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EX-32.2 - Exousia Advanced Materials, Inc. | ex32-2.htm |
EX-31.1 - Exousia Advanced Materials, Inc. | ex31-1.htm |
EX-31.2 - Exousia Advanced Materials, Inc. | ex31-2.htm |
EX-32.1 - Exousia Advanced Materials, Inc. | ex32-1.htm |
UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM
10-K/A
Amendment No. 1
T ANNUAL REPORT PURSUANT TO
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR
ENDED: DECEMBER 31, 2009 OR
o TRANSITION REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
o CHECK WHETHER THE
ISSUER IS NOT REQUIRED TO FILE REPORTS PURSUANT TO SECTION 13 OR 15(D) OF THE
EXCHANGE ACT.
Commission
File Number 333-87696
EXOUSIA
ADVANCED MATERIALS, INC.
Texas
90-0347581
(State or
other jurisdiction of (IRS Employer
incorporation
or organization) identification No.)
350 Fifth
Avenue, Suite 5720
New York,
New York, 10118-5720
(Address
of Principal Executive Offices, including zip code)
(Registrant’s
Telephone Number, Including Area Code)
(212)
796-4333
Securities
registered under Section 12(b)of the Exchange Act
Title of
Each Class: N/A Name of Each Exchange on which Registered: N/A
Securities
registered pursuant to 12(g) of the Exchange Act:
Title of
Each Class: Common Stock, $.001 par value
Check whether the registrant is a
well-known seasoned issuer, as defined in Rule 405 of the Securities
Act. Yes o No T
Check
whether the issuer is not required to file reports pursuant to Section 13 or
15(d) of the Exchange Act. o
Check
whether the registrant (1) has filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 T
No o
Check if
there is no disclosure of delinquent filers in response to Item 405 of
Regulation S-K (Sec.229.405 of this chapter) contained herein, and no disclosure
will 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
Check
whether the registrant is a large accelerated filer, an accelerated filer, a
non-accelerated filer, or a smaller reporting company. See definitions of
“large accelerated filer,” “accelerated filer” and “smaller reporting company”
in Rule 12b-2 of the Exchange Act. (Check one):
Check whether the issuer is a shell
company (as defined in Rule 12b-2 of the Exchange
Act). Yes o No T
The
Issuer's revenues for the year ended December 31, 2009 were 360,827. 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
sold, or the average bid and asked price of such common equity, as of a
specified date within the past 60 days. As of April 15 2010,
the common equity closed at $0.115 per share. On that date 45,509,488
shares with a market capitalization of 5,233,591were held by
non-affiliates.
The
registrant’s common stock outstanding as of April 15, 2010 was 61,825,654
shares.
FORWARD-LOOKING
STATEMENTS
This Form
10-K contains “forward-looking
statements” relating to Exousia Advanced Materials, Inc. (“Exousia”
or the “Company”) which
represent Exousia’s current expectations or beliefs including, but not limited
to, statements concerning Exousia’s operations, performance, financial condition
and growth. For this purpose, any statements contained in this Form 10-K that
are not statements of historical fact are forward-looking statements. Without
limiting the generality of the foregoing, words such as “may”, “anticipate”, “intend”, “could”, “believe”, “if”, “future”, “ plans”,
“propose”, “expect”, “hope”, “ endeavor”, “seek”, “estimate”, or “continue” or the negative or
other comparable terminology are intended to identify forward-looking
statements. These statements by their nature involve substantial risks and
uncertainties, such as credit losses, dependence on management and key
personnel, variability of quarterly results, and the ability of Exousia to
implement its growth strategy and competition, certain of which are beyond
Exousia’s control. Should one or more of these risks or uncertainties
materialize or should the underlying assumptions prove incorrect, actual
outcomes and results could differ materially from those indicated in the
forward-looking statements.
Any
forward-looking statement speaks only as of the date on which such statement is
made, and Exousia undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those contained in
any forward-looking statements.
ADDITIONAL
INFORMATION
We
are subject to the information and periodic reporting requirements of the
Securities Exchange Act of 1934, as amended (the “Exchange Act”) and in
accordance with the Exchange Act, we file annual, quarterly and special reports,
and other information with the Securities and Exchange Commission. These
periodic reports and other information are available for inspection and copying
at the regional offices, public reference facilities and website of the
Securities and Exchange Commission referred to above.
Statements
contained in this report about the contents of any contract or any other
document that is filed as an exhibit are not necessarily complete, and we refer
you to the full text of the contract or other document filed as an
exhibit. A copy of annual, quarterly and special reports and related
exhibits and schedules may be inspected without charge at the Public Reference
Room maintained by the Securities and Exchange Commission at 100 F Street, N.E.,
Washington, D.C. 20549, and copies of such reports may be obtained from the
Securities and Exchange Commission upon payment of the prescribed fee.
Information regarding the operation of the Public Reference Room may be obtained
by calling the Securities and Exchange Commission at 1-800-SEC-0330. The
Securities and Exchange Commission maintains a web site that contains reports,
proxy and information statements, and other information regarding registrants
that file electronically with the SEC. The address of the site is
www.sec.gov.
PAGE
|
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PART
I
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||
Item
1.
|
Business
|
4
|
Item
1A.
|
Risk Factors
|
14
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Item
2.
|
Properties
|
16
|
Item
3.
|
Legal Proceedings
|
17
|
Item
4.
|
Submission of Matters to a Vote of Security
Holders
|
17
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PART
II
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||
Item
5.
|
Market for Common Equity and Related
Stockholder Matters
|
18
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Item
6.
|
Selected Financial Data
|
19
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Item
7.
|
Management's Discussion and Analysis
or Plan of Operations
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19
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Item
8.
|
Consolidated Financial Statements
|
24
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Item
9.
|
Changes in and Disagreements With Accountants on
Accounting and Financial Disclosure
|
45
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Item
9A.
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Controls and Procedures
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45
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Item
9B.
|
Other Information
|
46
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PART
III
|
Item
10.
|
Directors, Executive Officers, Promoters and
Control Persons
|
47
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Item
11.
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Executive Compensation
|
47
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Item
12.
|
Security Ownership of Certain Beneficial Owners
and Management
|
48
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Item
13.
|
Certain Relationships and
Transactions
|
49
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Item
14.
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Principal Accountant Fees and
Services
|
49
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Item
15.
|
Exhibits and Reports on Form
8K
|
49
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PART
I
ITEM
1 - DESCRIPTION OF BUSINESS
Company
Overview
·
|
Exousia
Advanced Materials, Inc. is a compliant public company (EXOU) that
develops, manufactures and markets advanced industrial materials for
worldwide markets and applications. Exousia headquarters are in Sugar
Land, TX - about 30 minutes from the center of Houston.
|
·
|
Exousia
products include proprietary resins, additives, industrial coatings and
structural materials. The Company’s products are sold under the trade
names RPA™ Resin,
VISTAMER® Rubber
Engineered Particles, AEGEON™ (U.S.) and Power Shield™ (China)
Industrial Coatings, TrussCore™ Structural
Components and ECORE™ Structural
Foam.
|
·
|
Exousia
products provide significant competitive benefits, including superior cost
effectiveness and increased performance, and are used as core materials in
high-volume manufacturing and large industrial
operations.
|
·
|
Exousia
products are designed to compete in the Plastics, Industrial Coating and
Structural Materials industries and have sizable applications in
transportation, marine, petrochemical, energy and construction. Exousia
believes its products address global and target
markets.
|
·
|
The
Company’s strategy is to develop advanced, differentiated and high-value
industrial materials that enable its potential customers to manufacture
superior products, deliver enhanced services and become more competitive.
Exousia is commercializing its products in both North America and
China.
|
·
|
In
the U.S., Exousia is commercializing initial RPA applications in the
manufacture of Recreational Vehicles and Truck Bodies. Exousia has
acquired a coating manufacturer firm in March 2008 and sales began in
2008. The Company is extending its commercialization of RPA through its
TRUSSCORE product. TRUSSCORE is an RPA Resin-based composite material that
can be used as a structural component that replaces fiberglass reinforced
plywood or similar natural materials in various applications. A
proprietary resin that bonds rubber and plastic, RPA overcomes problems of
poor strength and performance, provides a reusable and recyclable
packaging and shipping solution, and results in highly improved tensile
strength and elongation capability. The application of this product in
cargo trailers and shipping containers provides a stronger and lighter
material that among other qualities means greater fuel economy to
users.
|
·
|
In
China Exousia has developed distributors and alliances with leading
Chinese companies and marketing representatives to distribute our Shield
family of industrial coatings. Exousia opened its first Chinese production
facilities in September 2008.
|
·
|
Exousia’s
revenues in 2009, as reported below, were diminished due to its inability
to raise capital due to the current adverse economic conditions being
experienced both here in the United States and globally in the capital
markets.
|
4
·
|
As
further described in Note N, on January 13, 2010, Exousia Advanced
Materials, Inc. (“Exousia”) acquired a 100% ownership interest in
Evergreen Global Investments Ltd. (“Evergreen”). This was accomplished by
the reverse merger of an Exousia subsidiary, formed for the sole purpose
of the merger, with Evergreen. Evergreen was the surviving entity after
the merger and therefore became a wholly owned subsidiary of
Exousia.
|
As a
result of its acquisition of Evergreen, Exousia’s business is expanding to
include the marketing, sales and development of ecologically sensitive fuel
products, initially in the Northeastern sector of the United
States.
Principal
Products
o
|
RPAä
Resin
|
RPA Resin
is a family of polymers used as a high-volume manufacturing material. It is a
proprietary plastic resin that bonds rubber and plastic, and enables Exousia to
develop a wide range of advanced, composite materials with superior performance
characteristics. These new materials have applications in the automotive,
building, recreation, marine, and household goods industries.
The key
differentiator of RPA is that it successfully bonds plastic and rubber materials
to form a new category of plastic resin. RPA enables the development of new
thermoplastic elastomer alloys that overcome earlier problems of poor strength
and performance. This provides a degree of rubber-plastic compatibilization not
previously achieved, and results in a thermoplastic blend with a highly improved
tensile strength and elongational capability.
Leading
applications for RPA include the construction, transportation and marine
industries. One large application for RPA is in the manufacture of recreational
vehicles (RV). The benefit of RPA to the transportation industry is that it
substantially reduces vehicle weight. This is because RPA-based solutions weigh
roughly one-quarter less than a typical fiberglass-Luan build-up. RPA also
increases strength and durability leading to higher quality and more
cost-effective production.
RPA is
manufactured in pellets and shipped in truckload or boxcar quantities to end
users or distributors. RPA can also be formed, or extruded, to accommodate
customer applications. Exousia also produces extruded components and composite
products that integrate RPA, such as TrussCore. Exousia will market
RPA direct and through distributors, manufacturer’s representatives and
resellers.
o
|
VISTAMER®
RUBBER
|
VISTAMER
Rubber is a cryogenically ground particulate rubber that has been surface
activated by a patented reactive gas process. The process chemically alters the
rubber particles to create reactive functional groups on the surface of the
material. These reactive functional groups react with a broad spectrum of rubber
and plastic materials to create superior adhesion between the particles and the
surrounding polymer.
5
VISTAMER
Rubber is a performance additive for plastics, concrete, epoxy, latex, and
polysulfides that improves impact resistance, tear resistance, adhesive
strength, traction, toughness, flexibility and abrasion resistance. Customers
use VISTAMER Rubber as a performance additive to manufacture new products with
superior characteristics, or enhance the performance and value of existing
products, such as industrial coatings. Examples of how customers might use
VISTAMER Rubber include:
·
|
Addition
to epoxy floor coatings to increase flexibility and improve impact
resistance
|
·
|
Addition
to polyurethane industrial wheels to give superior grip and
traction
|
·
|
Incorporation
in polysulfide coatings to increase abrasion resistance and
toughness
|
·
|
Addition
to latex floor paint to increase slip
resistance
|
VISTAMER
Rubber is delivered as pellets, granulate or powder, and is sold in bulk to
distributor and end-user customers. Typical target customers include
manufacturers and applicators of urethanes, adhesives and epoxies. VISTAMER
Rubber is also integrated into other Exousia products, such as industrial
coatings and ECORE Structural Foam.
o
|
INDUSTRIAL COATINGS WITH
VISTAMERÒ
RUBBER
|
Typical
industrial coatings, such as standard epoxy-based coatings, are relatively
undifferentiated. However, by integrating VISTAMER Rubber Engineered Particles
into coatings Exousia has developed a family of industrial coatings that provide
significant differentiation compared to similar categories of competitive
products that do not include VISTAMER.
Industrial
coatings with VISTAMER Rubber, typically loaded 10%-15% by weight, exhibit a
broad range of increased performance benefits. Some of the more significant
benefits include:
·
|
Improved
Impact Resistance to Increase Strength and Durability
|
·
|
Superior
Barrier to Environmental Forces
|
·
|
Increased
Surface Energy
|
·
|
Greater
Tensile Strength
|
·
|
Stronger
Adhesion to Substrates
|
·
|
Enhanced
Flexibility
|
·
|
Higher
Coefficient of Friction and Wet Traction for Superior
Grip
|
Exousia
industrial coatings are positioned for large, heavy-duty applications and
markets such as corrosion control and environmental protection in the
petrochemical, marine, energy, utility, and public and industrial infrastructure
sectors. These applications and industries require large quantities of
high-quality industrial coatings.
o
|
TrussCoreä STRUCTURAL
COMPONENTS
|
TrussCore
is an ultra-high strength; low-weight structural composite that provides a
high-value, high-performance substitute in applications that would normally
utilize lower strength, higher weight plywood. TrussCore
is formed by taking sheets of RPA and having them vacuum-pulled into a
honey-comb structure. TrussCore is then laminated with RPA sheets to produce
structural panels with substantial strength relative to weight. This strength is
derived from a design similar to I-beam construction. The resulting
sandwich-configuration makes TrussCore highly impact and deflection resistant,
in addition to having superior compressive and shear strength, wear resistance,
and durability. TrussCore is also UV and moisture resistant. Leading
applications for TrussCore panels include vehicle truck floors and sidewalls,
ceilings, bulkhead walls, divider walls and numerous other applications where
high strength and low relative weight are critical.
