Attached files
| file | filename |
|---|---|
| EX-10.3 - JOINT VENTURE AGREEMENT - AQUENTIUM INC | exh103jim.htm |
| EX-31.1 - CHIEF EXECUTIVE OFFICER CERTIFICATION - AQUENTIUM INC | f09dec10qexhibit311.htm |
| EX-32.1 - SECTION 1320 CERTIFICATION - AQUENTIUM INC | f09dec10qexhibit32.htm |
| EX-31.2 - PRINCIPAL FINANCIAL OFFICER CERTIFICATION - AQUENTIUM INC | f09dec10qexhibit312.htm |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2009
[ ]
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
From transition period from ____ to ____
Commission File No.: 000-23402
| AQUENTIUM, INC. (Exact name of registrant as specified in its charter) | |
| Delaware (State or other jurisdiction of incorporation or organization) | 11-2863244 (I.R.S. Employer Identification No.) |
| 5188 Western Way, Perris, California (Address of principal executive offices) | 92571 (Zip Code) |
| (951) 657-8832 (Registrant’s telephone number, including area code) | |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Yes [X] No [ ]
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.:
| Large accelerated filer [ ] Non-accelerated filer [ ] | Accelerated filer [ ] Smaller reporting company [X] |
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
[ ] Yes [X] No
As of February 9, 2010, the registrant had 45,357,403 shares of common stock outstanding.
TABLE OF CONTENTS
| PART I – FINANCIAL INFORMATION | 2 |
| Item 1. Financial Statements | 2 |
| Consolidated Balance Sheets as of December 31, 2009 (Unaudited) and | 3 |
| September 30, 2009 (Audited) |
|
| Consolidated Statements of Operations for the Three Months Ended December 31, 2009 |
|
| and 2008 (Unaudited) and from inception (April 31, 2001) to December 31, 2009 | 4 |
| Consolidated Statements of Cash Flows for the Three Months Ended December 31, 2009 |
|
| and 2008 (Unaudited) and from inception (April 31, 2001) to December 31, 2009 | 5 |
| Notes to Consolidated Financial Statements (Unaudited) | 7 |
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 15 |
| Item 3. Quantitative and Qualitative Disclosures about Market Risk | 17 |
| Item 4T.Controls and Procedures | 18 |
| PART II – OTHER INFORMATION | 18 |
| Item 6. Exhibits | 18 |
| Signatures | 19 |
PART I – FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The financial information set forth below with respect to our statements of operations for the three month periods ended December 31, 2009 and 2008 is unaudited. This financial information, in the opinion of management, includes all adjustments consisting of normal recurring entries necessary for the fair presentation of such data. The results of operations for the three month period ended December 31, 2009, are not necessarily indicative of results to be expected for any subsequent period. Our year end is September 30.
2
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED BALANCE SHEETS
,
|
| December 31, 2009 | September 30, 2009 |
|
| (Unaudited) | (Audited) |
| ASSETS |
| |
| Current assets | ||
| Total current assets | $ -- | $ -- |
|
|
|
|
| Other assets | -- |
|
| Investment in joint venture | 15,000 | 15,000 |
| Total assets | $ 15,000 | $ 15,000 |
|
|
| |
| LIABILITIES AND STOCKHOLDERS’ DEFICIT |
| |
|
|
| |
| Current liabilities |
| |
| Accounts payable | $ 31,355 | $ 24,708 |
| Accrued interest | 27,458 | 24,448 |
| Accrued expense- litigation | 177,247 | 177,247 |
| Advances-related party | 165,459 | 163,226 |
| Accrued rent-related party | 14,400 | -- |
| Salaries payable- related party | 1,055,357 | 995,357 |
|
|
|
|
| Total current liabilities | 1,471,276 | 1,384,986 |
|
|
|
|
| Total liabilities | 1,471,276 | 1,384,986 |
|
|
|
|
| Stockholders’ deficit |
|
|
| Preferred shares, par value $0.00001 |
|
|
| 10,000,000 authorized; none issued and outstanding | -- | -- |
| Common stock, par value $0.005 |
|
|
| authorized 100,000,000 shares, |
|
|
| issued and outstanding 45,357,403 |
|
|
| as of December 31, 2009 and 45,357,403 as of |
|
|
| September 30, 2009 | 226,787 | 226,787 |
| Additional paid-in capital | 912,971 | 912,971 |
| Accumulated deficit during development stage | (2,596,034) | (2,509,744) |
| Total stockholders’ deficit | (1,456,276) | (1,369,989) |
|
|
|
|
| Total liabilities and stockholders’ deficit | $ 15,000 | $ 15,000 |
|
|
|
|
| The accompanying notes are an integral part of the financial statements | ||
3
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT-STAGE COMPANY)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
| From Inception |
|
| Three Months Ended | (April 30, 2001) | |
|
| December 30, | to December 31 | |
|
| 2009 | 2008 | 2009 |
|
|
|
|
|
| Income | $ -- | $ -- | $ -- |
|
|
|
|
|
| Selling, general and administrative expenses | 83,244 | 136,266 | 4,218,452 |
|
|
|
|
|
| Depreciation | - | - | 3,973 |
|
|
|
|
|
| Income (loss) from operations | (83,244) | (136,266) | (4,222,425) |
|
|
|
|
|
| Other income (expense) |
