Cavitation Technologies, Inc. - Annual Report: 2008 (Form 10-K)
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
WASHINGTON,
D.C. 20549
FORM
10-K
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[X]
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ANNUAL
REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
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| For the fiscal year ended June 30, 2008 | ||||||
| [ ] | TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT | |||||
| For the transition period from _________ to ________ | ||||||
| Commission file number: 000-53239 | ||||||
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Bioenergy,
Inc.
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(Exact
name of registrant as specified in its charter)
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Nevada
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20-4907818
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(State
or other jurisdiction of incorporation or organization)
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(I.R.S.
Employer Identification No.)
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3702 South Virginia Street,
#G12-401
Reno,
NV
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89502
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number: 202-470-4698
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Securities
registered under Section 12(b) of the Exchange Act:
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Title
of each class
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Name
of each exchange on which registered
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none
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not
applicable
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Securities
registered under Section 12(g) of the Exchange Act:
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Title
of each class
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Name
of each exchange on which registered
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Common Stock, par
value $0.001
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not
applicable
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Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act. Yes
[ ] No
[X]
Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act. Yes
[ ] No
[X]
Check
whether the Issuer (1) filed all reports required to be filed by Section 13 or
15(d) of the Securities Exchange Act during the past 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 if disclosure of delinquent filers pursuant to Item 405 of
Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not
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. Yes
[ ] No [X]
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 [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
Indicate
by check mark whether the registrant is a shell company (as defined in Rule
12b-2 of the Exchange Act). Yes [X] No
[ ]
State the
aggregate market value of the voting and non-voting common equity held by
non-affiliates computed by reference to the price at which the common equity was
last sold, or the average bid and asked price of such common equity, as of the
last business day of the registrant’s most recently completed second fiscal
quarter. Not
available
Indicate
the number of shares outstanding of each of the registrant’s classes of common
stock, as of the latest practicable date. 2,500,000 as of June 30,
2008.
TABLE OF
CONTENTS
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Page
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PART
I
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PART
II
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PART
III
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PART
IV
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| Item 15. | Exhibits, Financial Statement Schedules | |
PART I
Item 1. Business
Company
Overview
Bioenergy
Inc. was formed as a Nevada corporation on May 8, 2006. Our principal
executive offices are located at 3702 South Virginia Street, #G12-401 Reno
Nevada 89502. Our telephone number is (202) 470-4698. Our operations
office in China is located at 12-303 Binjiangxincheng, Hangzhou, Zhejiang,
China.
We are in
the business of developing a system for refining ethanol from wasted grain
straw. China is a large agricultural country with a huge production
of rice and wheat. Tons of grain straw are burned and wasted every
year (up to 700 million tons). Our intention is to help Chinese farmers use our
biotechnology to refine this grain straw, producing ethanol, which would
significantly benefit those Chinese farmers, release the tension of energy
demand and help the environment. We have already completed a prototype of our
system, developed by our Chief Technology Officer and one of our
directors.
Background
Global
energy demand continues to increase. According to information
provided by the U.S. Department of Energy, in 2003, the world
consumed:
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29
billion barrels of oil,
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5,440
million short tons of coal; and
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95.5
trillion cubic feet of natural gas.
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The
combustion of these fossil fuels results in the annual release of approximately
8 gigatons of carbon dioxide into the Earth's atmosphere with uncertain effects
on global temperature.
China has
recently moved into second place worldwide as a consumer of oil, and its recent
pace of economic growth has resulted in global demand for oil and energy growing
at rates well above recent historical averages. Political instability in
oil-rich countries only adds to economic problems through the potential for
major supply disruptions, resulting in a global energy crisis.
On the
other hand, Chinese farmers generate more than 700 million tons of grain straw
from the cultivation and harvest of rice and wheat, and this grain straw could
be refined to ethanol, a well-known alternative energy source.
Ethanol
Ethanol
is a clean-burning, high-octane fuel that is produced from renewable
sources. At its most basic, ethanol is grain alcohol, produced from
crops such as corn, because grains contain a sugar element that is key for the
production of ethanol. As grain straw also contains the basic sugar
element found in corn, ethanol can also be produced from grain
straw. Because it is domestically produced, ethanol helps reduce
China's dependence upon foreign sources of energy.
Pure 100%
ethanol is not generally used as a motor fuel; instead, a percentage of ethanol
is combined with unleaded gasoline. This is beneficial because the
ethanol:
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decreases
the fuel's cost;
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increases
the fuel's octane rating;
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decreases
gasoline's harmful emissions.
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Any
amount of ethanol can be combined with gasoline, but the most common blend is
“E10”. E10 is 10% ethanol and 90% unleaded gasoline. E10
is approved for use in any make or model of vehicle sold in China, because of
its high performance, clean-burning characteristics. In 2005, about
20% of China's gasoline was blended with ethanol, most in this 10%
variety.
In recent
years, China has set up quite a few enterprises to produce ethanol, but our goal
is to help Chinese farmers set up small-sized ethanol refinery systems using
grain straw produced by themselves. Therefore these big enterprises are not our
direct competitors.
Our
Ethanol Refinery System
There are
five main components in our system:
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Grinder (15kw,
25kg/h)
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Cooker
#1 (Boiler – high
temperature cooker) Standard Volume:
100L
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Cooker
#2 (Slow cooker – low
temperature cooker) Standard Volume:
100L
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Distiller (5kw)
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Dehydrator (7.5kw)
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Our
ethanol refinery system provides the technology to process refined ethanol
through the following procedures:
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1.
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Milling. The grain straw
passes through a grinder, which grinds it into a fine powder called
meal.
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2.
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Liquefaction. The meal
is mixed with water and alpha-amylase (the first enzyme), and then poured
into cooker #1 where the starch is liquefied. Heat is applied
at this stage to enable liquefaction. This step takes about 48
hours. Cooker #1 is a large, sealed boiler. The meal
is placed into it at a ratio of one-third meal to two-thirds water. Cooker
#1 has two indicators – one for temperature (which needs to be above
105ºC) and one for pH value. The product is liquefied and
boiled until it reaches a pH of 7. At this point nitric acid is
added until the pH value drops to
5.
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3.
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Saccharification. The
mash from the cooker is then cooled and the secondary enzyme
(gluco-amylase) is added to convert the liquefied starch to fermentable
sugars (dextrose).
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4.
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Fermentation. Yeast is
added to the mash to ferment the sugars to ethanol and carbon dioxide
until it is fully fermented and leaves cooker #1. At this
stage, the temperature first needs to drop to 35ºC. Once this
temperature is reached, the product is moved to cooker #2. The
product is left to ferment at 35ºC for seven days. At the end
of seven days, the sediment is filtered
out.
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5.
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Distillation. The
fermented mash, similar to beer, contains about 10% alcohol plus all the
non-fermentable solids from the meal and yeast cells. The mash
is pumped to the continuous flow, multi-column distiller, where the
alcohol is removed from the solids and the water. The alcohol
leaves the top of the final column at about 96% strength, and the residue
mash, called stillage, is transferred from the base of the column to the
co-product processing area. The product is now cooked in the distiller
until 50% to 60% of the water has evaporated. At the end of
this process, the product has become 60% ethanol (40%
water).
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6.
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Dehydration. The alcohol
from the top of the column passes through a dehydrator, where the
remaining water will be removed. The alcohol product at this stage is
called anhydrous ethanol (pure, without water) and is approximately 200
proof. Once the dehydration process is complete, the resulting product
will be a minimum of 95% ethanol, which is sufficient for use as a blend
for automobile gas.
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The
entire system looks like a small wine making system, and everything can be fit
into a standard garage-sized space. Our proposed ethanol refinery system can be
built entirely with in-house expertise and resources, without any special
maintenance or reconstruction. Our ethanol refinery products can be
built to be a variety of sizes to fit various requirements by simply adding more
cookers. Our standard enthanol system is a 100L model that can generate 50
liters of 95% pure ethanol.
