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| EX-99.1 - CONSOLIDATED FINANCIAL STATEMENTS - Beam Global | casita_8ka-ex9901.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
____________________________________________________________
FORM
8-K/A
CURRENT
REPORT
Pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
___________________________________________________________________
Date of
Report (Date of earliest event reported): February 12,
2010
Casita Enterprises,
Inc.
(Exact
Name of Registrant as Specified in Charter)
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Nevada
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333-147104
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20-8457250
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(State
or other jurisdiction
of
incorporation)
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(Commission
File Number)
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(IRS
Employer
Identification
No.)
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7675
Dagget Street
Suite
150
San
Diego, California
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92111
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(Address
of principal executive offices)
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(Zip
Code)
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Registrant’s
telephone number, including area code: (858)
799-4583
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1093
East Main Street, # 508
El
Cajon, California 92021
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(Former
name or former address, if changed since last
report)
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Check the
appropriate box below if the Form 8-K filing is intended to simultaneously
satisfy the filing obligation of the registrant under any of the following
provisions:
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o
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Written
communications pursuant to Rule 425 under the Securities Act (17 CFR
230.425)
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o
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Soliciting
material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
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o
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Pre-commencement
communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR
240.14d-2(b))
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o
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Pre-commencement
communications pursuant to Rule 13e-4 (c) under the Exchange Act (17 CFR
240.13e-4(c))
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EXPLANATORY
NOTE
On February 12, 2010, we filed with the
Securities and Exchange Commission (the “SEC”) a Current Report on Form 8-K,
with respect to the Agreement of Merger and Plan of Reorganization, dated as of
February 12, 2010, by and among us, Envision Solar International, Inc., a
privately held California corporation (“Envision”), and ESII Acquisition, Corp.,
a newly formed wholly-owned Delaware subsidiary of ours (“Acquisition Sub”),
whereby Acquisition Sub was merged with and into Envision, and Envision became a
wholly-owned subsidiary of ours. Following the merger, we succeeded to the
business of Envision as our sole line of business.
We are
filing this amendment to the Form 8-K in order to correct the date of the
merger, include a Management’s Discussion and Analysis or Plan of Operation
relating to the consolidated financial condition and results of operations of
Envision as of, and for each of the years ended, December 31, 2008 and 2009, as
well as consolidated financial statements and related notes for such
periods.
2
Item 2.01 Completion
of Acquisition or Disposition of Assets
Management’s Discussion and Analysis
of Financial Condition and Results of Operations
This
discussion should be read in conjunction with the other sections of this Report,
including “Risk Factors,” “Description of Business” and the Financial Statements
attached hereto pursuant to Item 9.01 and the related exhibits. The
various sections of this discussion contain a number of forward-looking
statements, all of which are based on our current expectations and could be
affected by the uncertainties and risk factors described throughout this
Report. See “Forward-Looking Statements.” Our actual results may
differ materially.
Recent
Events
Prior to
February 12, 2010, we were a “shell company”, as defined by the Securities and
Exchange Commission, without material assets or activities. On February 12,
2010, we completed a merger, pursuant to which a wholly owned subsidiary of ours
merged with and into Envision, with Envision being the surviving corporation and
becoming our wholly owned subsidiary. In connection with this merger, we
discontinued our former business and succeeded to the business of Envision as
our sole line of business. The merger is being accounted for as a
recapitalization, with
Envision deemed to be the accounting acquirer and Casita the acquired company.
Accordingly, Envision’s historical financial statements for periods prior to the
merger have become those of the registrant (Casita) retroactively restated for,
and giving effect to, the number of shares received in the merger. The
accumulated earnings of Envision were also carried forward after the
acquisition. Operations reported for periods prior to the merger are those of
Envision.
Overview
We are a solar design
and development company that services the sustainable and solar building systems
industries. We have developed solar parking arrays on parking
lots and parking structures and solar integrated building systems and provide
services including solar infrastructure master planning, solar master planning,
solar system design and solar system procurement and management for commercial,
industrial, institutional and residential customers.
Critical
Accounting Policies
Use of
Estimates. The preparation of financial statements in
accordance with generally accepted accounting principles in the U.S. (“U.S.
GAAP”) requires us 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 reported amounts of
revenues and expenses during the reporting period. The financial statements
include estimates based on currently available information and our judgment as
to the outcome of future conditions and
circumstances. Significant estimates in the accompanying
consolidated financial statements include the allowance for doubtful accounts
receivable, depreciable lives of property and equipment, fair value allocation
in an acquisition, valuation of goodwill and trademarks, valuation of accrued
rent, valuation of share-based payments, valuation of accrued loss contingencies
and the valuation allowance on deferred tax assets.
