EXTREME BIODIESEL, INC. - Quarter Report: 2009 September (Form 10-Q)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15 (d) of
Securities Exchange Act of 1934
For the quarterly period ended September 30, 2009
Commission File Number: 333- 152837
BIGWEST ENVIRONMENTAL, Inc.
(Exact Name of Issuer as Specified in Its Charter)
Nevada | 8741 | 36- 4627722 |
State of Incorporation | Primary Standard Industrial Employer Classification Code Number # | I.R.S. Identification No. |
1350 W. Horizon Ridge Drive
Suite 1922
Henderson, Nevada 89014
Phone (702) 301-7333
(Address and Telephone Number of Issuer's Principal Executive Offices)
Frank Rossana
President and Chief Executive Officer
1350 W. Horizon Ridge Drive
Suite 1922
Henderson, Nevada 89014
Phone (702) 301-7333
(Name, Address, and Telephone Number of Agent)
Indicate by check mark whether the registrant (1) has 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 S No £
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 | £ | Non-Accelerated Filer | £ |
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Accelerated Filer | £ | Smaller reporting company | S |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). YES £ NO S
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be filed by Section 12, 13, 15(d) of the Exchange Act after the distribution of the securities under a plan confirmed by a court. YES S NO £
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding of each of the issuer's classes of common stock at the latest practicable date. As of November 19, 2009, the registrant had 11,021,500 shares of common stock, $0.001 par value, issued and outstanding.
Transitional Small Business Disclosure Format (Check one): YES £ NO S
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited- Prepared by Management)
BIGWEST ENVIRONMENTAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Unaudited Financial Statements
For the Three Months Ended September 30, 2009 and 2008, and the
Period of February 28, 2008 (Inception) to September 30, 2009
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BIGWEST ENVIRONMENTAL, INC.
(A DEVELOPMENT STAGE ENTERPRISE)
Unaudited Financial Statements
For the Three Months Ended September 30, 2009 and 2008, and the
Period of February 28, 2008 (Inception) to September 30, 2009
TABLE OF CONTENTS
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Balance Sheets as of September 30, 2009 and June 30, 2009 | 4 |
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Statements of Operations for the three moths ended September 30, 2009 and 2008, and the period of February 28, 2008 (inception) to September 30, 2009 | 5 |
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Statements of Cash Flows for the three moths ended September 30, 2009 and 2008, and the period of February 28, 2008 (inception) to September 30, 2009 | 6 |
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Notes to Unaudited Financial Statements | 7 |
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BIGWEST ENVIRONMENTAL, INC. | ||||||
(A Development Stage Enterprise) | ||||||
Balance Sheets | ||||||
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| September 30, 2009 |
| June 30, 2009 | ||
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ASSETS | ||||||
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Current assets |
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| Cash | $ | 9 |
| $ | 9 |
Total current assets |
| 9 |
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| 9 | |
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Total assets | $ | 9 |
| $ | 9 | |
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LIABILITIES AND STOCKHOLDERS' DEFICIT | ||||||
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Current liabilities |
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| Accounts payable | $ | 31,900 |
| $ | 33,450 |
| Related party payable |
| 250 |
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| - |
Total current liabilities |
| 32,150 |
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| 33,450 | |
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Stockholders' Deficit |
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| Common stock, $.001 par value; 75,000,000 shares authorized, 11,441,500 and 11,441,500 issued and outstanding at September 30 and June 30, 2009 |
| 11,442 |
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| 11,342 |
| Additional paid in capital |
| 41,723 |
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| 36,823 |
| Deficit accumulated during the development stage |
| (85,306) |
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| (81,606) |
Total stockholders' deficit |
| (32,141) |
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| (33,441) | |
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Total liabilities and stockholders' deficit | $ | 9 |
| $ | 9 | |
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See accompanying notes to unaudited financial statements | ||||||
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BIGWEST ENVIRONMENTAL, INC. | |||||||||
(A Development Stage Enterprise) | |||||||||
Statements of Operations (unaudited) | |||||||||
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| Three months ended September 30, |
| For the period from February 28, 2008 (inception) to September 30, 2009 | |||||
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| 2009 |
| 2008 |
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Revenue | $ | - |
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| $ | - | |
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Operating expenses |
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| Professional fees |
| 3,700 |
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| 2,398 |
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| 84,290 |
| Other general & administrative |
| - |
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| 1,016 |
Total operating expenses |
| 3,700 |
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| 2,398 |
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| 85,306 | |
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Net loss | $ | (3,700) |
| $ | (2,398) |
| $ | (85,306) | |
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Basic and diluted loss per common share | $ | (0.00) |
| $ | (0.00) |
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Weighted average common shares outstanding |