Research
and Development
Although
we believe that our technology is not the most advanced in the ethanol refinery
area available on the market today, our products are inexpensive, and we feel
they are appropriate for Chinese farmers’ requirements.
We will
continue to upgrade and refine our existing technologies. During the
next twelve months, we will continue to focus on enhancing our refinery speed,
our purity of product, and reducing costs.
Present
Stage of Development
All
related technologies were acquired from our Chief Technology Officer and one of
our directors, Haiming Zhang, at no cost. Mr. Zhang has completed a
prototype of our ethanol refinery system. The volume of our system’s
production is in direct proportion to the numbers of cookers purchased and
configured. Thus our systems can be as large or small as a user
requires.
We have
not yet completed the development of our ethanol refinery
technology. We believe our products will be commercially available by
the end of December, 2008.
To remain
competitive in the ethanol refinery industry, we will continue developing and
improving our core technology. Currently the standard system takes
about nine days to finish one complete process, and our current goal is to make
the system work one-third faster, or about six days, which requires us to test
various kinds of additives. The costs of our research and development activities
are not borne by customers since we will not have customers until the completion
of the marketing and development of our ethanol refinery system. We
will either raise more funds from investors or borrow from existing directors to
cover our projected research and development expenses. Our directors
and officers have agreed to contribute up to $50,000 in additional funds before
we seek further financing through a private placement.
Our Chief
Technology Officer and one of our directors, Mr. Haiming Zhang, was a former
engineer at Hengli Chemical Factory, located in Hangzhou, where he invented our
ethanol refinery system. It is estimated that the cost of
manufacturing the system will be less than 50,000 Chinese Yuan (approximately
USD$6,000). Users can purchase more cookers to increase the system’s
output.
We are
still conducting research to reduce the costs of each system with the goal of
making the units more affordable for individual farmers.
Manufacturing,
Service & Support
Our
proposed ethanol refinery system can be built entirely with in-house expertise
and resources, without any special maintenance or reconstruction. Our
ethanol refinery products can be built to be a variety of sizes to fit various
requirements, depending upon the number of cookers configured with the
system.
All of
the materials and parts related to the ethanol refinery system are available
through the public marketplace.
Once we
receive orders, we will contract with Original Equipment Manufacturers (“OEM
manufacturers”) to produce these for us at pre-negotiated prices. OEM Manufacturers are
general manufacturer who can produce and brand our product according to our
specifications. We can then sell the products ourselves without entering into
the manufacturing industry. Typically, an OEM will ship an order
within five business days.
The
manufacture of our ethanol refinery system doesn’t require any special
facilities or equipment. A large number of OEM manufacturers have the
skills and materials necessary to assemble our product by following our
instructions.
Our
directors have contacted several OEM manufacturers who have shown interest in
working with us. We will look for OEM manufacturers either by direct
communication or advertisement. As our product nears the commercialization
phase, we intend to pursue relationships with OEM manufacturers more
vigorously.
We intend
to employ local representatives to be part of our sales and technical support
team. If a user has any difficulties, our representatives will be on-site for
assistance, free of charge for the initial call and at pre-established rates
thereafter.
Marketing
Our goal
is for our ethanol refinery system to become a leading product in the Chinese
marketplace. In order to achieve our goal, we intend to increase
awareness of our products with potential customers, generally anticipated to be
farmers. We intend to do this by engaging in the
following:
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Attending Agriculture
Meetings, Promotional Events and Conferences: We plan to
attend a number of events attended by agriculture-related institutions in
order to further expose our products. These events will include
agricultural products and technology trade meetings and promotional events
that are attended by agriculture-related institutions and related seminars
and conferences.
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Developing Direct
Marketing Programs to Attract Farmers: Through their
past and current employment in the chemical and agriculture industry in
China, our directors have developed business contacts and an in-depth
understanding of business practices and customs in these industries. In
addition to attending the foregoing conferences and seminars, we intend to
market directly to farmers. Initially we will seek to contact
farmers in eastern and southern Mainland China, because these farmers are
the wealthiest farmers in China, and they are very interested in
diversification, rather than farming only. Our marketing will include
conducting seminars and the use of online and traditional advertising
media such as newspapers and trade publications. We intend to develop our
website as one medium to promote our ethanol refinery system. We also plan
to conduct a demonstration show in various
villages.
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Developing Sales
Representative Network: We intend to eventually develop a network
of qualified representatives who will understand how our ethanol refinery
system will benefit farmers. Initially, we hope to include at
least one professional in the southeast of China. We will build
our network through a direct marketing program and through
word-of-mouth. To ensure that our customers receive high
quality products, we will implement a follow-up program to seek feedback
from all farmers purchasing our ethanol refinery system. We will be
dependent on representatives for the sale of
our ethanol refinery system. Currently we do not have any
distribution representatives. Even if we do have representatives, we may
not be able to deliver any products to the user in a timely manner and
these representatives may not be able to sell our products in volumes
anticipated by us.
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Our
anticipated costs to implement our marketing strategy for the next 12 months are
estimated as follows:
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travel
- $4,000
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marketing
- $2,000
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We intend
to obtain funds to cover these costs by private equity fundraising or
shareholders' loans. We anticipate that we will begin to receive
revenues from the sale of our ethanol refinery systems to farmers before the end
of December 2008.
Management
Team
We intend
to expand our current management to retain skilled directors, officers and
employees with experience relevant to our business focus. Our current
management team is highly skilled in technical areas such as researching and
developing our technologies, but not skilled in areas such as marketing and
business management. Obtaining the assistance of individuals with an
in-depth knowledge of operations, technology and markets will allow us to build
market share more effectively.
Competition
We are
not aware of any companies that are marketing similar ethanol refinery systems
to farmers in China. The existing ethanol refinery systems are only affordable
by chemical factories and not by Chinese farmers because the size of the
products and the financial investment required to purchase and install these
large systems is prohibitive to the average farmer.
The
technologies we are currently using are commonly used and are available to the
public. We are in the process of researching patent rights, and at
present we are not aware of anyone in China having any patents, trademarks
and/or copyright protection for the technologies and any proprietary rights to
these technologies. We believe that the ethanol refinery system
developed by us should be protected. In order to protect our products
we plan to apply for patent protection and/or copyright protection in the United
States, China and other jurisdictions, and we will require purchasers of our
products to enter into non-disclosure agreements with us.
Customer
Service
Our
customers will receive one free on-site technical support call that can be used
for initial installation and instruction. Subsequently we will charge
200 RMB per hour for service calls.
Intellectual
Property
We have
not obtained any copyrights, patents or trademarks in respect of our ethanol
refinery system, which is currently undergoing research and
development. We intend to obtain all necessary copyrights, patents or
trademarks, as applicable, in the United States and China, when we are in a
financial position to do so. We have not entered into any licensing,
franchise, concession or royalty agreements in respect of our proposed ethanol
refinery system. At present, we have non-disclosure agreements with
our employees to protect our technology.
Employees
Our
President and director, Mr. Jose Castro, our Chief Executive Officer and director, Mr. Min
Ge, and our Chief Technology Officer and director, Mr. Haiming Zhang, are the
only employees of the company. They handle all of the
responsibilities in the area of corporate administration, business development
and research.
Government
Regulation and Supervision
We are
subject to the laws and regulations of those jurisdictions in which we plan to
sell our ethanol refinery system that are generally applicable to business
operations, such as business licensing requirements, income taxes and payroll
taxes. In general, the sale of our ethanol refinery system in China
is not subject to special regulatory and/or supervisory
requirements.
Subsidiaries
We do not
currently have any subsidiaries.
Item 1A. Risk Factors.
A smaller
reporting company is not required to provide the information required by this
Item.