Revenue and Cost
Recognition. Revenues consist of design fees for the
design of solar systems and arrays, and revenues from sales, construction and
installation of the same.
Revenues
from design services are recognized as earned.
Construction
contracts are generally short term (less than one year duration) and revenues
and related costs are recognized using the “completed contract method” of
accounting in accordance with ASC 605-35 formerly, Statement of
Position 81-1, “Accounting for Performance of Construction-Type and Certain
Production Type Contracts”. Under this method, contract costs are
accumulated as deferred assets and billings and/or cash received are recorded to
a deferred revenue liability account, during the periods of construction, but no
revenues, costs, or profits are recognized in operations until the period upon
completion of the contract. Costs include direct material, direct
labor and subcontract labor. A contract is considered complete when
all costs except insignificant items have been incurred and the installation is
operating according to specifications or has been accepted by the
customer. Corporate general and administrative expenses are charged
to the periods as incurred. However, in the event a loss on a
contract is foreseen, the Company will recognize the loss as it is
incurred.
3
The
deferred asset (accumulated contract costs) in excess of the deferred liability
(billings and/or cash received) is classified as a current asset under costs in
excess of billings on uncompleted contracts. The deferred liability
(billings and/or cash received) in excess of the deferred asset (accumulated
contract costs) is classified under current liabilities as billings in excess of
costs on uncompleted contracts. Contract retentions are included in
accounts receivable.
The
Company includes shipping and handling fees billed to customers as revenues and
shipping and handling costs as cost of revenues. The Company does not
provide any warranties on its products other than those passed on to its
customers from its manufacturers, if any.
Additionally,
the Company follows the guidance of ASC 605-50 formerly, Emerging Issues Task
Force (EITF) Issue 01-9 “Accounting for Consideration Given by a Vendor to a
Customer” and (ASC 605-50 formerly (EITF) Issue 02-16 “Accounting by a Customer
(Including a Reseller) for Certain Considerations Received from
Vendors.” Accordingly, any incentives received from vendors are
recognized as a reduction of the cost of products. Cash incentives
provided to our customers are recognized as a reduction of the related sale
price, and therefore, are a reduction in sales.
Stock Based
Compensation. At inception, we adopted ASC 718, formerly SFAS
123(R), Share Based Payment and Related Interpretations (“SFAS 123(R)”). SFAS
123(R) requires companies to estimate and recognize the fair value of
stock-based awards to employees and directors. The value of the portion of an
award that is ultimately expected to vest is recognized as an expense over the
requisite service periods using the straight-line attribution
method. We estimate the fair value of each stock option at the grant
date by using the Black-Scholes option pricing model.
Changes in Accounting
Principles. No significant changes in accounting principles
were adopted during fiscal 2008 and 2009.,
Fair Value
Measurements. SFAS 157, Fair Value Measurements (“SFAS 157”)
is effective for financial assets and liabilities in fiscal years beginning
after November 15, 2007, and for non-financial assets and liabilities in fiscal
years beginning after November 15, 2008. We adopted SFAS 157 for financial
assets and liabilities in fiscal 2008 with no material impact to our
consolidated financial statements.
SFAS 157
applies to all assets and liabilities that are being measured and reported on a
fair value basis. SFAS 157 requires new disclosure requirements that establish a
framework for measuring fair value in accordance with U.S. GAAP, and expands
disclosure requirements pertaining to fair value measurements. SFAS 157 enables
the reader of the financial statements to assess the inputs used to develop
those measurements by establishing a hierarchy for ranking the quality and
reliability of the information used to determine fair values. The statement
requires that assets and liabilities carried at fair value be classified and
disclosed in one of the following three categories:
Level 1:
Quoted market prices in active markets for identical assets or
liabilities.
Level 2:
Observable market based inputs or unobservable inputs that are corroborated by
market data.
Level 3:
Unobservable inputs that are not corroborated by market data.
In
determining the appropriate levels, we perform a detailed analysis of the assets
and liabilities that are subject to SFAS 157. At each reporting period, all
assets and liabilities for which the fair value measurement is based on
significant unobservable inputs are classified as Level 3.
