Organization and Significant Accounting Policies
Basis of Presentation and Organization
Basis of Presentation
U.S. Natural Nutrients and Minerals, Inc. was incorporated in the state of Nevada on June 9, 2008.
The Company currently has limited operations and, in accordance with Financial Accounting Standard Board Codification (“FASB ASC”) is classified as a Development Stage Entity. The Company has been in the development stage since its formation and has realized minimal revenues from its operations.
As used in these Notes to the Financial Statements, the terms the "Company", "we", "us", "our" and similar terms refer to U.S. Natural Nutrients and Minerals, Inc.
Basis of Financial Statement Presentation
Principles of Consolidation
The accompanying consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Bio Multimin, Inc All significant intercompany accounts and transactions have been eliminated.
BUSINESS DESCRIPTION
U.S. Natural Nutrients and Minerals, Inc. (the “Company”), formerly known as America’s Driving Ranges, Inc. was originally organized on June 9, 2008 to develop a high-tech driving range in the Coachella Valley of California and to eventually develop or license other sites with a unique combination of facilities and services. On October 23, 2009, the Company changed its business plan in order to primarily focus on sales and distribution of certain products derived from the Company’s mining activities relating to natural mineral deposits commonly known as Calcium Montmorillonite. These activities will be carried out through a web-based and distributor-based sales program directed at agricultural, animal and human uses of the product
Revenue Recognition
Revenue from the sale of product obtained from our mining contractor is recognized when ownership passes to the purchaser at which time the following conditions are met:
i) persuasive evidence that an agreement exists;
ii) the risks and rewards of ownership pass to the purchaser including delivery of the product;
iii) the selling price is fixed and determinable; or,
iv) collectively is reasonably assured.
Going Concern
The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. To date, the Company generated minimal revenue, is considered a development stage company, has experienced recurring net operating losses, had a net loss of $336,470 for the year ended December 31, 2010, and a working capital deficiency of $60,337 at December 31, 2010. These factors raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty. We will need to raise funds or implement our business plan to continue operations.
F-6
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management’s plan is to obtain such resources for the Company by obtaining capital sufficient to meet its minimal operating expenses by seeking equity and/or debt financing. However management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.
The ability of the Company to continue as a going concern is dependent upon its ability to successfully accomplish the plans described in the preceding paragraph and eventually begin operations in accordance with our business plan. The accompanying financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
Recently Adopted and Recently Issued Accounting Guidance
Adopted
In June 2009, the Financial Accounting Standards Board (“FASB”) issued authoritative guidance for “Accounting for Transfers of Financial Assets,” which eliminates the concept of a “qualifying special-purpose entity,” changes the requirements for derecognizing financial assets, and requires additional disclosures in order to enhance information reported to users of financial statements by providing greater transparency about transfers of financial assets, including securitization transactions, and an entity’s continuing involvement in and exposure to the risks related to transferred financial assets. This guidance is effective for fiscal years beginning after November 15, 2009. The Company adopted this guidance for the year ended December 30, 2010. It does not have a material impact on the consolidated financial statements.
In June 2009, the FASB issued authoritative guidance amending existing guidance. The amendments include: (1) the elimination of the exemption for qualifying special purpose entities, (2) a new approach for determining who should consolidate a variable-interest entity, and (3) changes to when it is necessary to reassess who should consolidate a variable-interest entity. This guidance is effective for the first annual reporting period beginning after November 15, 2009 and for interim periods within that first annual reporting period. The Company adopted this guidance for the year ended December 31, 2010. It does not have a material impact on the consolidated financial statements.
In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires new disclosures on the transfers of assets and liabilities between Level 1 (quoted prices in active market for identical assets or liabilities) and Level 2 (significant other observable inputs) of the fair value measurement hierarchy, including the reasons and the timing of the transfers. The Company adopted this guidance for the period ended December 31, 2010. The adoption of this guidance does not have a material impact on the Company’s consolidated financial statements.
