UPD HOLDING CORP. - Annual Report: 2014 (Form 10-K)
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
x | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the fiscal year ended June 30, 2014 |
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o | TRANSITION REPORT UNDER SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
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| For the transition period from _______________ to _______________ |
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| Commission File Number 001-10320 |
Esio Water & Beverage Development Corp.
(Name of small business issuer in its charter)
Nevada |
| 13-3465289 |
(State or other jurisdiction of incorporation of organization) |
| (I.R.S. Employer Identification No.) |
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36508 N 15th Lane Phoenix, AZ |
| 85086 |
(Address of principal executive offices) |
| Zip Code |
(866) 545-4875 |
(Issuer’s telephone number) |
Securities registered under Section 12(b) of the Exchange Act: None
Securities registered under Section 12(g) of the Exchange Act:
Title of Each Class |
| Name of Each Exchange on Which Registered |
Common Stock, $.005 par value |
| OTC OB |
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. o Yes x No
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. o Yes x No
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. x Yes o No
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). o 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. o
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer | o |
| Accelerated filer | o |
Non-accelerated filer | o | (Do not check if a smaller reporting company) | Smaller reporting company | x |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). x Yes o 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. $685,917.
At September 29, 2014, the issuer had outstanding 18,566,636 shares of Common Stock, par value $.005 per share.
DOCUMENTS INCORPORATED BY REFERENCE
None
PART I
Forward-Looking Information
The statements contained in this Annual Report on Form 10-K 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. The Company wishes to caution the reader that its 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. While sometimes presented with numerical specificity, these projections and other forward-looking statements are based upon a variety of assumptions relating to the business of the Company, which, although considered reasonable by the Company, may not be realized. 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. Consequently, 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. The Company’s 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.
Item 1. Description of Business.
General
Esio Water & Beverage Development Corp. is a Nevada corporation originally incorporated in 1988 as Richard Barrie Fragrances, Inc. From March 1996 through February 2000 it operated as a “shell company” under the name FBR Capital Corp. In February 2000, it was merged with an operating company engaged in developing and selling employee time keeping systems. Its name was then changed to Vitrix, Inc., changed again to Time America, Inc. in November, 2003, and changed yet again to NETtime Solutions, Inc. in May 2007. Upon the sale of substantially all of its operating assets in February, 2008, it again became a shell company with no business plan except to seek to acquire or merge with an operating company and its name was changed to Tempco, Inc. 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. In April 2012 we entered into a Regional Development Deposit Agreement with Esio Franchising, LLC (“ESIO”) with the intent of marketing and servicing ESIO’s multi-serve beverage dispensing systems and beverage products for use in the home and office. In August 2012 we paid the balance due on the purchase price of the first Regional Franchise Area for the Dallas/Ft. Worth region and entered into 3 franchise agreements with EFL. In February 2013 EFL and its parent, Esio Holding Company, LLC (“EHC”), filed a Chapter 11 bankruptcy petition in U.S. Bankruptcy Court, district of Arizona (Phoenix). On August 15, 2013 the Chapter 11 petition was converted to a Chapter 7 petition. EFL’s conversion to a Chapter 7 petition made it unlikely that we would be able to develop our Dallas/Ft. Worth franchises in the future. As such, we were not successful in this endeavor and continue to seek to acquire or merge with an operating company.
Research and Development
We have not engaged in any material product research and development, nor do we anticipate having any in the next fiscal year.
Acquisitions of Plant and Equipment
We do not have any plans to acquire any plant or equipment.
Employees
At June 30, 2014, the Company had no employees apart from our Officers and Directors.
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Effect of Status as a “Shell” Company
Holders of restricted securities issued while we were a shell company may not re-sell them pursuant to SEC Rule 144 for a period of one year after we cease to be a shell. However, holders of the Company’s restricted securities for one year may re-sell the securities pursuant to Section 4(a)(1) of the Securities Act of 1933
Item 1A. Risk Factors
The Company is currently a “shell company”, having no business operations, its sole activity being to seek to find a suitable acquisition with an existing operating business or to develop a business of its own.
Competition
The market for acquiring profitable companies is highly competitive. The competition may hinder our ability to successfully locate a profitable company that desires to become public. We may not have the resources, expertise or other competitive factors to compete successfully in the future. We expect to face competition from existing competitors and new market entrants in the future. Some of our competitors will have greater resources than we do. As a result, these competitors may be able to acquire companies we would wish to acquire.
Market Price of Common Stock
Because of the range of the public trading for the Company’s Common Stock is so volatile and the trading volume so low, there can be no assurance that if, and when, an investor were to attempt to sell the Common Stock, the holder would be able to sell such shares of Common Stock for a profit or even recover his investment.
Penny Stock Rules
The Company’s Common Stock trades well below $5.00 per share and is therefore considered a “penny stock” under the Exchange Act and is subject to SEC rules and regulations that impose limitations on the manner in which it can be publicly traded. The Exchange Act and such penny stock rules generally impose additional sales practice and disclosure requirements on broker dealers who sell our securities to persons other than accredited investors, who are, generally, institutions with assets in excess of $5,000,000, or individuals with net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with spouse, or in transactions not recommended by the broker-dealer. For transactions covered by the penny stock rules, a broker–dealer must make a suitability determination for each purchaser and receive the purchaser’s written agreement prior to the sale. In addition, the broker-dealer must make certain mandated disclosures required by the SEC. These regulations require the delivery, prior to any transaction involving a penny stock, of a disclosure schedule explaining the penny stock and the associated risks. Generally, these regulations have the effect of limiting the liquidity of an investment in the Company’s Common Stock. Consequently, penny stock rules may also affect the ability of broker-dealers to make a market in or trade in the Company’s Common Stock and may also affect an investor’s ability to re-sell any shares purchased in the public markets. In addition, the over-the–counter market for the Company’s Common Stock is subject to large volume and price fluctuations. The securities of companies such as ours have historically seen extreme price and volume fluctuations during certain periods. These broad market fluctuations and other factors relating to the Company and its operations and in the investment markets in general, as well as economic conditions, may have a negative effect on the market price of its Common Stock.
Securities to be Issued Pursuant to an Exemption from Registration
In the future, Company securities will be offered and issued pursuant to Regulation D adopted under the Securities Act and pursuant to exemptions from registration in all states where they are being offered. There is no assurance that such offerings will qualify for such exemptions due, among other things, to the adequacy of the disclosure and the manner of distribution of the offering, other past, present and future offerings made or to be made by the Company, the conduct by the Company in other activities or any change in securities laws or regulations. If and to the extent that suits for rescission are brought and successfully concluded for failure to register an offering pursuant to the Securities Act, both the capital and assets of the Company could be adversely affected, thus jeopardizing the ability of the Company to operate successfully. Its capital could be depleted in defending any action by subscribers or by state or federal securities commissions, even if it is ultimately exonerated.
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Expenses of a Public Company
Operating a public company involves substantial costs to comply with reporting obligations under federal securities laws which are continuing to increase as provisions of the Sarbanes Oxley Act of 2002 are implemented. These reporting obligations impose a substantial financial expense on the Company on a quarterly and annual basis. The Company may not reach sufficient size to justify public reporting status. If the Company were forced to become a private company, shareholders may lose their ability to sell their shares and there would be substantial costs associated with becoming a private company.
Item 1B. Unresolved Staff Comments
Not applicable.