|
|
|
| Gain on sale of business | -- | -- | 370,000 |
| Rental income | -- | -- | 1,471,279 |
| Other expense | -- | -- | (177,247) |
| Interest expense | (3,046) | (3,661) | (37,641) |
|
|
|
|
|
| Total other income (expense) | (3,046) | (3,661) | 1,626,391 |
|
|
|
|
|
| Net loss | $ (86,290) | $ (139,927) | $ (2,596,034) |
|
|
|
|
|
| Loss per common share - basic | $ (0.00) | $ (0.00) |
|
|
|
|
|
|
| Basic weighted average umber |
|
|
|
| of common shares outstanding | 45,357,403 | 42,946,963 |
|
The accompanying notes are an integral part of the financial statements
4
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
| From | |
|
|
| inception | |
|
| Three Months | (April 30, 2001) | |
|
| Ended December 31, | to December 31, | |
|
| 2009 | 2008 | 2009 |
| Cash Flows From Operating Activities: |
|
|
|
| Net loss | $ (86,290) | $ (139,927) | $ (2,596,034) |
| Adjustments to reconcile net loss to |
|
|
|
| net cash used in operating activities: |
|
|
|
| Depreciation | -- | -- | 3,973 |
| Stock for services | -- | 62,363 | 670,755 |
| Stock for joint venture | -- | -- | 6,000 |
| Gain on exchange of stock | -- | -- | (370,000) |
| Stock brought into capital | -- | -- | -- |
| Disposition of subsidiary | -- | -- | 18,465 |
| Stock options compensation | -- | -- | 100,000 |
| Impairment expenses | -- | -- | 3,638 |
| Changes in operating assets and liabilities: |
|
|
|
| Accrued rent | 14,400 | -- | 14,400 |
| Accrued expense-litigation payable | -- | -- | 177,247 |
| Accounts payable | 6,647 | (5,014) | 31,354 |
| Accrued interest | 3,010 | 3,661 | 39,383 |
| Salaries payable-related party | 60,000 | 60,000 | 1,472,253 |
|
|
|
|
|
| Net cash used in operating activities | (2,233) | (18,917) | (428,566) |
|
|
|
|
|
| Cash Flows From Investing Activities: |
|
|
|
| Investment in joint venture |
|
| (15,000) |
| Purchase of fixed assets | -- | -- | (3,973) |
|
|
|
|
|
| Net cash used in investing activities | -- | -- | (18,973) |
|
|
|
|
|
| Cash Flows From Financing Activities: |
|
|
|
| Note payable-related party | 1,633 | -- | 136,593 |
| Advances – related party | 600 | 18,917 | 301,446 |
| Capital contribution – founder | -- | -- | 500 |
| Capital contribution – office space | -- | -- | 9,000 |
|
|
|
|
|
| Net cash provided by financing activities | 2,233 | 18,917 | 447,539 |
|
|
|
|
|
| Net decrease in cash | -- | -- | -- |
| Cash at beginning of period | -- | -- | -- |
| Cash at end of period | $ -- | $ -- | $ -- |
The accompanying notes an integral part of the financial statements
5
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
CONSOLIDATED STATEMENTS OF CASH FLOWS - Continued
(Unaudited)
|
|
| From | |
|
|
| inception | |
|
| Three Months | (April 30, 2001) | |
|
| Ended December 31, | to December 31, | |
|
| 2009 | 2008 | 2009 |
| Non-Monetary Transactions |
|
|
|
|
|
|
|
|
| Stock for services 4,850,000 shares |
|
|
|
| shares issued at $ 0.0255 to $0.03 |
|
|
|
| per share respectively (net of prepaid $66,937) | $ -- | $ 62,363 | $ 626,130 |
|
|
|
|
|
| Stock for debt settlement 5,292,549 shares |
|
|
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| issued at $0.0255 per share | $ -- | $ 134,960 | $ 135,000 |
|
|
|
|
|
| Stock for accrued interest 467,631 |
|
|
|
| shares issued at $0.0255 per share | $ -- | $ 11,925 | $ 11,925 |
|
|
|
|
|
| Stock for officer salaries payable 7,039,820 |
|
|
|
| shares issued $0.0255 per share | $ -- | $ 179,515 | $ 239,515 |
|
|
|
|
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| Stock for licensing agreement 100,000 |
|
|
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| shares issued at $0.06 per share | $ -- | $ -- | $ 6,000 |
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|
|
|
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| Stock for acquisitions 1,150,000 |
|
|
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| shares issued at $0.02 per share | $ -- | $ -- | $ 23,000 |
|
|
|
|
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| Stock issue for salary 3,000,000 |
|
|
|
| shares issued at $0.02 per share | $ -- | $ -- | $ 60,000 |
|
|
|
|
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| Stock for patent pending 4,000 |
|
|
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| shares issued at 1.00 per share | $ -- | $ -- | $ 4,000 |
|
|
|
|
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| Reduction of liability to a related |
|
|
|
| party by an exchange in investment | $ -- | $ -- | $ 375,000 |
The accompanying notes are an integral part of the financial statements
6
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information with the instructions to Form 10-Q. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of the Company's management, all adjustments (consisting of normal accruals) considered necessary for a fair presentation of these financial statements have been included.