6
o
|
E COREä STRUCTURAL
FOAM
|
E CORE
integrates urethane foam, carbon spheres and VISTAMER Rubber Engineered
Particles into a composite foam material that is typically cut into sheets.
These sheets can then be laminated to RPA or other materials. The result is a
composite structural panel that is highly competitive in heavy-duty applications
where plywood or similar materials are used, such as marine decking. E CORE
panels are far lighter than laminated plywood; yet provide a strong, high-impact
material that is moisture resistant. They also provide excellent protection
against harsh weather and UV radiation. E CORE can be manufactured in solid,
single pieces of up to 8’ x 28’, thereby allowing it to be a solution for a
wider range of applications. It may also be manufactured with
application-specific surfaces (i.e. non-skid), and in various
colors.
Market Analysis and Analysis
of Competition
The
plastics industry is large and diverse. Exousia seeks to establish
the viability and applications for new engineered materials using cross-linked
plastic and rubber molecules. Its competitors are generally divisions
of large chemical companies with far more financing, staff and history than we
have.
Exousia
faces competition from a number of companies, including both direct and
substitute products. Exousia’s RePoly resin competes directly with companies
including Solvay Engineered Materials, Exxon’s Advanced Elastomer Division, A.
Schulman, Inc. (SHLM), Basell Polyolefins, and a dozen or so other TPO and
plastic manufacturers. One comparable competitor is Belgium-based
Solvay, which manufactures a family of products through its high growth
Specialty Polymers and Vinyls division. Solvay is a public company that trades
in the US under the ticker SVYSY.
Exousia
hopes to win supplier contracts by working with customers to engineer and
deliver solutions for specific applications that deliver high performance and
reduced cost. Management believes the key to gaining market share for
these materials will be getting customers to replace the materials they are
using now with superior materials we have designed for their
applications.
Exousia
believes that VISTAMER® is
unique in the industry and offers a level of performance enhancement that will
allow it to compete successfully against larger
suppliers. Suppliers of substitute additive products that
enhance the performance of polymer materials may compete with VISTAMER® but
such competition will be product specific. In these cases Exousia
believes that VISTAMER® will
offer concrete benefits in performance and cost-effectiveness over our
competition.
The E
CORE product is a unique building material that will compete primarily with
plywood, or other products used in the same applications. E CORE avoids the wood
preservatives of marine plywood, such as MDA, which are toxic to the environment
and occasionally poisonous. Another structural material E CORE will compete
directly against is Fiberglass Reinforced Plywood, or FRP. FRP panels
are used in a wide range of automotive and marine applications in which E CORE
may provide significant competitive advantages. Exousia acquired the
underlying intellectual property of E CORE in early 2006.
Marketing
Plan
Exousia products provide high-value, high-performance solutions for very large worldwide markets in the manufacturing, industrial and construction sectors spanning the plastics, coatings, and structural materials industries.
7
Primary
Market: Plastics Industry
In 2008
the US plastics industry generated approximately $380 billion of sales. Exousia
products compete in a number of high value segments for engineered resins and
other specialty plastics. Key markets for Exousia products are transportation,
appliance, marine, and construction. Applications include cargo
containers, golf cart, ATV, and snowmobile panels, vacuum cleaner housings, boat
decks, and architectural frames and panels.
Growth
rates in these markets vary significantly by region, from around 3% in the U.S.
to double-digit growth in parts of Asia and Eastern Europe. The target
plastic/polymer market sectors that our products address are estimated at $4-$5
billion in North America, and upwards of $7-$8 billion worldwide.
Primary
Market: Coatings Industry
In 2006
the global coatings market was approximately $85 billion. The largest region was
Asia with 30% share, closely followed by Western Europe and North America.
Growth ranges from low single-digit growth in mature economies, to explosive
growth in Asia and Eastern Europe. The industry consists of numerous products
spanning low-margin, commodity paints to high-value specialized industrial
coatings. Price points can range from under $10/gallon to over $100/gallon. The
best future opportunities are found in high growth markets, such as China, and
high-value specialty products, such as corrosion control. For example, the
anti-corrosion coating marketing in China has been growing 20%
annually.
Exousia
sells high-performance specialty coatings for industrial applications, such as
corrosion control and marine environments. Heavy users of industrial coatings
include oil and gas drilling (esp. offshore drilling), petrochemical refining
and production, petrochemical storage and transmission/pipelines, marine
shipping and ports, electric generation and utility infrastructure, and public
infrastructure (bridges, waterworks, etc). Most of our products will price in
the range of $30-$90 wholesale. The Company currently market into two regions:
China and the US. The US market for specialty industrial coatings is estimated
at $4 billion/annually. The China market for specialty industrial coatings is
estimated at $2 billion with potentially another $2 billion in the greater Asian
region. Currently our revenue is from the United States market
only. If and when we are able to generate revenue in China, we will
report the two regions are segments.
Primary
Market: Structural Materials Industry
The
market for structural materials is very broad and includes numerous construction
and manufacturing applications that encompass wood, metal, plastic and other
materials. The diversity and magnitude of these
markets are vast. For example, the US plywood and gypsum industries alone exceed
$10 billion of sales.
Exousia
products such as TrussCore and ECORE offer unique, high-value alternatives to
traditional wood and plastic structural materials. For example, both TrussCore
and ECORE can replace laminated wood products used in heavy-duty applications
such as container walls and marine decking. Exousia structural products are also
ideal for certain types of construction.
o
|
Exousia
estimates that the worldwide market for composite structural building and
manufacturing materials exceeds $100 billion. The Company believes that
the numerous niche markets its structural materials address, including
countless applications for plywood and laminated panels, represents $6 to
$7 billion in the US and China
alone.
|
As
a result of the acquisition of Evergreen, the number of markets and business
opportunities has expanded to include
o
|
Proprietary
Internet Platform
|
PriceEnergy.com
(“PriceEnergy”) is a company that manages a proprietary internet platform that
provides users the ability to source and pay for a variety of commercial and
residential fuels on line throughout the Northeast and receive delivery through
PriceEnergy’s line of distributors.
8
o
|
Biodiesel
|
Through
its interest in a biodiesel production facility located in Greenville, South
Carolina, the Evergreen produces a soy bean based biodiesel fuel and
its by product glycerin. The facility produces to the ASTM/EN 14214
biodiesel specifications and is one of a handful of biodiesel producers to the
European Union specifications for biodiesel. The facility has a
capacity of 36 million gallons per year and has been a member of the National
Biodiesel Board as well as BQ-9000 accredited by the Board.
STRATEGY
Overview
The
Company, through its acquisition of Evergreen, has developed a strategy of
combining its existing product lines into investment in growth industries
focused on clean energy, the use of renewable energy, ecologically superior
products, and the development of energy efficient production
methods.
Product
Strategy
Focus is
on achieving the goal of capturing products that are renewable and ecologically
superior. The Company will continue to develop advanced, differentiated and
high-value industrial materials that enable large, industrial customers to make
superior products, deliver enhanced services and become more
competitive.
Competitive Strategy
(Positioning)
The
Company markets high quality, ecologically sensitive, value-priced and
performance-differentiated products into specialized, high-value segments of
multi-billion dollar, global industrial markets as well as into individual
consumer markets for biodiesel and other fuel products.
Revenue Strategy
Drive
rapid sales growth through the development of web based selling of fuel
products, capitalizing on governmental initiatives driving renewable energy and
direct selling and relationship development. The Company will continue to focus
product sales into industrial coatings markets in North American and the rapidly
developing markets in China. However the internet platform being
developed by PriceEnergy will create a more consumer focused strategy by the
Company, providing a much larger customer base meeting the demands for fuel
products. In addition, it is anticipated that the United States Congress will
pass legislation that will provide incentives for use of renewable energy
sources such as biodiesel and the Company is well positioned through its
interest in the biodiesel production facility in South Carolina to provide such
energy on a wide spread basis.
Distribution
Strategy
US:
|
Sell
through regional, independent representatives &
distributors.
|
China:
|
Sell
through regional distributors and national marketing representatives, as
well as directly to end users.
|
9
Promotion
Strategy
US:
|
Selective,
High-Impact Marketing (direct, trade journals, industry involvement,
etc.)
|
China:
|
Implement
co-op Marketing Programs with Distributors and direct sales efforts to
certainhigh
impact end users.
|
Production
Strategy
Expand to
capacity the South Carolina biodiesel production facility which has a production
capacity of 36 million gallons per year.
Expand
PriceEnergy’s network of dealers and product lines since it neither manufactures
nor directly delivers any of the products that it sells. It utilizes a
distribution network linked to its proprietary technology platform for
distribution as well as sourcing product directly from
manufacturers.
Develop
captive manufacturing as quickly as possible to optimize margins and price
competiveness. The Company has manufacturing facilities in
Channelview, Texas and Tianjin, China. The plant in Texas has a
monthly capacity of 80,000 gallons while the China plant’s monthly capacity is
120,000 gallons.
US
Strategy:
|
1.
Maximize the production capacity in captive or contract
manufacturers.
|
2. Use
contract manufacturing (tolling) plastics production until demand and funding
justifies developing internal capacity.
3.
VISTAMER production facilitated by existing and expandable
facilities.
China
Strategy: 1. Maximize the production capacity in
the Tianjin facility.
2. Build RPA and VISTAMER Plants when
justified by demand and funding.
10
Business
Group Strategies
Advanced
Materials
The
commercialization strategy of the Advanced Materials Group is to spearhead
application “beachheads” within key target markets, develop and validate the
applications, and then penetrate the relevant markets. As early customers
integrate our advanced materials into their products, their competitors will be
pressured to do likewise in order to neutralize competitive differentiation.
Exousia believes this will allow it to capture meaningful market share as it
commercializes application-markets.
The
long-term production strategy is to achieve economies of scale that will allow
Exousia to minimize its product costs in order to expand margins and/or access
new markets.
Industrial
Coatings
The
commercialization strategy of the Industrial Coatings Group is to 1) focus on
mid-range and high-end industrial coatings applications, 2) leverage Exousia’s
patented VISTAMER Rubber and world-class technical & engineering support to
differentiate its coatings, 3) utilize its production flexibility and broad
product line to more effectively capture quick-turnaround and specialty business
that generates high margins but is too small for the major coating suppliers,
and 4) implement a nimble procurement system and extensive supplier network to
effectively control costs. This strategy will position the Company’s products at
the high-end/high-margin part of the market, while containing production
costs.
In order
to effectively implement this strategy, Exousia will operate regional, flexible
blending plants in the markets it serves. To reduce cost the Company utilizes a
unique procurement methodology that will allow it to take advantage of cost
savings in the spot market, and also generate side-profits off its inventory.
Exousia will also selectively sell its below-market, excess inventory to smaller
manufacturers who are willing to pay a premium. The profit margins generated
will then be applied to overall materials costs to help further contain
them.
PriceEnergy
This is
an e-commerce business that develops, owns and manages a proprietary technology
platform that solicits inquiries, develops sales and manages the order
fulfillment of home heating fuel to thousands of customers in the Northeastern
United States. This platform is unique and the Company intends to extend its
reach to other fuel commodities.
Biodiesel
Production
The
Company’s subsidiary Evergreen has contractual relationships with distributors
of biodiesel that provide it with a tolling fee per gallon. The strategy is to
capitalize on the quality standards in place to meet the growing demands of
renewable energy. Currently the biodiesel plan is shut down without
production.
11
Patents,
Licenses and Royalty Agreements
OVERVIEW
The
company owns several patented properties that are described below. During 2009,
these intellectual properties were used as collateral to secure certain
financing as described in Note C. Also as described in Note C, the company took
an impairment charge of $1,405,180 writing down the value of the Intellectual
Property to net realizable value. The Company believes these patents have
considerable value if adequate sources of funding for development can be
secured. However in 2009 the development funding was not secured and as a result
the Company has taken the write-down of value of the Intellectual
Properties.
Thermoplastic
Elastomers
On December 5, 2007, the Company agreed to acquire intellectual property from Amitkumar N. Dharia. Mr. Dharia is a named inventor on Patent No. 7,235,609 entitled Thermoplastic Olefin Compositions and Articles along with Donald T. Robertson and J. Wayne Rodrigue, founder of the Company. The Company has acquired an assignment of Mr. Dharia’s rights with respect to such patent. In consideration for the assignment to the Company, the Company has agreed to pay Mr. Dharia $100,000 in cash in four quarterly installments of $25,000 and issue to him 400,000 shares of the Company’s restricted Common Stock. Additionally, Mr. Dharia’s company, Transmit Technology Group, LLC (“TTG”) will be retained in a technical advisory role pursuant to a technical services agreement to be entered into that pays TTG an amount equal to $4,000 per month for a period of twelve (12) months. The payment of cash and issuance of the Shares described in this Section to Mr. Dharia will likely be a taxable event to him, and he will bear all personal tax consequences relating thereto. Mr. Dharia and the Company have been in discussions for some time regarding the Company’s acquisition of Mr. Dharia’s patent rights, and the acquisition of his patent rights culminates a lengthy discussion regarding such acquisition. During 2008, the Company paid $50,000 in cash. The final $25,000 payments were made in 2009.
VISTAMER® RW
Rubber
On
December 28, 2007, the Company agreed to acquire the following Patents from
Composite Materials, Inc. (“CPI”):
U.S.