Item 2. Description of Property.
We do not own any real property.
Item 3. Legal Proceedings.
As of the date of this report, we were not currently involved in any legal proceedings.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Market for Common Stock
Our common stock is quoted on the OTC QB maintained by the NASD under the symbol “ESWB.” The high and low bid prices of our common stock as reported for the periods presented, by fiscal quarter (i.e. 1st Quarter = July 1 through September 30), were as follows. The quotations reflect inter-dealer prices, without retail markup, mark-down or commission and may not represent actual transactions.
| High | Low |
Fiscal Year Ended: June 30, 2014 |
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First Quarter | $0.13 | $0.08 |
Second Quarter | 0.05 | 0.10 |
Third Quarter | 0.10 | 0.01 |
Fourth Quarter | 0.07 | 0.02 |
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Fiscal Year Ended: June 30, 2013 |
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First Quarter | $0.30 | $0.15 |
Second Quarter | 0.28 | 0.17 |
Third Quarter | 0.35 | 0.10 |
Fourth Quarter | 0.15 | 0.07 |
Holders
As of September 29, 2014 there were approximately 160 holders of record of our common stock. This does not include beneficial owners holding stock in street name.
Dividend Policy
To date, we have not paid any cash dividends and our present policy is to retain earnings, if any for use in our business.
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Recent Sales of Unregistered Securities
All previous unregistered sales were disclosed in prior quarterly or current reports.
Transfer Agent
Our transfer agent and registrar are American Stock Transfer and Trust Co., 6201 15th Avenue, 3rd Floor, Brooklyn, NY 11219, Telephone (718) 921-8210.
Item 6. Selected Financial Data
We are a “smaller reporting company” as defined by Regulation S-K and as such, are not required to provide the information contained in this item pursuant to Regulation S-K.
Item 7. Management’s Discussion and Analysis and Plan of Operation.
The following discussion and analysis provides information that management believes is relevant to an assessment and understanding of our results of operations and financial condition for the periods presented. The following selected financial information is derived from our historical consolidated financial statements and should be read in conjunction with such consolidated financial statements and notes thereto set forth elsewhere herein and the “Forward-Looking Statements” explanation included herein.
Plan of Operation
On August 14, 2012 Tempco, Inc. (the “Registrant”) executed a Regional Developer Agreement (the “RDA”) and three franchise agreements (the “FA”) with ESIO Franchising, LLC (“EFL”) 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 Registrant paid $250,000 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 was to commence operations of its Regional Development business and first 3 franchises within 1 year of the execution of the RDA. Further, Registrant was to 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 was to receive 50% of the initial franchise fees ESIO received from its franchisees in the Territory and 40% of all royalties ESIO received from its franchisees in the Territory, excluding advertising fund payments.
Pursuant to the terms of the RDA and the FA Registrant and future franchisees were to 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 included countertop and floor stand beverage dispensers that conveniently offered any size hot and cold drinks at the touch of a button. ESIO’s patented E-Paks delivered perfectly blended national brand and private label juices, sport drinks, vitamin waters, teas and coffees.
In February 2013 EFL and its parent, EHC, filed a Chapter 11 bankruptcy petition in U. S. Bankruptcy Court in Phoenix, Arizona. On August 15, 2013 the Chapter 11 petition was converted to a Chapter 7 petition. EFL’s conversion to a Chapter 7 petition made it unlikely that we would be able to develop our Dallas/Ft. Worth franchises in the future.
Currently, the Company’s business objective is to locate a suitable business combination opportunity. The Company does not currently engage in any business activities that generate cash flow. As of June 30, 2014 we had approximately $146,000 in cash. We believe this will be sufficient to fund the costs of investigating and analyzing a suitable business combination or to fund general and administrative expenses for the next twelve months, however, if our efforts are unsuccessful within that time period, we will have to seek additional funds.
During the next 12 months we anticipate incurring costs related to:
| (i) | Filing of Exchange Act reports; |
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| (ii) | Officer and director’s salaries and rent, consulting fees; and |
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| (iii) | Investigating and/or consummating an acquisition. |
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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 opinions on the consolidated financial statements of the Company for the fiscal years ended June 30, 2014 and 2013.
CRITICAL ACCOUNTING POLICIES
“Management’s Discussion and Analysis of Financial Condition and Results of Operations ” (“MDA”) discusses our consolidated financial statements that have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and assumptions that affect the reported amount of assets and liabilities at the date of the financial statements, the 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. On an on-going basis, we evaluate our estimates and judgments, including those related to research and development costs, deferred income taxes and the impairment of long-lived assets. We base our estimates and judgments on historical experience and on various other factors that are believed to be reasonable under the circumstances. The result of these estimates and judgments form the basis for making conclusions about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions; changes in these estimates as a result of future events may have a material effect on the Company’s financial condition. The SEC suggests that all registrants list their most “critical accounting policies” in MDA. A critical accounting policy is one which is both important to the portrayal of the Company’s financial condition and results of operations and requires management’s most difficult, subjective or complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management believes the following critical accounting policies affect its more significant judgments and estimates in the preparation of its consolidated financial statements: The impairment of long-lived assets, stock based compensation, deferred income tax valuation allowances, pending or threatening litigation and the allocation of assets acquired and liabilities assumed in acquisitions.
Impairment or Disposal of long-lived assets.
In accordance with ASC 360 “Impairment or Disposal of Long-lived Assets”, the Company periodically evaluates whether events and circumstances have occurred that may indicate that the carrying amount of such assets may not be recoverable. If the carrying amount of an asset or group of assets exceeds its net realizable value, the asset will be written down to its fair market value. During the year ended June 30, 2013, we recognized an impairment loss of $532,056.
Deferred tax assets.
In assessing the realizability of deferred tax assets, management assesses the likelihood that deferred tax assets will be recovered from future taxable income, and to the extent that recovery is not likely a valuation allowance is established. We adjust the valuation allowance in the period management determines it is more likely than not that deferred tax assets will or will not be realized. To date, we have fully reserved for our deferred tax assets based primarily on our history of recurring losses.
Use of Estimates.
The preparation of financial statements in accordance with accounting principles generally accepted in the United States of America 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 reportable amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
Revenue
There are no revenues reflected in our financial statements for the years ended June 30, 2014 or 2013.
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General and Administrative Expenses
For the years ended June 30, 2014 and 2013 we have recorded general and administrative expenses of $123,192 and $360,949, respectively. Our general and administrative expenses in the current year consist primarily of officer’s salaries, legal and accounting fees, and other costs associated with maintaining the company as a publicly traded entity. The decrease in the current year is the result of a decrease in consulting and professional fees. For the years ended June 30, 2014 and 2013, we have recorded Directors’ fees of $71,960 and $12,000, respectively. The current year directors’ fees include stock based compensation expense of $59,960 there was no similar expense in the prior year. We also recognized an impairment loss of $532,056 in relation to the Regional Development Agreement during the year ended June 30, 2013.
Net Loss
For the years ended June 30, 2014 and 2013, we have reflected net loss of $195,152 and $1,638,609, respectively.
Liquidity and Capital Resources
As of June 30, 2014 we have current assets of $153,457 and working capital of $147,231. Over the next twelve months we estimate in order to maintain reporting company status as defined under the Securities Exchange Act of 1934, we will require cash for expenses, which include accounting, legal and other professional fees, as well as filing fees.
