UPD HOLDING CORP. - Quarter Report: 2012 December (Form 10-Q)

U.S. SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


X	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended December 31, 2012


___	TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from _______________ to _______________

Commission File number 001-10320

Esio Water & Beverage Development Corp.

(Exact name of registrant as specified in its charter)


Nevada	13-3465289
(State or other jurisdiction of	(I.R.S. Employer
incorporation of organization)	Identification No.)

7377 East Doubletree Road, Suite 288 Scottsdale, AZ 85258

(Address of principal executive offices)

(480) 272-8745

(Issuer’s telephone number)

Tempco, Inc.

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ___

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.) Yes X 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 ___	Accelerated Filer ___
	Non-accelerated filer ___ (Do not check if a smaller reporting company)	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 ___ No X

APPLICABLE ONLY TO CORPORATE ISSUERS

As of February 11, 2013 the issuer had 18,666,636 shares of Common Stock outstanding, par value $.005 per share.

PART I – FINANCIAL INFORMATION

Item 1 Financial Statements

ESIO WATER AND BEVERAGE DEVELOPMENT CORP.

fka TEMPCO, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED BALANCE SHEETS

(UNAUDITED)


	December 31,			June 30,
	2012			2012

ASSETS

Current assets:
Cash and cash equivalents	$	404,369		$	640,458
Prepaid expenses		5,907			2,342
Other assets, net		—			46,146

Total current assets		410,276			688,946

Intangible assets		546,359			347,112

Total Assets	$	956,635		$	1,036,058

LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)

Current Liabilities:
Accounts payable	$	26,426		$	23,955
Accounts payable-related party		—			2,027
Accrued liabilities		5,760			11,012
Convertible notes payable, net of discount of $597,703 at June 30, 2012		—			57,297

Total current liabilities		32,186			94,291

Total Liabilities		32,186			94,291

Commitments:		—			—

Stockholders’ equity (deficit):
Common stock, $.005 par value 50,000,000 authorized; 18,666,636 and 15,490,016 issued and outstanding as of December 31, 2012 and June 30, 2012 respectively		93,333			77,450
Additional paid in capital		14,900,109			13,944,172
Accumulated deficit prior to reentering the development stage		(11,160,829	)		(11,160,829	)
Deficit accumulated in the development stage		(2,908,164	)		(1,919,026	)

Total stockholders’ equity (deficit)		924,449			941,767

Total liabilities and stockholders’ equity (deficit)	$	956,635		$	1,036,058

The Accompanying Notes are an Integral Part of the Unaudited Financial Statements

- 2 -

ESIO WATER AND BEVERAGE DEVELOPMENT CORP

fka TEMPCO, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)


													Cumulative Since
													Reentering the
													Development Stage,
	For the Three Months Ended						For the Six Months Ended						February 5, 2008 to
	December 31,						December 31,						December 31,
	2012			2011			2012			2011			2012

Costs and Expenses
General and administrative	$	121,678		$	68,311		$	249,534		$	84,394		$	1,443,175
Directors fees		3,000			45,000			6,000			202,500			489,092
Operating loss		124,678			113,311			255,534			286,894			1,932,267

Net loss from operations		(124,678	)		(113,311	)		(255,534	)		(286,894	)		(1,932,267	)

Other Income (Expense)
Interest expense		—			(14,475	)		(733,554	)		(29,351	)		(999,194	)
Interest income		—			—			—			—			23,547
		—			(14,475	)		(733,554	)		(29,351	)		(975,647	)

Provision for income taxes		—			(50	)		(50	)		(50	)		(250	)

Net Loss	$	(124,678	)	$	(127,836	)	$	(989,138	)	$	(316,295	)	$	(2,908,164	)


Basic and diluted loss per share	$	(0.01	)	$	(0.01	)	$	(0.06	)	$	(0.03	)

Basic and diluted weighted average common shares outstanding		18,539,027			11,490,016			17,823,584			11,490,016