| 11,441,500 |
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| 10,590,000 |
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See accompanying notes to unaudited financial statements | |||||||||
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BIGWEST ENVIRONMENTAL, INC. | ||||||||||
(A Development Stage Enterprise) | ||||||||||
Statements of Cash Flows (unaudited) | ||||||||||
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| For the period from February 28, 2008 (inception) to September 30, 2009 | |
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| Three months ended September 30, |
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| 2009 |
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Cash flows from operating activities |
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| Net loss | $ | (3,700) |
| $ | (2,398) |
| $ | (85,306) | |
| Adjustments to reconcile net loss to net cash used in operating activities |
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| Common stock issued for services |
| 5,000 |
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| 13,090 |
| Changes in operating assets and liabilities: |
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| Prepaid expenses |
| - |
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| 2,398 |
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| Increase in accounts payable |
| (1,550) |
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| - |
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| 31,900 |
Net cash used in operating activities |
| (250) |
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| - |
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| (40,316) | ||
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Cash flows from investing activities |
| - |
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| - |
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Cash flows from financing activities |
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| Proceeds from related party payable |
| 250 |
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| - |
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| 250 |
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| Proceeds from sale of stock (net of offering costs) |
| - |
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| 40,075 |
Net cash provided by financing activities |
| 250 |
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| 40,325 | ||
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| Increase in cash |
| - |
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| 9 |
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| Cash at beginning of period |
| 9 |
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| 1,000 |
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| Cash at end of period | $ | 9 |
| $ | 1,000 |
| $ | 9 |
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Supplemental disclosure of non-cash investing and financing activities: |
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| Issuance of common stock for professional and consulting services | $ | 5,000 |
| $ | - |
| $ | 13,090 | |
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Supplemental cash flow Information: |
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| Cash paid for interest | $ | - |
| $ | - |
| $ | - | |
| Cash paid for income taxes | $ | - |
| $ | - |
| $ | - | |
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See accompanying notes to unaudited financial statements | ||||||||||
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BIGWEST ENVIRONMENTAL, INC.
(A Development Stage Enterprise)
Notes to the Unaudited Financial Statements
For the Three and Ended September 30, 2009 and 2008 and the
Period of February 28, 2008 (Inception) to September 30, 2009
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by the Company without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows as of and for the periods ended September 30, 2009 and for all periods presented have been made.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company's June30, 2009 audited financial statements as reported in Form 10-K. The results of operations for the period ended September 30, 2009 are not necessarily indicative of the operating results for the full year ended June 30, 2010.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using accounting principles generally accepted in the United States of America applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern. The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable. If the Company is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other things, additional capital resources. Management's plans to obtain such resources for the Company include (1) obtaining capital from management and significant stockholders sufficient to meet its minimal operating expenses, and (2) as a last resort, seeking out and completing a merger with an existing operating company. 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 financial statements do not include any adjustments that might be necessary if the Company is unable to continue as a going concern.
NOTE 3 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events from the balance sheet date through November 9, 2009, and determined there are no events to disclose.
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Item 2. Management's Discussion and Analysis of Financial Condition and Plan of Operations.
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Information set forth herein contains "forward-looking statements" which can be identified by the use of forward-looking terminology such as "believes," "expects," "may,” “should" or "anticipates" or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy. No assurance can be given that the future results covered by the forward-looking statements will be achieved. The Company cautions readers that important factors may affect the Company’s actual results and could cause such results to differ materially from forward-looking statements made by or on behalf of the Company. These include the Company’s lack of historically profitable operations, dependence on key personnel, the success of the Company’s business, ability to manage anticipated growth and other factors identified in the Company's filings with the Securities and Exchange Commission.