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 7A. Quantitative and Qualitative Disclosures About Market Risk
Our Company does not invest in any market sensitive instruments, either foreign or domestic.
Item 8. Financial Statements and Supplementary Data.
The financial statements and schedules are included herewith commencing on page F-1.
Report of Independent Registered Public Accounting Firm | F-1 |
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Consolidated Balance Sheets | F-2 |
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Consolidated Statements of Operations | F-3 |
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Consolidated Statements of Changes in Stockholders’ Equity (Deficit) | F-4 |
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Consolidated Statements of Cash Flows | F-5 |
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Notes to Consolidated Financial Statements | F-6 |
Item 9. Changes In And Disagreements With Accountants On Accounting And Financial Disclosure.
None.
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Item 9A. Controls and Procedures.
Disclosure Controls and Procedures
In accordance with Rule 13a-15(b) of the Securities Exchange Act of 1934 as amended (the “Exchange Act”), as of the end of the period covered by this Annual Report on Form 10-K, the Company’s management evaluated, with the participation of the Company’s principal executive and financial officer, the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rule 13a-15(e) or Rule 15d-15(e) under the Exchange Act). Disclosure controls and procedures are defined as those controls and other procedures of an issuer that are designed to ensure that the information required to be disclosed by the issuer in the reports it files or submits under the Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Act is accumulated and communicated to the issuer’s management, including its principal executive officer and principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Based on their evaluation of these disclosure controls and procedures, the Company’s chairman of the board and chief executive and financial officer have concluded that the disclosure controls and procedures were effective as of the date of such evaluation to ensure that material information relating to the Company, including its consolidated subsidiaries, was made known to them by others within those entities, particularly during the period in which this Annual Report on Form 10-K was being prepared.
Internal Control Over Financial Reporting
Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting. The Company’s internal control over financial reporting has been designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles generally accepted in the United States of America.
The Company’s internal control over financial reporting includes policies and procedures that pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect transactions and dispositions of assets of the Company; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures are being made only in accordance with authorization of management and directors of the Company; and provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the Company’s financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of the Company’s internal control over financial reporting at June 30, 2014. Management has determined that, at June 30, 2014, the Company’s internal control over financial reporting were effective.
This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by the Company’s registered public accounting firm pursuant to temporary rules of the SEC that permit the Company to provide only management’s report in this annual report.
Changes in Internal Control over Financial Reporting.
There have not been changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fourth quarter of fiscal 2014 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.
Item 9B. Other Information.
None.
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PART III
Item 10. Directors, Executive Officers, and Corporate Governance
Information regarding our directors and executive officer is provided below:
ANDREW ECCLESTONE, age 52, was elected as a Director of the Company on May 18, 2011. He was also elected as Chairman of the Board of Directors on that date. On August 26, 2013, he was also named as the Company’s Chief Executive Officer and President. Mr. Ecclestone is presently the portfolio manager of Mountainview Asset Management, a private investment fund in Toronto, Canada, which he founded in June 2002. From October 2000 to May 2002, he was the portfolio manager of Thomson Kernaghan Company Ltd, in Toronto, Canada. From June 1999 to September 2000, Mr. Ecclestone was the corporate finance consultant for Storm Investment Management Ltd. in North York, Ontario, Canada. Mr. Ecclestone received a Bachelor of Technology Degree, in industrial engineering, from the Ryerson Polytechnical Institute, Toronto, Canada, in 1985 and an M.B.A. from York University, North York, Ontario, in 1988. He has been a Chartered Financial Analyst since 1998.
FRED BURSTEIN, age 79, has been a director and officer of the company since February 4, 2008, becoming Chief Executive Officer on May 18, 2011 and serving in that position until April 12, 2012, when he resigned his position as an Officer. He continues as a director of the Company. Mr. Burstein has been a lawyer since 1960 practicing law in Minneapolis, Minnesota. He holds both his Juris Doctor and Business Administration degrees from the University of Minnesota.
KIMBERLY CONLEY, age 47, was elected Chief Financial Officer on April 12, 2012. Since May 2007, Ms. Conley has been providing accounting and financial services as an independent contractor to various companies, including the Company. From December 1999 to May 2007, she was employed by Semple Marchal & Cooper, LLP providing accounting and auditing services. Ms. Conley received a Bachelor of Science in Criminal Justice from Northern Arizona University in 1993. She has been a certified public accountant since 2003.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our directors and executive officers, as well as persons beneficially owning more than 10% of our outstanding common stock, to file reports of ownership and changes in ownership with the Securities and Exchange Commission (the “SEC”) within specified time periods. Such officers, directors and shareholders are also required to furnish us with copies of all Section 16(a) forms they file.
Based solely on its review of such forms received by us, or written representations from certain reporting persons, we believe that all Section 16(a) filing requirements applicable to our officers, directors and 10% shareholders were complied with during the fiscal year ended June 30, 2014; except Donald Schreifels became a beneficial owner of more than 10% in June 2012 and has not yet filed the forms with the SEC.
Code of Ethics
We have not yet adopted a Code of Business Conduct and Ethics.
Audit Committee, Compensation Committee and Nominating Committee
As of the date of this filing, we do not have a formal Audit Committee, Compensation Committee or Nominating Committee. We have two directors, Fred Burstein and Andrew Ecclestone who make all decisions that an audit committee would ordinarily make. We have no independent members of our Board of Directors and accordingly, we have determined that the Company does not have a member of its Board of Directors (or Audit Committee) that qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, or who is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
We believe that the members of our Board of Directors are collectively capable of analyzing and evaluating our consolidated financial statements. In addition, we believe that at this time, retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any revenues to date.
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Item 11. Executive Compensation.
The following table summarizes all compensation paid to our Chief Executive Officers for each of the fiscal years ended June 30, 2014 and 2013. We did not have any other executive officers whose total annual salary and bonus exceeded $100,000 for the periods presented.
Summary Compensation Table
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| All other |
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| Salary |
| Compensation |
| Total | |||
Name and Principal Position |
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Andrew Ecclestone, Chairman of the Board, |
| 2014 |
| $ | — |
| $ | 29,980 |
| $ | 29,980 |
Principal Executive Officer (1) |
| 2013 |
| $ | — |
| $ | — |
| $ | — |
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Anthony Silverman, Principal Executive Officer (3) |
| 2013 |
| $ | — |
| $ | — |
| $ | — |
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Fred Burstein, Director |
| 2014 |
| $ | 12,000 |
| $ | 29,980 |
| $ | 41,980 |
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| 2013 |
| $ | 12,000 |
| $ | — |
| $ | 12,000 |
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Kimberly A Conley, Principal Accounting Officer |
| 2014 |
| $ | 42,000 |
| $ | — |
| $ | 42,000 |
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| 2013 |
| $ | 44,000 |
| $ | — |
| $ | 44,000 |
___________________
(1) | Mr. Ecclestone began serving as the Principal Executive Officer and President on August 26, 2013. |
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(2) | Includes the issuance of an option to purchase 600,000 shares of common stock at an exercise price of $.05. |
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(3) | Mr. Silverman began serving as a Director and Chief Financial Officer on May 11, 2011. He served in that capacity through April 12, 2012 when he was appointed as Principal Executive Officer and President. He served in that position through August 26, 2013 at which time he resigned as an Officer and Director. |
Following is information regarding outstanding equity awards for each of our named executive officers as of the fiscal year ended June 30, 2014:
Outstanding Equity Awards at Fiscal Year End
|
| Option Awards | ||||
Name |
| Number of securities |
| Option |
| Option |
|
|
|
|
|
|
|
Andrew Ecclestone |
| 250,000 |
| $ 0.25 |
| 7/11/2016 |
Andrew Ecclestone |
| 600,000 |
| $ 0.05 |
| 2/03/2019 |
Fred Burstein |
| 250,000 |
| $ 0.25 |
| 7/11/2016 |
Fred Burstein |
| 600,000 |
| $ 0.09 |
| 2/28/2016 |
Fred Burstein |
| 600,000 |
| $ 0.05 |
| 2/03/2019 |
Item 12. Security Ownership Of Certain Beneficial Owners And Management and Related Stockholder Matters.