The Accompanying Notes are an Integral Part of the Unaudited Financial Statements

- 3 -

ESIO WATER AND BEVERAGE DEVELOPMENT CORP

fka TEMPCO, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


							Cumulative Since
							Reentering the
							Development Stage,
	For the Six Months Ended						February 5, 2008 to
	December 31,						December 31,
	2012			2011			2012
Cash flows from operating activities
Net loss	$	(989,138	)	$	(316,295	)	$	(2,908,164	)
Adjustments to reconcile net loss to net cash provided (used) by operating activities:
Stock based compensation		119,863			112,500			430,855
Amortization and depreciation		25,753			—			25,753
Amortization of beneficial conversion feature and offering costs		643,849			25,550			880,884
Financing expense due to sweetener for conversion of debt		85,800			—			85,800
Loss on settlement of note receivable and accrued interest		—			—			69,750
Loss on settlement of notes payable		—			—			525,000
Accrued interest receivable		—			—			(14,750	)
Changes in Assets and Liabilities:
Prepaid expenses		(3,565	)		6,461			(18,906	)
Other assets		—			—			(46,146	)
Accounts payable		2,471			(15,023	)		26,426
Accounts payable-related party		(2,027	)		—			50,000
Accrued liabilities		3,905			53,414			14,917
Net cash used by operating activities		(113,089	)		(133,393	)		(878,581	)

Cash flows from investing activities
Purchase of intangible asset		(225,000	)		—			(272,500	)
Collection of note receivable		—			—			145,000
Net cash used by investing activities		(225,000	)		—			(127,500	)

Cash flows from financing activities:
Repayment of debt		—			(5,578	)		(33,036	)
Repayment of debt-related party		—			—			(34,188	)
Proceeds from notes payable		—			—			262,486
Proceeds from convertible notes payable-related party		—			132,688			184,188
Proceeds from convertible notes payable		—			—			655,000
Net Proceeds from sale of common stock		117,000			—			342,000
Disbursement for cancellation of an option		(15,000	)		—			(15,000	)
Proceeds from exercise of option		—			—			9,000
Net cash provided by financing activities		102,000			127,110			1,370,450
Net change in cash and cash equivalents		(236,089	)		(6,283	)		364,369
Cash and cash equivalents at beginning of year		640,458			6,615			40,000
Cash and cash equivalents at end of period	$	404,369		$	332		$	404,369

Supplemental Disclosures:
Cash paid for income taxes	$	50		$	50		$	200
Cash paid for interest	$	—		$	337		$	11,528
Non Cash Investing and Financing Activities
Beneficial Conversion Feature	$	—		$	—		$	655,000
Beneficial Conversion Feature- related party	$	—		$	—		$	154,188
Forgiveness of debt- related party	$	—		$	—		$	50,000
Repayment of notes payable through issuance of common stock	$	655,000		$	—		$	655,000
Intangible assets acquired through issuance of warrant	$	—		$	—		$	299,612

The Accompanying Notes are an Integral Part of the Unaudited Financial Statements

- 4 -

ESIO WATER AND BEVERAGE DEVELOPMENT CORP

fka TEMPCO, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 - Basis of Presentation, Interim Consolidated Financial Statements, and Going Concern

Tempco, Inc. was incorporated in Nevada in June 1988 as Richard Barrie Fragrances, Inc. Over the years, the Company changed its name several times, most recently from Tempco, Inc. on February 4, 2008 to Esio Water & Beverage Development Corp. (“ESWB”) The consolidated financial statements include the accounts of ESWB and its wholly-owned subsidiaries (collectively, “We” “Our” or the “Company”), NETtime Solutions, Inc. an Arizona corporation, and Net Edge Devices, LLC, an Arizona Limited Liability Company. All intercompany accounts and transactions have been eliminated in consolidation.