In February 2010, the FASB issued amended guidance on subsequent events to alleviate potential conflicts between FASB guidance and SEC requirements. Under this amended guidance, SEC filers are no longer required to disclose the date through which subsequent events have been evaluated in originally issued and revised financial statements. This guidance was effective immediately and we adopted these new requirements for the period ended December 31, 2010. The adoption of this guidance did not have a material impact on our financial statements.
Issued
In October 2009, the FASB issued changes to revenue recognition for multiple-deliverable arrangements. These changes require separation of consideration received in such arrangements by establishing a selling price hierarchy (not the same as fair value) for determining the selling price of a deliverable, which will be based on available information in the following order: vendor-specific objective evidence, third-party evidence, or estimated selling price; eliminate the residual method of allocation and require that the consideration be allocated at the inception of the arrangement to all deliverables using the relative selling price method, which allocates any discount in the arrangement to each deliverable on the basis of each deliverable’s selling price; require that a vendor determine its best estimate of selling price in a manner that is consistent with that used to determine the price to sell the deliverable on a standalone basis; and expand the disclosures related to multiple-deliverable revenue arrangements. These changes become effective on January 1, 2011. The Company has determined that the adoption of these changes will not have an impact on the consolidated financial statements, as the Company does not currently have any such arrangements with its customers.
F-7
In January 2010, the FASB issued guidance to amend the disclosure requirements related to recurring and nonrecurring fair value measurements. The guidance requires a roll forward of activities on purchases, sales, issuance, and settlements of the assets and liabilities measured using significant unobservable inputs (Level 3 fair value measurements). The guidance will become effective for the Company with the reporting period beginning July 1, 2011. The adoption of this guidance will not have a material impact on the Company’s consolidated financial statements.
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not, or are not believed by management to, have a material impact on the Company’s present or future consolidated financial statements.
Note 3. Loans and Debentures Payable
As of December 31, 2010, the Company has accreted $724 of debt premium and recognized $2,500 in accrued interest and we have 8 debentures issued at $4,750 each which comes to $47,500 plus accrued interest for a total of $40,000. Each mature within six months of issue.
All debt in relation to the Debentures has become due either in March or April 2010. Management is working with these note holders to extend the terms for a year, but these terms have not yet been finalized. In the 3rd quarter two of the debentures were converted to stock.
In October 2009, the Company entered into a promissory note for $5,000 due in January 2010 which carries 10% interest per annum. Management is working with this note-holder to extend the terms for a year, but these terms have not yet been finalized.
Note 4. Common Stock
The Company’s authorized preferred stock is 50,000,000 with a $0.001 par value and common stock is 300,000,000 common shares with $0.001 par value.
During the year ended December 31, 2010 2010, 5,563,612 shares were issued as follows:
| Description | # of Shares | Par Value | APIC | Payable | Amount | |||||||||||||||
|
Issuance of common stock for cash
|
510,498 | 511 | 136,389 | - | 136,900 | |||||||||||||||
|
Issuance of common stock for services
|
4,970,000 | 4,970 | 218,530 | (25,000 | ) | 198,500 | ||||||||||||||
|
Issuance of common stock for equipment
|
26,666 | 27 | 7,473 | - | 7,500 | |||||||||||||||
|
Issuance of common stock for debt
|
56,448 | 56 | 31,457 | - | 31,513 | |||||||||||||||
As of December 31, 2010, the Company has 11,474,779 shares of common stock issued and outstanding.
Note 5. Related Party Transactions
The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts. As of December 31, 2010 a stockholder of the Company has personally paid for inventory for resale thus creating a note payable to him with 4% interest calculated.