Equity Compensation Plan Information
The following table sets forth information regarding the number of shares of our common stock that may be issued pursuant to our equity compensation plans or arrangements as of the end of fiscal 2014.
- 9 -
Plan Category |
| Number of Securities |
| Weighted-Average |
| Number of Securities Remaining Available For Future Issuance Under |
|
|
|
|
|
|
|
Equity compensation plans approved by security holders |
| None (1) |
| $ — |
| 600,000 (3) |
|
|
|
|
|
|
|
Equity compensation plans not approved by security holders |
| 3,272,767 (2) |
| $ 0.57 |
| — |
|
|
|
|
|
|
|
TOTAL |
| 3,272,767 |
| $ 0.57 |
| 600,000 |
___________________
(1) | Represents shares of common stock that may be issued pursuant to outstanding options granted under our 1999 Equity Compensation Plan. |
|
|
(2) | Represents shares of common stock that may be issued pursuant to options available for future grant under our 1999 Equity Compensation Plan. |
|
|
(3) | Represents an aggregate of 2,717,287 shares of common stock underlying non-statutory stock options approved by the Company’s board of directors and granted to directors and employees of the Company (the “Options”). The options have vesting schedules ranging from immediate vesting to four year vesting and have an exercise price equal to the closing bid price of the common stock on the date of grant and a term of five to ten years. |
Security Ownership of Certain Beneficial Owners
The following table sets forth certain information, as of September 28, 2014 concerning the beneficial ownership of shares of Common Stock of the Company by (i) each person known by the Company to beneficially own more than 5% of the Company’s Common Stock; (ii) each Director; (iii) the Company’s Chief Executive Officer; and (iv) all directors and executive officers of the Company as a group. To the knowledge of the Company, all persons listed in the table have sole voting and investment power with respect to their shares, except to the extent that authority is shared with their respective spouse under applicable law.
|
| Shares Beneficially Owned (1) | ||
Name and Address of Beneficial Owner(2) |
| Number |
| Percent of Class |
|
|
|
|
|
Anthony Silverman |
| 2,404,380 |
| 13.0% |
Fred Burstein (5) |
| 1,479,151 |
| 7.4% |
Andrew Ecclestone (3) |
| 850,000 |
| 4.4% |
Donald Schreifels (4) |
| 3,299,500 |
| 16.0% |
Kimberly Conley |
| 52,000 |
| 0.3% |
Executive officers as a group |
| 2,381,151 |
| 11.4% |
(1) | A person is deemed to be the beneficial owner of securities that can be acquired within 60 days from the date set forth above through the exercise of any option, warrant or right. Shares of common stock subject to options, warrants or rights that are currently exercisable or exercisable within 60 days are deemed outstanding for computing the percentage of the person holding such options, warrants or rights, but are not deemed outstanding for computing the percentage of any other person. The amounts and percentages are based upon 19,416,636 shares of common stock outstanding as of September 28, 2014 for Andrew Ecclestone and 20,016,636 for Fred Burstein. |
|
|
(2) | The address of each of the beneficial owners is as follows: Anthony Silverman, 7625 East Via Del Reposo, Scottsdale, Arizona 85258; Fred Burstein, 36508 N 15th Lane, Phoenix, AZ 85086; Andrew Ecclestone 36508 N 15th Lane, Phoenix, AZ 85086. Donald Schreifels 6900 Wedgewood Road N., Suite 340 Maple Grove, Minnesota, 55311; Kimberly Conley, 36508 N 15th Lane, Phoenix, AZ 85086 |
- 10 -
(3) | Includes 850,000 shares of common stock underlying warrants that were exercisable on September 28, 2014 or within 60 days thereafter. |
|
|
(4) | Includes 69,500 shares of common stock owned by spouse, and a warrant to purchase an additional two million shares that were exercisable on September 28, 2014 or within 60 days thereafter. |
|
|
(5) | Includes 1,450,000 shares of common stock underlying warrants that were exercisable on September 28, 2014 or within 60 days thereafter. |
Item 13. Certain Relationships And Related Transactions, and Director Independence.
The Company did not have any transactions during fiscal years 2014 and 2013 with any director, director nominee, executive officer, security holder known to the Company to own of record or beneficially more than 5% of the Company’s common stock, or any member of the immediate family of any of the foregoing persons, in which the amount involved exceeded $120,000.
Director Independence
During the year ended June 30, 2014 our directors were Fred Burstein and Andrew Ecclestone. Only Mr. Burstein would be considered “independent”.
“Independent director” means a person other than an executive officer or employee of the company or any other individual having a relationship which, in the opinion of the issuer’s board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of a director. The following persons shall not be considered independent:
(A) a director who is, or at any time during the past three years was, employed by the company;
(B) a director who accepted or who has a Family Member who accepted any compensation from the company in excess of $100,000 during any period of twelve consecutive months within the three years preceding the determination of independence, other than the following:
| (i) | compensation for board or board committee service; |
|
|
|
| (ii) | compensation paid to a Family Member who is an employee (other than an executive officer) of the company; or |
|
|
|
| (iii) | benefits under a tax-qualified retirement plan, or non-discretionary compensation. |
Provided, however, that in addition to the requirements contained in this paragraph (B), audit committee members are also subject to additional, more stringent requirements under Rule 4350(d).
(C) a director who is a Family Member of an individual who is, or at any time during the past three years was, employed by the company as an executive officer;
(D) a director who is, or has a Family Member who is, a partner in, or a controlling shareholder or an executive officer of, any organization to which the company made, or from which the company received, payments for property or services in the current or any of the past three fiscal years that exceed 5% of the recipient’s consolidated gross revenues for that year, or $200,000, whichever is more, other than the following:
| (i) | payments arising solely from investments in the company’s securities; or |
|
|
|
| (ii) | payments under non-discretionary charitable contribution matching programs. |
(E) a director of the issuer who is, or has a Family Member who is, employed as an executive officer of another entity where at any time during the past three years any of the executive officers of the issuer serve on the compensation committee of such other entity; or
- 11 -
(F) a director who is, or has a Family Member who is, a current partner of the company’s outside auditor, or was a partner or employee of the company’s outside auditor who worked on the company’s audit at any time during any of the past three years.
(G) in the case of an investment company, in lieu of paragraphs (A)–(F), a director who is an “interested person” of the company as defined in Section 2(a)(19) of the Investment Company Act of 1940, other than in his or her capacity as a member of the board of directors or any board committee.