Item 1B. Unresolved Staff Comments
A smaller
reporting company is not required to provide the information required by this
Item.
Item 2. Properties
BioEnergy
currently shares office space located at 3702 South Virginia Street, #G12-401,
Reno, Nevada 89502-6030. Since August 1, 2006, we have also used
office space located at 12-303 Binjiangxincheng, Hangzhou, Zhejiang,
China. Our director, Mr. Haiming Zhang, also provides these
facilities to us at no charge.
Item 3. Legal Proceedings
We are
not a party to any pending legal proceeding. We are not aware of any pending
legal proceeding to which any of our officers, directors, or any beneficial
holders of 5% or more of our voting securities are adverse to us or have a
material interest adverse to us.
Item 4. Submission of Matters to a Vote of Security
Holders
No
matters were submitted to a vote of the Company's shareholders during the fiscal
year ended June 30, 2008.
PART II
Item 5. Market for Registrant’s Common Equity
and Related Stockholder Matters and Issuer Purchases of Equity
Securities
Market
Information
Our
common stock is currently quoted on the OTC Bulletin Board (“OTCBB”), which is
sponsored by FINRA. The OTCBB is a network of security dealers who buy and sell
stock. The dealers are connected by a computer network that provides information
on current "bids" and "asks", as well as volume information. Our shares are
quoted on the OTCBB under the symbol “BEEY.OB.”
The
following table sets forth the range of high and low bid quotations for our
common stock for each of the periods indicated as reported by the OTCBB. These
quotations reflect inter-dealer prices, without retail mark-up, mark-down or
commission and may not necessarily represent actual transactions.
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Fiscal
Year Ending June 30, 2008
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Quarter
Ended
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High
$
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Low
$
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June
30, 2008
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n/a
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n/a
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March
31, 2008
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n/a
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n/a
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December
31, 2007
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n/a
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n/a
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September
30, 2007
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n/a
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n/a
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Fiscal
Year Ending June 30, 2007
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Quarter
Ended
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High
$
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Low
$
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June
30, 2007
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n/a
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n/a
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March
31, 2007
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n/a
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n/a
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December
31, 2006
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n/a
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n/a
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September
30, 2006
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n/a
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n/a
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Penny
Stock
The SEC
has adopted rules that regulate broker-dealer practices in connection with
transactions in penny stocks. Penny stocks are generally equity securities with
a market price of less than $5.00, other than securities registered on certain
national securities exchanges or quoted on the NASDAQ system, provided that
current price and volume information with respect to transactions in such
securities is provided by the exchange or system. The penny stock rules require
a broker-dealer, prior to a transaction in a penny stock, to deliver a
standardized risk disclosure document prepared by the SEC, that: (a) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (b) contains a description of the
broker's or dealer's duties to the customer and of the rights and remedies
available to the customer with respect to a violation of such duties or other
requirements of the securities laws; (c) contains a brief, clear, narrative
description of a dealer market, including bid and ask prices for penny stocks
and the significance of the spread between the bid and ask price; (d) contains a
toll-free telephone number for inquiries on disciplinary actions; (e) defines
significant terms in the disclosure document or in the conduct of trading in
penny stocks; and (f) contains such other information and is in such form,
including language, type size and format, as the SEC shall require by rule or
regulation.
The
broker-dealer also must provide, prior to effecting any transaction in a penny
stock, the customer with (a) bid and offer quotations for the penny stock; (b)
the compensation of the broker-dealer and its salesperson in the transaction;
(c) the number of shares to which such bid and ask prices apply, or other
comparable information relating to the depth and liquidity of the market for
such stock; and (d) a monthly account statement showing the market value of each
penny stock held in the customer's account.
In
addition, the penny stock rules require that prior to a transaction in a penny
stock not otherwise exempt from those rules, the broker-dealer must make a
special written determination that the penny stock is a suitable investment for
the purchaser and receive the purchaser's written acknowledgment of the receipt
of a risk disclosure statement, a written agreement as to transactions involving
penny stocks, and a signed and dated copy of a written suitability
statement.
These
disclosure requirements may have the effect of reducing the trading activity for
our common stock. Therefore, stockholders may have difficulty selling our
securities.
Holders
of Our Common Stock
As of
June 30, 2008, we had 2,500,000 shares of our common stock issued and
outstanding, held by 35 shareholders of record.
Dividends
The
Company has not declared, or paid, any cash dividends since inception and does
not anticipate declaring or paying a cash dividend for the foreseeable
future.
Nevada
law prohibits our board from declaring or paying a dividend where, after giving
effect to such a dividend, (i) we would not be able to pay our debts as they
came due in the ordinary course of our business, or (ii) our total assets would
be less than the sum of our total liabilities plus the amount that would be
needed, if the corporation were to be dissolved at the time of distribution, to
satisfy the rights of any creditors or preferred stockholders.
Securities
Authorized for Issuance under Equity Compensation Plans
We do not
have any equity compensation plans.
Item 6. Selected Financial Data
A smaller
reporting company is not required to provide the information required by this
Item.
Item 7. Management’s Discussion and Analysis of Financial
Condition and Results of Operations
Forward-Looking
Statements
Certain
statements, other than purely historical information, including estimates,
projections, statements relating to our business plans, objectives, and expected
operating results, and the assumptions upon which those statements are based,
are “forward-looking statements” within the meaning of the Private Securities
Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. These forward-looking
statements generally are identified by the words “believes,” “project,”
“expects,” “anticipates,” “estimates,” “intends,” “strategy,” “plan,” “may,”
“will,” “would,” “will be,” “will continue,” “will likely result,” and similar
expressions. We intend such forward-looking statements to be covered by the
safe-harbor provisions for forward-looking statements contained in the Private
Securities Litigation Reform Act of 1995, and are including this statement for
purposes of complying with those safe-harbor provisions. Forward-looking
statements are based on current expectations and assumptions that are subject to
risks and uncertainties which may cause actual results to differ materially from
the forward-looking statements. Our ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on our operations and future prospects on a
consolidated basis include, but are not limited to: changes in economic
conditions, legislative/regulatory changes, availability of capital, interest
rates, competition, and generally accepted accounting principles. These risks
and uncertainties should also be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. We
undertake no obligation to update or revise publicly any forward-looking
statements, whether as a result of new information, future events or otherwise.
Further information concerning our business, including additional factors that
could materially affect our financial results, is included herein and in our
other filings with the SEC.
Plan
of Operation in the Next Twelve Months
Since we
have only recently begun development of our ethanol refinery system and have not
generated any revenue, our independent auditors have issued an opinion about our
ability to continue as a going concern in connection with our audited financial
statements for the period from our inception on May 8, 2006 to June 30,
2008. This means that our auditors believe there is doubt that we can
continue as an on-going business for the next twelve months unless we obtain
additional capital to pay our bills. This is because we have
generated no revenues and no revenues are anticipated unless and until we
complete the development and marketing of our proposed ethanol refinery
system. Accordingly, we must raise cash from sources other than the
sale of our products. Our only other source for cash at this time is
equity investments by others in our company. Our accumulated deficit
is $82,200 as of June 30, 2008. The discussion below provides an
overview of our operations, discusses our results of operations, our plan of
operations, our liquidity and capital resources.
Our
primary objective in the next twelve months will be to complete development of
our proposed ethanol refinery system, establish our marketing plan, commence an
advertising campaign for our proposed ethanol refinery system, and employ our
first sales force for direct sales of our proposed products in
China.
Since our
incorporation on May 8, 2006, we have taken active steps to implement our
business plan. In March 2005, we began the development of our ethanol refinery
system. Our Chief Technology Officer and member of our board of directors,
Haiming Zhang, has completed several experiments of key components that will
form the basis of our proposed ethanol refinery system.