Interim Financial Statements

The accompanying unaudited condensed consolidated financial statements of ESWB and subsidiaries have been prepared in accordance with generally accepted accounting principles (“GAAP”), pursuant to the rules and regulations of the Securities and Exchange Commission, and are unaudited. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary for a fair presentation of the results for the interim periods presented have been made. The results for the three and six month periods ended December 31, 2012, may not be indicative of the results for the entire year. These financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2012.

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ materially from these estimates.

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 revenue 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. These factors raise substantial doubt about the Company’s ability to continue as a going concern.

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 (i) obtaining capital from management and significant stockholders sufficient to meet its operating expenses; (ii) obtaining funding from outside sources through the sale of its debt and/or equity securities; and (iii) commencing sales of ESIO Franchises. However, management cannot provide any assurances that the Company will be successful in accomplishing any of its plans.

Note 2 - Intangible Assets

On August 14, 2012 the Company executed the Regional Developer Agreement (the “RDA”) and three franchise agreements (the “FA”) with ESIO Franchising, LLC (“ESIO”) for the Dallas/Fort Worth region of Texas (the “Territory”) and three franchises therein. The Company has paid $225,000 cash to ESIO and issued a warrant in April 2012 valued at $299,612 toward the purchase of the RDA and FA and $25,000 towards legal fees associated with the agreements. The agreements have a ten year term with an option to renew for two additional ten year periods.

- 5 -

ESIO WATER AND BEVERAGE DEVELOPMENT CORP

fka TEMPCO, INC. AND SUBSIDIARIES

(A DEVELOPMENT STAGE COMPANY)

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

On November 1, 2012 we entered into the Second Amendment to Regional Development Deposit Agreement with ESIO Franchising, LLC (“EFC”), which delays the dates which we must purchase our second and subsequent regional developer areas from EFC for an additional three months from November 1, 2012. The expiration dates for the five regional areas commence on February 1, 2013 with the next region option expiring every 3 months thereafter through December 1, 2013. We paid $25,000 to EFC for this region option extension, of which $22,500 will be credited against the purchase price of a region we acquire from EFC, and the balance of $2,500 related to legal fees for the agreement. In addition, we have an option to purchase Regional Development Franchises in the following Optioned Areas in the State of California: San Francisco, CA –Bay Area and Eureka; Sacramento, CA and Chico, Reno, Nevada; Orange County, CA; San Diego and Imperial, California; and Northwest Los Angeles, CA – Ventura to San Luis Obispo. The option period for each of the optioned areas in the State of California commenced June 25, 2012 with the effective registration of the 2012 Franchise Disclosure Document with the state of California (“the Registration Date”) and expires June 25, 2013.

At December 31, 2012, the company has recorded amortization expense of $25,753 in relation to the agreements.

Note 3 - Stockholders’ Equity

Between July 31, 2012 and August 14, 2012, the Company issued 2,656,620 shares of its common stock along with warrants to purchase 2,656,620 shares of its common stock at an exercise price of $.75 for the conversion of $655,000 of convertible notes payable and accrued interest of $9,124. As consideration for the conversion of the notes, the Company issued the note holders a warrant to purchase 12,500 shares of common stock at $.75 for each $25,000 of principal converted resulting in the issuance of 327,500 additional warrants. Included as interest expense at December 31, 2012 is $85,800 related to the additional warrants issued to the note holders for the early conversion of their notes as well as $597,703 of interest related to the discount on the notes payable and $46,146 of deferred financing costs. In relation to the conversion of the notes, the Company also issued warrants to purchase an additional 241,358 shares at $.75 to finders.

During the six months ended December 31, 2012 we have received proceeds of $130,000 from the sale of 520,000 Units in a private placement. The Units consist of one share and a warrant to purchase an additional share one and one quarter share at $.75. In connection with the private placements we paid finders’ fees of $13,000.

In August 2012, the Company paid $15,000 for the cancellation of an option to purchase 300,000 shares of common stock. The options had an exercise price of $.09 per share.