Item 14. Principal Accountant Fees and Services.
The following table sets forth fees billed to us by our auditors during the fiscal years ended June 30, 2014 and 2013 for: (i) services rendered for the audit of our annual financial statements and the review of our quarterly financial statements, (ii) services by our auditors that are reasonably related to the performance of the audit or review of our financial statements and that are not reported as Audit Fees, (iii) services rendered in connection with tax compliance, tax advice and tax planning, and (iv) all other fees for services rendered.
|
|
| June 30, 2014 |
| June 30, 2013 |
|
|
|
|
|
|
(i) | Audit Fees |
| $ 12,500 |
| $ 12,500 |
(ii) | Audit Related Fees |
| — |
| — |
(iii) | Tax Fees |
| — |
| — |
(iv) | All Other Fees |
| — |
| — |
Audit Committee Pre-Approval Policies and Procedures
The entire board of directors acts as the Company’s Audit Committee. The Audit Committee does not have a financial expert serving on its committee at this time due to the size and nature of the Company.
All audit and non-audit services are pre-approved by the Audit Committee, which consists of the members of the board of directors which considers, among other things, the possible effect of the performance of such services on the auditors’ independence. The Audit Committee pre-approves the annual engagement of the principal independent registered public accounting firm, including the performance of the annual audit and quarterly reviews for the subsequent fiscal year, and pre-approves specific engagements for tax services performed by such firm. The Audit Committee has also established pre-approval policies and procedures for certain enumerated audit and audit related services performed pursuant to the annual engagement agreement, including such firm’s attendance at and participation at Board and committee meetings; services associated with SEC registration statements approved by the Board of Directors; review of periodic reports and other documents filed with the SEC or other documents issued in connection with securities offerings, such as comfort letters and consents; assistance in responding to any SEC comments letters; and consultations with such firm as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by the SEC, Public Company Accounting Oversight Board (PCAOB), Financial Accounting Standards Board (FASB), or other regulatory or standard-setting bodies. The Audit Committee is informed of each service performed pursuant to its pre-approval policies and procedures. The Audit Committee has considered the role of MaloneBailey, LLP in providing services to us for the fiscal year ended June 30, 2014 and has concluded that such services are compatible with such firm’s independence.
- 12 -
PART IV
Item 15. Exhibits.
The exhibits as indexed immediately following the signature page of this Report are included as part of this Form 10-K.
EXHIBIT INDEX
Exhibit | Description | By Reference | No. In |
|
|
|
|
31.1 | Certification pursuant to Rules 13a-14(a) and 15d-14(a)(5) of the Securities Exchange Act of 1934 by Andrew Ecclestone | * | — |
31.2 | Certification pursuant to Rules 13a-14(a) and 15d-14(a)(5) of the Securities Exchange Act of 1934 by Kimberly Conley | * | — |
32.1 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Andrew Ecclestone | * | — |
32.2 | Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 by Kimberly Conley | * | — |
101 | Interactive Data Files of Financial Statements and Notes | ** | — |
___________________
* | Filed herewith. |
** | In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Annual Report on Form 10-K shall be deemed “furnished” and not “filed”. |
- 13 -
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.
Esio Water & Beverage Development Corp.
/s/ Andrew Ecclestone
Andrew Ecclestone, President and Chief Executive Officer
(Principal Executive Officer)
Dated: October 14, 2014
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
Signatures | Title | Date |
|
|
|
/s/ Fred Burstein | Director | October 14, 2014 |
Fred Burstein |
|
|
|
|
|
/s/ Kimberly Conley | Chief Financial Officer | October 14, 2014 |
Kimberly Conley | (Principal Financial Officer) |
|
|
|
|
/s/ Andrew Ecclestone | Chief Executive Officer and Director | October 14, 2014 |
Andrew Ecclestone |
|
|
- 14 -
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors
Esio Water & Beverage Development Corp.
Phoenix, Arizona
We have audited the accompanying consolidated balance sheets of Esio Water & Beverage Development Corp. and its subsidiaries (a development stage company) (collectively, the “Company”) as of June 30, 2014 and 2013 and the related consolidated statements of expenses, shareholders’ equity (deficit), and cash flows for the years 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 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 about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Esio Water & Beverage Development Corp. and its subsidiaries as of June 30, 2014 and 2013 and the results of their operations and their cash flows for the years 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 2 to the financial statements, the Company suffered reoccurring losses since inception, which raises substantial doubt about its ability to continue as a going concern. Management’s plans regarding those matters also are described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/S/ MALONEBAILEY, LLP
MaloneBailey, LLP
www.malonebailey.com
Houston, Texas
October 14, 2014
F-1
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
CONSOLIDATED BALANCE SHEETS
|
| June 30, |
| June 30, |
| ||
|
| 2014 |
| 2013 |
| ||
|
|
|
|
|
|
|
|
ASSETS | |||||||
|
|
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 146,086 |
| $ | 280,903 |
|
Prepaid expenses |
|
| 7,371 |
|
| 9,375 |
|
|
|
|
|
|
|
|
|
Total current assets |
|
| 153,457 |
|
| 290,278 |
|
|
|
|
|
|
|
|
|
Total Assets |
| $ | 153,457 |
| $ | 290,278 |
|
|
|
|
|
|
|
|
|
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | |||||||
|
|
|
|
|
|
|
|
Current Liabilities: |
|
|
|
|
|
|
|
Accounts payable |
| $ | 466 |
| $ | 2,095 |
|
Accrued liabilities |
|
| 5,760 |
|
| 5,760 |
|
|
|
|
|
|
|
|
|
Total current liabilities |
|
| 6,226 |
|
| 7,855 |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
| 6,226 |
|
| 7,855 |
|
|
|
|
|
|
|
|
|
Commitments: |
|
| — |
|
| — |
|
|
|
|
|
|
|
|
|
Stockholders’ equity (deficit): |
|
|
|
|
|
|
|
Common stock, $.005 par value 200,000,000 authorized; 18,566,636 issued and outstanding as of June 30, 2014 and 2013 |
|
| 92,833 |
|
| 92,833 |
|
Additional paid in capital |
|
| 14,968,014 |
|
| 14,908,054 |
|
Accumulated deficit prior to reentering the development stage |
|
| (11,160,829 | ) |
| (11,160,829 | ) |
Deficit accumulated in the development stage |
|
| (3,752,787 | ) |
| (3,557,635 | ) |
|
|
|
|
|
|
|
|
Total stockholders’ equity (deficit) |
|
| 147,231 |
|
| 282,423 |
|
|
|
|
|
|
|
|
|
Total liabilities and stockholders’ equity (deficit) |
| $ | 153,457 |
| $ | 290,278 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-2
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF OPERATIONS