Patent #5,382,635 “Higher Modulus Compositions Incorporating Particulate Rubber”
27 January 1995 - Process of surface-modification of vulcanized rubber particles
with chlorine-containing atmosphere.
U.S.
Patent #5,693,714 “Higher Modulus Compositions Incorporating Particulate
Rubber” 2 December 1997- Process for making specific
end-products by use of the new materials described in U.S. Patent #
5,506,283. Examples of claimed products include PU foam, adhesives,
coatings, wheels, etc.
U.S.
Patent #5,969,053 “Higher Modulus Compositions Incorporating
Particulate Rubber” 19 October 1999 - Process of surface modifying
plastic items, such as pallets and truck bed liners, followed by application of
slip-resistant coatings, in particular, coatings made with VISTAMER®
Rubber.
In
consideration for the transfer of the above patents, the Company paid CPI
$50,000 in cash and issued 1,000,000 shares of the Company’s restricted Common
Stock.
12
Composite Hybrid Resin
Panels
In
consideration of the payment of 100,000 of the Company’s restricted common
shares and an agreed royalty interest, the Company acquired rights to a patent
entitled “Composite Hybrid Resin Panels, Molded Parts and Filler Enhanced
Polymers There from”. The agreement obligates the Company to pay a
royalty equal to 1 ½ percent of gross revenues of products derived from the
technologies until the earlier of (a) aggregate total royalty payments equal $5
million or (b) December 31, 2012.
Environmental
Issues
During
2008, the Company entered into its manufacturing or distribution phase. As of
December 31, 2008, management estimated the potential cost of waste disposal and
recorded a liability. The Company will continue to monitor and evaluate the need
for of environmental remediation of its facilities and formerly owned facilities
based on evaluations of current law and existing technologies. Inherent
uncertainties exist in such evaluations primarily due to unknown conditions,
changing governmental regulations and legal standards regarding liability, and
evolving technologies. The recorded liabilities will be adjusted periodically as
remediation efforts progress, or as additional technical or legal information
becomes available. As of December 31, 2009 the accrued liability was
$50,000.
Employees
The
Company currently has written employment agreements with its two Senior
Executives. We currently employ 7 people. However during the later
part of 2009, the Company was unable to secure funding to meet the payroll of
those employees. However during the later part of 2009, the Company the unable
to secure funding and accrued the payment of payroll.
Executive
Management Team
CEO
J.
Wayne Rodrigue
Mr.
Rodrigue is the founder and driving force behind Exousia, and has spent years
developing its products and market opportunities. His career spans over 25 years
of materials development and commercialization, including twenty years
experience in rubber particle and plastic processing and development. Mr.
Rodrigue has held numerous executive level posts where he led technical
development and commercialization. Mr. Rodrigue is a former senior designer for
civil/structural engineering, and has direct experience in the design and
implementation of petrochemical facilities and paper plants, pipelines,
recycling and energy projects. Mr. Rodrigue is the entrepreneurial force behind
Exousia and drives its overall development and vision. Mr. Rodrigue holds a
Bachelor of Science degree in business and is a member of The Society of
Plastics Engineers.
Chief
Financial Officer
Robert
Roddie
Mr.
Roddie brings over 25 years of Senior Financial and Operational experience to
the company having served as the Controller/Chief Financial Officer of three
subsidiaries of Public Companies during his career. He brings critical expertise
in the International Financial and Operational management having managed the
financial and operation affairs of companies in the U.K., Norway, Italy,
Venezuela and Mexico. In addition, Mr. Roddie has vast experience in
implementing Sarbanes-Oxley compliant systems and has helped to negotiate
numerous acquisitions and combine the operations of the companies
acquired.
13
ITEM
1A – RISK FACTORS
In
addition to the other information in this Report on Form 10-K the following risk
factors should be considered carefully in evaluating our Company and its
business.
1. Limited Capital
The Company has limited capital and there can be no assurance that it will be able to raise the capital needed to carry on its business. The Company has incurred, and will continue to incur, operating losses for the foreseeable future. Even if profitability is achieved, there can be no assurance that it can be sustained or increased on a quarterly or annual basis. The failure to meet and realize objectives may have a material adverse effect on business, financial condition and results of operations, including failure as a business.
2. Our
auditors have expressed substantial doubt regarding our ability to continue as a
going concern.
Our
independent certified public accountant has added an emphasis paragraph to its
report on our financial statements for the year ended December 31, 2009
regarding our ability to continue as a going concern. Key to this determination
is our recurring net losses, an accumulated deficit, and a working capital
deficiency. The Company’s financial statements are prepared using principles
applicable to a going concern, which contemplates the realization of assets and
liquidation of liabilities in the normal course of business. However, the
Company does not have significant cash or other material liquid assets, nor does
it have an established source of revenue sufficient to cover its operating costs
and to allow it to continue as a going concern. The Company may, in the
future, experience significant fluctuations in its results of
operations.
If it is
required to obtain additional debt and equity financing, illiquidity could
suppress the value and price of its shares if and when trading in those shares
develops. However, future offerings of securities may not be undertaken,
and if undertaken, may not be successful or the proceeds derived from these
offerings may be less than anticipated and/or may be insufficient to fund
operations and meet the needs of its business plan. The Company’s current
working capital is not sufficient to cover expected cash requirements for 2010
or to bring it to a positive cash flow position. It is possible that it
will never become profitable and will not be able to continue as a going
concern.
3. The
Company Will Require Additional Capital to Develop and Market Our
Products.
The development and marketing of the Company’s products will require the expenditures of significant capital. Additional capital will be required to acquire existing business centers in accordance with its expansion plans described herein. The Company expects to incur operating losses for the foreseeable future. Its actual working capital needs will depend upon many factors including, but not limited to, its progress and the success of its marketing and sales efforts and commercial acceptance of our products. The Company may seek to obtain additional capital through private or public debt or equity from the financings. If it raises additional funds through the issuance of equity, equity-related or debt securities, such securities may have rights, preferences or privileges senior to those of the rights of the common stock. The sale of additional equity or convertible debt securities will result in additional dilution to existing shareholders. In addition, the issuance of debt securities will increase its cost to do business and will increase the risk or perceived risk to the Company. There can be no assurance that any additional financing will be available to the Company on acceptable terms if at all.
14
4.
Competition
The Company faces competition from other companies which are larger, better known and which have greater financial assets and resources than the Company has.
5. The
Common Stock Has Experienced Limited Trading
The Company is traded on the Electronic Bulletin Boards under the symbol “EXOU.OB”. It has experienced limited trading. Unless shares of the Company’s common stock become more broadly held and orderly markets develop and even thereafter, the prices of the stock may fluctuate significantly. Prices for the stock will be determined in the marketplace and may be influenced by many factors, including, but not limited to, the following:
*
|
The
depth and liquidity, if any, of the markets for the Common
Stock
|
*
|
Investor
perception of the Company and the industry in which the Company
participates
|
*
|
General
economic and market conditions
|
*
|
Responses
to quarter-to-quarter variations in operating results, if
any
|
*
|
Failure
to meet securities analysts' estimates
|
*
|
Changes
in financial estimates by securities analysts
|
*
|
Announcements
of significant acquisitions, strategic alliances, joint ventures or
capital commitments, if any, by the Company or its
competitors
|
*
|
Additions
or departures, if any, of key personnel
|
*
|
Sales
of Common Stock, if any
|
*
|
Accounting
pronouncements or changes in accounting rules that affect the Company's
financial statements
|
*
|
Other
factors and events beyond the control of the Company
|
6.
Potential Future Sales of Restricted Shares Could Depress the Market Price for
our Common Stock.
60,893,972 shares of common stock were issued and outstanding as of December 31, 2009. The Company believes that approximately 15,384,484 of these shares are "restricted securities" as that term is defined in Rule 144 of the Securities Act of 1933, as amended. The possible sale of these restricted shares may in the future dilute an investor's percentage of freely tradable shares and may depress the price of the Company's common stock.
7. The
Trading Price of The Company’s Common Stock Entails Additional Regulatory
Requirements, Which May Negatively Affect Such Trading Price
Because the Company’s stock trades at under $5.00 per share, the trading in its common stock will be subject to the requirements of the ‘penny stock’ rules promulgated under the Securities Exchange Act of 1934. These rules require additional disclosure by broker-dealers in connection with any trades generally involving any non-NASDAQ equity security that has a market price of less than $5.00 per share ("penny stock"), subject to certain exceptions. Such rules require the delivery, before any penny stock transaction, of a disclosure schedule explaining the penny stock market and the risks associated therewith, and impose various sales practice requirements on broker-dealers who sell penny stocks to persons other than established customers and accredited investors (generally institutions). For these types of transactions, the broker-dealer must determine the suitability of the penny stock for the purchaser and receive the purchaser's written consent to the transaction before sale. The additional burdens imposed upon broker-dealers by such requirements may discourage broker-dealers from effecting transactions in the common stock affected. As a consequence, the market liquidity of its common stock will be severely limited by these regulatory requirements.
15
8. The
Company Does Not Expect to Pay Cash Dividends
The Company has never declared or paid any cash dividends on its capital stock. It currently intends to retain any future earnings, if any, for use in the operation and expansion of its business. Therefore, it does not expect to pay any cash dividends in the foreseeable future. It currently does not have any dividend paying capacity.
ITEM
2 - DESCRIPTION OF PROPERTY
Exousia
did not acquire any property in 2008 or 2009. However, as further described in
Note N, on January 13, 2010, Exousia acquired its 100% ownership interest in
Evergreen which owns the following assets:
|
·
|
An
oil terminal in Rockaway, New Jersey on which are
located
|
|
o
|
Two
office buildings
|
|
o
|
A
Fuel loading rack
|
|
o
|
Fuel
storage tanks with a capacity of 3,150,000 gallons (75,000
barrels)
|
|
·
|
A
throughput and distribution fee
agreement
|
|
·
|
A
fuel contract for supplying diesel
fuel
|
|
·
|
An
interest in PriceEnergy
|
|
·
|
An
Interest in a biodiesel production
facility
|
On May 2
2007, Exousia leased office space from Third Cross Copperstone, Inc., at 1200
Soldiers Field Drive, Suite 200, Sugar Land, TX 77479. The cost of lease
is $4,666.67 per month. The
Company signed a 40 month lease effective June 1, 2007 for the office space.
On March 25, it leased an additional space from Third Cross
Copperstone, Inc. at 1200 Soldiers Field Drive, Suite 201, Sugar Land, Texas
77479. The cost for both was $10,313 per month, starting April 1, 2008. This
lease was for 30 months. During 2009, the Company vacated this lease. On January
28, 2010, suit was filed by Third Cross Copperstone, Inc. in the 268th
Judicial District Court of Fort Bend County, Richmond, Texas, bearing Cause No.
10-DCV-178160 to collect unpaid rent. The Company has accrued the rent due up to
the date of abandonment and intends to defend any attempt to collect rent for
the time the office space became occupied subsequent to that date.
On
January 9, 2008, Exousia leased space from Madden 2004 Children’s Trust, at 905
Frank Stubbs Road, El Campo, Texas 77437. The cost of lease is $3,500 per month
for the first year, $4,000 for the second and third year, and $4,500 for the
fourth and fifth year. The Company signed a sixty month lease effective February
1, 2008. The Company is in default under this lease and any unpaid rent owed by
the Company has been accrued.
On March
5, 2008, Exousia leased space from Jacque Vickers, at 16537 Shady Lane,
Channelview, Texas 77530, and from Don Vickers at 16531 Shady Lane, Channelview,
Texas 77530. The cost of lease is $1,739 per month for Jacque Vickers and
$1,512.50 per month for Don Vickers. The Company signed a sixty month lease
effective March 5, 2008. The Company is in default under this lease and any
unpaid rent owed by the Company has been accrued.
On July
15, 2008, Exousia leased a 30,000 square foot space from Wuquig Industrial Park,
at East Quanfa Road, Wuqing Development Zone, and Tianjin, China 301726. The
Company signed a sixty month lease effective July 15, 2008. The cost of the
lease is approximately $15,000 USD per year. The Company is in default under
this lease and any unpaid rent owed by the Company has been
accrued.
16
ITEM
3 - LEGAL PROCEEDINGS
On or
about July 21, 2008, a suit was filed by Baker & Daniels, LLP against the
Company in St. Joseph circuit Court, in the State of Indiana, bearing Cause No.
71C01-0807-CC-01617, for unpaid legal fees in the amount of $7,051, with late
fees accruing at $63 monthly. The Company disputes the claim, and intends to
vigorously defend the claim. As of December 31, 2008, the Company has accrued a
total of $7,051.
On or
about November 6, 2008, a Judgment was entered in Cause No. 20D02-0709-PL-79 in
the Elkhart Superior Court No. 2, Elkhart, Indiana, in favor of Group Impact,
LLC, Tektrellis, Inc., Marc Lacounte and Mary Wetzel, Plaintiffs, against J.
Wayne Rodrigue, Exousia Advanced Materials, Inc., Re-Engineered Composite
Systems, LLC and Engineered Particle Systems, LLC, Defendants, jointly and
severally, in the amount of One Hundred Thousand Dollars ($100,000), plus
prejudgment interest at the rate of 12% A.P.R. from May 1, 2007 through April 1,
2008 totaling Eleven Thousand Dollars ($11,000), plus post judgment interest
accruing on the outstanding judgment amount at the statutory rate of Eight
Percent (8%) from the date of summary judgment of April 1, 2008. In
addition, Judgment was entered against the Defendants, jointly and severally, in
the amount of Seven Thousand Three Hundred Thirty-Eight Dollars ($7,338) in
attorney’s fees and costs, plus post judgment interest accruing on the
outstanding judgment amount at the statutory rate of Eight Percent (8%) from the
date of award of attorney’s fees and costs of May 21, 2008. On or about November
12, 2008, Plaintiffs filed a Notice of Filing Foreign Judgment in the 240th
Judicial District Court of Fort Bend County, Texas bearing Cause Number
08-DCV-167838.