F-8
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9AT. INTERNAL CONTROL OVER FINANCIAL REPORTING
Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Company’s principal executive and principal financial officers and effected by the Company’s board of directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles generally accepted in the United States of America and includes those policies and procedures that:
|
●
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company;
|
|
●
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate. All internal control systems, no matter how well designed, have inherent limitations. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Because of the inherent limitations of internal control, there is a risk that material misstatements may not be prevented or detected on a timely basis by internal control over financial reporting. However, these inherent limitations are known features of the financial reporting process. Therefore, it is possible to design into the process safeguards to reduce, though not eliminate, this risk.
As of December 31, 2010, management assessed the effectiveness of our internal control over financial reporting based on the criteria for effective internal control over financial reporting established in Internal Control--Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission ("COSO") and SEC guidance on conducting such assessments. Based on that evaluation, they concluded that, during the period covered by this report, such internal controls and procedures may not be effective to detect the inappropriate application of US GAAP rules as more fully described below. This was due to deficiencies that existed in the design or operation of our internal controls over financial reporting that adversely affected our internal controls and that may be considered to be material weaknesses.
13
The matter involving internal controls and procedures that our management considered may be a material weakness under the standards of the COSO was the lack of a functioning audit committee due to a lack of a majority of independent members and a lack of a majority of outside directors on our board of directors, resulting in the potential for ineffective oversight in the establishment and monitoring of required internal controls and procedures. The aforementioned material weakness was identified by our Chief Executive Officer in connection with the review of our financial statements as of December 31, 2010.
Management believes that the lack of a functioning audit committee and the lack of a majority of outside directors on our board of directors results in ineffective oversight in the establishment and monitoring of required internal controls and procedures, which could result in a material misstatement in our financial statements in future periods.
Management’s Remediation Initiatives
In an effort to remediate the identified material weakness and other deficiencies and enhance our internal controls, we have initiated, or plan to initiate, the following series of measures:
Management believes that the appointment of one or more outside directors, who shall be appointed to a fully-functioning audit committee, will remedy the lack of a functioning audit committee and a lack of a majority of outside directors on our Board.
We anticipate that these initiatives will be at least partially, if not fully, implemented by December 31, 2011. Additionally, we plan to test our updated controls and remediate our deficiencies by December 31, 2011.
Changes in internal controls over financial reporting
There was no change in our internal controls over financial reporting that occurred during the period covered by this report, which has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
None.
14
PART III.
ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Set forth below are the names of our directors and executive officers, their ages, all positions and offices that they held with us, the period during which they have served as such, and their business experience during at least the last five years.
|
Name
|
Age
|
Position
|
||
|
Paul Hait
|
70
|
Director, Chairman &Secretary
|
||
|
Dennis Cullison
|
50
|
Director, President & Treasurer
|
Paul Hait (70) Mr. Hait has been Secretary, Vice President of R&D and a director of the Company since 2009. Mr. Hait currently lives in Bend, Oregon with his wife Elizabeth of 46 years. He is a Class of 62 Stanford Graduate. He holds a BS Degree in Mechanical Engineering with a minor in Industrial Design. In 1960 he won an Olympic Gold Medal in World Record time swimming the 100 Meter Breaststroke Leg in the 4x100 Medley Relay in Rome, Italy. He holds over 50 patents in such diversified fields as Ultra High Vacuum systems and components (Varian Associates, Inc.), to the Pyromid Outdoor Cooking Systems and other notable innovations. For the past 5 years, Mr. Hait has been involved in the product develop consulting business for a number of startup companies. During his business career Mr. Hait has traveled extensively throughout the World. His proven product development, patenting, business consulting, seasoned management, corporate contacts, and business founding and financing experiences are highly recognized and respected in the Business World.