On September 17, 2012, the Company authorized the issuance of 1 million warrants to a third party. The warrants vest 250,000 warrants at issuance and 250,000 warrants every three months thereafter. As of December 31, 2012, 500,000 warrants vested valued at $119,863 and were recorded as stock compensation expense.

As of December 31, 2012, a summary of the warrants outstanding is as follows:


Expected volatility		303%
Risk-free interest rate		0.64%
Expected dividends		0%
Expected lives (in years)		5


		Weighted
	Number of	Average
	Shares	Exercise Price
Warrants outstanding - June 30, 2012	4,045,000	$ 0.71
Granted	4,375,478	0.75
Expired	—	—
Warrants outstanding - December 31, 2012	8,420,478	$ 0.73

Note 4 - Subsequent Events

On February 1, 2013, the Company determined not to exercise its option for the area of the State of Colorado.

- 6 -

Item 2. Management’s Discussion and Analysis of Financial Condition and Plan of Operation.

Plan of Operation

On August 14, 2012 Esio Water & Beverage Development Corp. (the “Registrant”) executed a Regional Developer Agreement (the “RDA”) and three franchise agreements (the “FA”) with ESIO Franchising, LLC (“ESIO”) for the Dallas/Fort Worth region of Texas (the “Territory”) and three franchises therein. The Dallas/Fort Worth region has a population of over 7,700,000 people and over 2,800,000 households. Upon the execution of the RDA as amended, the Registrant has paid $275,000 cash to ESIO, including a credit of $70,000 from a payment made earlier in the year on a deposit agreement covering 10 other regions with ESIO.

Registrant must commence operations of its Regional Development business and first 3 franchises within 1 year of the execution of the RDA or forfeit its rights under the RDA and three franchise agreements. Further, Registrant must sell or open 12 additional franchises in the Territory within the 10 year term of the RDA, the first two of which must be in operation within the third year after the execution of the RDA. Under the RDA once its three franchises are operating, Registrant will receive 50% of the initial franchise fees ESIO receives from its franchisees in the Territory and 40% of all royalties ESIO receives from its franchisees in the Territory, excluding advertising fund payments. The RDA and the FA contain standard franchise industry language concerning confidentiality and the use of ESIO’s marks, as well as other standard industry provisions.

Pursuant to the terms of the RDA and the FA Registrant and future franchisees will be marketing and servicing ESIO’s multi-serve beverage dispensing systems and beverage products for use in the home and office. The ESIO Beverage System includes countertop and floor stand beverage dispensers that conveniently offer any size hot and cold drinks at the touch of a button. ESIO’s patented E-Paks deliver perfectly blended national brand and private label juices, sport drinks, vitamin waters, teas and coffees. More information on the ESIO Beverage System and its franchises is available at www.esiobev.com.

On November 5, 2012 our Board of Directors approved a name change to “Esio Water And Beverage Development Corp.” The name change became effective on January 18, 2013.

As of December 31, 2012, we have approximately $404,000 in cash and cash equivalents. We believe this will be sufficient to fund the costs of funding general and administrative expenses for the next 12 months, however, we do not believe that it will be sufficient to exercise our option to purchase additional regional franchises without raising additional capital.

During the next 12 months we anticipate incurring costs related to:


	(i)	Filing of Exchange Act reports;

	(ii)	Officer and director’s salaries and rent, consulting fees; and

	(iii)	Commencing our operation of a Regional Franchise in the Dallas/Ft. Worth area.

We believe we will be able to meet these costs through use of existing cash and cash equivalents or additional amounts, as necessary, to be loaned by or invested in us by our stockholders, management or other investors. However, no assurance can be given that we will be able to raise additional capital, when needed or at all, or that such capital, if available, will be on acceptable terms. In the absence of obtaining additional financing, the Company may be unable to fund its operations. Accordingly, the Company’s financial condition could require that the Company seek the protection of applicable reorganization laws in order to avoid or delay actions by third parties, which could materially adversely affect, interrupt or cause the cessation of the Company’s operations. As a result, the Company’s independent registered public accounting firm has issued going concern opinion on the consolidated financial statements of the Company for the fiscal year ended June 30, 2012.