The results for the periods presented are not necessarily indicative of the results for the full year and should be read in conjunction with the audited consolidated financial statements for the year ended September 30, 2009 included in our Annual Report on Form 10-K, filed on December 29, 2009.
NOTE 2- GOING CONCERN
The Company's financial statements are prepared using generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has an accumulated deficit of $2,596,034 and has not established revenues sufficient to cover its operating costs. This uncertainty raises substantial doubt about the Company's ability to continue as a going concern. The ability of the Company to continue as a going concern is dependent on additional sources of capital and the success of the Company's plan. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might result from the outcome of this uncertainty.
NOTE 3- BUSINESS AND HISTORY
A.
Business
Aquentium, Inc. and subsidiaries (“Aquentium” or “the Company”) (a Delaware corporation) is a diversified holding company in the development stage. (See Note 4C “Development-Stage Company”) Its holdings include the design and development of solar panels, (Charis Energy Development, Inc.), the development of waste recycling systems (Environmental Waste Management, Inc.) and the development of portable housing (HERE, Inc.) and (Aquentium DeMexico). All the above companies were inactive during the three months ended December 31, 2009.
B. History
Aquentium Inc.-Delaware, formerly WaterPur International, Inc. (the Company) was incorporated in the state of Delaware on April 3, 1987 as Arnex Investment Group, Ltd. The corporation name was changed to Vector Environmental Technologies, Inc. in 1993 and then to WaterPur International, Inc. (“WaterPur”) in 1997. Up through September 30, 1997, WaterPur operated principally in one business segment, the development and sale of environmental technologies, primarily water purification. WaterPur became an inactive shell as of September 30, 1998.
7
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On April 2, 2002, Aries Ventures, Inc., (“Aries”) formerly Casmyn Corp. and holder of 100% of the 5% cumulative convertible preferred stock of WaterPur received 1,000,000 post split shares and 250,000 warrants in consideration for the release of any and all outstanding debts or claims that Aries had or may have had against WaterPur.
On April 2, 2002, Aquentium, Inc. - Delaware acquired 100% of Aquentium, Inc., a Nevada corporation incorporated on April 30, 2001 (“Aquentium-Nevada”), in exchange for 4,000,000 shares of its common stock. With this transaction the common stock of Aquentium, Inc.- Delaware outstanding was: 5,076,014 shares with 4,000,000 shares held by the Aquentium-Nevada shareholders, 1,000,000 held by Aries and the remaining shares of 76,014 (post reverse split 200 to 1) held by the former stockholders of WaterPur.
Aquentium-Delaware, formerly WaterPur, entered into an asset purchase agreement with Duck Marine Systems, Inc. (a British Columbia Corporation) on May 7, 1999. The agreement was rescinded April 2, 2002.
In connection with the above transactions, the officers and principal stockholders of Aquentium-Delaware, on one hand and Aquentium-Nevada on the other hand, effected a mutual release of any and all debts and claims that either party may have had against each other.
In substance, the Aquentium-Delaware transaction is considered to be a capital transaction rather than a business combination. Consequently, the transaction is considered a reverse takeover and the accounting treatment will be as if Aquentium-Nevada acquired Aquentium-Delaware. Accordingly, these financial statements are the historical financial statements of Aquentium-Nevada.
On October 24, 2007, Aquentium formed Aquentium De Mexico, a Mexican subsidiary, to manufacture and market our low-cost housing model units in the Mexican Republic.
C. Acquisitions and Dispositions
Subsequent to Aquentium, Delaware acquiring Aquentium, Nevada, the following acquisitions were made:
On June 29, 2002, 100% of Fiber Application Systems Technology (FAST) was acquired for 500,000 common shares at $0.02 per share or $10,000. The Company acquired cash of $4,363, organization costs of $10,817 (written off) and accounts payable of $15,080 for a net asset value of $100 resulting in goodwill of $9,900.
On March 12, 2003, FAST was disposed of for 500,000 ten dollar convertible preferred shares of Alpha Solarco, Inc., a publicly traded company. The preferred shares can be converted into 5,000,000 common shares. Alpha Solarco stock is thinly traded; therefore, no value was assigned to this transaction. An $817 gain, measured by the accounts payable, cash reduction and $9,900 cost basis, was recognized. In March 2004, the Company agreed to rescind the acquisition and sale of FAST by canceling the 500,000 shares of Aquentium common stock issued for the acquisition and FAST agreed to cancel the 500,000 ten-dollar convertible preferred shares.