We
anticipate that, in time, the primary source of revenue for our business model
will be the sale of our proposed ethanol refinery system. We also anticipate
that we may receive compensation for professional services such as customized
design and development of the ethanol refinery system.
Currently,
we do not have any customers, as our ethanol refinery system is not yet fully
developed.
In our
management’s opinion, we need to achieve the following events or milestones in
the next twelve months:
|
·
|
Enhance
our core technology that will further the marketability of our products;
and
|
|
·
|
Establish
customer relationships in China once our proposed ethanol refinery system
is fully developed.
|
In order
to reach these milestones, we will do the following:
|
·
|
Develop
a demonstration of our ethanol refinery system by December 31, 2008. This
will allow users to see the results of the ethanol refinery technology and
determine its effectiveness. We estimate that this will cost a total of
$4,000.
|
|
·
|
Develop
the completed commercial version of our proposed ethanol refinery system
by December 31, 2008. This system will be marketed to potential customers
in China. We estimate that the remaining cost for completion of the
ethanol refinery system development is approximately
$4,000
|
|
·
|
Commence
a marketing campaign for our ethanol refinery system following its
development, which will be by the end of December 2008. We estimate that
we will need $6,000 to implement our marketing and advertising
campaign.
|
Furthermore,
in our management’s opinion, we can expect to incur the following expenses to
fund our plan of operation for the next twelve months:
|
·
|
Audit
fees, which consist primarily of accounting and auditing fees for the
year-end audit. We estimate that our audit fees for the next twelve months
will be approximately $4,000;
|
|
·
|
Bank
charges, which consist primarily of charges by our bank for processing
transactions through our checking account. We estimate that our bank
charges for the next twelve months will be approximately
$100;
|
|
·
|
Legal
and organizational fees, which consist primarily of legal fees paid by us
regarding securities advice and organizing the company. We estimate that
our legal and organizational fees for the next twelve months will be
approximately $10,000; and
|
|
·
|
Other
operating expenses, which consist primarily of the expenses incurred for
further development of our proposed ethanol refinery system; for the
advertising campaign for our proposed ethanol refinery system, and other
administrative expenses. We estimate that our other operating expenses for
the next twelve months will be approximately
$30,000.
|
Purchase
or Sale of Equipment
We do not
expect to purchase or sell any plant or significant equipment. We will lease
warehouse space as needed for the development of our system.
Personnel
Mr. Jose
Castro, our President and Director, and Mr. Haiming Zhang, our Chief Technology
Officer and Director, are currently each working approximately 10 to 20 hours
per week to meet our needs. As demand requires, Mr. Castro, Mr. Ge
and Mr. Zhang will devote additional time. We currently have no other
employees. We expect that we will only increase our number of
employees by one person during the next twelve months.
Results
of Operations for the period from inception (May 8, 2006) to June 30,
2008
We
generated no revenue for the period from inception (May 8, 2006) to June 30,
2008. We are a development stage company and do not yet have any products to
sell.
Our
operating expenses for the year ended June 30, 2008 were $19,000, compared to
$58,200 for the year ended June 30, 2007. Our operating expenses for
the period from inception (May 8, 2006) through June 30, 2008 were
$82,200. For each period, our expenses consisting entirely of
management and professional fees. Thus, we had Net Losses of $19,000 for the
year ended June 30, 2008, $58,200 for the year ended June 30, 2007, and $82,200
for the period from inception (May 8, 2006) to June 30, 2008.
We
anticipate our operating expenses will increase as we implement our business
plan. The increase will be attributable to expenses to implement our business
plan, and the professional fees to be incurred in connection with being a
reporting company under the Securities Exchange Act of 1934.
Liquidity
and Capital Resources
As of
June 30, 2008, we had total current assets of $0. Our total current liabilities
as of June 30, 2008 were $19,200. Thus, we have a working capital
deficit of $19,200 as of June 30, 2008.
Operating
activities used $19,000 in cash for the year ended June 30, 2008, and $82,200
for the period from inception (May 8, 2006) to June 30, 2008. Our net losses of
$19,000 and $82,200, respectively, were the primary negative components of our
operating cash flows. Cash flows provided by financing activities during the
year ended June 30, 2008 consisted of $13,000, which was loaned to us by a
member of our board of directors. Cash flows provided by financing activities
for the period from inception (May 8, 2006) to June 30, 2008 consisted of
$65,200, $15,200 of which was loaned to us by a member of our board of directors
and $50,000 of which was from the sale of our common stock.
The
success of our business plan beyond the next 12 months is contingent upon us
obtaining additional financing. We intend to fund operations through debt and/or
equity financing arrangements, which may be insufficient to fund our capital
expenditures, working capital, or other cash requirements. We do not have any
formal commitments or arrangements for the sales of stock or the advancement or
loan of funds at this time. There can be no assurance that such additional
financing will be available to us on acceptable terms, or at all.
Off
Balance Sheet Arrangements
As of
June 30, 2008, there were no off balance sheet arrangements.
Item 7A. Quantitative and Qualitative Disclosures
About Market Risk
A smaller
reporting company is not required to provide the information required by this
Item.
Item 8. Financial Statements and Supplementary
Data
See the
financial statements annexed to this annual report.
Item 9. Changes In and Disagreements with
Accountants on Accounting and Financial Disclosure
Effective
on December 10, 2007, Maddox Ungar Silberstein, PLLC, Certified Public
Accountants, have been retained to provide Auditors’ Reports on the annual
financial statements of the Company for the fiscal year ended June 30, 2008, and
to conduct review engagements on the Company’s non-annual quarterly financial
statements on an ongoing basis thereafter. The change of accountant was approved
by majority consent of the board of directors. We have contacted our former
accountant, Dale Matheson Carr Hilton Labonte LLP, Chartered Accountants, for
dismissal of their services and there are no disagreements between us and our
former accountant, Dale Matheson Carr Hilton Labonte LLP, whether resolved or
not resolved, on any matter of accounting principles or practices, financial
statement disclosures or auditing scope or procedure, which would cause them to
make reference to the subject matter of a disagreement in connection with their
report from our inception to December 10, 2007. The former accountant’s report
on our financial statements does not contain any adverse opinions or disclaimers
of opinions and is not qualified or modified as to uncertainty, auditing scope
or accounting principles.
Prior to
engaging the new accountant, we did not consult with it regarding any accounting
or auditing concerns stated in Item 304(a)(2) of Regulation S-B.
We have
provided Dale Matheson Carr Hilton Labonte LLP with a copy of the disclosure
provided within our report filed on form 8-K dated December 10, 2007 and they
have advised the Commission as to whether they agree or disagree with the
disclosure made herein.
A copy of
their response is filed with our report on form 8-K dated December 10, 2007, and
incorporated herein by reference.
Item 9A(T). Controls and Procedures
Disclosure
controls and procedures are controls and other procedures that are designed to
ensure that information required to be disclosed in company reports filed or
submitted under the Securities Exchange Act of 1934 (the “Exchange Act”) is
recorded, processed, summarized and reported, within the time periods specified
in the Securities and Exchange Commission’s rules and forms. Disclosure controls
and procedures include without limitation, controls and procedures designed to
ensure that information required to be disclosed in company reports filed or
submitted under the Exchange Act is accumulated and communicated to management,
including our chief executive officer and treasurer, as appropriate to allow
timely decisions regarding required disclosure.
As
required by Rules 13a-15 and 15d-15 under the Exchange Act, our chief executive
officer and chief financial officer carried out an evaluation of the
effectiveness of the design and operation of our disclosure controls and
procedures as of June 30, 2008. Based on their evaluation, they concluded that
our disclosure controls and procedures were effective.