Critical Accounting Policies

Our significant accounting policies are described in the audited consolidated financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended June 30, 2012.

- 7 -

General and Administrative Expenses

For the three months ended December 31, 2012 and 2011 we have recorded operating expenses of $124,678 and $113,311, respectively, which includes directors’ fees of $3,000 and $45,000 at December 31, 2012 and 2011, respectively. For the six months ended December 31, 2012 and 2011 we have recorded operating expenses of $255,534 and $286,894, respectively, which includes directors’ fees of $6,000 and $202,500 at December 31, 2012 and 2011, respectively. Our operating expenses in the current and prior fiscal year consist primarily of legal and accounting fees, and other costs associated with maintaining the company as a publicly traded entity and for the current year periods, costs incurred in relation to the execution of the Regional Development Agreement with ESIO. Our operating expenses from the date of reentering the development stage (February 5, 2008) through December 31, 2012 were $1,932,267 which includes directors’ fees of $489,092. We anticipate an increase in our general and administrative expenses due to expenses which we will incur related to developing our franchise operations.

Net Loss

For the three months ended December 31, 2012 and 2011, we have reflected net loss of $124,678 and $127,836, respectively. For the six months ended December 31, 2012 and 2011, we have reflected net loss of $989,138 and $316,295, respectively. The increase in the net loss is due to a charge to interest expense in the amount of $733,554 which arose due to beneficial conversion expense associated with notes payable converted to common stock and the issuance of warrants as a sweetener for the early conversion of the notes, as well as an increase in general and administrative expenses, offset by a decrease in directors fees. Our net loss from the date of reentering the development stage (February 5, 2008) through December 31, 2012 was $2,908,164.

Liquidity and Capital Resources

As of December 31, 2012 we have current assets of $404,369 and working capital of $378,090. On November 1, 2012 we paid $25,000 for the Second Amendment to Regional Development Deposit Agreement with ESIO Franchising, LLC. We anticipate expending funds for the purchase of equipment, software, inventory, salaries, rent and other related business expenses. In addition to the amount already paid for the purchase of the license, we estimate that the working capital requirement for the Dallas/Ft. Worth area will be approximately $300,000 prior to reaching profitability, which we don’t believe we will do until sometime in 2014. However, there can be no assurance that we will attain profitability at that time or any time in the future. Currently, we are seeking space for our franchise operations in the Dallas/Ft. Worth Area but to date we have not entered into a lease agreement. Further pursuant to our Regional Developer Deposit Agreement entered into on April 11, 2012, we have the option, but not the obligation to purchase additional Regional Development Franchise in the following areas:


	1.	State of Arizona
	2.	Jacksonville Florida metropolitan area
	3.	Houston Texas metropolitan area
	4.	San Antonio Texas metropolitan area
	5.	State of Colorado

On February 1, 2013, we elected not to exercise our option on the State of Colorado. The option period for the remaining four numbered optioned areas shall expire on May 1, 2013, with the next region option expiring every 3 months thereafter through December 1, 2013.

In addition, the Registrant shall have an option to purchase Regional Development Franchises in the following Optioned Areas in the State of California: San Francisco, CA –Bay Area and Eureka; Sacramento, CA and Chico, Reno, Nevada; Orange County, CA; San Diego and Imperial, California; and Northwest Los Angeles, CA – Ventura to San Luis Obispo. The option period for each of the optioned areas in the State of California shall commence on the effective registration date of the 2012 Franchise Disclosure Document with the state of California (“the Registration Date”) and expire one year after the registration date, which was June 25, 2012.

We anticipate that the purchase price of each of the aforementioned option areas will be approximately $250,000. Additionally, we anticipate that we will require working capital of $300,000 per optioned area to reach profitability.