8
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On August 9, 2002, 100% of USA Public Auction, Inc. was acquired for 250,000 common shares at $0.02 per share or $5,000. The Company acquired cash of $82 and organization costs of $4,280 (written off) resulting in goodwill of $638.
On September 9, 2002, 100% of Canby Group, Inc. was acquired for 150,000 common shares at $0.02 per share or $3,000 with no net assets.
On October 28, 2002, 100% of Food Safe, Inc., a Texas corporation, was acquired for 250,000 common shares valued at $5,000 in exchange for 100% of Food Safe’s shares. Food Safe was sold on October 29, 2003 to a publicly traded corporation (eFoodSafety.com Inc.). Aquentium received 500,000 (split 3 to 1 on December 8, 2003) restricted shares valued at $650,000 resulting in a gain of $645,000.
On December 8, 2003, Charis Energy Development, Inc., a privately held company, was acquired for 1,000,000 restricted shares. As there were no assets or liabilities, the acquisition is treated as a capital transaction instead of a business combination and no goodwill or other intangibles are recognized.
On January 27, 2004, Environmental Waste Management, Inc., a privately held company, was acquired for 1,080,000 restricted shares. As there were no assets or liabilities, the acquisition is treated as a capital transaction instead of a business combination and no goodwill or other intangibles are recognized.
In March 2004, Aquentium entered into 50/50 joint venture. Aquentium Hong Kong, Ltd., a Chinese limited liability company, was formed to manufacture market and sell Aquentium's products and/or services, if any, in Asia for a period of 10 years. As of December 31, 2009, the joint venture has not entered into any formal agreements.
NOTE 4 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its subsidiaries. There was no activity in any of the subsidiaries.
B. Development-Stage Company
The accompanying consolidated financial statements have been prepared in accordance with Financial Accounting Standards Board’s Accounting Standard Codification (FASB ASC) 915-205 “Development-Stage Enterprises". A development-stage enterprise is one in which planned principal operations have not commenced or if its operations have commenced, there has been no significant revenue there from. Development-stage companies report cumulative costs from the enterprise’s inception.
C. Use of Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the
9
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
D. Loss per Share
Basic earnings (loss) per share includes no dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Dilutive earnings (loss) per share reflect the potential dilution of securities that could share in the earnings of the Company. Dilutive earnings (loss) per share are equal to that of basic earnings (loss) per share as the effects of stock options and warrants have been excluded as they are anti-dilutive.
NOTE 5: RECENT ACCOUNTING PRONOUNCEMENTS
Below is a listing of the most recent accounting standards and their effect on the Company.
In January 2010, the FASB (Financial Accounting Standards Board) issued Accounting Standards Update 2010-03 (ASU 2010-03), Extractive Activities—Oil and Gas (Topic 932): Oil and Gas Reserve Estimation and Disclosures. This amendment to Topic 932 has improved the reserve estimation and disclosure requirements by (1) updating the reserve estimation requirements for changes in practice and technology that have occurred over the last several decades and (2) expanding the disclosure requirements for equity method investments. This is effective for annual reporting periods ending on or after December 31, 2009. However, an entity that becomes subject to the disclosures because of the change to the definition oil- and gas- producing activities may elect to provide those disclosures in annual periods beginning after December 31, 2009. Early adoption is not permitted. The Company does not expect the provisions of ASU 2010-03 to have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-02, Consolidation (Topic 810): Accounting and Reporting for Decreases in Ownership of a Subsidiary. This amendment to Topic 810 clarifies, but does not change, the scope of current US GAAP. It clarifies the decrease
in ownership provisions of Subtopic 810-10 and removes the potential conflict between guidance in that Subtopic and asset derecognition and gain or loss recognition guidance that may exist in other US GAAP. An entity will be required to follow the amended guidance beginning in the period that it first adopts FAS 160 (now included in Subtopic 810-10). For those entities that have already adopted FAS 160, the amendments are effective at the beginning of the first interim or annual reporting period ending on or after December 15, 2009. The amendments should be applied retrospectively to the first period that an entity adopted FAS 160. The Company does not expect the provisions of ASU 2010-02 to have a material effect on the financial position, results of operations or cash flows of the Company.
In January 2010, the FASB issued Accounting Standards Update 2010-01, Equity (Topic 505): Accounting for Distributions to Shareholders with Components of Stock and Cash (A Consensus of the FASB Emerging Issues Task Force). This amendment to Topic 505 clarifies the stock portion of a distribution to shareholders that allows them to elect to receive cash or stock with a limit on the amount of cash that will be distributed is not a stock dividend for purposes of applying Topics 505 and 260. Effective for interim and annual periods ending on or after December 15, 2009, and would be applied on a
10
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
retrospective basis. The Company does not expect the provisions of ASU 2010-01 to have a material effect on the financial position, results of operations or cash flows of the Company.