Dennis Cullison (50) Mr. Cullison has been the Treasurer, Vice President of Operations and a director of the Company since 2009. Mr. Cullison resides in Bend, Oregon. Mr. Cullison graduated in 1978 from Benson Polytechnic High School. Mr. Cullison attended Portland State University and Portland Community College where he received his Business Degree, Certificate in Computer Programming and Certificate in Graphic Arts. Prior to joining the Company he was the Secretary and Chief Financial Officer and a Director of HERB-VITA, Inc. and the co-founder of US Organic Marketing, LLC, the company that brought the EXCELERITE product opportunity to the our Company. He is active in developing the operations systems for controlling product production, tracking product sales and overseeing the Web design to promote and sell our products world-wide. Prior to becoming involved with Herb Vita and US Organics, Mr. Cullison co-designed, patented and developed the third brake light (above the rear window) innovation for automobiles. This product afforded Mr. Cullison the opportunity to travel world-wide promoting his and become familiar with a host of foreign customs and business practices.
In April, 2010, former Directors James Harrison, Jay Lofthouse and Gary Ketelson resigned from the Board of Directors and James Harrison also resigned as President of the Company in order to pursue other personal interests.
Audit Committee and Audit Committee Financial Expert
We do not currently have an audit committee financial expert, nor do we have an audit committee. Our entire board of directors handles the functions that would otherwise be handled by an audit committee. We do not currently have the capital resources to pay director fees to a qualified independent expert who would be willing to serve on our board and who would be willing to act as an audit committee financial expert. As our business expands and as we appoint others to our board of directors we expect that we will seek a qualified independent expert to become a member of our board of directors. Before retaining any such expert our board would make a determination as to whether such person is independent.
15
Section 16(a) Beneficial Ownership Reporting Compliance.
Section 16(a) of the Securities Act of 1934 requires the Company's officers and directors, and greater than 10% stockholders, to file reports of ownership and changes in ownership of its securities with the Securities and Exchange Commission. Copies of the reports are required by SEC regulation to be furnished to the Company. Based on management's review of these reports during the fiscal year ended December 31, 2009, all reports required to be filed were filed on a timely basis.
Code of Ethics
Our board of directors has adopted a code of ethics that our officers, directors and any person who may perform similar functions are subject to. The Code of Ethics does not indicate the consequences of a breach of the code. If there is a breach, the board of directors would review the facts and circumstances surrounding the breach and take action that it deems appropriate, which action may include dismissal of the employee who breached the code. The board of directors is responsible for reviewing their own conduct under the Code of Ethics and determining what action to take in the event of a breach of the Code of Ethics by any director(s).
ITEM 11. EXECUTIVE COMPENSATION.
No past officer or director of the Company has received any salary and none is due or payable. We currently have no formal written salary arrangement with any of our officers or directors. Notwithstanding, any or all of our officers and /or directors may receive a salary or other compensation for services that they provide to the Company in the future. No retirement, pension, profit sharing or insurance programs or other similar programs have been adopted by the Company for the benefit of the Company’s employees. The Company did adopt its 2010 Employee, Director and Consultant Stock Plan in January 2010 (see Item 5, above).
Paul Hait, Chairman and Dennis Cullison, President were each awarded shares of unregistered common stock of the Company by the Board of Directors of the Company to compensate each of them for all of their past services to the Company and for all of the services to be rendered by them to the Company for calendar year of 2011. Paul Hait received 2,250,000 shares, Dennis Cullison received 2,500,000 shares. Our corporate counsel, received 2,000,000 shares for all past unpaid and for all day to day legal services to be preformed during 2011 to the Company. A consultant to the Company, received 2,000,000 shares for significant administrative services for past unpaid services and for future administrative services to be provided by him for 2011 to the Company. Such distribution of shares of unregistered common stock of the Company shall be in lieu of any salary or bonus or cash payment for services and is in full consideration of all services provided to the Company by each of said persons in full consideration for all services to be rendered to the Company for calendar year 2011. The Company is unable to pay currently said persons with money for their significant services to the Company and therefore since said persons are willing to accept unregistered common stock subject to certain restrictions which are set forth hereinafter, which will restrict the sale of said unregistered common stock, the Company has agreed with each of said parties to issue them the aforementioned number of shares. The issuance of said shares shall, in addition to the usual legend set forth on the shares indicating that they have not been registered pursuant to the Securities Act of 1933, there shall also be an additional restrictive legend which shall provide that the “shares represented by such certificate may not be sold or transferred prior to June 30, 2012, except in the event that the Company is sold or there is a transfer of control of the Company before said date; and provided that the shares may be transferred or sold to an immediate family member for estate planning purposes or otherwise but any such transfer to an immediate family member shall not affect or change the restrictions set forth herein and other than that one time transfer to an immediate family member no other transfers by such immediate family member will be permitted.” The shares to be issued shall be in lieu of any salary or other compensation for services rendered to the Company by each of the four persons during calendar year 2011.