|
| June 30, |
| ||||
|
| 2014 |
| 2013 |
| ||
|
|
|
|
|
|
|
|
Costs and Expenses |
|
|
|
|
|
|
|
General and administrative |
| $ | 123,192 |
| $ | 360,949 |
|
Directors fees |
|
| 71,960 |
|
| 12,000 |
|
Impairment expense |
|
| — |
|
| 532,056 |
|
Operating loss |
|
| 195,152 |
|
| 905,005 |
|
|
|
|
|
|
|
|
|
Net loss from operations |
|
| (195,152 | ) |
| (905,005 | ) |
|
|
|
|
|
|
|
|
Other Income (Expense) |
|
|
|
|
|
|
|
Interest expense |
|
| — |
|
| (733,554 | ) |
|
|
| — |
|
| (733,554 | ) |
|
|
|
|
|
|
|
|
Provision for income taxes |
|
| — |
|
| (50 | ) |
|
|
|
|
|
|
|
|
Net Loss |
| $ | (195,152 | ) | $ | (1,638,609 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and diluted loss per share |
| $ | (0.01 | ) | $ | (0.09 | ) |
|
|
|
|
|
|
|
|
Basic and diluted weighted average common shares outstanding |
|
| 18,566,636 |
|
| 18,222,741 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-3
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ DEFICIT
|
| Common Stock |
| Treasury Stock |
| Additional |
| Accumulated |
| Deficit |
|
|
| ||||||||||
|
| Shares |
| Amount |
| Shares |
| Amount |
| Capital |
| Stage |
| 2008 |
| Total |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2012 |
| 15,490,016 |
| $ | 77,450 |
| — |
| $ | — |
| $ | 13,944,172 |
| $ | (11,160,829 | ) | $ | (1,919,026 | ) | $ | 941,767 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for the cancellation of an option |
| — |
|
| — |
| — |
|
| — |
|
| (15,000 | ) |
| — |
|
| — |
|
| (15,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for conversion of notes payable and accrued interest |
| 2,656,620 |
|
| 13,283 |
| — |
|
| — |
|
| 650,874 |
|
| — |
|
| — |
|
| 664,157 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued as a sweetener for early conversion |
| — |
|
| — |
| — |
|
| — |
|
| 168,177 |
|
| — |
|
| — |
|
| 168,177 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Warrants issued for services |
| — |
|
| — |
| — |
|
| — |
|
| 69,931 |
|
| — |
|
| — |
|
| 69,931 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shares issued for cash |
| 520,000 |
|
| 2,600 |
| — |
|
| — |
|
| 127,400 |
|
| — |
|
| — |
|
| 130,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Finders fees |
| — |
|
| — |
| — |
|
| — |
|
| (13,000 | ) |
| — |
|
| — |
|
| (13,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Repurchase of shares issued for cash |
| (100,000 | ) |
| (500 | ) | — |
|
| — |
|
| (24,500 | ) |
| — |
|
| — |
|
| (25,000 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| — |
|
| — |
| — |
|
| — |
|
| — |
|
| — |
|
| (1,638,609 | ) |
| (1,638,609 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2013 |
| 18,566,636 |
|
| 92,833 |
| — |
|
| — |
|
| 14,908,054 |
|
| (11,160,829 | ) |
| (3,557,635 | ) |
| 282,423 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock based compensation |
| — |
|
| — |
| — |
|
| — |
|
| 59,960 |
|
| — |
|
| — |
|
| 59,960 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss |
| — |
|
| — |
| — |
|
| — |
|
| — |
|
| — |
|
| (195,152 | ) |
| (195,152 | ) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance at June 30, 2014 |
| 18,566,636 |
| $ | 92,833 |
| — |
| $ | — |
| $ | 14,968,014 |
| $ | (11,160,829 | ) | $ | (3,752,787 | ) | $ | 147,231 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-4
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
| For the Year Ended |
| ||||
|
| June 30, |
| ||||
|
| 2014 |
| 2013 |
| ||
Cash flows from operating activities: |
|
|
|
|
|
|
|
Net loss |
| $ | (195,152 | ) | $ | (1,638,609 | ) |
Adjustments to reconcile net loss to net cash provided (used) by operating activities: |
|
|
|
|
|
|
|
Stock based compensation |
|
| 59,960 |
|
| 152,308 |
|
Amortization of intangilbes |
|
| — |
|
| 40,056 |
|
Amortization and depreciaton |
|
| — |
|
| 46,146 |
|
Amortization of beneficial conversion feature |
|
| — |
|
| 597,703 |
|
Financing expense due to sweetener for conversion of debt |
|
| — |
|
| 85,800 |
|
Impairment expense |
|
| — |
|
| 532,056 |
|
Changes in Assets and Liabilities: |
|
|
|
|
|
|
|
Prepaid expenses |
|
| 2,004 |
|
| (7,033 | ) |
Accounts payable |
|
| (1,629.00 | ) |
| (21,860 | ) |
Accounts payable-related party |
|
| — |
|
| (2,027 | ) |
Accrued liabilities |
|
| — |
|
| 3,905 |
|
Net cash used by operating activities |
|
| (134,817 | ) |
| (211,555 | ) |
|
|
|
|
|
|
|
|
Cash flows from investing activities: |
|
|
|
|
|
|
|
Purchase of intangible asset |
|
| — |
|
| (225,000 | ) |
Net cash provided by (used) by investing activities |
|
| — |
|
| (225,000 | ) |
|
|
|
|
|
|
|
|
Cash flows from financing activities: |
|
|
|
|
|
|
|
Proceeds from sale of common stock |
|
| — |
|
| 117,000 |
|
Disbursement for repurchase of common stock |
|
| — |
|
| (25,000 | ) |
Cash paid for the cancellation of an option |
|
| — |
|
| (15,000 | ) |
Net cash provided by financing activities |
|
| — |
|
| 77,000 |
|
Net change in cash and cash equivalents |
|
| (134,817 | ) |
| (359,555 | ) |
Cash and cash equivalents at beginning of year |
|
| 280,903 |
|
| 640,458 |
|
Cash and cash equivalents at end of period |
| $ | 146,086 |
| $ | 280,903 |
|
|
|
|
|
|
|
|
|
Supplemental Disclosures: |
|
|
|
|
|
|
|
Cash paid for income taxes |
| $ | — |
| $ | 50 |
|
Cash paid for interest |
| $ | — |
| $ | — |
|
Non Cash Investing and Financing Activities of common stock |
| $ | — |
| $ | 664,157 |
|
The accompanying notes are an integral part of these consolidated financial statements
F-5
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 – Organization, Basis of Presentation, Description of Business and Principles of Consolidation
Esio Water & Beverage Development Corp. (“the Company” or “ESWB”) 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 Vitrix, Inc. in October 1999, to Time America, Inc. in December 1993, then to NETtime Solutions, Inc. in January 2007. The name was changed again on February 4, 2008 to Tempco, Inc. 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. The company is a Development stage Company, as defined by accounting Standards Codification 915, Development Stage Entities.
On April 11, 2012, the Company entered into a Regional Developer Deposit Agreement with ESIO Franchise, LLC. The Agreement gave the Company the option to purchase up to ten regional franchise areas for the sale of ESIO franchises, as well as requiring the Company to operate three franchises within the optioned areas. The Company planned to market and service ESIO’s multi-serve beverage dispensing system and beverage products for use in the home and office. In connection with that agreement, the Company changed its name to Esio Water & Beverage Development Corp. in January 2013. We were unsuccessful in that endeavor.
The Company intends to locate and combine with an existing company that is profitable or which, in management’s view, has growth potential, irrespective of the industry in which it is engaged. A combination may be structured as a merger, consolidation, exchange of the Company’s common stock for stock or assets or any other form, and continue to seeking to negotiate and consummate a combination or merger with another business.