In December 2009, the FASB issued Accounting Standards Update 2009-17, Consolidations (Topic 810): Improvements to Financial Reporting by Enterprises Involved with Variable Interest Entities. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 167.
In December 2009, the FASB issued Accounting Standards Update 2009-16, Transfers and Servicing (Topic 860): Accounting for Transfers of Financial Assets. This Accounting Standards Update amends the FASB Accounting Standards Codification for Statement 166.
In October 2009, the FASB issued Accounting Standards Update 2009-15, Accounting for Own-Share Lending Arrangements in Contemplation of Convertible Debt Issuance or Other Financing. This Accounting Standards Update amends the FASB Accounting Standard Codification for EITF 09-1.
In October 2009, the FASB issued Accounting Standards Update 2009-14, Software (Topic 985): Certain Revenue Arrangements That Include Software Elements. This update changed the accounting model for revenue arrangements that include both tangible products and software elements. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-14 to have a material effect on the financial position, results of operations or cash flows of the Company.
In October 2009, the FASB issued Accounting Standards Update 2009-13, Revenue Recognition (Topic 605): Multiple-Deliverable Revenue Arrangements. This update addressed the accounting for multiple-deliverable arrangements to enable vendors to account for products or services (deliverables) separately rather than a combined unit and will be separated in more circumstances under existing US GAAP. This amendment has eliminated that residual method of allocation. Effective prospectively for revenue arrangements entered into or materially modified in fiscal years beginning on or after June 15, 2010. Early adoption is permitted. The Company does not expect the provisions of ASU 2009-13 to have a material effect on the financial position, results of operations or cash flows of the Company.
In September 2009, the FASB issued Accounting Standards Update 2009-12, Fair Value Measurements and Disclosures (Topic 820): Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent). This update provides amendments to Topic 820 for the fair value measurement of investments in certain entities that calculate net asset value per share (or its equivalent). It is effective for interim and annual periods ending after December 15, 2009. Early application is permitted in financial statements for earlier interim and annual periods that have not been issued. The Company does not expect the provisions of ASU 2009-12 to have a material effect on the financial position, results of operations or cash flows of the Company.
NOTE 6: STOCK ISSUED
During the three months period ended December 31, 2009 no shares were issued.
11
AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 7- RELATED PARTY TRANSACTIONS
Mark T. Taggatz, President, CEO and Chairman of the Board had the following transactions with the Company:
a)
Mr. Taggatz is the majority shareholder and an officer and director of Ozone Safe Food (OSF). Through OSF, Mr. Taggatz advanced $1,633 to pay for expenses on behalf of the Company. Mr. Taggatz advanced $600 to the Company and affiliates for a total outstanding balance of $165,459 as of December 31, 2009.
b)
The Company recorded compensation of $60,000 as salary payable for each quarter ending December 31, 2009 and 2008 which are accrued but not paid. Total salaries payable as of December 31, 2009 and September 30, 2009 was $1,055,357 and $995,357, respectively.
c)
The Company entered into a lease agreement with Sani Dri and has accrued rent payable of $14,400 for the three months ending December 31, 2009. (See Note 12 “Lease Agreement”). Sani Dri is a Company which the wife of Mr. Taggatz controls.
d)
On June 30, 2006, the Company exchanged 1,500,000 shares of a publicly held company held as an investment. The shares, valued at $0.25 per share or $375,000, were exchanged for accrued salary and advances to the Company due to an officer. The shares originally valued at $650,000 were written down to $375,000 resulting in a loss of $275,000.
During the year ending September 30, 2009, the Company issued shares to related parties as follows:
e)
The Company issued 3,500,000 shares of common stock to a related party, the spouse of Mr. Taggatz, with a value of $89,250 for consulting fees for the fiscal year ending September 30, 2009.
f)
Through Ozone Safe Food (OSF), of which Mr. Taggatz is an officer and majority shareholder, exchanged $134,960 of debt and $11,925 of accrued interest for 5,760,180 shares of common stock during the period ending December 31, 2008.
g)
Mr. Taggatz accepted 7,039,820 shares of common stock in lieu of salary payable totaling $179,515 during the period ending December 31, 2008.
NOTE 8 - ACCRUED INTEREST
The Company throughout the fiscal year 2008 has received advances from Ozone Safe Foods, Inc. Mr. Taggatz is the majority shareholder, officer, and director of Ozone Safe Food, Inc. These advances are used for operational expense in the normal course of business. Based on the date of advances and amount of each advance or repayment; interest has been imputed at an annual rate of six percent on the outstanding balance. During the fiscal year ended September 30, 2009, interest in the amount of $11,925 was accrued and subsequently settled when the Company issued shares to Ozone Safe Foods for the debt and interest owed to Ozone Safe Foods (See Note 7: Related Party Transactions).