These activities are likely to have a material impact on our liquidity. We will need to raise additional capital in order to purchase the remaining 9 optioned areas. We may not have sufficient funds to purchase any other region or all ten regions within the contracted time limits.

- 8 -

Off-balance sheet arrangements

We have no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

Market risk generally represents the risk that losses may occur in the values of financial instruments as a result of movements in interest rates, foreign currency exchange rates and commodity prices. We do not have foreign currency exchange rate or commodity price market risk.

Interest Rate Risk—From time to time we temporarily invest our excess cash in interest-bearing securities issued by high-quality issuers. We monitor risk exposure to monies invested in securities in our financial institutions. Due to the short time the investments are outstanding and their general liquidity, these instruments are classified as cash equivalents in our condensed consolidated balance sheets and do not represent a material interest rate risk.

Item 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures. Our principal executive and financial officer, after evaluating the effectiveness of our disclosure controls and procedures (as defined in Exchange Act Rules 13a — 15e and 15d — 15e) as of the quarter ended December 31, 2012 (the “Evaluation Date”), have concluded that, as of such date, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting. There were no changes in our internal control over financial reporting during the fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

FORWARD-LOOKING INFORMATION

The statements contained in this Quarterly Report on Form 10-Q that are not historical fact are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995), within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The forward-looking statements contained herein are based on current expectations that involve a number of risks and uncertainties. These statements can be identified by the use of forward-looking terminology such as “believes,” “expects,” “may,” “will,” “should,” or “anticipates,” or the negative thereof or other variations thereon or comparable terminology, or by discussions of strategy that involve risks and uncertainties. Investors are cautioned that these forward-looking statements that are not historical facts are only predictions. No assurances can be given that the future results indicated, whether expressed or implied, will be achieved. Because of the number and range of assumptions underlying the Company’s projections and forward-looking statements, many of which are subject to significant uncertainties and contingencies that are beyond the reasonable control of the Company, some of the assumptions inevitably will not materialize, and unanticipated events and circumstances may occur subsequent to the date of this report. These forward-looking statements are based on current expectations and the Company assumes no obligation to update this information. Therefore, the actual experience of the Company and the results achieved during the period covered by any particular projections or forward-looking statements may differ substantially from those projected. The inclusion of projections and other forward-looking statements should not be regarded as a representation by the Company or any other person that these estimates and projections will be realized, and actual results may vary materially. There can be no assurance that any of these expectations will be realized or that any of the forward-looking statements contained herein will prove to be accurate.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings.

As of the date of this report, the Company is not currently involved in any legal proceedings.

Item 1A. Risk Factors

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

- 9 -

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

Information previously include on Form 10Q filed November 19, 2012 with the Securities and Exchange Commission.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosure

Not applicable

Item 5. Other information

None.

Item 6. Exhibits


Exhibit Number	Description	By Reference from Document	No. In Document

10.1	Regional Developer Deposit Agreement	A	10.1
10.1	Regional Developer Agreement	B	10.1
10.2	Form of Three Franchise Agreements	B	10.2
10.1	Second Amendment to Regional Developer Deposit Agreement	C	10.1
31.1	Certification of President and Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	*	—
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	*	—
32.1	Certification of President and Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*	—
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	*	—
101	Interactive Data Files of Financial Statements and Notes	**	—

___________________


A.	Form 8-K Current Report reporting event on April 12, 2012
B.	Form 8-K Current Report reporting event on August 14, 2012
C.	Form 8-K Current Report reporting event on November 1, 2012
*	Filed herewith.
**	In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

- 10 -

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Esio Water & Beverage Development Corp.

Dated: February 14, 2013

By /s/ Anthony Silverman

Anthony Silverman

President and Chief Executive Officer

Dated: February 14, 2013

By /s/ Kimberly A Conley

Kimberly A Conley

Chief Financial Officer

- 11 -