Company History
BigWest Environmental, Inc. (the “Company”) is a development stage company that was incorporated on February 28, 2008, in the state of Nevada. The Company intends to enter into the sale and distribution of solar pv panels. The Company has never declared bankruptcy, it has never been in receivership, and it has never been involved in any legal action or proceedings. Since becoming incorporated, BigWest Environmental has not made any significant purchase or sale of assets, nor has it been involved in any mergers, acquisitions or consolidations and the Company owns no subsidiaries. The fiscal year end is June 30th. The Company has not had revenues from operations since its inception and/or any interim period in the current fiscal year.
Business Development
To date, our business activities have been limited to organizational matters, researching areas to be developed within the state of New Mexico, the preparation and filing of our registration statement, which was deemed effective by the Securities and Exchange Commission (“SEC”) on August 15, 2008 maintaining our reporting company status with the SEC and raising proceeds from our offering.
We plan over the course of the next six months to focus on a targeted group of solar products (amorphous thin film solar panels and ancillary products) and technologies for a wide range of applications including electrical power production. To date, we have generated no revenues from operations. We intend to enter into supply agreement(s) with manufacturers of solar electric power products and utilize technologies which directly convert sunlight into electricity. We are seeking solar cells that are efficient and cost effective.
Liquidity and Capital Resources
As of September 30, 2009, we have $9 of cash available. We have current liabilities of $32,150. From the date of inception (February 28, 2008) to September 30 , 2009 the Company has recorded a net loss of $85,306 of which were expenses relating to the initial development of the Company, filing its Registration Statement on Form S-1, and expenses relating to maintaining reporting company status with the Securities and Exchange Commission. We have not generated any revenues to date and as of September 30, 2008 we have sold approximately 851,500 common shares from our 4,000,000 direct offering of common stock at $0.05 per share pursuant to our registered offering.
We require immediate additional capital investments or borrowed funds to meet cash flow projections and carry forward our business objectives. There can be no guarantee or assurance that we can raise adequate capital from outside sources to fund the proposed business. If we cannot secure additional funds our business will fail and any investment made into the Company would be lost in its entirety.
To date there is a limited public market for the Company’s common stock. Management’s present objective is to focus efforts on raising funds. There can be no guarantee or assurance that they will be successful in raising any funds at all. Failure to create a market for the Company’s common stock would result in business failure and a complete loss of any investment made into the Company.
Recently Issued Accounting Pronouncements
We do not expect the adoption of any recently issued accounting pronouncements to have a significant impact on our net results of operations, financial position, or cash flows.
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Off-Balance Sheet Arrangements
As of the date of this Quarterly Report, the Company does not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to investors. The term "off-balance sheet arrangement" generally means any transaction, agreement or other contractual arrangement to which an entity unconsolidated with the Company is a party, under which the Company has (i) any obligation arising under a guarantee contract, derivative instrument or variable interest; or (ii) a retained or contingent interest in assets transferred to such entity or similar arrangement that serves as credit, liquidity or market risk support for such assets.
Product Research and Development
The Company does not anticipate any costs or expenses to be incurred for product research and development within the next twelve months.
The Company does not plan any purchase of significant equipment in the next twelve months.
Employees
We currently have two employees, including our President. We do not intend to hire any employees for the next 6 months.
Critical Accounting Policies
The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires us to make a number of estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Such estimates and assumptions affect the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, we evaluate estimates and assumptions based upon historical experience and various other factors and circumstances. We believe our estimates and assumptions are reasonable in the circumstances; however, actual results may differ from these estimates under different future conditions.
We believe that the estimates and assumptions that are most important to the portrayal of our financial condition and results of operations, in that they require subjective or complex judgments, form the basis for the accounting policies deemed to be most critical to us. These relate to bad debts, impairment of intangible assets and long lived assets, contractual adjustments to revenue, and contingencies and litigation. We believe estimates and assumptions related to these critical accounting policies are appropriate under the circumstances; however, should future events or occurrences result in unanticipated consequences, there could be a material impact on our future financial conditions or results of operations.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not Applicable.