As a result of arbitration during the fiscal year 2007, a former landlord was awarded a judgment against the Company totaling $177,247. The Company is accruing interest on the judgment at an annual rate of seven percent on the outstanding balance. During the three month period ended December 31, 2009, the
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AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Company accrued interest of $3,406 for the outstanding judgment resulting in total interest accrued as of December 31, 2009 of $27,458. (See Note 9: Commitments and Contingencies)
NOTE 9- COMMITMENTS AND CONTINGENCIES
Effective September 1, 2004, the Company exercised an option to lease 84,772 square feet of building space on an average monthly basis of $31,897 per month. The Company was assigned the lease rights of the other tenants in the building and collected rents from those tenants. For the years ending September 30, 2009 and 2008, the Company recorded no lease expenses in connection with these leases. The Company had an option to purchase the building for $5.1 million. The largest tenant in the building was eFoodsafety.com.
During the year ended September 30, 2007, the Company was party to an arbitration hearing with the landlord pertaining to the lease of the building and the sub-lease of portions of the building to its sub-tenants. On April 11, 2007, the arbitrator granted legal fees to the landlord in the amount of $47,000. On April 19, 2007 and June 29, 2007, amended notices of ruling were heard by the Superior Court of California, County of Riverside resulting in a judgment awarded on September 21, 2007 to the landlord of $146,917 including fees and interest. Additionally, on August 17, 2007, the landlord received a judgment against the Company of $29,692 pertaining to termination of the Company’s occupancy of the building.
The Company is a plaintiff in suits against the individual sub-tenants pertaining to rent withheld by the sub-tenants. No determination of these cases has been concluded. As of December 31, 2009, $177,247 for the judgment plus accrued interest of $27,458 has been accrued by the Company for a total liability of $204,705.
NOTE 10 – JOINT VENTURES
On September 20, 2007, Aquentium, Inc. entered into a joint venture agreement with Mootah Energetic Pty, Ltd., a Republic of Botswana company (“Mootah”). Aquentium and Mootah agreed to jointly develop a mining concession granted to Mootah by the Republic of Botswana.
Prospecting License No. PL 163/2007 (“License”) was granted to Mootah on July 30, 2007, and on September 20, 2007, Aquentium issued 100,000 shares of common stock, valued at approximately $6,000 (was expensed as of September 30, 2007), to Mootah in consideration for a 51% interest in that License. The License provides for the exclusive right to prospect a 572.6 square kilometer area located in Southern Botswana for copper, nickel, lead, silver, gold, platinum group metals and uranium. The initial term of the License is for a period of three years, ending on June 30, 2010. The Company may terminate the agreement if there is an unacceptable change in control of the government of Botswana. In addition, the Company has an option to continue operations related to the License for a period of 25 years.
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AQUENTIUM, INC. AND SUBSIDIARIES
(A DEVELOPMENT STAGE COMPANY)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
On August 18, 2008, the Company signed a business development agreement with Megaros, Inc. Under the terms of the agreement Megaros will receive commissions starting at five percent of the first $1,000,000 of any building contract, four percent of the second $1,000,000 of any building contract, three percent of the third $1,000,000 of any building contract, two percent of the fourth $1,000,000 of any building contract, and one (1) percent on the balance above $5,000,000 of a building contract. All individual SIP sales are paid a commission of 7.5% percent of total sales of our products, to be paid either in cash or stock at the option of the company. As the date of this filing, we have not entered into any building contract which would require commissions to be paid to Megaros.
On July 28, 2009, the Company signed a joint venture agreement with an individual for the production and harvesting of algae on property owned by the individual. Under the terms of the agreement the Company is required to raise substantial capital within twenty four months of the date of the agreement plus manage the joint venture on behalf of both parties. The Company is obligated to a one-time fee of $15,000, which has been paid, plus an annual fee of $250,000 payable to the individual, once production begins.
NOTE 11 – FOREIGN SUBSIDIARY
On October 24, 2007, Aquentium formed Aquentium De Mexico, a Mexican subsidiary, to manufacture and market our low-cost housing model units in the Mexican Republic. The Company hired an intermediary to do the necessary work for the legal formation and registration of the subsidiary in Mexico. The Company paid the intermediary $10,000 as a service fee which included all expenses related to this matter. In addition, the intermediary was granted 100,000 shares of the Company’s common stock.
NOTE 12 - LEASE AGREEMENT
On October 1, 2009, the Company entered into a lease agreement with Sani-Dri, Sani-Dri is controlled by the wife of Mr. Taggatz. The Company has exclusive distribution territories for the Sani-Dri ozone hand dryer. Under the terms of the agreement the Company is subleasing 8,000 square feet of commercial office and warehouse space for three years. They will pay the affiliate rent of $4,000 per month through the year ending September 30, 2010; $4,800 per month for year two ending September 30, 2011 and $6,000 per month for year three ending September 30, 2012.
NOTE 13 – SUBSEQUENT EVENTS
The Company has evaluated subsequent events through February 10, 2010, the date which the financial statements were available to be issued and no events were identified.