4
Accounts
Receivable. Accounts receivable are customer obligations due
under normal trade terms. Management reviews accounts receivable on a
monthly basis to determine if any receivables will potentially be
uncollectible. Management’s evaluation includes several factors
including the aging of the accounts receivable balances, a review of significant
past due accounts, our historical write-off experience, net of recoveries and
economic conditions. The Company includes any accounts receivable
balances that are determined to be uncollectible, along with a general reserve,
in its overall allowance for doubtful accounts. After all attempts to
collect a receivable have failed, the receivable is written off against the
allowance.
Fair Value of Financial
Instruments. We measure our financial assets and liabilities
in accordance with generally accepted accounting principles. For
certain of our financial instruments, including cash, accounts receivable,
accounts payable, accrued expenses and short term loans the carrying amounts
approximate fair value due to their short maturities. .
Unrecognized Tax
Benefits. Effective September 12, 2007, the
Company adopted ASC 740-10-05, formerly, FASB Staff Position FIN 48-1,
Definition of Settlement in FASB Interpretation No. 48, (“FSP FIN 48-1”), which
was issued on May 2, 2007. FSP FIN 48-1 amends FIN 48 to provide
guidance on how an entity should determine whether a tax position is effectively
settled for the purpose of recognizing previously unrecognized tax
benefits. The term “effectively settled” replaces the term
“ultimately settled” when used to describe recognition, and the terms
“settlement” or “settled” replace the terms “ultimate settlement” or “ultimately
settled” when used to describe measurement of a tax position under FIN
48. FSP FIN 48-1 clarifies that a tax position can be effectively
settled upon the completion of an examination by a taxing authority without
being legally extinguished. For tax positions considered effectively
settled, an entity would recognize the full amount of tax benefit, even if the
tax position is not considered more likely than not to be sustained based solely
on the basis of its technical merits and the statute of limitations remains
open. The adoption of FSP FIN 48-1 did not have an impact on the
accompanying consolidated financial statements.. We do not expect our
unrecognized tax benefits to change significantly over the next twelve
months.
Results
of Operations
Year
Ended December 31, 2009 Compared to Year Ended December 31, 2008
Revenue. For
the year ended December 31, 2009, our revenue was $968,668, compared to
$2,418,391 for the same period in 2008, representing a decrease of
59.9%. This decline in revenue was primarily attributable to our
current and potential customers’ inability to obtain financing for solar
projects as a result of recent market conditions. In particular,
revenue received from subcontracting out installation and electrical work was
$61,592 for the year ended December 31, 2009, compared to $120,803 for the same
period in 2008, a decrease of 49% and Envision Construction’s revenue was
$199,774 for the year ended December 31, 2009 compared to $2,061,855 for the
same period in 2008, a decrease of 90%. The decrease in our revenue
was offset by an increase in architectural design fee income of $571,833
compared to $133,725 for the same period in 2008.
Gross Profit. For
the year ended December 31, 2009, our gross profit was $242,625, compared to a
gross loss of $477,073 for the same period in 2008, representing an increase of
151%. This increase in our gross profit resulted primarily from the lower costs
of raw materials and favorable pricing terms in our contracts.
Operating
Expenses. Excluding stock based compensation, total operating
expense was $1,577,134 for the year ended December 31, 2009, compared to
$4,722,561 for the same period in 2008, a decrease of 67%. This
reduction was primarily caused by lower operating expenses, employee-related
costs, marketing expenses and travel expenses. Employee-related costs
decreased from $1,391,081 to $670,334, marketing expenses decreased from
$199,520 to $33,777, and travel expenses decreased from $274,828 to
$45,348..
Provision for Income
Taxes. Our income taxes for the year ended December 31, 2009
were $3,218, compared to $9,420 compared to the same period in 2008, a decrease
of 66%. We did not incur any federal tax liability in 2009 and 2008
because we incurred operating losses in those years. However, we were
obligated to pay certain state and local income taxes associated with
our operations in the State of California.
5
Net Earnings. We
generated net losses of approximately $4,267,310 for the year ended December 31,
2009 compared to approximately $9,595,342 for the same period in 2008, a
decrease of 56%. Approximately
$2,752,730` of the 2009 loss is attributable to non-cash charges associated with
stock related compensation.
Liquidity
and Capital Resources
General. At
December 31, 2009, we had cash and cash equivalents of approximately $23,000. We
have historically met our cash needs through a combination of cash flows from
operating activities and proceeds from private placements of our securities and
from loans. Our cash requirements are generally for operating
activities.
Our
operating activities used cash in operations of approximately $274,876 year
ended December 31, 2009, and we used cash in operations of approximately
$2,898,044 during 2008. The principal elements of cash flow from operations for
the year ended December 31, 2009 included a net loss of
$4,267,310 offset by depreciation and amortization expense of
$82,118, stock-based compensation expense of $2,752,730 and decreased
investment in operating working capital elements of approximately
$1,175,229.