On or
about June 18, 2009, a Judgment was entered in Cause No. 09-CCV-038967 in the
County Court at Law 4 of
Fort Bend County, Texas,
in favor of Baker & Daniels LLP against Exousia for the sum of $7,438.91
with interest thereon from the 18th day of June, 2009, at the rate of 5% per
annum. As of December 31, 2009, the Company has accrued a total of
$17,280.
On or
about June 12, 2009, suit was filed by Little Trailer Company, Inc. against
Exousia in the Elkhart Superior Court, bearing Cause No. 20D06-0906-PL-7
relating to a claim by Little Trailer Company Inc. for payment of a ‘break up
fee’ allegedly owed in connection with an Asset Purchase and Sale Agreement
between Little Trailer Company, Inc. and Exousia. The Company disputes the
claim of Little Trailer Company, Inc., and is engaged in defending the claim. As
of December 31, 2009 the Company has accrued a total of $100,000.
On or
about January 28, 2010, suit was filed by Third Cross Copperstone, Inc. against
Exousia in the 268th Judicial District Court of Fort Bend County, Richmond,
Texas, bearing Cause No. 10-DCV-178160, to collect unpaid rent in the amount of
$103,130.00 in connection with the lease by Exousia of office space at 1200
Soldiers Field Drive, Suite 200, Sugar Land, TX 77479. The Company
filed its Answer in the case on March 1, 2010, and is in the process of
responding to discovery requests submitted by the Plaintiff in the
suit. The Company disputes the claims, but continues to investigate
the claims made in the suit. Neither the likely outcome of the suit
nor the amount of loss, if any, can be reasonably estimated.
The
Company entered into a Contract for Services in 2005 with GoPublicToday.com,
Inc., which GoPublicToday.com, Inc., or an affiliated entity (“GPT”) claims to
have been breached, and which allegedly forms the basis for a claim by GPT of
75,000 shares of Exousia common stock and an additional amount of approximately
$76,017.66 in cash. The Company disputes that any amount or any
shares are owed to GPT. Neither the likely outcome of the claim nor
the amount of loss, if any, can be reasonably estimated.
ITEM
4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The
Company has scheduled a meeting of its Shareholders for April 26, 2010 to
consider the following:
|
1.
|
Expansion
of the number of authorized shares from 100,000,000 to
450,000,000
|
|
2.
|
Ratification
of the Company’s by-laws
|
17
PART
II
ITEM
5 - MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Market
Information
Approximate
Number of Holders of Common Stock
At
December 31, 2009 there were 60,893,972 shares of our common stock outstanding,
which were held by 215 shareholders of record. As a result of the acquisition of
Evergreen, the Company issued 10,000,000 shares of Series A Convertible
Preferred Stock. There are 3 Preferred shareholders of record.
Dividend
Policy
We have
not paid any dividends on our common stock, and it is not anticipated that any
dividends will be paid in the foreseeable future. Our board of
directors intends to follow a policy of using retained earnings, if any, to
finance our growth. The declaration and payment of dividends in the future will
be determined by our board of directors in light of conditions then existing,
including our earnings, if any, financial condition, capital requirements and
other factors. The Company currently has no dividend paying
capacity.
Additional
Information Describing Securities
For
additional information regarding our securities, you may view our Articles of
Incorporation and By-laws which are available for inspection at our offices or
which can be viewed through the EDGAR database at www.sec.gov as exhibits to the
registration statement on Form SB-2. You may also choose to review
applicable statutes of the state of Texas for a description concerning statutory
rights and liabilities of shareholders.
Reports
to Shareholders
The
Company will furnish to holders of our common stock annual reports containing
audited financial statements examined and reported upon, and with an opinion
expressed by, an independent registered public accounting firm. It may issue
other unaudited interim reports to our shareholders as it deems
appropriate.
Security
Holders
At
December 31, 2009 there were 60,893,972 shares of our common stock outstanding,
which were held by 215 shareholders of record. The registration of
shares by selling shareholders is discussed in detail in our prospectus which
you may view at www.sec.gov or which you may request from the
Company. The Company is authorized to issue up to 100 million shares
of common stock with a par value of $0.001. Its stock has the
following characteristics:
(i)
Voting Rights – Each of our shareholders of common stock is entitled to one vote
for each share held of record on all matters submitted to the vote of
stockholders, including the election of directors. All voting is
noncumulative, which means that the holders of fifty percent (50%) of the shares
voting for the election of the directors can elect all the
directors. The Board of Directors may issue shares of previously
authorized but unissued stock for consideration without stockholder
action.
18
(ii)
Dividend Rights – The holders of outstanding shares of common stock are entitled
to receive dividends out of assets legally available at such times and in such
amounts as the Board of Directors may determine to be in the best interests of
the shareholders.
(iii)
Liquidation Rights – Upon liquidation, the holders of the common stock are
entitled to receive pro rata all of the assets available for distribution to
common shareholders.
(iv)
Preemptive Rights – Holders of common stock are not entitled to preemptive
rights.
(v) No
conversion rights, redemption rights or sinking fund rights exist for holders of
the common stock.
No
material potential liabilities are anticipated to be imposed on stockholders
under state statutes. Certain Texas regulations, however, require
regulation of beneficial owners of more than 5% of the voting
securities. Stockholders that fall into this category, therefore, may
be subject to state regulation and compliance requirements.
The
Penny Stock Rules
The
Company’s securities are currently considered a penny stock. Penny stocks are
securities with a price of less than $5.00 per share other than securities
registered on certain national securities exchanges or quoted on the NASDAQ
stock market, provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system. The
Company’s securities are currently subject to "penny stock rules" that impose
additional sales practice requirements on broker-dealers who sell penny stock
securities to persons other than established customers and accredited
investors. For transactions covered by these rules, the broker-dealer
must make a special suitability determination for the purchase of penny stock
securities and have received the purchaser's written consent to the transaction
prior to the purchase. Additionally, for any transaction involving a penny
stock, unless exempt, the "penny stock rules” require the delivery, prior to the
transaction, of a disclosure schedule prescribed by the Commission relating to
the penny stock market. The broker-dealer also must disclose the commissions
payable to both the broker-dealer and the registered representative and current
quotations for the securities. Finally, monthly statements must be sent
disclosing recent price information on the limited market in penny stocks.
Consequently, the "penny stock rules" may restrict the ability of broker-dealers
to sell our securities and may have the effect of reducing the level of trading
activity of our common stock in the secondary market. The foregoing required
penny stock restrictions will not apply to our securities if our market price is
$5.00 or greater. The price of its securities may not reach or maintain a $5.00
price level.
ITEM
6 – SELECTED FINANCIAL DATA
Not
Applicable
ITEM
7 - MANAGEMENT’S DISCUSSION AND ANALYSIS OR PLAN OF OVERVIEW AND RESULTS
OPERATIONS
The
following discussion should be read along with our financial statements, which
are included in another section of this document. This discussion contains
forward-looking statements about our expectations for our business and financial
needs. These expectations are subject to a variety of uncertainties and
risks that may cause actual results to vary significantly from our expectations.
The cautionary statements made in this Report should be read as applying
to all forward-looking statements in any part of this report.
19
Exousia’s
revenues in 2009, as reported below, were diminished due to its inability to
raise capital due to the current adverse economic conditions being experienced
both here in the United States and globally in the capital markets.
Exousia
is an Advanced Materials Company that is built on two principal core sciences
that has been developed by its founders over a period of 14 years. On January
13, 2010 the company consummated an acquisition agreement with Evergreen that
expanded the scope of products and services by the company to include a
proprietary internet platform and renewable energy resource products. The
Company believes that this transaction greatly enhanced its financial position
as well as expanding its product offerings into growth industries.
Evergreen
is a private investment firm that invests in growth companies focused on clean
energy, the use of renewable energy, ecologically superior products, and
companies involved in the development of energy efficient production methods.
Evergreen believes that it is well positioned to participate in, and contribute
to, the fundamental and long-term transition of our global economy to a
low-carbon economy, requiring trillions of dollars in capital expenditures as
well as the deployment of alternative technologies and business
models.
To
illustrate this positioning, Evergreen has an interest in a South Carolina
biodiesel production facility. (“Biodiesel Production Facility”). The Biodiesel
Production Facility was a producer of soybean oil based biodiesel, its
production by-product glycerin, and has a 36-million gallon per year production
capacity for biodiesel. The Biodiesel Production Facility produces to the ASTM /
EN 14214 biodiesel specifications and is one of a handful of biodiesel
facilities to produce to the European Union (“EU”) biodiesel specifications. The
Biodiesel Production Facility has been a member of the National Biodiesel Board
and has taken great time and effort to become BQ-9000 accredited by the National
Biodiesel Board. In 2009 the US House of Representatives passed an incentive
package providing for a $1.00 per gallon credit to provide incentives to produce
renewable energy resources such as biodiesel. In early 2010, the Senate passed a
similar piece of legislation that is currently in the reconciliation process
with the House bill. Currently there is no production in this
facility.
Evergreen
owns 82% of PriceEnergy.com Inc. (PriceEnergy). PriceEnergy
is an e-commerce business that has developed, owns, and manages a proprietary
technology platform that solicits inquiries, generates sales and manages the
order fulfillment of, home heating oil to thousands of customers in the
northeastern United States from Maine to Maryland. PriceEnergy has a unique
combination of systems, distribution networks, and products giving it several
distinct market advantages:
•
One-stop source for energy products and services.
• Low
cost provider - systems and existing distribution network provide a low cost
advantage.
•
Customer acquisition cost is significantly below industry norms.
•
Geographically scalable without investing in delivery assets.
•
Cross-selling capability makes lifetime customer retention
possible.
•
E-commerce platform is efficient, effective and scalable.
PriceEnergy
has initially focused on the geographically dense heating oil market in the
Northeastern U.S., where 70% of the market resides but as mentioned is scalable.
The Company intends to use this platform to provide access to other commodity
based fuels around the United States. PriceEnergy has a distinct competitive
advantage in lowering order fulfillment costs by 20% when compared to the
typical industry fulfillment costs. The savings result from the automation of
the otherwise manually intensive process: e.g. price discovery, order placement,
payment processing, manifesting, order tracking, A/R, A/P, and account
management.
20
ADVANCE
MATERIALS Overview
During
2009, the Company made several attempts to commercialize its patented RPA
technology. During the year it entered into an exclusive distribution agreement
with Universal Forest Products Inc. However due to a combination of extensive
start-up costs which the company was unable to finance and the end-user testing
requirements, which again the company was unable to finance, this venture proved
unsuccessful. The Company remains confident however of the commercial viability
of RPA to a variety of end-users. The Company plans in 2010, to search for
partners with a need for the technology to assist in the development and testing
of the products.
INDUSTRIAL
COATINGS Overview:
In 2009 the Company continued to focus on the development and commercialization of Industrial Coatings. Sales in 2009 were 360,827, or 72% below 2008, primarily due to the Company’s inability to raise sufficient Working Capital to fund operations. Aegeon is located in Channelview, Texas and has a production capacity of 960,000 gallons of Industrial Coatings per year.
The
Company’s strategy in this acquisition was to leverage on existing sales while
transforming Aegeon from a company focused on tolling other’s sales to
establishing nationwide brand recognition of Aegeon Coatings. Sales declined
during 2008 and 2009 from the predecessor’s run rate as a result of this
transformation effort and the inability of the Company to raise sufficient
capital to support increased sales. The Company continues to believe that the
long term strategy will prove successful.
In
addition to the Aegeon acquisition which was focused on the United States
Industrial Coatings market, the Company invested in the Chinese Industrial
Coatings market in 2008. Trading under the Power Shield brand, Tianjin Exousia
Advanced Materials (TEAM) opened in the Wu Qing Industrial Park south of Beijing
in September 2008. In 2009, the Company recorded its first sales in China,
totaling $35,000. In addition the Company signed several supply and distribution
contracts. However the Company was unable to meet the demand on the new
contracts due to the inability of the Company to raise sufficient capital. At
year end the Chinese Government had issued a demand for the Company to make
certain safety improvements totaling approximately $100,000. The Company has not
made those improvements due to its inability to raise sufficient
capital.
At year
end the Company had accumulated debts and obligations which it was unable to pay
due to its inability to raise sufficient capital. As a result, the Company
reduced overhead by ending its lease in Sugar Land Texas and laying off all but
essential employees. Further, management payroll was held in an attempt to
provide liquidity to the Company. These efforts were largely ineffective in
reducing overall debt and providing for raw materials to provide for growth and
revenues.
In
addition to the commercial opportunities afforded by the acquisition of
Evergreen Global Investments, it is anticipated that the assets acquired will
provide the Company with the ability to recapitalize the debts and allow
sufficient resources to grow certain aspects of the Company.
Liquidity
and Capital Resources
The
United States as well as the rest of the world has been engulfed in depressed
economic conditions since October 2008. Exousia has been similarly impacted by
the credit crunch. It has created an environment that has made raising capital,
debt and equity, extremely difficult. Exousia depends during its growth period
upon its ability to raise capital. During 2009, the Company raised only
$3,234,699. These funds were used primarily to meet short term product demands
and to satisfy certain vendor obligations. As a result the Company was unable to
provide funding for raw materials and other resources necessary to meet customer
demands and to grow revenues. The Company took steps to reduce its overhead in
response to this economic environment.
21
Product
Categories:
Results of
Operations
Comparison
of the Year ended December 31, 2009 to the Year ended December 31,
2008.
The
Company’s revenue for 2009 was $360,827 and revenue for 2008 was $1,297,934.
Revenue primarily was from sales of Industrial Coatings.