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 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 minimal operating expenses; (ii) obtaining funding from outside sources through the sale of its debt and/or equity securities; and (iii) 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 attaining 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 – Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America 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 or revenues and expenses during the period. Actual results could differ from those estimates. Significant estimates include deferred income taxes and fair value of stock-based compensation. It is at least reasonably possible a material change in these estimates may occur in the near term.
F-6
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Beneficial Conversion Features
The intrinsic value of a beneficial conversion feature inherent to a convertible note payable, which is not bifurcated and accounted for separately from the convertible note payable and may not be settled in cash upon conversion, is treated as a discount to the convertible note payable. This discount is amortized over the period from the date of issuance to the date the note is due using the effective interest method. If the note payable is retired prior to the end of its contractual term, the unamortized deferred financing costs are expensed in the period of retirement to interest expense.
In general, the beneficial conversion feature is measured by comparing the effective conversion price, after considering the relative fair value of detachable instruments included in the financing transaction, if any, to the fair value of the common shares at the commitment date to be received upon conversion.
Stock-Based Compensation
We account for share-based awards to employees in accordance with ASC 718 “Stock Compensation”. Under this guidance, stock compensation expense is measured at the grant date, based on the fair value of the award, and is recognized as an expense over the estimated service period (generally the vesting period) on the straight-line attribute method. Share-based awards to non-employees are accounted for in accordance with ASC 505-50 “Equity”, wherein such awards are expensed over the period in which the related services are rendered.
Cash and Cash Equivalents
Cash and cash equivalents are considered to be all highly liquid investments purchased with an initial maturity of three months or less.
Concentration of Credit Risk
The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. The Company maintains the majority of its cash balances with one financial institution. At times, such balances may be in excess of any insured limits.
Deferred Financing Costs
Debt financing costs are amortized over the contractual term of the underlying note payable using the effective interest method. If debt is retired prior to the end of its contractual term, the unamortized deferred financing costs are expensed in the period of the retirement to interest expense.
Impairment of Long Lived Assets
Impairment losses are to be recognized when the carrying amount of a long lived asset is not recoverable or exceeds its fair value. The Company evaluates its long lived assets for impairment whenever events or changes in circumstances indicate that a carrying value may not be recoverable. The Company uses estimates of future cash flows over the remaining useful life of a long lived asset or asset group to determine the recoverability of the asset. These estimates only include the net cash flows directly associated with, and that are expected to arise as a direct result of, the use and eventual disposition of the asset or asset group. The evaluation of asset impairment requires the Company to make assumptions about future cash flows over the life of the asset being evaluated. During the year ended June 30, 2013, the Company recorded an impairment loss of $532,056 related to an intangible asset.
Fair Value of Financial Instruments
The Company’s financial instruments include cash, accounts payable and other accrued expenses and notes payable. All instruments are accounted for on a historical cost basis, which, due to the short maturity of these financial instruments, approximates fair value at June 30, 2013 and 2012. The fair value hierarchy under GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:
F-7
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
· | Level one – Quoted market prices in active markets for identical assets or liabilities; |
|
|
· | Level two – Inputs other than level one inputs that are either directly or indirectly observable; and |
|
|
· | Level three – Unobservable inputs developed using estimates and assumptions, which are developed by the reporting entity and reflect those assumptions that a market participant would use. |
Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.
The Company does not have any assets or liabilities measured at fair value on a recurring basis as of June 30, 2014 and 2013.
Income Taxes
In accordance with ASC 740 - Income Taxes, the provision for income taxes is computed using the asset and liability method. Under the asset and liability method, deferred income tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the currently enacted tax rates and laws. A valuation allowance is provided for the amount of deferred tax assets that, based on available evidence, are not expected to be realized.
The Company also follows the guidance related to accounting for income tax uncertainties. In accounting for uncertainty in income taxes, the Company recognizes the financial statement benefit of a tax position only after determining that the relevant tax authority would more likely than not sustain the position following an audit. For tax positions meeting the more likely than not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. No liability for unrecognized tax benefits was recorded as of June 30, 2014 and 2013.
Income (Loss) Per Share:
Diluted income (loss) per share is computed based on the weighted average number of shares of common stock and dilutive securities outstanding during the period. Potentially dilutive securities are options and warrants that are exercisable into common stock and convertible notes payable. Dilutive securities are not included in the weighted average number of shares when inclusion would increase the income per share or decrease the loss per share. At June 30, 2014 and 2013, there were options and warrants outstanding to purchase 11,426,245 and 10,872,765, respectively, shares of the Company’s common stock. At June 30, 2014 and 2013, there were no potentially dilutive securities included in the calculation as their effect was anti-dilutive.
The computation of earnings per share of common stock is based on the weighted average number of shares outstanding at the date of the financial statements as follows:
|
| Loss |
| Shares |
| Per Share |
| ||
|
| (Numerator) |
| (Denominator) |
| Amount |
| ||
Basic and diluted loss per share |
|
|
|
|
|
|
|
|
|
For the year ended June 30, 2014 |
| $ | (195,152 | ) | 18,566,636 |
| $ | (0.01 | ) |
|
|
|
|
|
|
|
|
|
|
For the year ended June 30, 2013 |
| $ | (1,638,609 | ) | 18,222,741 |
| $ | (0.09 | ) |
Recent Accounting Pronouncements
In June 2014, the Financial Accounting Standards Board issued ASU 2014-10, Development Stage Entities (Topic 915): Elimination of Certain Financial Reporting Requirements. ASU 2014-10 eliminates the distinction of a development stage entity and certain related disclosure requirements, including the elimination of inception-to-date information on the statements of operations, cash flows and stockholders’ equity. The amendments in ASU 2014-10 will be effective prospectively for annual reporting periods beginning after December 15, 2014, and interim periods within those annual periods, however early adoption is permitted. In the year ended August 31, 2014, the Company elected to early adopt ASU 2014-10 and removed the inception to date information and all reference to development stage.
F-8
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 4 – 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 (“EFC”) for the Dallas/Fort Worth region of Texas (the “Territory”) and three franchises therein. The Company paid $225,000 cash to EFC and issued a warrant valued at $299,612 in the year ended June 30, 2012 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.
On November 1, 2012 we entered into the Second Amendment to Regional Development Deposit Agreement with ESIO Franchising, LLC which delayed 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 commenced 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 was to be credited against the purchase price of a region we acquired from EFC, and the balance of $2,500 related to legal fees for the agreement. In addition, we had 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 on June 25, 2012, with the effective registration of the 2012 Franchise Disclosure Document with the state of California (“the Registration Date”) and expired June 25, 2013.
On February 25, 2013, we were notified that Esio Holding Company, LLC and Esio Franchising, LLC a subsidiary of EHC, filed a Chapter 11 petition in U.S. Bankruptcy Court, District of Arizona (Phoenix), on February 22, 2013.
Through the period ended March 31, 2013, the Company had recorded amortization expense in the amount of $40,056 in relation to the license agreements.
Additionally, at that time, due to the bankruptcy proceeding, the company evaluated the carrying value of the license agreement and had determined that the undiscounted future cash flows are insufficient to recover the carrying value of the license agreement and therefore recorded and impairment loss in the amount of $532,056.