Our
internal control over financial reporting is a process designed by, or under the
supervision of, our chief executive officer and chief financial officer and
effected by our board of directors, management and other personnel, to provide
reasonable assurance regarding the reliability of our financial reporting and
the preparation of our financial statements for external purposes in accordance
with generally accepted accounting principles. Internal control over financial
reporting includes policies and procedures that pertain to the maintenance of
records that in reasonable detail accurately and fairly reflect the transactions
and dispositions of our assets; provide reasonable assurance that transactions
are recorded as necessary to permit preparation of our financial statements in
accordance with generally accepted accounting principles, and that our receipts
and expenditures are being made only in accordance with the authorization of our
board of directors and management; and provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition
of our assets that could have a material effect on our financial
statements.
Under the
supervision and with the participation of our management, including our chief
executive officer, we conducted an evaluation of the effectiveness of our
internal control over financial reporting based on the criteria established in
Internal Control – Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission (“COSO”). Based on this evaluation
under the criteria established in Internal Control – Integrated Framework, our
management concluded that our internal control over financial reporting was
effective as of June 30, 2008.
This
annual report does not include an attestation report of our registered public
accounting firm regarding internal control over financial reporting.
Management’s report was not subject to attestation by our registered public
accounting firm pursuant to temporary rules of the Securities and Exchange
Commission that permit us to provide only management’s report in this annual
report.
During
the most recently completed fiscal quarter, there has been no change in our
internal control over financial reporting that has materially affected or is
reasonably likely to materially affect, our internal control over financial
reporting.
Item 9B. Other Information
None
PART III
Item 10. Directors, Executive Officers and Corporate
Governance
The
following information sets forth the names of our current directors and
executive officers, their ages as of June 30, 2008 and their present
positions.
|
Name
|
Age
|
Position
Held with the Company
|
|
Jose
Castro
|
33
|
Director,
President, Chief Executive Officer, Treasurer (Principal Accounting
Officer), Principal Financial Officer and Secretary
|
|
Haiming
Zhang
|
51
|
Director
and Chief Technology Officer
|
Set forth
below is a brief description of the background and business experience of
executive officers and directors.
Jose
Castro, Director, President, Secretary, Chief Executive Officer, Chief Financial
Officer, Principal Accounting Officer, and Treasurer
Mr.
Castro has served as one of our directors since May 8, 2006. On May 14, 2008, he
was appointed as our President, Secretary, Chief Executive Officer, Chief
Financial Officer, Principal Accounting Officer, and Treasurer. Since 1999, Mr.
Castro has worked as an independent venture capital investor. He invested and
has worked as a deputy manager of Shuanglu Battery Co., Ltd. located in China,
since 2001. He also invested Yudu foods Co., Ltd. in China. In
2003
Haiming
Zhang, Director and Chief Technology Officer
Mr. Zhang
has served as our Chief Technical Officer and as one of our directors since May
8, 2006. Since 1985, Mr. Zhang has worked as research associate and
engineerer for Hangzhou Runming Chemicial Company in Hangzhou
China. He holds a Bachelor degree from Wuhan University in Wuhan,
China.
Changes
in Management
On May
14, 2008, Min Ge resigned from serving as our officer and
director. On the same date, Jose Castro was appointed by our board of
directors to serve President, Secretary, Chief Executive Officer, Chief
Financial Officer, Principal Accounting Officer, and Treasurer of our
company.
Mr.
Castro has not had any material direct or indirect interest in any of our
transactions or proposed transactions over the last two years. At
this time, we do not have any employment agreement with Mr. Castro.
Family
Relationships
There are
no family relationships between or among the directors, executive officers or
persons nominated or chosen by us to become directors or executive
officers.
Involvement
in Certain Legal Proceedings
To the
best of our knowledge, during the past five years, none of the
following occurred with respect to a
present or former director, executive officer, or employee: (1) any
bankruptcy petition filed by or against any business of which such
person was a general partner or executive officer either
at the time of the bankruptcy or within two
years prior to that time; (2) any conviction in a
criminal proceeding or being subject to a
pending criminal
proceeding (excluding traffic violations and
other minor offenses); (3) being subject to any order,
judgment or decree, not subsequently reversed, suspended
or vacated, of any court of competent jurisdiction, permanently or
temporarily enjoining, barring, suspending or otherwise limiting his or her
involvement in any type of business, securities or banking
activities; and (4) being found
by a court of competent jurisdiction (in a civil
action), the SEC or the
Commodities Futures Trading Commission to have violated
a federal or state securities or commodities law, and the judgment has not been
reversed, suspended or vacated.
Audit
Committee
We do not
have a separately-designated standing audit committee. The entire Board of
Directors performs the functions of an audit committee, but no written charter
governs the actions of the Board when performing the functions of what would
generally be performed by an audit committee. The Board approves the selection
of our independent accountants and meets and
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of the Exchange Act requires our directors and executive officers and
persons who beneficially own more than ten percent of a registered class of the
Company’s equity securities to file with the SEC initial reports of ownership
and reports of changes in ownership of common stock and other equity securities
of the Company. Officers, directors and greater than ten percent
beneficial shareholders are required by SEC regulations to furnish us with
copies of all Section 16(a) forms they file. To the best of our
knowledge based solely on a review of Forms 3, 4, and 5 (and any amendments
thereof) received by us during or with respect to the year ended June 30, 2006,
the following persons have failed to file, on a timely basis, the identified
reports required by Section 16(a) of the Exchange Act during fiscal year ended
June 30, 2008:
|
Name
and
principal
position
|
Number
of
late
reports
|
Transactions
not
timely
reported
|
Known
failures to
file
a required form
|
|
Jose
Castro
|
0
|
0
|
1
|
|
Haiming
Zhang
|
0
|
0
|
1
|
Code
of Ethics
As of
June 30, 2008, we had not adopted a Code of Ethics for Financial Executives,
which would include our principal executive officer, principal financial
officer, principal accounting officer or controller, or persons performing
similar functions.
Item 11. Executive Compensation
Summary
Compensation Table
The table
below summarizes all compensation awarded to, earned by, or paid to both to our
officers and to our directors for all services rendered in all capacities to us
for our fiscal years ended June 30, 2008 and 2007.
|
SUMMARY
COMPENSATION TABLE
|
|||||||||
|
Name
and
principal
position
|
Year
|
Salary ($)
|
Bonus
($)
|
Stock
Awards
($)
|
Option
Awards
($)
|
Non-Equity
Incentive
Plan
Compensation
($)
|
Nonqualified
Deferred
Compensation
Earnings
($)
|
All
Other
Compensation
($)
|
Total
($)
|
|
Jose
Castro, Director, President, Chief Executive Officer, Treasurer (Principal
Accounting Officer), Principal Financial Officer and
Secretary
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
|
Haiming
Zhang, Director and Chief Technology Officer
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
|
Min
Ge, Former Officer and Director
|
2008
2007
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
0
0
|
Narrative
Disclosure to the Summary Compensation Table
We have
not entered into any employment agreement or consulting agreement with our
executive officers. There are no arrangements or plans in which we
provide pension, retirement or similar benefits for executive
officers. Our executive officers may receive stock options at the
discretion of our board of directors in the future, although no stock option
plan is currently in place. We do not have any 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 our board of directors.
Although
we do not currently compensate our officers, we reserve the right to provide
compensation at some time in the future. Our decision to compensate
officers depends on the availability of our cash resources with respect to the
need for cash to further our business purposes.
Stock
Option Grants
We have
not granted any stock options to the executive officers or directors since our
inception.