16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The following table sets forth certain information regarding beneficial stock ownership as of December 31, 2010 of (i) all persons known to us to be beneficial owners of more than 5% of our outstanding common stock; (ii) each director of our company and our executive officers, and (iii) all of our officers and directors as a group. Each of the persons in the table below has sole voting power and sole dispositive power as to all of the shares shown as beneficially owned by them, except as otherwise indicated.
The following table sets forth information regarding beneficial ownership of our common stock as of December 31, 2010 (i) by each person who is known by us to beneficially own more than five percent of our common stock; (ii) by each of our officers and directors; and (iii) by all of our officers and directors as a group:
|
Title of Class
|
Name & Address of
Beneficial Owner
|
Office, If Any
|
Amount &
Nature of
Beneficial
Ownership (1)
|
Percent of
Class (2)
|
||||
|
Common Stock
$0.001 par value
|
Paul Hait
156 NW Phil’s Loop
Bend, OR 97701
|
Secretary, Director
|
1,400,500
|
12.20
|
||||
|
Common Stock
$0.001 par value
|
Dennis Cullison
18614 Riverwoods Dr.
Bend, OR 97702
|
Treasurer, Director
|
1,550,000
|
13.50
|
||||
|
Common Stock
$0.001 par value
|
All officers and directors as a group
(2 persons named above)
|
|
2,950,500
|
25.70
|
*Less than 1%
|
(1)
|
Beneficial Ownership is determined in accordance with Rule 13d-3 of the Securities and Exchange Commission and generally includes voting or investment power with respect to securities. Each of the beneficial owners listed above has direct ownership of and sole voting power and investment power with respect to the shares of our common stock. For each Beneficial Owner above, any options exercisable within 60 days have been included in the denominator.
|
|
|
(2)
|
Based on 11,474,779 shares of our Common Stock outstanding as of December 31, 2010.
|
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE
Certain Relationships and Related Transactions
The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interest. The Company has not formulated a policy for the resolution of such conflicts.
17
The Company has commenced its mining activities. The Company entered into an agreement in 2009 with M Strata, LLC whereby M Strata granted the Company permission and consent to mine certain mining claims owned or controlled by M Strata located in Panaca, Nevada. M Strata’s principal owners are Paul Hait and Dennis Cullison. Paul Hait and Dennis Cullison are directors of the Company.
Director Independence
As of December 31, 2010, Messrs. Hait and Cullison are not considered "independent" in accordance with rule 4200(a)(15) of the NASDAQ Marketplace Rules. We are currently traded on the Over the Counter Pink Sheets. The Over the Counter Pink Sheets does not require that a majority of the board be independent.
ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.
AUDIT FEES
The aggregate fees billed by our auditors, Paritz & Co., P.A., for professional services rendered for the audit of our annual financial statements for fiscal year ended December 31, 2010 and review of our interim financial statements for the first, second and third quarters of 2010 was approximately $6,290. The aggregate fees billed by our auditors for professional services rendered for the audit of our annual financial statements for fiscal year ended December 31, 2009 and review of our interim financial statements for the first, second and third quarters of 2010 was approximately $6,495.