Note 5 – Income Taxes
As of June 30, 2014 and 2013 deferred tax assets consist of the following:
|
| 2014 |
| 2013 |
| ||
|
|
|
|
|
|
|
|
Federal loss carryforwards |
| $ | 3,275,423 |
| $ | 3,228,106 |
|
State loss carryforwards |
|
| 127,295 |
|
| 131,686 |
|
Other |
|
| — |
|
| — |
|
|
|
| 3,402,718 |
|
| 3,359,792 |
|
Less: valuation allowances |
|
| (3,402,718 | ) |
| (3,359,792 | ) |
|
| $ | — |
| $ | — |
|
The Company has established a valuation allowance equal to the full amount of the deferred tax assets primarily because of uncertainty in the utilization of net operating loss carryforwards.
As a result of stock ownership changes, the Company’s ability to utilize net operating losses in the future could be limited, in whole or part, under Internal Revenue Code. As of June 30, 2014 the Company’s federal and state net operating loss carryforwards were $9,358,352 and $1,591,186, respectively, and expire through 2034.
The Company’s tax expense differed from the statutory rate primarily due to the change in the deferred tax asset valuation allowance.
F-9
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 6 – Stockholders’ Equity
At June 30, 2014 and 2013 the Company has 200,000,000 shares of Common Stock with a par value of $.005 authorized. At June 30, 2014 and 2013, there were 18,566,636 shares are issued and outstanding. There are also authorized 10,000,000 shares of preferred stock, par value $.01, none of which are issued and outstanding.
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 $9,157. 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 June 30, 2013 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 year ended June 30, 2013 we received proceeds of $130,000 from the sale of 520,000 Units in a private placement. The Units consisted of one share and a warrant to purchase an additional share at $.75. In connection with the private placements we paid finders’ fees of $13,000. In May 2013, the Company refunded one of the investors $25,000 and cancelled the 100,000 shares units issued.
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 for consulting services. The warrants vest 250,000 at issuance and 250,000 warrants every three months thereafter. The agreement was terminated in April 2013. The Company has recorded stock compensation expense in relation to the 750,000 warrants issued prior to the termination of the agreement in the amount of $152,308.
Stock Options:
On July 13, 1999, the Board of Directors authorized the 1999 Equity Compensation Plan. The plan allows for the award of incentive stock options, non-statutory stock options or restricted stock awards to certain employees, directors, consultants and independent contractors. The Company has reserved an aggregate of 600,000 shares of common stock for distribution under the plan. Incentive stock options granted under the plan may be granted to employees only, and may not have an exercise price less than the fair market value of the common stock on the date of grant. Options may be exercised on a one-for-one basis, with a maximum term of ten years from the date of grant. Incentive stock options granted to employees generally vest annually over a four year period.
The fair value of option grants is estimated as of the date of grant utilizing the Black-Scholes option-pricing model. The assumptions used at that the time of the most recent issuances were as follows:
|
| Year Ended |
|
| June 30, |
|
| 2012 |
|
|
|
Expected volatility |
| 304% |
Risk-free interest rate |
| 1.5% |
Expected dividends |
| 0% |
Expected lives (in years) |
| 5 |
The weighted average fair value at date of grant for options granted during the year ended June 30, 2014 was $.05. There were no options issued under the plan during the year ended June 30, 2014 or 2013.
F-10
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A summary of the activity of options under the plan and non-statutory options granted outside the plan follows:
|
|
|
| Weighted | |
|
| Number of |
| Average | |
|
| Options |
| Exercise Price | |
|
|
|
|
| |
Outstanding at June 30, 2012 | 3,197,287 |
|
| 0.28 | |
Granted |
| — |
|
| — |
Exercised |
| — |
|
| — |
Expired |
| (480,000 | ) |
| 0.25 |
Forfeited |
| — |
|
| — |
Outstanding at June 30, 2013 | 2,717,287 |
|
| 0.28 | |
Granted |
| 1,200,000 |
|
| 0.05 |
Exercised |
| — |
|
| — |
Expired |
| (394,520 | ) |
| 0.81 |
Forfeited |
| — |
|
| — |
Outstanding at June 30, 2014 |
| 3,522,767 |
| $ | 0.14 |
Additional information about outstanding options to purchase the Company’s common stock as of June 30, 2014 is as follows:
|
| Options Outstanding |
| Options Exercisable | ||||||||||||||||
|
|
|
| Weighted |
|
|
|
|
|
|
|
|
| Weighted |
|
|
|
|
|
|
|
|
|
| Average |
| Weighted |
|
|
|
|
|
| Average |
| Weighted |
|
|
| ||
|
| Number |
| Remaining |
| Average |
| Aggregate |
|
|
| Remaining |
| Average |
| Aggregate | ||||
Exercise |
| of |
| Contractual |
| Exercise |
| Intrinsic |
| Number of |
| Contractual |
| Exercise |
| Intrinsic | ||||
Price |
| Shares |
| Life (Years) |
| Price |
| Value |
| Shares |
| Life (Years) |
| Price |
| Value | ||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$0.51-$0.43 |
| 320,000 |
| 1.50 |
| $ | 0.47 |
| $ | — |
| 320,000 |
| 1.50 |
| $ | 0.47 |
| $ | — |
$0.16-$0.13 |
| 152,767 |
| 3.04 |
| $ | 0.02 |
| $ | — |
| 152,767 |
| 3.04 |
| $ | 0.15 |
| $ | — |
$0.25 |
| 750,000 |
| 2.03 |
| $ | 0.25 |
| $ | — |
| 750,000 |
| 2.03 |
| $ | 0.25 |
| $ | — |
$0.09 |
| 1,100,000 |
| 1.66 |
| $ | 0.09 |
| $ | — |
| 1,100,000 |
| 1.66 |
| $ | 0.09 |
| $ | — |
$0.05 |
| 1,200,000 |
| 4.60 |
| $ | 0.05 |
| $ | — |
| 1,200,000 |
| 4.60 |
| $ | 0.05 |
| $ | — |
|
| 3,522,767 |
|
|
|
|
|
|
|
|
| 3,522,767 |
|
|
|
|
|
|
|
|
The Company recognized stock based compensation expense of $59,960 during the year ended June 30, 2014 in relation to 1,200,000 options issued outside of the plan for options issued to two directors of the Company. The options were granted to directors on February 3, 2014 and are exercisable at $0.05 for 5 years.
Non-Employee Stock Options and Warrants:
As of June 30, 2014 the Company has warrants outstanding that were issued primarily in connections with financing arrangements and consulting services. Activity relative to these warrants for the year ended June 30, 2014 is as follows:
|
|
|
| Weighted | |
|
| Number of |
| Average | |
|
| Shares |
| Exercise Price | |
|
|
|
|
|
|
Warrants outstanding - June 30, 2012 |
| 4,045,000 |
| $ | 0.71 |
Granted |
| 4,625,478 |
|
| 0.75 |
Expired |
| (515,000 | ) |
| 0.41 |
Warrants outstanding - June 30, 2013 |
| 8,155,478 |
| $ | 0.75 |
Granted |
| — |
|
| — |
Expired |
| — |
|
| — |
Warrants outstanding - June 30, 2014 |
| 8,155,478 |
| $ | 0.75 |
F-11
ESIO WATER & BEVERAGE DEVELOPMENT CORP.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
All the warrants outstanding as of June 30, 2014 are exercisable.
Note 7 – Commitments
The Company leased office space on a month to month basis at the rate of $300 per month from September 2012 through August 2013. Included in general and administrative expense at June 30, 2014 and 2013 is $600 and $3,000, respectively, for rent expense.
F-12