Outstanding
Equity Awards at Fiscal Year-End
The table
below summarizes all unexercised options, stock that has not vested, and equity
incentive plan awards for each named executive officer as of June 30,
2008.
|
OUTSTANDING
EQUITY AWARDS AT FISCAL YEAR-END
|
|||||||||
|
OPTION
AWARDS
|
STOCK
AWARDS
|
||||||||
|
Name
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
|
Number
of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
|
Equity
Incentive
Plan
Awards:
Number
of
Securities
Underlying
Unexercised
Unearned
Options
(#)
|
Option
Exercise
Price
($)
|
Option
Expiration
Date
|
Number
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
(#)
|
Market
Value
of
Shares
or
Units
of
Stock
That
Have
Not
Vested
($)
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value
of
Unearned
Shares,
Units
or
Other
Rights
That
Have
Not
Vested
(#)
|
|
Jose
Castro, Director, President, Chief Executive Officer, Treasurer (Principal
Accounting Officer), Principal Financial Officer and
Secretary
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Haiming
Zhang, Director and Chief Technology Officer
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
|
Min
Ge, Former Officer and Director
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
-
|
Compensation
of Directors
We do not
pay any compensation to our directors at this time. However, we reserve the
right to compensate our directors in the future with cash, stock, options, or
some combination of the above.
We have
not reimbursed our directors for expenses incurred in connection with attending
board meetings nor have we paid any directors fees or other cash compensation
for services rendered as a director in the period ended June 30,
2007.
We have
no formal plan for compensating our directors for their services in their
capacity as directors. In the future we may grant options to our
directors to purchase shares of common stock as determined by our Board of
Directors or a compensation committee that may be established. We do
not, however, have a stock option plan in place at this
time. Directors are entitled to reimbursement for reasonable travel
and other out-of-pocket expenses incurred in connection with attendance at
meetings of our board of directors. The board of directors may award
special remuneration to any director undertaking any special services on behalf
of Bioenergy other than services ordinarily required of a
director. No director received and/or accrued any compensation for
his or her services as a director, including committee participation and/or
special assignments
Stock
Option Plans
We did
not have a stock option plan in place as of June 30, 2008.
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder
Matters
The
following table sets forth certain information known to us with respect to the
beneficial ownership of our Common Stock as of June 30, 2008, by (1) all persons
who are beneficial owners of 5% or more of our voting securities, (2) each
director, (3) each executive officer, and (4) all directors and executive
officers as a group. The information regarding beneficial ownership of our
common stock has been presented in accordance with the rules of the Securities
and Exchange Commission. Under these rules, a person may be deemed to
beneficially own any shares of capital stock as to which such person, directly
or indirectly, has or shares voting power or investment power, and to
beneficially own any shares of our capital stock as to which such person has the
right to acquire voting or investment power within 60 days through the exercise
of any stock option or other right. The percentage of beneficial ownership as to
any person as of a particular date is calculated by dividing (a) (i) the number
of shares beneficially owned by such person plus (ii) the number of shares as to
which such person has the right to acquire voting or investment power within 60
days by (b) the total number of shares outstanding as of such date, plus any
shares that such person has the right to acquire from us within 60 days.
Including those shares in the tables does not, however, constitute an admission
that the named stockholder is a direct or indirect beneficial owner of those
shares. Unless otherwise indicated, each person or entity named in the table has
sole voting power and investment power (or shares that power with that person’s
spouse) with respect to all shares of capital stock listed as owned by that
person or entity.
Except as
otherwise indicated, all Shares are owned directly and the percentage shown is
based on 2,500,000 Shares of Common Stock issued and outstanding as of June 30,
2008. Addresses for all of the individuals listed in the table below are c/o
BioEnergy, Inc., 3702 South Virginia Street, #G12-401, Reno, NV
89502.
|
Name
and Address of Beneficial Owners of Common Stock1
|
Title
of Class
|
Amount
and Nature of Beneficial Ownership
|
%
of Common Stock2
|
|
Min
Ge
|
Common
Stock
|
0
|
0.00%
|
|
Haiming
Zhang
|
Common
Stock
|
625,000
|
25.00%
|
|
Jose
Castro
|
Common
Stock
|
637,500
|
25.50%
|
|
DIRECTORS
AND OFFICERS – TOTAL
|
Common
Stock
|
1,262,500
|
50.50%
|
|
5%
SHAREHOLDERS
|
|||
|
NONE
|
Common
Stock
|
Item 13. Certain Relationships and Related
Transactions, and Director Independence
Except as
provided below, none of our directors or executive officers, nor any proposed
nominee for election as a director, nor any person who beneficially owns,
directly or indirectly, shares carrying more than 5% of the voting rights
attached to all of our outstanding shares, nor any members of the immediate
family (including spouse, parents, children, siblings, and in-laws) of any of
the foregoing persons has any material interest, direct or indirect, in any
transaction over the last two years or in any presently proposed transaction
which, in either case, has or will materially affect us.
Mr. Jose
Castro loaned us a total of $19,200 as of June 30, 2008. Amounts due
to this officer and director at June 30, 2008 is non-interest bearing,
unsecured, with no stated terms of repayment. Amounts due to this officer and
director are recorded at carrying value as comparable arms-length debt service
rates, risk profiles and terms are not reasonably determinable.
As of the
date of this annual report, our common stock is traded on the OTC Bulletin Board
(the “Bulletin Board”). The Bulletin Board does not impose on us
standards relating to director independence or the makeup of committees with
independent directors, or provide definitions of independence.
Item 14. Principal Accounting Fees and
Services
Below is
the table of Audit Fees (amounts in US$) billed by our auditor in connection
with the audit of the Company’s annual financial statements for the years
ended:
|
Financial
Statements for the
Year
Ended June 30
|
Audit
Services
|
Audit
Related Fees
|
Tax
Fees
|
Other
Fees
|
|
2008
|
$8,000
|
$0
|
$0
|
|
|
2007
|
$0
|
$0
|
$0
|
PART IV
Item 15. Exhibits, Financial Statements
Schedules
Index to
Financial Statements Required by Article 8 of Regulation S-X:
|
Audited
Financial Statements:
|
|
|
Exhibit
Number
|
Description
|
|
3.1
|
Articles
of Incorporation, as amended (1)
|
|
3.2
|
Bylaws,
as amended (1)
|
| 23.2 | Consent of Dale Matheson Carr-Hilton Labonte LLP "DMCL" Charter Accountants |
|
(1)
|
Incorporated
by reference to the Registration Statement on Form SB-2 filed with the
Securities and Exchange Commission on October 19,
2006.
|
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
BioEnergy,
Inc.
|
By:
|
/s/
Jose Castro
|
|
Jose
Castro
President,
Secretary,
Chief
Executive Officer,
Chief
Financial Officer,
Principal
Accounting Officer,
Treasurer,
and Director
|
|
|
September
15,
2008
|
In
accordance with Section 13 or 15(d) of the Exchange Act, this report has been
signed below by the following persons on behalf of the registrant and in the
capacities and on the dates indicated:
|
By:
|
/s/
Jose Castro
|
|
Jose
Castro
President,
Secretary,
Chief
Executive Officer,
Chief
Financial Officer,
Principal
Accounting Officer,
Treasurer,
and Director
|
|
|
September
15,
2008
|
|
By:
|
/s/
Haiming Zhang
|
|
Haiming
Zhang, Chief Technology Officer,
Director
|
|
|
September
15,
2008
|
Maddox Ungar Silberstein, PLLC CPAs and Business
Advisors
Phone
(248) 203-0080
Fax (248)
281-0940
30600
Telegraph Road, Suite 2175
Bingham
Farms, MI 48025-4586
www.maddoxungar.com
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Bioenergy,
Inc.
Reno,
Nevada
We have
audited the accompanying balance sheet of Bioenergy, Inc., a Nevada Corporation,
as of June 30, 2008, and the related statements of operations, stockholders’
deficit, and cash flows for the year then ended. 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 audit. The financial statements of Bioenergy, Inc. as of June 30,
2007, were audited by other auditors whose report dated September 24, 2007
included an explanatory paragraph describing conditions that raised substantial
doubt about the Company’s ability to continue as a going concern.