The
Company’s cost of goods sold for 2009 was $212,206 and for 2008 was $957,504.
Cost of goods sold increased as a direct result of Industrial Coatings
sales.
The
Company’s operating expenses were $8,474,352 in 2009, as compared to operating
expenses of $10,762,686 for 2008. Its operating expenses for 2009 included
$7,594,387 in general and administrative costs, as compared to $5,074,656
for 2008; research and development expense of $0 as compared to
$94,734 for 2008; compensation for officers and directors expense of $294,517
for officers and directors as compared to $1,196,756 for 2008; professional
fees expense of $220,000 as compared to $416,054 for 2008; and depreciation
and amortization expense of $217,737 as compared to $210,968 for 2008; China
relations expense of $0 as compared to $3,322,802 in 2008. The increase in
operating expenses was primarily due to non cash charges for stock warrants
issued, but also included non-material increases in our rent, increased general
office expenses due to increases in our staff, increased expenses related to
public company filings and compliance, hosting fees, and increases in our
advertising, public relations, and investor relations expenses. Other
income and losses included $906,951 Interest Expense in 2009 vs. $10,279 in
2008; abandoned acquisition costs of $19,999 for 2008; other expense
of $2,244,444 for 2009 and $88,456 for 2008; the other expense in 2009 included
patent impairment charge of $1,405,180 described below; inventory write-down of
$732,305 interest income of $71 for 2009, as compared to interest income of
$3,852 for 2008. The Company had extraordinary gain of $234,583 for 2008. The
Company had impairment in value of patent expense of $1,405,180 for 2009 and
$43,640 for 2008. The company took an impairment charge writing off the value of
the patents described in Note B. The patents have not expired and the company
believes they retain significant value but due to the inability to raise working
capital to fund the commercialization of the patents, the cash flows did not
support maintaining the value of the patents on the Company’s Balance
Sheet.
The
Company had a net loss of $11,264,849 for 2009, as compared to $9,340,551 in
2008. The Company utilized its common stock to pay many expenses in
2009 and 2008 respectfully and as a result recorded $8,298,354 and $6,126,453 of
non-cash charges.
Liquidity and Capital
Resources
The
Company had total assets of $227,553 as of December 31, 2009, which consisted of
total current assets of $52,141, which included cash of $3,015, prepaid expenses
of $4,060, inventory of $0, and accounts receivable of $45,066. Other
non-current assets included property and equipment of $166,523, patents of
$0.
22
The
Company had total liabilities of $3,408,590 as of December 31, 2009, which
consisted solely of current liabilities and included $1,677,704 of accounts
payable and $1,730,886 of short-term debt. The
Company had an accumulated deficit of $23,940,658 as of December 31,
2009.
The
Company had net cash used in operating activities of ($2,565,949) for the year
ended December 31, 2009, which consisted of net loss of ($11,264,849),
depreciation and amortization of $355,171, capital stock issued
for services of $1,927,573 interest payable of
$126,339, inventory of ($74,605), accounts receivable of $34,797, reserve
for disposal and legal cost of $(25,000), , impairment of value of patents,
inventory and fixed assets of $2,162,169 and accounts payable and accrued
liabilities of $733,016.
The
Company had net cash used by investing activities of ($10,181) for the year
ended December 31, 2009, which consisted of purchase of property and equipment
of ($10,181).
The
Company had $2,439,178 in net cash provided by financing activities for the year
ended December 31, 2009, which consisted of debt issued for cash $2,999,574,
common stock issued for cash of $220,500, payments of insurance payable of
($76,972), payments of note payable related parties of ($718,549) and proceeds
from warrants of $14,625.
Exousia
suffered losses of $11,264,849 and $9,340,551 in 2009 and 2008, respectively,
has an accumulated deficit of $23,940,658 at December 31, 2009.
During
2009, the Company raised $2,999,574 in short term Notes Payable. As of December
31, 2009, the company had negotiated with the lenders agreement to withhold
foreclosing on their debt pending attempts by the company to recapitalize the
debt. There can be no guarantees that the lenders will not demand payment and
force the company into involuntary bankruptcy if the company is not successful
in recapitalizing the debt.
The
Company’s ability to continue as a going concern is dependent upon its ability
to successfully accomplish our business plans and secure additional funding
sources and attaining profitable operations. Although the Company has engaged in
fund raising efforts, there is no guarantee that either the fund raising efforts
or cash flows from operations, if any, will generate sufficient working capital
for the Company to remain as a going concern.
23
REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the
Board of Directors
Exousia
Advanced Materials, Inc.
Sugar
Land, Texas
We have
audited the accompanying consolidated balance sheets of Exousia Advanced
Materials, Inc. and subsidiaries as of December 31, 2009 and 2008, and the
related statements of operations, changes in shareholders' equity (deficit) and
of cash flows for the years then ended. These financial statements are the
responsibility of the management of Exousia Advanced Materials, Inc. 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 the 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 audit 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 Exousia Advanced Materials, Inc. as
of December 31, 2009 and 2008, and the results of its operations and its 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 shown in the financial statements, Exousia
suffered recurring losses from operations and has a working capital deficiency
at December 31, 2009. These factors and others raise substantial doubt about
Exousia's ability to continue as a going concern. Management's plans in regard
to these matters are described in Note B to the financial statements. The
financial statements do not include any adjustments relating to the
recoverability and classification of recorded assets, or to the amounts and
classification of liabilities that might be necessary in the event Exousia
cannot continue in existence.
/s/ M&K CPAs,
PLLC
www.mkacpas.com
Houston,
Texas
April 15,
2010
24
ITEM
8 - FINANCIAL STATEMENTS
EXOUSIA
ADVANCED MATERIALS, INC. AND SUBSIDIARIES
BALANCE
SHEETS
As
of December 31, 2009 and 2008
ASSETS
|
December 31, 2009
|
December 31, 2008
|
||||||
Cash
and cash equivalents
|
$ | 3,015 | $ | 139,967 | ||||
Accounts
receivable trade, net
|
45,066 | 79,863 | ||||||
Inventory
|
- | 657,700 | ||||||
Prepaid
expenses
|
4,060 | 121,833 | ||||||
TOTAL
CURRENT ASSETS
|
52,141 | 999,363 |
NON-CURRENT
ASSETS
|
||||||||
Fixed
assets, net of accumulated depreciation of $38,301
and
$23,567 as of December 31, 2009 and 2008,
respectively
|
166,523 | 224,113 | ||||||
Patents,
net of amortization and impairments of $1,750,000 and $170,171 as of
December 31, 2009 and 2008, respectively
|
- | 1,579,830 | ||||||
Other
assets
|
8,889 | 14,417 | ||||||
TOTAL
NON-CURRENT ASSETS
|
175,412 | 1,818,360 | ||||||
TOTAL
ASSETS
|
$ | 227,553 | $ | 2,817,723 | ||||
LIABILITIES
AND SHAREHOLDERS' EQUITY(DEFICIT)
|
||||||||
CURRENT
LIABILITIES
|
||||||||
Accounts
payable and accrued liabilities
|
$ | 1,677,704 | $ | 969,688 | ||||
Notes
payable
|
1,674,390 | 109,855 | ||||||
Debenture
principal and interest payable to related parties
|
56,496 | 50,362 | ||||||
TOTAL
CURRENT LIABILITIES
|
3,408,590 | 1,129,905 | ||||||
SHAREHOLDERS'
EQUITY(DEFICIT)
|
||||||||
Common
stock $0.001 par value, 100 million shares authorized;
60,893,972 and 50,917,866 shares issued and
outstanding at December 31, 2009 and 2008,
respectively
|
60,893 | 50,917 | ||||||
Additional
paid-in capital
|
20,698,728 | 14,312,710 | ||||||
Accumulated
deficit
|
(23,940,658 | ) | (12,675,809 | ) | ||||
Total
shareholders' equity (Deficit)
|
(3,181,037 | ) | 1,687,818 | |||||
TOTAL
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
|
$ | 227,553 | $ | 2,817,723 |
The
accompanying notes are an integral part of these financial
statements.
25
EXOUSIA
ADVANCED MATERIALS, INC. AND SUBSIDIARIES
STATEMENTS
OF OPERATIONS
For
the Years Ended December 31, 2009, and December 31, 2008
Year
Ended
12/31/09
|
Year
Ended 12/31/08
|
|||||||
REVENUES:
|
||||||||
Sales
|
$ | 360,827 | $ | 1,297,934 | ||||
EXPENSES:
|
||||||||
Cost
of Sales
|
212,206 | 957,504 | ||||||
Compensation
- officers and directors
|
294,517 | 1,196,756 | ||||||
General
and administrative expenses
|
7,594,387 | 5,074,656 | ||||||
Bad
debt expense
|
155,505 | - | ||||||
China
relations
|
- | 3,322,802 | ||||||
Depreciation
and amortization
|
217,737 | 210,968 | ||||||
TOTAL
OPERATING EXPENSES
|
8,474,352 | 10,762,686 | ||||||
OPERATING
LOSS
|
(8,113,525 | ) | (9,464,752 | ) | ||||
OTHER
INCOME (EXPENSE):
|
||||||||
Interest
expense
|
(906,951 | ) | (10,279 | ) | ||||
Abandoned
acquisition expense
|
- | (19,999 | ) | |||||
Interest
income
|
71 | 3,852 | ||||||
Other
expense
|
(2,244,444 | ) | (88,456 | ) | ||||
Other
income
|
- | 4,500 | ||||||
Total
Other Income & Expenses
|
(3,163,627 | ) | (110,382 | ) | ||||
Net
loss before extraordinary items
|
$ | (11,264,849 | ) | $ | (9,575,134 | ) | ||
Extraordinary
gain- bargain purchase
|
- | 234,583 | ||||||
NET
LOSS
|
$ | (11,264,849 | ) | $ | (9,340,551 | ) | ||
Basic
and diluted net loss per share
|
$ | (0.20 | ) | $ | (0.21 | ) | ||
|
||||||||
Weighted
average number of shares outstanding
|
56,565,823 | 43,740,085 |
The
accompanying notes are an integral part of these financial
statements.
26
EXOUSIA
ADVANCED MATERIALS, INC. AND SUBSIDIARIES
STATEMENTS
OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)
For
the Years Ended December 31, 2009 and 2008
No.
of
Shares
|
Capital
Stock
|
Additional
Paid
In
Capital
|
Accumulated
Deficit
|
Total
|
||||||||||||||||
Balance,
December 31, 2007
|
36,185,083 | $ | 36,184 | $ | 4,427,377 | $ | (3,335,258 | ) | $ | 1,128,303 | ||||||||||
Shares
issued for cash
|
5,629,177 | 5,629 | 3,527,621 | - | 3,533,250 | |||||||||||||||
Shares
issued for services
|
7,941,538 | 7,942 | 5,677,150 | - | 5,685,092 | |||||||||||||||
Conversion
on debentures
|
662,068 | 662 | 231,062 | - | 231,724 | |||||||||||||||
Shares
issued for patent
|
500,000 | 500 | 449,500 | - | 450,000 | |||||||||||||||
Net
loss
|
(9,340,551 | ) | (9,340,551 | ) | ||||||||||||||||
Balance,
December 31, 2008
|
50,917,866 | $ | 50,917 | $ | 14,312,710 | $ | (12,675,809 | ) | $ | 1,678,818 | ||||||||||
Shares
issued for services
|
7,594,657 | 7,595 | 1,919,979 | 1,927,574 | ||||||||||||||||
Shares
issued for cash
|
740,571 | 740 | 219,759 | 220,500 | ||||||||||||||||
Conversion
of note payable
|
1,640,878 | 1,641 | 228,082 | 229,723 | ||||||||||||||||
Warrants
issued for services
|
2,491,385 | 2,491,385 | ||||||||||||||||||
Warrants
issued for cash
|
14,625 | 14,625 | ||||||||||||||||||
Warrants
issued for interest
|
1,357,954 | 1,357,954 | ||||||||||||||||||
Stock
Options for compensation
|
154,234 | 154,234 | ||||||||||||||||||
Net
loss
|
(11,264,849 | ) | (11,264,849 | ) | ||||||||||||||||
Balance,
December 31, 2009
|
60,893,972 | $ | 60,893 | $ | 20,698,728 | $ | (23,940,658 | ) | $ | (3,181,037 | ) | |||||||||
The
accompanying notes are an integral part of these financial
statements.