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Reference in this report to “Aquentium’” “we,” “us,” and “our” refer to Aquentium, Inc. and its subsidiaries.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
The Securities and Exchange Commission (“SEC”) encourages companies to disclose forward-looking information so that investors can better understand future prospects and make informed investment decisions. This report contains these types of statements. Words such as “may,” “expect,” “believe,” “anticipate,” “estimate,” “project,” or “continue” or comparable terminology used in connection with any discussion of future operating results or financial performance identify forward-looking statements. You are cautioned not to place undue reliance on the forward-looking statements, which speak only as of the date of this report. All forward-looking statements reflect our present expectation of future events and are subject to a number of important factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements.
ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Executive Overview
Aquentium, Inc. is a holding company of six wholly-owned subsidiaries and we have interests in joint ventures, as well as business opportunities related to ozone equipment and structural insulated panels. During the past year, we have actively expanded our focus into providing green technologies and solutions to businesses throughout the world. We are expanding our business in the area of alternative energy and are currently pursuing Waste-to-Energy projects throughout the world as well as the production of algae bio-fuels. We have been focused on bringing Waste-to-Energy solutions to the countries of Korea and China. Management is very optimistic about the worldwide demand for such technology.
On a daily basis Aquentium plans to sell and market our complete line of ozone sanitation equipment. We recently introduced our MOS-1 ozone system for use in food processing, beverage processing, hotels, schools, hospitals, and veterinarian clinics. We have plans to market directly to these businesses as well as sell directly to outside distributors.
Aquentium continues to market our Structural Insulated Panels – referred to commonly in the building industry as – SIPS. With this technology, Aquentium is actively seeking real estate projects in the area of affordable living or commercial office buildings that would utilize our SIP system.
As part of our original business model, Aquentium is actively seeking other businesses to acquire or invest in.
As of the date of this filing we have minimal operations and have not recorded revenues for the past two years. Our focus for the next twelve months will be to obtain additional funding to develop and expand our operations and new projects. Our success will depend on our ability to obtain funding through equity and/or debt transactions. However, with the downturn of the United States and world economies, we will encounter substantial competition for the limited financing that will be available in the market place. If we are unable to obtain financing, then we will likely delay further business development of any of our products, marketing and other projects and joint ventures. Potential investors must recognize that we have limited capital available for the development of our business plan and all risks inherent in a new and inexperienced enterprise are inherent in our plan to launch operations.
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In summary, management continues to position the company in a way to best benefit from worldwide economic conditions, trends, events, and demand for new technologies.
Liquidity and Capital Resources
From inception (April 30, 2009) to December 31, 2009, we had an accumulated deficit of $2,596,034 and recorded a net loss of $86,290 for the three month ended December 31, 2009. Based on these numbers there is substantial doubt that we can continue as a going concern unless we obtain external funding. Management plans to continue limited operations until we obtain additional funding to expand our operations.
During the past two fiscal years we have relied primarily on related party advances and loans and the issuance of our common stock to satisfy our cash requirements. During three month period ended December 31, 2009 (2010 first quarter) we received advances of $600 from our President, Mark T. Taggatz, and a loan of $1,633 from Ozone Safe Food, Inc., a related party. During the three month period ended December 31, 2008 (2009 first quarter) we received advances of $18,917 from Mr. Taggatz. The advances are used for operational expenses in the normal course of business. We anticipate that Mr. Taggatz or our affiliates may provide advances in the future; however, we have not entered into written agreements with any person and, therefore, no one is obligated to provide advances to us.
Historically, we also issue shares of our common stock to pay for services and loans. We did not issue shares for services during the 2010 first quarter; however, during the 2009 first quarter we issued an aggregate of 17,650,000 common shares, valued at $455,700, in consideration for consulting services, salaries, and conversion of debt and interest. Of those shares 1,250,000 were issued in October 2008 to Raymond Sabbaghi in consideration for consulting services related to business development for our ozone equipment and housing system operations valued at approximately $37,500. We also issued 12, 800,000 shares for accrued salaries and debt owed to Ozone Safe Food, a related party, and we issued 3,600,000 shares for marketing and consulting services. During the 2008 first quarter we issued 100,000 shares, valued at $23,000, for business development services related to Aquentium de Mexico.
Management expects to continue to issue common stock to pay for acquisitions, services and agreements. Any issuance of common stock will likely be pursuant to exemptions to the registration requirements provided by federal and state securities laws. The purchasers and manner of issuance will be determined according to our financial needs and the available exemptions. We do not currently intend to make a public offering of our stock. We also note that if we issue more shares of our common stock our shareholders may experience dilution in the value per share of their common stock.
We intend to rely on debt and equity financing, capital contributions from management and sales of our common stock to pay for costs, services, operating leases, litigation expense and future development of our business opportunities. Accordingly, our focus for the next twelve months will be to obtain additional funding through debt or equity financing, but as of the date of this filing we have not finalized agreements for additional funding. Our success in obtaining funding will depend upon our ability to sell our common stock or borrow on terms that are financially advantageous to us. If we are unable to obtain financing, then expansion of our operations will be delayed and our subsidiaries may remain inactive.