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 has determined that it 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 includes examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis
for our opinion.
In our
opinion, the financial statements referred to above present fairly, in all
material respects, the financial position of Bioenergy, Inc., as of June 30,
2008 and the results of its operations and its cash flows for the year then
ended, 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 1 to the
financial statements, the Company has negative working capital, has incurred
losses from operations and is in need of additional capital to grow its
operations so that it can become profitable. These factors raise
substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans with regard to these matters are
described in Note 1. The accompanying financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Maddox Ungar
Silberstein, PLLC
Maddox
Ungar Silberstein, PLLC
Bingham
Farms, Michigan
August
18, 2008
F-1
REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Stockholders and Board of Directors of Bioenergy Inc.
We have
audited the accompanying balance sheets of Bioenergy Inc. (a development stage
company) as of June 30, 2007 and 2006 and the related statements of operations,
stockholders’ equity (deficit) and cash flows for the year ended June 30, 2007,
for the period from May 8, 2006 (date of inception) to June 30, 2006 and for the
period from May 8, 2006 (date of inception) to June 30, 2007. 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 an audit to obtain reasonable assurance 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 and 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, these financial statements present fairly, in all material respects,
the financial position of Bioenergy Inc. as of June 30, 2007 and 2006 and the
results of its operations and its cash flows for the year ended June 30, 2007,
for the period from May 8, 2006 (date of inception) to June 30, 2006 and for the
period from May 8, 2006 (date of inception) to June 30, 2007 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 1 to the
financial statements, the Company has not generated revenues since inception,
has incurred losses in developing its business, and further losses are
anticipated. The Company requires additional funds to meet its
obligations and the costs of its operations. These factors raise
substantial doubt about the Company’s ability to continue as a going
concern. Management’s plans in this regard are described in Note
1. The financial statements do not include any adjustments that might
result from the outcome of this uncertainty.
/s/
DMCL
DALE
MATHESON CARR-HILTON LABONTE LLP
CHARTERED
ACCOUNTANTS
Vancouver,
Canada
September
24, 2007
BIOENERGY INC.
(A
Development Stage Company)
BALANCE
SHEETS
|
June
30, 2008
|
June
30, 2007
|
||||
|
LIABILITIES
AND STOCKHOLDERS' DEFICIT
|
|||||
|
Current
|
|||||
|
Due
to director (Note 3)
|
19,200 | 6,200 | |||
|
Total current
liabilities
|
19,200 | 6,200 | |||
|
Stockholders'
deficit
|
|||||
|
Common stock (Note
4)
|
|||||
|
Authorized:
75,000,000
common shares, par value $0.001 per share
|
|||||
|
Issued
and outstanding:
2,500,000 common
shares
|
2,500 | 2,500 | |||
|
Additional paid-in
capital
|
60,500 | 54,500 | |||
|
Deficit
accumulated during the development stage
|
(82,200) | (63,200) | |||
|
Total stockholders’
deficit
|
(19,200) | (6,200) | |||
|
Total
liabilities and stockholders’ deficit
|
$ | - | $ | - | |
The
accompanying notes are an integral part of these financial
statements
BIOENERGY INC.
(A
Development Stage Company)
STATEMENTS
OF OPERATIONS
|
Year
ended
June
30, 2008
|
Year
ended
June
30, 2007
|
Accumulated
from May 8, 2006
(Date
of Inception) to June 30, 2008
|
||||||
|
ADMINISTRATION
EXPENSES
|
||||||||
|
Management
fees (Note 6)
|
$ | 6,000 | $ | 6,000 | $ | 13,000 | ||
|
Professional
fees
|
13,000 | 52,200 | 69,200 | |||||
|
Net
loss
|
$ | ( 19,000) | $ | ( 58,200) | $ | (82,200) | ||
|
Basic
and diluted loss per share
|
$ | (0.01) | $ | (0.02) | ||||
|
|
||||||||
|
Weighted
average common shares outstanding-basic and diluted shares
outstanding
|
2,500,000 | 2,500,000 | ||||||
The
accompanying notes are an integral part of these financial
statements
BIOENERGY INC.
(A
Development Stage Company)
STATEMENT
OF STOCKHOLDERS' DEFICIT
|
Common
Stock
|
Additional
Paid-in
|
Deficit
Accumulated
During
the
Development
|
||||||||||||
|
Number
of Shares
|
Amount
|
Capital
|
Stage
|
Total
|
||||||||||
|
Balance, May 8, 2006
(Date of Inception)
|
- | $ | - | $ | - | $ | - | $ | - | |||||
|
Common
stock issued for cash at $0.02 per share, May 15, 2006
|
2,500,000 | 2,500 | 47,500 | - | 50,000 | |||||||||
|
Donated
services (Note 6)
|
- | - | 1,000 | - | 1,000 | |||||||||
|
Net
loss
|
- | - | - | (5,000) | (5,000) | |||||||||
|
Balance, June 30,
2006
|
2,500,000 | 2,500 | 48,500 | (5,000) | 46,000 | |||||||||
|
Donated
services (Note 6)
|
- | - | 6,000 | - | 6,000 | |||||||||
|
Net
loss
|
- | - | - | (58,200) | (58,200) | |||||||||
|
Balance, June 30,
2007
|
2,500,000 | 2,500 | 54,500 | (63,200) | (6,200) | |||||||||
|
Donated
services (Note 6)
|
- | - | 6,000 | - | 6,000 | |||||||||
|
Net
loss
|
- | - | - | (19,000) | (19,000) | |||||||||
|
Balance, June 30,
2008
|
2,500,000 | $ | 2,500 | $ | 60,500 | $ | (82,200) | $ | (19,200) | |||||
The
accompanying notes are an integral part of these financial
statements
BIOENERGY INC.
(A
Development Stage Company)
STATEMENTS
OF CASH FLOWS
|
Year
ended
June
30, 2008
|
Year
ended
June
30, 2007
|
Accumulated
from
May
8, 2006
(Date
of Inception) to
June
30, 2008
|
||||||
|
CASH
FLOWS FROM OPERATING ACTIVITIES
|
||||||||
|
Net loss
|
$ | (19,000) | $ | (58,200) | $ | (76,700) | ||
|
Non-cash
item:
Donated
capital
|
6,000 | 6,000 | 11,500 | |||||
|
Changes
in non-cash operating working capital item:
|
||||||||
|
Decrease in prepaid
expenses
|
5,000 | |||||||
|
Decrease in accounts payable
and accrued liabilities
|
(4,000) | |||||||
|
Net cash used in operating
activities
|
(13,000) | (51,200) | (65,200) | |||||
|
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
|
Due
to director
|
13,000 | 6,200 | 15,200 | |||||
|
Issuance of common
shares
|
- | - | 50,000 | |||||
|
Net cash provided by financing
activities
|
13,000 | 6,200 | 65,200 | |||||
|
Change
in cash during the period
|
- - | (45,000) | - | |||||
|
Cash,
beginning
|
- | 45,000 | - | |||||
|
Cash,
ending
|
$ | - | $ | - | $ | - | ||
|
Supplemental
disclosure of cash flow information:
|
||||||||
|
Cash
paid during the period for:
|
||||||||
|
Interest
|
$ | - | $ | - | $ | - | ||
|
Income taxes
|
$ | - | $ | - | $ | - | ||
The
accompanying notes are an integral part of these financial
statements
BIOENERGY INC.