27
EXOUSIA
ADVANCED MATERIALS, INC. AND SUBSIDIARIES
STATEMENTS
OF CASH FLOWS
For
the Years Ended December 31, 2009 and 2008
Year
Ended
12/31/09
|
Year
Ended
12/31/08
|
|||||||
Net
loss
|
$ | (11,264,849 | ) | $ | (9,340,551 | ) | ||
Adjustments
to reconcile net loss to net cash used by operating
activities:
Extraordinary
Gain
|
- | (234,583 | ) | |||||
Impairment
valuation charges
|
2,162,169 | 43,640 | ||||||
Capital
stock issued for services
|
1,927,573 | 5,685,092 | ||||||
Stock
based compensation
|
154,234 | - | ||||||
Warrants
issued for services
|
2,491,385 | - | ||||||
Warrants
issued for interest
|
357,954 | - | ||||||
Depreciation
and amortization
|
355,171 | 210,968 | ||||||
Interest
payable
|
126,339 | 927 | ||||||
Abandoned
acquisition expense
|
- | 19,999 | ||||||
Amortization
of debt discount
|
384,704 | - | ||||||
Loss
on conversion of debt
|
65,635 | - | ||||||
Change
in operating assets and liabilities:
|
||||||||
---Inventory
|
(74,605 | ) | (576,166 | ) | ||||
---Accounts
receivable
|
34,797 | (79,863 | ) | |||||
---Investment
|
- | 5,176 | ||||||
---Prepaid
expenses
|
- | 80,998 | ||||||
---Other
assets
|
5,528 | (9,751 | ) | |||||
---Accounts
payable and accrued liabilities
|
733,016 | 597,976 | ||||||
---Reserve
for legal costs
|
(25,000 | ) | 232,829 | |||||
Net
cash used by operating activities
|
(2,565,949 | ) | (3,363,309 | ) | ||||
CASH
FLOWS FROM INVESTING ACTIVITIES
|
||||||||
Net
cash used for asset purchase
|
(10,181 | ) | (169,572 | ) | ||||
Net
cash used in investing activities
|
(10,181 | ) | (169,572 | ) | ||||
CASH
FLOWS FROM FINANCING ACTIVITIES
|
||||||||
Payments
of insurance payable
|
(76,972 | ) | (120,519 | ) | ||||
Payments
on debt
|
(718,549 | ) | (87,458 | ) | ||||
Common
stock issued for cash
|
220,500 | 3,533,250 | ||||||
Warrants
issued for cash
|
14,625 | - | ||||||
Borrowings
on debt
|
2,999,574 | 80,363 | ||||||
Net
cash provided by financing activities
|
2,439,178 | 3,405,636 | ||||||
NET
INCREASE IN CASH AND CASH EQUIVALENTS
|
(136,967 | ) | (127,245 | ) | ||||
Cash
and cash equivalents, beginning of period
|
139,967 | 267,212 | ||||||
Cash
and cash equivalents, end of period
|
$ | 3,015 | $ | 139,967 |
28
SUPPMENTARY
INFORMATION
|
||||||||
2009
|
2008
|
|||||||
Supplemental
disclosures of cash flow information:
|
||||||||
Non-cash
activities:
|
||||||||
Common
stock issued for:
|
||||||||
---
purchase of patents
|
$ | - | $ | 450,000 | ||||
---
notes payable
|
- | 231,724 | ||||||
---
conversion of note payable to equity
|
164,088 | - | ||||||
Prepaid
insurance - financed
|
19,661 | 177,831 | ||||||
CD
used to pay off line of credit
|
- | 201,549 | ||||||
The
accompanying notes are an integral part of these financial
statements.
29
EXOUSIA
ADVANCED MATERIALS, INC. AND SUBSIDIARIES
NOTES TO
CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER
31, 2009
Note A - Summary of
Significant Accounting Policies
Basis of
Presentation
The
financial statements contained herein include the accounts of Exousia Advanced
Materials, Inc. (formerly Cyber Law Reporter, Inc.), Exousia Corp., Agros
Development I, LLC and Les Maisons du Lac, Ltd. All intercompany
transactions and balances have been eliminated.
On
December 31, 2006, Cyber Law Reporter, Inc. acquired Exousia Corp. and
subsidiaries. Since the shareholders of Exousia Corp. control the
acquiring entity, this transaction was accounted for as a reverse
merger. Consequently, the operating history of Cyber Law Reporter,
Inc. has been eliminated from the accounting records of Exousia Advanced
Materials, Inc. (formerly Cyber Law Reporter, Inc.) by closing out the
stockholders’ deficit of Cyber Law Reporter, Inc. of $473,470 to additional
paid-in capital in the amount of $399,000, and the balance to accumulated
deficit in the amount of $78,004 net of common stock of $3,534.
Principles of
Consolidation
The
accounts of our wholly-owned subsidiary, Aegeon, are included in the
consolidation of these financial statements from the date of acquisition.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
Company
Information
Exousia
Advanced Materials, Inc. (“Exousia” or the “Company”) was
incorporated in Texas on March 2, 2000 as Cyber Law Reporter,
Inc. The original business plan involved developing and delivering
online legal information services to businesses and consumers. The
Company registered as a reporting company under the Securities Act of 1933 by
filing a report on form SB-2 that became effective August 6,
2002. That business plan was abandoned at the end of
2003.
On
December 31, 2006, as described above, Exousia Advanced Materials, Inc.
(formerly Cyber Law Reporter, Inc.) entered into a definitive Stock Exchange
Agreement with Exousia Corp. The agreement provided for the
acquisition of all of the issued and outstanding common stock of Exousia Corp.,
consisting of 24,899,245 shares, in exchange for an equal number of shares of
Cyber Law Reporter, Inc. Prior to the closing of this transaction,
Cyber Law Reporter, Inc. had 3,534,000 shares issued and outstanding and
subsequent to the transaction it had 28,433,245 shares issued and
outstanding.
Exousia
Advanced Materials, Inc. is a compliant public company (EXOU) that develops,
manufactures and markets advanced industrial materials for worldwide markets and
applications. The products are designed to compete in the Plastics, Industrial
Coating and Structural Materials industries and have sizable applications in
transportation, marine, petrochemical, energy and construction.
Use of
Estimates
The
preparation of financial statements, in conformity with accounting principles
generally accepted in the United States, requires management to make estimates
and assumptions that affect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from these
estimates.
30
Cash and Cash
Equivalents
Exousia
considers all highly liquid investments purchased with a maturity period of
three months or less to be cash equivalents. There are no cash equivalents at
December 31, 2009 and 2008, respectively.
Concentrations of Credit
Risk
Financial
instruments which potentially subject the Company to concentrations of credit
risk consist principally of cash and receivables. The Company places
its cash with high credit quality financial institutions. At times,
such amounts may exceed the FDIC limits; however, these deposits typically may
be redeemed upon demand and therefore bear minimal risk. In
monitoring this credit risk, the Company periodically evaluates the stability of
the financial institutions. Generally, no collateral or other
security is required to support receivables. To reduce credit risk, a
customer’s credit history is evaluated before extension of credit. In
addition, an allowance for doubtful receivables has been established as needed
based on facts surrounding the credit risk of specific customers, historical
trends and other information.
Revenue
Recognition
Exousia
recognizes revenues when products have been shipped to a customer pursuant to a
purchase order or other contractual arrangement, the sales price is fixed or
determinable, and collectability is reasonable assured.
Allowance for Doubtful
Accounts
The
Company has not accrued any balance for uncollectable accounts receivable. Based
on its collection history and quality of its customer, the Company deems the
accounts receivable balance as of December 31, 2009 and 2008 to be fully
collectible. During 2009, the Company entered into a factoring agreement to
facilitate cash collections, with recourse. The average discount to the
factoring company was 3.5% and the factored receivables are accounted for as a
sale.
Inventory
The
Company has industrial coatings inventory in Channelview, Texas and in China.
The Company has Vistamer inventory in El Campo, Texas. The
inventories are valued using the average cost method and recorded at the lower
of cost or market. The Company evaluates inventory quarterly and any obsolete or
unsellable materials are written off at that time. As of December 31, 2009 the
company’s inventories in El Campo, Channelview and China were valued
at zero due to potential restrictions on access.
Property, Plant and
Equipment
Property,
plant and equipment are recorded at cost and depreciated over the estimated
useful lives using the straight line method. Useful lives range from 5 to 7
years.
31
Impairment of Long-Lived
Assets
The
Company account for intangible assets with indefinite lives in accordance with
FASB guidelines, Goodwill and
Other Intangible Assets, which establishes financial accounting and
reporting standards for acquired goodwill and other intangible assets. Under the
provisions of FASB guidelines, goodwill and indefinite-lived intangible assets
are required to be tested for impairment annually, in lieu of being amortized,
using a fair value approach at the reporting unit level. Furthermore, testing
for impairment is required on an interim basis if an event or circumstance
indicates that it is more likely than not an impairment loss has been incurred.
An impairment loss shall be recognized to the extent that the carrying amount of
goodwill or any indefinite-lived intangible asset exceeds its implied fair
value. Impairment losses shall be recognized in operating results.
Our
valuation methodology for assessing impairment, using the discounted cash flows
approach, requires management to make judgments and assumptions based on
historical experience and projections of future operating performance. If these
assumptions differ materially from future results, we may record impairment
charges in the future. Our annual impairment review performed on
December 31, 2009 indicated that due to a lack of funding for Working
Capital, the Company had not been able to commercialize the Rubber Plastic Alloy
and Vistamer patents and as a result the Company impaired 100% of the value of
these patents.
Income
Taxes
Exousia
recognizes deferred tax assets and liabilities based on differences between the
financial reporting and tax bases of assets and liabilities using the enacted
tax rates and laws that are expected to be in effect when the differences are
expected to be recovered. Exousia provides a valuation allowance for
deferred tax assets for which it does not consider realization of such assets
likely.
Fair Value of Financial
Instruments
Carrying
amounts for cash and cash equivalents, amounts due from acquisition target
companies, accounts payable, notes and accrued interest payable, and debentures
principal and interest payable approximate fair value due to the
short-term nature of these instruments and interest at market
rates. However, these values may not be representative of actual
values that could have been realized as of the balance sheet dates or that will
be realized in the future.
Basic and Diluted Net Loss
per Share
The basic
net loss per common share is computed by dividing the net loss by the weighted
average number of common shares outstanding. Diluted net loss per common share
is computed by dividing the net loss adjusted on an "as if converted" basis, by
the weighted average number of common shares outstanding plus potential dilutive
securities.
Stock Based
Compensation
Stock-Based Compensation The Company estimates
the fair value of share-based payment awards made to employees and directors,
including stock options, restricted stock and employee stock purchases related
to employee stock purchase plans, on the date of grant using an option-pricing
model. The value of the portion of the award that is ultimately expected
to vest is recognized as an expense ratably over the requisite service
periods. We estimate the fair value of each share-based award using the
Black-Sholes option pricing model. The Black-Sholes model is highly complex and
dependent on key estimates by management. The estimates with the greatest degree
of subjective judgment are the estimated lives of the stock-based awards and the
estimated volatility of our stock price. The Black-Sholes model is also used for
our valuation of warrants.
32
Recently Issued Accounting
Pronouncements
Exousia
does not expect the adoption of recently issued accounting pronouncements to
have a significant impact on its results of operations, financial position or
cash flow.
Reclassifications
Certain
reclassifications have been made to the prior period’s financial statements to
conform to the current period’s presentation.
Note B – Going
Concern
As of
December 31, 2009, the Company had generated revenue of $360,827. The
Company is subject to the risks associated with companies that lack working
capital, operating resources and contracts, cash and ready access to the credit
and equity markets. Without additional funding, the Company may be unable to
continue as a going concern. The Company expects to obtain additional debt and
equity financing from various sources in order to finance its operations and to
grow through merger and acquisition opportunities. However, the Company is
currently dependent upon external debt and cash flows have historically been and
in 2009 insufficient for the Company’s cash needs. New debt or equity capital
may contain provisions that could suppress future stock prices further, or cause
significant dilution to current shareholders and increase the cost of doing
business. In the event the Company is unable to obtain additional debt and
equity financing, the Company may not be able to continue its operations. On
January 13, 2010 the Company acquired 100% of Evergreen in exchange for 100
million Series A Preferred Shares of the Company. The assets, net of
liabilities, of Evergreen were $23,970,000.
Note C– Prepaid Expenses,
Patents and Intangible Assets
On
December 5, 2007, the Company agreed to acquire intellectual property from
Amitkumar N. Dharia. Mr. Dharia is a named inventor on Patent No.
7235609 entitled Thermoplastic Olefin Compositions and Articles
along with Donald T. Robertson and J. Wayne Rodrigue, founder of the
Company. The Company has acquired an assignment of Mr. Dharia’s
rights with respect to such patent. In consideration for the
assignment to the Company, the Company has agreed to pay Mr. Dharia $100,000 in
cash in four quarterly installments of $25,000 and issue to him 400,000 shares
of the Company’s restricted Common Stock valued at $400,000 based on the closing
price of the Company’s common stock on the date of
purchase. Additionally, Mr. Dharia’s company, Transmit Technology
Group, LLC (“TTG”) will be retained in a technical advisory role pursuant to a
technical services agreement to be entered into that pays TTG an amount equal to
$4,000 per month for a period of twelve (12) months. On December 5,
2007, the Company issued 400,000 shares at the closing price of $1.00 for a
total value of $400,000. In 2007, the Company paid $25,000 resulting
in an accrual of $75,000 at December 31, 2007. During 2008, the
Company paid $50,000 resulting in an accrual of $25,000 at December 31, 2008.
The patent has a useful life of 17 years and is amortized using the
straight-line method.
33
On
December 28, 2007, the Company agreed to acquire the following Patents from
Composite Materials, Inc. (“CPI”).
U.S.
Patent #5382635 “Higher Modulus Compositions Incorporating Particulate Rubber”
27 January 1995 - Process of surface-modification of vulcanized rubber particles
with chlorine-containing atmosphere. The patent has a useful life of 5 years and
is amortized using the straight-line method.
U.S.
Patent #5693714 “Higher Modulus Compositions
Incorporating Particulate Rubber” 2 December 1997- Process for
making specific end-products by use of the new materials described in U.S.
Patent #5506283. Examples of claimed products include PU foam,
adhesives, coatings, wheels, etc. The patent has a useful life of 7 years and is
amortized using the straight-line method.
U.S.
Patent #5969053 “Higher Modulus Compositions Incorporating
Particulate Rubber” 19 October 1999 - Process of surface modifying
plastic items, such as pallets and truck bed liners, followed by application of
slip-resistant coatings, in particular, coatings made with VISTAMER® Rubber. The
patent has a useful life of 9 years and is amortized using the straight-line
method.
In
consideration for the transfer of the above patents, the Company paid CPI
$50,000 in cash in 2008 and issued 1,000,000 shares of the Company’s restricted
Common Stock valued at $750,000 based on the closing price of the Company’s
common stock on the date of acquisition. Additionally, the Company
contemplates that Dr. Bernie Bauman of CPI will join the Company’s Executive
Advisory Board. The Company intends to retain Dr. Baumann in a
technical advisory role pursuant to a technical services agreement to be entered
into after the acquisition of the Patents. The terms of this services
agreement are still being negotiated. On December 31, 2007, the Company issued
1,000,000 shares at the closing price of $0.75 for a total value of
$750,000.