Results of Operations
We did not record revenue in either the 2010 or 2009 first quarters. Our general and administrative expenses decreased in the 2010 first quarter compared to 2009 first quarter primarily due to not issuing shares for services and debt. Management anticipates our general and administrative expenses will increase when we launch full operations related to the business opportunities we are currently
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investigating. Other expense in both the 2010 and 2009 first quarters were related to interest expense related to outstanding loans and interest related to legal settlement. Management anticipates net losses will continue over the next two to three years as we develop our operations.
Off-Balance Sheet Arrangements
None.
Commitments and Contingent Liabilities
Prior to the 2007 year, we leased the Tennant Desert property in North Palm Springs, California. We subleased portions of this building and received rental income from the subleases. Due to a dispute with the landlord of the Tennant Desert property in August 2007 we moved to a new office. As a result of the legal action brought by the landlord a judgment was filed against Aquentium and we have recognized an accrued a liability of $177,247, including interest, related to the judgment awarded to the landlord of the Tennant Desert property.
On July 28, 2009 Aquentium entered into a joint venture agreement with Clinton Jim, an individual, to produce and harvest algae on 475.450 acres of land located near Standing Rock, New Mexico. Mr. Jim agreed to provide the land and Aquentium agreed to secure funding for the proposed budget of $44 million (US) for the development of this project. Under the agreement Aquentium provided an initial capital contribution of $15,000 to secure the use of the land and Aquentium agreed to manage the business operations. Also, Mr. Jim will receive an annual payment of $250,000 once production begins. If Aquentium fails to raise the necessary funding within 24 months of the effective date of the agreement, the joint venture agreement will become void. The joint venture agreement may be terminated by an agreed buyout, or expiration of its term, through July 27, 2108. As of the date of this filing, we have contributed $15,000 to secure the use of the land, but have not raised the necessary funds to move forward with this project.
Under the September 2007 joint venture agreement with Mootah, Aquentium has agreed to use its best efforts to raise the necessary capital to purchase and operate any and all equipment for the exploration and mining operations and provide the staff to conduct the mining operations for that joint venture. The joint venture agreement includes an annual charge of approximately 2,863 BWP, plus minimum annual expenditures for two years equivalent to approximately $180,000 US, plus the launch of drilling operations. As of the date of this filing, we have not secured funding to satisfy the annual expenditure requirement for the first two years.
In August 2008, Aquentium entered into a business development agreement with Megaros, Inc. related to building contracts utilizing our SIP products. Under the terms of the agreement Megaros will receive commissions starting at five percent of the first $1,000,000 of any building contract, four percent of the second $1,000,000 of any building contract, three percent of the third $1,000,000 of any building contract, two percent of the fourth $1,000,000 of any building contract, and one (1) percent on the balance above $5,000,000 of a building contract. All individual SIP sales are paid a commission of 7.5% percent of total sales of our products, to be paid either in cash or stock at the option of the company. As the date of this filing, we have not entered into any building contract which would require commissions to be paid to Megaros.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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ITEM 4T. CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
We maintain disclosure controls and procedures (as defined in Rule 13a-15(e) or 15d-15(e) under the Exchange Act) that are designed to ensure that information required to be disclosed in our filings under the Exchange Act is recorded, processed, summarized and reported within the periods specified in the rules and forms of the SEC. This information is accumulated to allow timely decisions regarding required disclosure. Our Chief Executive Officer, who also acts in the capacity of principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report and based on that evaluation he concluded that our disclosure controls and procedures were effective.
Management’s Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an evaluation of the effectiveness of our internal control over financial reporting and determined that there were no changes made in our internal control over financial reporting during the first quarter of our 2010 fiscal year that have materially affected or are reasonably likely to materially affect our internal control over financial reporting.
PART II – OTHER INFORMATION
ITEM 6. EXHIBITS
Part I Exhibits
No.
Description
31.1
Chief Executive Officer Certification
31.2
Principal Financial Officer Certification
32.1
Section 1350 Certification
Part II Exhibits
No.
Description
3(i)
Restated Certificate of Incorporation of Aquentium, as amended (Incorporated by reference to exhibit 3.1 for Form 10-KSB, as amended, filed on February 13, 2003)
3(ii)
Restated Bylaws of Aquentium (Incorporated by reference to exhibit 3.3 for Form 10-KSB, as amended, filed on February 13, 2003)
10.1
Joint Venture Agreement between Aquentium and Mootah Energetic Pty Ltd, dated September 20, 2007 (Incorporated by reference to exhibit 10.3 to Form 10-KSB, filed December 31, 2007)
10.2
Lease Agreement between Aquentium and Sani-Dri, Inc., effective October 1, 2009 (Incorporated by reference to exhibit 10.2 to Form 10-K, filed December 29, 2009)
10.3
Joint venture agreement between Aquentium and Clinton Jim, dated July 28, 2009.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
| Date: February 16, 2010 | AQUENTIUM, INC. By: /s/ Mark T. Taggatz Mark T. Taggatz President Chief Executive Officer Principal Financial and Accounting Officer |
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