(A
Development Stage Company)
NOTES TO
THE FINANCIAL STATEMENTS
June 30,
2008
1. NATURE
AND CONTINUANCE OF OPERATIONS
|
|
The
Company was incorporated in the State of Nevada on May 8, 2006. The
Company is planning to develop an ethanol refinery system in China. The
Company is considered to be a development stage company as it has not
generated any revenues from
operations.
|
|
|
The
accompanying financial statements have been prepared assuming the Company
will continue as a going concern. As of June 30, 2008, the Company has
negative working capital, has not yet achieved profitable operations and
has accumulated a deficit of $82,200. Its ability to continue as a going
concern is dependent upon the ability of the Company to obtain the
necessary financing to meet its obligations and pay its liabilities
arising from normal business operations when they come due and the
financial support of its directors. The outcome of these matters cannot be
predicted with any certainty at this time and raise substantial doubt that
the Company will be able to continue as a going concern. These financial
statements do not include any adjustments to the amounts and
classification of assets and liabilities that may be necessary should the
Company be unable to continue as a going
concern.
|
|
|
Management
believes that the Company will need to raise additional capital to
continue its operations. The Company expects to obtain additional funding
by borrowing funds from its directors and officers up to $50,000, or a
private placement of common stock.
|
2.
SIGNIFICANT ACCOUNTING POLICIES
The
financial statements of the Company have been
prepared in accordance with generally accepted accounting principles in the
United States of America. Because a precise determination of the fair value of
many assets and liabilities is dependent upon future events, the preparation of
financial statements involves the use of estimates, which have been made using
careful judgment. Actual results may vary from these estimates.
The
financial statements have, in management's opinion, been properly prepared
within the framework of the significant accounting policies summarized
below:
Development
Stage Company
The Company is in the
development stage. Since its formation, the Company has not
yet raised sufficient capital to commence its planned business and has not
realized any revenues from its operations.
Financial
Instruments
The fair
value of the
Company's financial instruments, comprising of amount due to director
approximates its fair value due to its short-term maturity. Unless otherwise
noted, it is management's opinion that the Company is not
exposed to significant interest, currency or credit risks arising from this
financial instrument.
Income
Taxes
The Company has
adopted Statements of Financial Accounting Standards ("SFAS") No. 109 - "Accounting for Income
Taxes". SFAS No. 109 requires the use of the asset and liability method
of accounting of income taxes. Under the asset and liability method of SFAS No.
109, deferred tax assets and liabilities are recognized for the future tax
consequences attributable to temporary differences between the financial
statements carrying amounts of assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates
expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled.
2. SIGNIFICANT ACOUNTING POLICIES
(continued)
Foreign
Currency Translation
The
financial statements are presented in United States dollars. In accordance with
SFAS No. 52, "Foreign Currency
Translation", foreign denominated monetary assets and liabilities are
translated into their United States dollar equivalents using foreign exchange
rates which prevailed at the balance sheet date. Non-monetary assets and
liabilities are translated at the transaction date. Revenue and expenses are
translated at average rates of exchange during the period. Related translation
adjustments are reported as a separate component of stockholders’ equity,
whereas gains or losses resulting from foreign currency transactions are
included in results of operations.
Basic and Diluted Loss Per
Share
In
accordance with SFAS No. 128 - "Earnings Per Share", the
basic loss per common share is computed by dividing net loss available to common
stockholders by the weighted average number of common shares outstanding.
Diluted loss per common share is computed similar to basic loss per common share
except that the denominator is increased to include the number of additional
common shares that would have been outstanding if the potential common shares
had been issued and if the additional common shares were dilutive. At June 30, 2007, the Company had no
stock equivalents that were anti-dilutive and excluded in the loss per share
computation.
Stock-based
Compensation
In
December 2004, the Financial Accounting Standards Board ("FASB") issued SFAS No. 123R,
"Share-Based Payment",
which replaced SFAS No. 123, "Accounting for Stock-Based
Compensation" and superseded APB Opinion No. 25, "Accounting for Stock Issued to
Employees". In January 2005, the
Securities and Exchange Commission ("SEC") issued Staff
Accounting Bulletin ("SAB") No. 107, "Share-Based Payment", which
provides supplemental implementation guidance for SFAS No. 123R. SFAS No.
123R requires all share-based payments to employees, including grants of
employee stock options, to be recognized in the financial statements based on
the grant date fair value of the award. Under SFAS No. 123R, the Company must
determine the appropriate fair value model to be used for valuing share-based
payments and the amortization method for compensation cost. The Company adopted
SFAS No. 123R since inception. As the Company has never
granted any stock options the adoption of this accounting policy had no effect
on its financial position or results of operations.
Comprehensive
Income
The Company has
adopted SFAS 130, "Reporting
Comprehensive Income", which establishes standards for reporting and
display of comprehensive income, its components and accumulated balances. When
applicable, the
Company would disclose this information on its Statement of Stockholder’s
Equity. Comprehensive income comprises equity except those resulting from
investments by owners and distributions to owners. The Company has not
had any transactions that are required to be reported in other comprehensive
income.
Use of
Estimates
The
preparation of financial statements in conformity with generally accepted
accounting principles 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 the financial statements and the
reported amount of revenues and expenses during the reporting
period. Actual results could differ from those
estimates.
BIOENERGY
INC.
(A
Development Stage Company)
NOTES TO
THE FINANCIAL STATEMENTS
June 30,
2008
2. SIGNIFICANT ACOUNTING POLICIES
(continued)
Recent
Accounting Pronouncements
In
February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for Financial
Assets and Financial Liabilities." This Statement permits entities to
choose to measure many financial assets and financial liabilities at fair value.
Unrealized gains and losses on items for which the fair value option has been
elected are reported in earnings. SFAS No. 159 is effective for fiscal years
beginning after November 15, 2007. The Company is
currently assessing the impact of SFAS No. 159 on its financial position and
results of operations.
The
Company does not expect the adoption of these or other recently issued
accounting pronouncements to have a significant impact on the results of its
operations, financial position or cash flow.
3. DUE
TO DIRECTOR
The
amounts due to director of $19,200 and $6,200 at June 30, 2008 and 2007,
respectively, is non-interest bearing, unsecured, with no stated terms of
repayment.
Amounts
due to director are recorded at carrying value as comparable arms-length debt
service rates, risk profiles and terms are not reasonably
determinable.
4. COMMON
STOCK
On May
15, 2006, the Company issued 2,500,000 shares of common stock at a price of
$0.02 per share for total proceeds of $50,000.
Common
shares
The
common shares of the Company are all of the same class, are voting and entitle
stockholders to receive dividends. Upon liquidation or wind-up, stockholders are
entitled to participate equally with respect to any distribution of net assets
or any dividends which may be declared.
Additional paid-in capital
The
excess of proceeds received for shares of common stock over their par value of
$0.001, less share issue costs, is credited to additional paid-in
capital.
5. INCOME
TAXES
At June
30, 2008, the Company has accumulated non-capital loss carry-forwards of
approximately $82,200, which are available to reduce taxable income in future
taxation years. These losses expire beginning in 2026. Due to the
uncertainty of realization of these loss carry-forwards, a full valuation
allowance had been provided for this deferred tax asset.
The
cumulative tax effect at the expected rate of 34% of significant items
comprising our net deferred tax amount is as follows:
|
June
30, 2008
|
June
30, 2007
|
||||
|
Deferred
tax asset attributable to:
|
|||||
|
Net
operating loss carryover
|
$ | 28,000 | $ | 20,000 | |
|
Valuation
allowance
|
(28,000) | (20,000) | |||
|
Net
deferred tax asset
|
$ | 0 | $ | 0 | |
BIOENERGY
INC.
(A
Development Stage Company)
NOTES TO
THE FINANCIAL STATEMENTS
June 30,
2008
6. RELATED
PARTY TRANSACTIONS
The
Company recognized donated services to directors of the Company for management
fees, valued at $500 per month, as follows:
|
Year
ended
June
30, 2008
|
Year
ended
June
30, 2007
|
May
8, 2006
(Date
of Inception) to
June
30, 2008
|
||||||
|
Donated
services
|
$ | 6,000 | $ | 6,000 | $ | 13,000 | ||
F-10