December 31, 2009
|
December 31, 2008
|
|||||||
Gross
Carrying Amount
|
1,800,000 | 1,800,000 | ||||||
Less:
Accumulated Amortization
|
((394,820 | ) | (176,531 | ) | ||||
Patent
impairment
|
(1,405,180 | ) | (43,640 | ) | ||||
Net
|
------- | 1,579,829 | ||||||
Security
Deposit
|
4,500 | 14,417 |
In 2009
the Company fully impaired all Patents. While the company believes these patents
retain great value, the inability to raise sufficient Working Capital to
commercialize the patents required that we fully impair the value.
Note D – Notes
Payable
During
2009, the Company raised $2,999,575 in short term Notes Payable. As of December
31, 2009, the company had negotiated with the lenders agreement to withhold
foreclosing on their debt pending attempts by the company to recapitalize the
debt. There can be no guarantees that the lenders will not demand payment and
force the company into involuntary bankruptcy if the company is not successful
in recapitalizing the debt.
December 31, 2009
|
December 31, 2008
|
|||||||
Total
Notes Payable
|
1,730,886 | 109,855 | ||||||
Less:
Current Portion
|
(1,730,886 | ) | (109,855 | ) | ||||
Long-Term
Portion
|
- | - | ||||||
Future payment due dates are:
|
|||||
2010
|
1,730,886 | ||||
2011
|
--- | ||||
2012
|
--- | ||||
2013
|
--- | ||||
2014
|
--- |
34
On July
28, 2009 the Company received $1,000,000 in exchange for a Convertible Note
Payable to PTV Investments and Fairbanks Investments (the “Lenders”). The Note
was secured by the Company’s Intellectual Properties and Patents. The note
provided for additional borrowing based upon agreement with the Lenders
predicated upon certain events and agreement with the Lenders. At December 31,
2009 no additional amounts had been borrowed. The terms of the Note provide for
minimum monthly payments at 12% per annum beginning on August 15, 2009. In
October 2009, November 2009 and December 2009 the Company was unable to meet the
minimum monthly payments and entered into a forbearance agreement with the
Lenders. As a result of the acquisition with Evergreen, the Lenders have agreed
to a delay in the monthly payments required in 2010 until April 28, 2010 in
exchange for 16,039,474 warrants to purchase common stock of the company at
$0.01 per share.
On
February 19, 2009_ the Company received $575,000 in exchange for a Note Payable
bearing interest at a rate of 12% to Jay Powers (the “Lender”). The Note was
secured by 3,250,000 shares of the company’s common stock currently being held
in escrow. The Note was due on June 15, 2009. The company was not able to make
payment on that date.
During
2009, the Company received $240,000 in exchange for various short term notes
bearing interest at a rate of 12% with Lee Mann (the “Lender”). The notes were
unsecured and the company was not able to make payments when those notes became
due.
During
2009, the Company received $350,000 in exchange for various short term notes
bearing interest at a rate of 12% with George Stapleton, a former director of
the company. The notes were unsecured and the company was not able to make
payments when those notes became due.
During
2009, the Company received $100,000 in exchange for a short term note bearing
interest at a rate of 12% with Fay Durand. The note was unsecured and the
company was not able to make payments when those notes became due.
During
2009, the Company received $25,000 in exchange for a short term note bearing
interest at a rate of 12% with Al Kau. The note was unsecured and the company
was not able to make payments when those notes became due.
During
2009, the Company received $5,000 in exchange for a short term note bearing
interest at a rate of 12% with Elorian Landers. The note was unsecured and the
company was not able to make payments when those notes became due.
During
2009, the Company received $399,575 in exchange for a short term note bearing
interest at a rate of 12% with Launch Pad Capital. The note was unsecured and
the company was not able to make payments when those notes became
due.
Note E – Related Party
Debentures Payable
During
2006 and 2007, the Company entered into convertible notes with a small group of
accredited investors, who are also shareholders of the Company, in the total
amount of $242,000. The Notes have a term of twelve months and bear simple
interest at a rate of 8% per annum. During 2007, $195,000 of the
debentures was converted to common stock. Investors received a stock kicker of
two shares of common stock for each $1.00 of investment made in the convertibles
notes resulting in the issuance of 364,000 shares of common stock to these
investors for the year ended December 31, 2006 and an additional 100,000 shares
during the year ended December 31, 2007. These shares were valued at
$85,681 and are included in Debt Issuance Costs at December 31,
2006. As of December 31, 2007, $85,681 had been amortized. During
2008, the remaining $47,000 of the convertible debentures, plus accrued interest
of $3,951 was converted into 148,223 shares of common stock valued at
$51,900.
35
During
2008, the Company entered into convertible notes with two accredited investors,
who are also shareholders in the Company, in the amount of $50,000. The notes
have a term of twelve months and bear simple interest at a rate of 12% per
annum. At the end of one year, the note is convertible at an exercise price of
$0.50 per share. The Notes were evaluated and do not have a beneficial
conversion feature as defined by Emerging Issues Task Force Issue No. 98-5,
“Accounting for Convertible Securities with Beneficial Conversion Features or
Contingently Adjustable Conversion Ratios.” For the year ended December 31,
2008, the Company accrued $50,000 of principal and $362 of
interest.
Note G – Income
Taxes
Exousia
uses the liability method where deferred tax assets and liabilities are
determined based on the future tax consequences of temporary differences between
the carrying amounts of assets and liabilities for financial and income tax
reporting purposes. During the period from inception to December 31,
2009, Exousia Advanced Materials, Inc. incurred net losses and therefore has no
tax liability accrued in the accompanying financial statements. The
net deferred tax asset generated by the loss carry forward has been fully
reserved. The cumulative net operating loss carry forward is approximately
$8,751,708 at December 31, 2009, and will expire beginning in the year
2025.
At
December 31, 2009 and 2008, deferred tax assets consisted of the
following:
2009 | 2008 | |||||||
Net
operating
losses
|
$ | 2,975,581 | $ | 1,815,106 | ||||
Less:
valuation
allowance
|
(2,975,581 | ) | (1,815,106 | ) | ||||
Net
deferred tax
asset
|
$ | - | $ | - |
Note H – Capital Structure
and Common Stock
As of
December 31, 2008, the Company had 50,917,866 common shares issued and
outstanding of which approximately 23,034,559 or 45.22% are owned directly
or indirectly by officers and directors of the Company.
We had
the following common stock transaction during the year ended December 31,
2008:
|
·
|
2,251,154
shares issued for cash totaling $1,463,250 to accredited investors as part
of a private placement with warrants of 2,251,154 at an exercise price of
$1.00 and a term of 30 months.
|
·
|
10,000
shares issued for services valued at $6,400 based upon the closing price
of the Company’s common stock on the date of issue.
|
·
|
662,068
shares issued for conversion of debentures valued at $231,724 based on the
contracted conversion price of $0.35 per share.
|
·
|
3,832,000
shares issued for services valued at $3,425,800 based upon the closing
price of the Company’s common stock on the date of
issue.
|
·
|
500,000
shares issued for patent valued at $450,000 based upon the closing price
of the Company’s common stock on the date of issue.
|
·
|
200,000
shares issued for cash totaling $130,000 to accredited investors as a part
of a private placement with warrants of 200,000 at an exercise price of
$1.00 and a term of 30 months.
|
·
|
2,033,538
shares issued for services valued at $1,220,122 based upon the closing
price of the Company’s common stock on the date of
issue.
|
·
|
650,000
shares issued for services valued at $386,000 based upon the closing price
of the Company’s common stock on the date of issue.
|
·
|
800,000
shares issued for cash totaling $520,000 to accredited investors as a part
of a private placement with warrants of 800,000 at an exercise price of
$1.00 and a term 30 months.
|
·
|
1,692,308
shares issued for cash totaling $1,100,000 to accredited investors as a
part of a private placement with warrants of 1,692,308 at an exercise
price of $1.00 and a term of 30 months.
|
·
|
685,715
shares issued for cash totaling $320,000 to accredited investors as part
of a private placement with warrants of 685,715 at an exercise price of
$.50 for a term of 30 months.
|
·
|
1,116,000
shares issued for services valued at $571,770 based upon the closing price
of the Company’s common stock on the date of issue.
|
·
|
300,000
shares issued for Board of Directors compensation valued at $75,000 based
upon the closing price of the Company’s common stock on the date of
issue.
|
36
The
Company had the following common stock transactions during the year ended
December 31, 2009:
·
|
7,594,657
shares issued for services valued at $1,927,523 based upon the closing
price of the Company’s common stock on the date of
issue.
|
·
|
740,571
shares issued for cash totaling $220,500 to accredited investors as part
of a private placement with attached warrants of 740,571 with an exercise
price range of $0.35 to $0.50 and a term of 30 months. The relative fair
value of the common stock is $73,709 and the relative fair value of the
warrants is $70,849.
|
·
|
1,640,878
shares issue for the conversion of note payable valued at $229,723 based
upon the closing price of the Company’s common stock on the date of
issue.
|
At
December 31, 2008, Exousia issued and sold units of securities consisting of
common stock and warrants to purchase additional shares of common stock in a
private placement. Aggregate gross proceeds of $3,533,250 were received for
5,629,177 shares of common stock and warrants to purchase an additional
5,629,177 shares of common stock. The relative fair value of the common stock
was $3,130,250 and the relative fair value of the warrants was $397,371. The
warrants have an exercise price of $0.50- $l.00 per share and expire in two and
one half years.
The fair
value of the stock was estimated using current market rates and the fair value
of the warrants granted was computed using the Black-Scholes option-pricing
model. Variables used in the option-pricing model include (1) risk-free
interest rate at the date of grant (1.09-2.55%), (2) expected warrant life
of 2 1/2 years, (3) expected volatility of 36.77 to 66.27%, and
(4) zero expected dividends.
On April
7, 2009, the Company sold warrants to purchase 600,000 shares of common stock at
an exercise price of $0.35 for a total value of $6,000. The warrants have a 30
month exercise period commencing on date of issuance.
On April
23, 2009, the Company sold warrants to purchase 562,500 shares of common stock
at an exercise price of $0.48 for a total value of $5,625. The warrants have a
30 month exercise period commencing on date of issuance.
On May
15, 2009, the Company sold warrants to purchase 300,000 shares of common stock
at an exercise price of $0.60 for a total value of $3,000. The warrants have a
30 month exercise period commencing on date of issuance.
37
On June
22, 2009, the Company issued the vested portion of the employee stock options.
The total value of the options is $308,470 with $77,117 vesting as of June 22,
2009.
On July
7, 2009, the Company issued warrants in lieu of interest for certain notes
payable. The total value of the warrants issued was $22,254.
In
the 4th
quarter of 2009, the Company issued warrants lieu of interest for certain notes
payable. The total value of the warrants issued was $1,042,996.
In the
4th
quarter of 2009, the Company issued warrants for services. The total value of
the warrants issued was $1,805,989.
On June
22, 2009, the Company issued the vested portion of the employee stock options.
The total value of the options is $308,470 with $77,117 vesting as of June 22,
2009 and $77,117 vesting as of December 22, 2009.
Note I – Stock Option
Plan
On
December 22, 2008 the Company’s Board of Directors approved a stock option plan
to attract and retain key employees. The plan authorized Management
to issue up to 5,250,000 options over 3 years period. In 2008,
1,750,000 of these options were issued. In 2009, 5,050,000 of these
options were issued. The options vest at 25% after 6 months, 50% after 12
months, 75% after 24 months and 100% after 36 months.
Options
|
Exercise Price
|
Value of Options
|
||||||
25%
vest on June 22, 2009
|
$ | 0.33 | $ | 77,117 | ||||
50%
vest on December 22, 2009
|
$ | 0.33 | $ | 77,117 | ||||
75%
vest on December 21, 2010
|
$ | 0.33 | $ | 77,117 | ||||
100%
vest on December 21, 2011
|
$ | 0.33 | $ | 77,117 | ||||
Total
|
$ | 308,470 |
The fair
value of the stock was estimated using current market rates and the fair value
of the options granted was computed using the Black-Scholes option-pricing
model. Variables used in the option-pricing model include (1) risk-free
interest rate at the date of grant (1.40%), (2) expected warrant life of 5
years, (3) expected volatility of 74.13%, and (4) zero expected
dividends.
Note J – Related Party
Transactions
J. Wayne
Rodrigue, Jr., Exousia’s founder and controlling shareholder, director and Chief
Executive Officer, for the twelve months ended December 31, 2008, Mr. Rodrigue
received $188,538 in cash compensation and 100,000 shares of common stock valued
at $25,000. Shares were compensation for serving on the Board of Directors. On
December 22, 2008, Mr. Rodrigue was also granted 400,000 stock options as part
of the company’s stock option plan valued at $70,507. The options vest in
accordance with the stock option plan (Note I) thus as of December 31, 2008 the
400,000 options are unvested. On November 30, 2009 Mr. Rodrigue was also granted
500,000 options as part of the company’s stock option plan valued at
$156,358. Additionally, Mr. Rodrigue was granted 600,000 options as
part of the company’s stock option plan valued at $64,134. The
options vest in accordance with the stock option plan (Note I) thus as of
December 31, 2009 1,200,000 options are unvested.