Cash used
in investing activities during the year ended December 31, 2009 was zero
compared to $261,602 during 2008 primarily for additions to property and
equipment and trademark purchases
Cash
received in our financing activities was $295,000 for the year ended December
31, 2009, compared to cash received of approximately $2,904,976 during
2008.
As of
December 31, 2009, current liabilities exceeded current assets by 23 times or by
$2,917,304. Current assets decreased from $247,544 at December 31, 2008 to
$133,241 at December 31, 2009 while current liabilities increased to $3,050,545
at December 31, 2009 from $1,797,851 at December 31, 2008. As a result, our
working capital decreased from a deficit of $1,550,307 at December 31, 2008 to a
deficit of $2,917,304 at December 31, 2009.
Factors
That May Affect Future Operations
We
believe that our future operating results will continue to be subject to
quarterly variations based upon a wide variety of factors, including the
cyclical nature of the solar industry and the markets for our products. Our
operating results could also be impacted by a continued weakening of the U.S.
economy as well as the general availability of credit to our customers who are
dependent upon obtaining bank loans to finance solar projects. We predominately
sell to customers in the commercial and state
government markets. Accordingly, changes in the condition
of any of our customers may have a greater impact than if our sales were more
evenly distributed between different end markets.
Off
Balance Sheet Transactions and Related Matters
We
have no off-balance sheet transactions, arrangements, obligations (including
contingent obligations), or other relationships with unconsolidated entities or
other persons that have, or may have, a material effect on our financial
condition, changes in financial condition, revenues or expenses, results of
operations, liquidity, capital expenditures or capital resources.
Recent
Accounting Pronouncements
In
May 2009, the Financial Accounting Standards Board (“FASB”) issued an accounting
standard that became part of ASC Topic 855, “Subsequent Events”. ASC
Topic 855 establishes general standards of accounting for and disclosure of
events that occur after the balance sheet date but before financial statements
are issued or are available to be issued. ASC Topic 855 sets forth
(1) the period after the balance sheet date during which management of a
reporting entity should evaluate events or transactions that may occur for
potential recognition or disclosure in the financial statements, (2) the
circumstances under which an entity should recognize events or transactions
occurring after the balance sheet date in its financial statements and (3) the
disclosures that an entity should make about events or transactions that
occurred after the balance sheet date. ASC Topic 855 is effective for
interim or annual financial periods ending after June 15, 2009. The
adoption of ASC Topic 855 did not have a material effect on the Company’s
consolidated financial statements.
6
In
June 2009, the FASB issued an accounting standard whereby the FASB Accounting
Standards Codification (“Codification” or “ASC”) will be the single source of
authoritative nongovernmental U.S. generally accepted accounting
principles. Rules and interpretive releases of the SEC under
authority of federal securities laws are also sources of authoritative GAAP for
SEC registrants. ASC Topic 105 is effective for interim and annual
periods ending after September 15, 2009. All existing accounting
standards are superseded as described in ASC Topic 105. All other
accounting literature not included in the Codification is
non-authoritative. The Codification is not expected to have a
significant impact on the Company’s consolidated financial
statements. The accompanying consolidated financial statements
contain references to both new codification and prior to ease the
transition.
Item 9.01
Financial Statements and Exhibits.
(a) Financial
Statements of Businesses Acquired. In accordance with Item
9.01(a), Envision’s audited consolidated financial statements for the fiscal
years ended December 31, 2009 and 2008 are filed in this Current Report on Form
8-K/A as Exhibit 99.1.
(c) Exhibits.
The
exhibits listed in the following Exhibit Index are filed as part of this Current
Report on Form 8-K/A.
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Exhibit
No.
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Description
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99.1
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Envision
Solar International, Inc. and Subsidiaries consolidated financial
statements for the fiscal years ended December 31, 2009 and
2008
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7
SIGNATURES
Pursuant
to the requirements of the Securities Exchange Act of 1934, the Registrant has
duly caused this report to be signed on its behalf by the undersigned thereunto
duly authorized.
Date: March
31, 2010
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CASITA
ENTERPRISES, INC.
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By:
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/s/
Robert Noble
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Robert
Noble
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Chief
Executive Officer
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8
INDEX TO EXHIBITS
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Exhibit
No.
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Description
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99.1
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Envision
Solar International, Inc. and Subsidiaries consolidated financial
statements for the fiscal years ended December 31, 2009 and
2008
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9