Item 4. Controls and Procedures
(a) Evaluation of Disclosure Controls and Procedures
Our management, on behalf of the Company, has considered certain internal control procedures as required by the Sarbanes-Oxley (“SOX”) Section 404 A which accomplishes the following:
Internal controls are mechanisms to ensure objectives are achieved and are under the supervision of the Company’s Chief Executive Officer and Chief Financial Officer, being Frank Rossana. Good controls encourage efficiency, compliance with laws and regulations, sound information, and seek to eliminate fraud and abuse.
These control procedures provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Company’s financial statements for external purposes in accordance with U.S. generally accepted accounting principles.
Internal control is "everything that helps one achieve one's goals - or better still, to deal with the risks that stop one from achieving one's goals."
Internal controls are mechanisms that are there to help the Company manage risks to success.
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Internal controls is about getting things done (performance) but also about ensuring that they are done properly (integrity) and that this can be demonstrated and reviewed (transparency and accountability).
In other words, control activities are the policies and procedures that help ensure the Company’s management directives are carried out. They help ensure that necessary actions are taken to address risks to achievement of the Company’s objectives. Control activities occur throughout the Company, at all levels and in all functions. They include a range of activities as diverse as approvals, authorizations, verifications, reconciliations, reviews of operating performance, security of assets and segregation of duties.
As of September 30, 2008, the management of the Company assessed the effectiveness of the Company’s 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. Management concluded, during the quarter ended September 30, 2009, internal controls and procedures were not effective to detect the inappropriate application of US GAAP rules. Management realized there are deficiencies in the design or operation of the Company’s internal control that adversely affected the Company’s internal controls which management considers being material weaknesses.
In the light of management’s review of internal control procedures as they relate to COSO and the SEC the following were identified:
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The Company’s Audit Committee does not function as an Audit Committee should since there is a lack of independent directors on the Committee and the Board of Directors has not identified an “expert”, one who is knowledgeable about reporting and financial statements requirements, to serve on the Audit Committee.
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The Company has limited segregation of duties which is not consistent with good internal control procedures.
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The Company does not have a written internal control procedurals manual which outlines the duties and reporting requirements of the Directors and any staff to be hired in the future. This lack of a written internal control procedurals manual does not meet the requirements of the SEC or good internal control.
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There are no effective controls instituted over financial disclosure and the reporting processes.
Management feels the weaknesses identified above, being the latter three, have not had any effect on the financial results of the Company. Management will have to address the lack of independent members on the Audit Committee and identify an “expert” for the Committee to advise other members as to correct accounting and reporting procedures.
The Company and its management will endeavor to correct the above noted weaknesses in internal control once it has adequate funds to do so. By appointing independent members to the Audit Committee and using the services of an expert on the Committee will greatly improve the overall performance of the Audit Committee. With the addition of other Board Members and staff the segregation of duties issue will be address and will no longer be a concern to management. By having a written policy manual outlining the duties of each of the officers and staff of the Company will facilitate better internal control procedures.
Management will continue to monitor and evaluate the effectiveness of the Company’s internal controls and procedures and its internal controls over financial reporting on an ongoing basis and are committed to taking further action and implementing additional enhancements or improvements, as necessary and as funds allow.
(b) Changes in Internal Controls
There were no changes in the Company’s internal controls or in other factors that could affect its disclosure controls and procedures subsequent to the Evaluation Date, nor any deficiencies or material weaknesses in such disclosure controls and procedures requiring corrective actions.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not a party to any pending legal proceedings, and no such proceedings are known to be contemplated.
No director, officer, or affiliate of the Company and no owner of record or beneficial owner of more than 5.0% of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.
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Item 1A. Risk Factors
There have been no material changes to the risks to our business described in registration statement filed on Form S-1 with the SEC on August 7, 2008.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibit Number |
| Description |
31.1 |
| Section 302 Certification of Chief Executive and Chief Financial Officer |
32.1 |
| Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 Of The Sarbanes-Oxley Act Of 2002 |
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Signatures
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| BigWest Environmental, Inc. |
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Dated: November 18, 2009 | /s/ Frank Rossana |
| Frank Rossana |
| Chief Executive Officer and Chief Financial Officer |
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