AUDIT-RELATED FEES
During the last two fiscal years, no fees were billed or incurred for assurance or related services by our auditors that were reasonably related to the audit or review of financial statements reported above.
TAX FEES
Tax preparation fees billed for the fiscal years ended December 31, 2010 and 2009 was approximately $ 775and $ 0, respectively.
ALL OTHER FEES
During the last two fiscal years, no other fees were billed or incurred for services by our auditors other than the fees noted above. Our board, acting as an audit committee, deemed the fees charged to be compatible with maintenance of the independence of our auditors.
THE BOARD OF DIRECTORS PRE-APPROVAL POLICIES
We do not have a separate audit committee. Our full board of directors performs the functions of an audit committee. Before an independent auditor is engaged by us to render audit or non-audit services, our board of directors pre-approves the engagement. Board of directors pre-approval of audit and non-audit services will not be required if the engagement for the services is entered into pursuant to pre-approval policies and procedures established by our board of directors regarding our engagement of the independent auditor, provided the policies and procedures are detailed as to the particular service, our board of directors is informed of each service provided, and such policies and procedures do not include delegation of our board of directors' responsibilities under the Exchange Act to our management. Our board of directors may delegate to one or more designated members of our board of directors the authority to grant pre-approvals, provided such approvals are presented to the board of directors at a subsequent meeting. If our board of directors elects to establish pre-approval policies and procedures regarding non-audit services, the board of directors must be informed of each non-audit service provided by the independent auditor. Board of directors pre-approval of non-audit services, other than review and attest services, also will not be required if such services fall within available exceptions established by the SEC. For the fiscal year ended December 31, 2009, 100% of audit-related services, tax services and other services performed by our independent auditors were pre-approved by our board of directors.
Our board has considered whether the services described above under the caption "All Other Fees", which are currently none, is compatible with maintaining the auditor's independence.
The board approved all fees described above.
18
PART IV
ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
The following documents are filed as part of this 10-K:
1. FINANCIAL STATEMENTS
The following documents are filed in Part II, Item 8 of this annual report on Form 10-K:
|
Report of Paritz & Co., P.A., Independent Registered Certified Public Accounting Firm
|
|
Balance Sheets as of December 31, 2010 and 2009
|
|
Statements of Operations for the years ended December 31, 2010 and 2009 and the period from inception (June 9, 2008) to December 31, 2009 (audited)
|
|
Statements of Stockholders’ Deficit from inception (June 9, 2008) to December 31, 2010 (audited)
|
|
Statement of Cash Flows for the years ended December 31, 2010and 2009 and the period from inception (June 9, 2008) to December 31, 2009 (audited)
|
|
Notes to Financial Statements (audited)
|
|
2. FINANCIAL STATEMENT SCHEDULES
|
All financial statement schedules have been omitted as they are not required, not applicable, or the required information is otherwise included.
3. EXHIBITS
The exhibits listed below are filed as part of or incorporated by reference in this report.
|
Exhibit No.
|
Identification of Exhibit |
|
31.1.
|
Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
31.2.
|
Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
|
|
32.1
|
Certification of Chief Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
|
32.2
|
Certification of Chief Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
|
19
|
SIGNATURES
|
Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
U.S. Natural Nutrients & Minerals, Inc.
(Registrant)
By /s/ Dennis Cullison
Dennis Cullison
President/Treasurer, Chief Financial Officer, Principal Financial Officer and Director
Date March 30, 2010
By /s/ Paul Hait
Paul Hait
Secretary, Chief Executive Officer, Principal Executive Officer and Director
Date March 30, 2010
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following person on behalf of the registrant and in the capacity and on the date indicated.
By /s/ Dennis Cullison
Dennis Cullison
President/Treasurer, Chief Financial Officer, Principal Financial Officer and Director
Date March 30, 2010
By /s/ Paul Hait
Paul Hait
Secretary, Chief Executive Officer, Principal Executive Officer and Director
Date March 30, 2010
20