Robert
Roddie was hired, on May 15, 2008, as the Company’s Senior Vice President, Chief
Financial Officer and Chief Operating Officer, and received $99,210 in cash
compensation for 2008. Mr. Roddie received 500,000 shares of the
Company’s common stock as a sign on bonus valued at $300,000. On December 22,
2008, Mr. Roddie was also granted 400,000 stock options as part of the company’s
stock option plan valued at $70,507. On November 30, 2009 Mr. Roddie
was also granted 500,000 options as part of the company’s stock option plan
valued at $156,358. Additionally, Mr. Roddie was granted
600,000 options as part of the company’s stock option plan valued at
$64,134. The options vest in accordance with the stock option plan
(Note I) thus as of December 31, 2009 the 1,200,000 options are
unvested.
38
Robert
Lane Brindley, received for the twelve months ended December 31, 2008, received
100,000 shares of common stock valued at $25,000. Shares were compensation for
serving on the Board of Directors. In 2009, Mr. Brindley received
250,000 options as part of the company’s stock option plan valued at
$31,067.
Note K– Commitments and
Contingencies
Commitments
On May 2,
2007, Exousia leased office space under an operating lease beginning June 1,
2007 that expires in September 2010. During 2008, the monthly rent expense
ranged from $4,667-$6,281 until April 1, 2008 when additional space was leased
and the monthly rent expense increased to $10,313. Rent expense was
$108,431 and $43,867 in 2008 and 2007, respectively. The Company recognizes rent
expense using the straight-line methods.
On
January 9, 2008,
Exousia leased space to store Vistamer in El Campo, Texas. The cost of lease is
$3,500 per month for the first year, $4,000 for the second and third year, and
$4,500 for the fourth and fifth year. The Company signed a sixty month lease
effective February 1, 2008. Rent expense was $47,500 in 2009 and $38,500 in
2008. At December 31, 2009 the Company was 3 months delinquent on payment of
this rent.
On March
5, 2008, Exousia leased two spaces in Channelview, Texas. The monthly
rent expense is $3,251. The Company signed a sixty month lease effective March
5, 2008. Rent expense was $43,040 in 2009 and $32,515 in 2008. At December 31,
2009 the Company was 3 months delinquent on payment of this rent.
On April
1, 2008, Exousia leased a 30,000 square foot space in Wuqing Development Zone
and Tianjin, China. The Company signed a sixty month lease effective April 1,
2008 to March 31, 2013 and the monthly rent expense is $1,220. Rent
expense was and $10,980 in 2008. No rent was paid during 2009.
Minimum
lease payments due under non-cancelable leases over the next five years and
thereafter are as follows as of December 31, 2008:
Year Ending December
31,
2010
|
$ | 89,008 | ||
2011
|
$ | 89,508 | ||
2012
|
$ | 10,418 | ||
2013
|
$ | 10,418 | ||
Total
|
$ | 199,352 |
39
Contingencies
On or
about July 21, 2008, a suit was filed by Baker & Daniels, LLP against the
Company in St. Joseph circuit Court, in the State of Indiana, bearing Cause No.
71C01-0807-CC-01617, for unpaid legal fees in the amount of $7,051, with late
fees accruing at $63 monthly. The Company disputes the claim, and intends to
vigorously defend the claim. As of December 31, 2008, the Company has accrued a
total of $7,051.
On or
about November 6, 2008, a Judgment was entered in Cause No. 20D02-0709-PL-79 in
the Elkhart Superior Court No. 2, Elkhart, Indiana, in favor of Group Impact,
LLC, Tektrellis, Inc., Marc Lacounte and Mary Wetzel, Plaintiffs, against J.
Wayne Rodrigue, Exousia Advanced Materials, Inc., Re-Engineered Composite
Systems, LLC and Engineered Particle Systems, LLC, Defendants, jointly and
severally, in the amount of One Hundred Thousand Dollars ($100,000), plus
prejudgment interest at the rate of 12% A.P.R. from May 1, 2007 through April 1,
2008 totaling Eleven Thousand Dollars ($11,000), plus post judgment interest
accruing on the outstanding judgment amount at the statutory rate of Eight
Percent (8%) from the date of summary judgment of April 1, 2008. In
addition, Judgment was entered against the Defendants, jointly and severally, in
the amount of Seven Thousand Three Hundred Thirty-Eight Dollars ($7,338) in
attorney’s fees and costs, plus post judgment interest accruing on the
outstanding judgment amount at the statutory rate of Eight Percent (8%) from the
date of award of attorney’s fees and costs of May 21, 2008. On or about November
12, 2008, Plaintiffs filed a Notice of Filing Foreign Judgment in the 240th
Judicial District Court of Fort Bend County, Texas bearing Cause Number
08-DCV-167838.
On or
about June 18, 2009, a Judgment was entered in Cause No. 09-CCV-038967 in the
County Court at Law 4 of
Fort Bend County, Texas,
in favor of Baker & Daniels LLP against Exousia for the sum of $7,438.91
with interest thereon from the 18th day of June, 2009, at the rate of 5% per
annum. As of December 31, 2009, the Company has accrued a total of
$17,280.
On or
about June 12, 2009, suit was filed by Little Trailer Company, Inc. against
Exousia in the Elkhart Superior Court, bearing Cause No. 20D06-0906-PL-7
relating to a claim by Little Trailer Company Inc. for payment of a ‘break up
fee’ allegedly owed in connection with an Asset Purchase and Sale Agreement
between Little Trailer Company, Inc. and Exousia. The Company disputes the
claim of Little Trailer Company, Inc., and is engaged in defending the claim. As
of December 31, 2009 the Company has accrued a total of $100,000.
On or
about January 28, 2010, suit was filed by Third Cross Copperstone, Inc. against
Exousia in the 268th Judicial District Court of Fort Bend County, Richmond,
Texas, bearing Cause No. 10-DCV-178160, to collect unpaid rent in the amount of
$103,130.00 in connection with the lease by Exousia of office space at 1200
Soldiers Field Drive, Suite 200, Sugar Land, TX 77479. The Company
filed its Answer in the case on March 1, 2010, and is in the process of
responding to discovery requests submitted by the Plaintiff in the
suit. The Company disputes the claims, but continues to investigate
the claims made in the suit. Neither the likely outcome of the suit
nor the amount of loss, if any, can be reasonably estimated.
The
Company entered into a Contract for Services in 2005 with GoPublicToday.com,
Inc., which GoPublicToday.com, Inc., or an affiliated entity (“GPT”) claims to
have been breached, and which allegedly forms the basis for a claim by GPT of
75,000 shares of Exousia common stock and an additional amount of approximately
$76,017.66 in cash. The Company disputes that any amount or any
shares are owed to GPT. Neither the likely outcome of the claim nor
the amount of loss, if any, can be reasonably estimated.
40
Note L – Technological
License Rights and Obligations
As of the
date of this report, the Company has not earned any revenues associated with
these rights and obligations.
Note M – Business
Combination
On March
5, 2008 the Company acquired the assets of Aegeon, LLC (“Aegeon”) for a purchase
price of $193,000 which was paid in cash at the close of this transaction.
Aegeon primarily has focused on the manufacturing and distribution of industrial
grade coatings. Certain notes and other liabilities due from Aegeon were not
part of this transaction. This purchase has been accounted for as a business
purchase pursuant to an evaluation by management of Accounting Standards
Codification 805, business combinations. The transaction was evaluated and the
Company believes that the historical cost of the assets acquired approximated
fair market value given the current nature of the assets acquired. The fair
value of the net assets acquired was $427,583 resulting in a bargain purchase of
$234,583. Pursuant to business combination accounting and
specifically FASB statement 141 in a bargain purchase any shortfall of
consideration is first netted against the long term assets acquired. Given that
the fair value of any long term assets acquired was zero the in accordance with
purchase accounting the next step would be to consider any contingent
consideration. Since there was no contingent consideration in this transaction
pursuant to purchase accounting the excess purchase price of $234,583 is treated
as an extraordinary gain.
A
breakdown of the purchase price is as follows:
Cash
|
$ | 37,787 | ||
Accounts
Receivable
|
140,066 | |||
Inventory
|
435,651 | |||
Prepaid
Expenses
|
18,220 | |||
LESS:
Liabilities assumed
|
(204,141 | ) | ||
Net
Assets Acquired
|
427,583 | |||
Less:
Excess purchase price
|
(234,583 | ) | ||
Total
Consideration
|
$ | 193,000 |
The
following unaudited pro-forma assumes the transaction occurred as of the
beginning of the periods presented as if it would have been reported during the
nine month periods below.
Pro
forma
|
||||
twelve
month period
|
||||
ended
12/31/08
|
||||
Sales
|
$ | 1,621,911 | ||
Cost
of Sales
|
1,228,954 | |||
Gross
Margin
|
392,957 | |||
Operating
Expenses
|
9,835,308 | |||
Other
Expenses
|
(184,815 | ) | ||
Net
Loss
|
$ | (9,257,833 | ) | |
Loss
Per Share
|
$ | 0.00 | ||
41
Note N – Subsequent
Events
The
Company has evaluate subsequent events through April 15, 2010. On January 13,
2010, Exousia Advanced Materials, Inc. (“Exousia”) acquired a 100% ownership
interest in Evergreen Global Investments Ltd. (“Evergreen”). This was
accomplished by the reverse merger of an Exousia subsidiary, formed for the sole
purpose of the merger, with Evergreen. Evergreen was the surviving entity after
the merger and therefore became a wholly owned subsidiary of Exousia. The
purchase price of the acquisition was $23,971,000. Exousia issued 10,000,000
shares of its Convertible Preferred Stock to the shareholders of Evergreen in
exchange Exousia acquired 100% of the stock of Evergreen. The preferred shares
are convertible to common stock at a rate of 20.475 shares of common stock for
every preferred stock share held. The assets of Evergreen
are:
(Unaudited)
Description
|
Value
|
|||
(in
thousands)
|
||||
82%
of the common shares of PriceEnergy.com, Inc.
|
$ | 5,740 | ||
An
interest in a South Carolina biodiesel production facility – net
assets
|
$ | 6,000 | ||
An
oil terminal located in Rockaway New Jersey
|
$ | 6,600 | ||
A
throughput and delivery fee charge agreement for the Rockaway Oil
Terminal
|
$ | 1,612 | ||
A
Fuel Contract with Green Energy Cooperative See Note
|
$ | 7.000 | ||
|
||||
Total
Value of Evergreen Assets
|
$ | 26,952 | ||
Total
Debt Associated with Evergreen Assets
|
$ | 2,981 | ||
Net
Book Value of Evergreen’s Assets
|
$ | 23,971 |
Note: The
value of the Fuel Contract acquired is a 5 year 100,000,000 gallon per year
agreement to provide diesel fuel. There currently is no throughput on
this contract pending resolution of the Congressional legislation which been
passed but not enacted as of this date.
A further
description of certain Evergreen assets follows:
·
|
Certain
real estate and equipment that are leased to third parties. Evergreen owns
the company that owns the real estate commonly known as the Rockaway Oil Terminal
located in Rockaway, New Jersey consisting of 5.8 acres, two office
buildings, fuel loading rack, and fuel tanks with a storage capacity of
3,150,000 gallons (75,000 barrels), valued at $6.6 million (hereinafter
referred to collectively as the “Rockaway Terminal”), subject to the
existing Mortgage Note Payable to a New Jersey bank secured by the
Rockaway Terminal in the amount of $2.981 million. The Rockaway
Terminal was acquired by Evergreen from Able Energy, Inc. on December 1,
2009. At that time, Able entered into a 20-year triple net lease with
Evergreen for the use of the Rockaway Terminal at a rent of $45,000 per
month (the “Lease”). An addendum to the Lease was made whereby Evergreen
shall receive throughput and delivery fees in addition to its rent under
the Lease.
|
42
·
|
82%
of the outstanding common stock of PriceEnergy. PriceEnergy is
an industry leading e-commerce based business selling energy products and
services to its residential and commercial customers. Through the use of
proprietary technology, customers can use the Internet to check their
local current fuel oil price, place orders, arrange for payment, and
manage deliveries of heating oil, diesel fuel, and other energy products
24 hours a day, 7 days a week. PriceEnergy is rapidly migrating its entire
product base to include Green Energy
attributes.
|
·
|
An
interest in a South Carolina biodiesel production facility (“Biodiesel
Production Facility”). The Biodiesel Production Facility is a producer of
soybean oil based biodiesel, its production by-product glycerin, and has a
36-million gallon per year production capacity for biodiesel. The
Biodiesel Production Facility produces to the ASTM / EN 14214 biodiesel
specifications and is one of a handful of biodiesel facilities to produce
to the European Union (“EU”) biodiesel specifications. The Biodiesel
Production Facility has been a member of the National Biodiesel Board and
has taken great time and effort to become BQ-9000 accredited by the
National Biodiesel Board. In 2009 the US House of Representatives passed
an incentive package providing for a $1.00 per gallon credit to provide
incentives to produce renewable energy resources such as biodiesel. In
early 2010, the Senate passed a similar piece of legislation that is
currently in the reconciliation process with the House bill. This plant is
currently shut down an is currently without
production.
|
UNAUDITED
PROFORMA CONSOLIDATED FINANCIAL INFORMATION
On
January 13, 2010, Exousia issued 10,000,000 shares of convertible Preferred
Stock in exchange for 100% of the common shares of Evergreen Global Investments
Inc.
The
following table sets forth at December 31, 2009 (i) the actual balance sheet of
Exousia Advanced Materials; (ii) the balance sheet of Evergreen Global
Investments on a pro forma basis reflecting the company’s balance sheet as if
the acquisition had occurred on December 31, 2009.
Exousia
|
Evergreen
|
Consolidated
|
||||||||||
Actual
|
Pro
Forma
|
Pro
Forma
|
||||||||||
Cash
|
3,015 | --- | 3,015 | |||||||||
Accounts
Receivable
|
45,066 | --- | 45,066 | |||||||||
Prepaid
Expenses
|
4.060 | --- | 4,060 | |||||||||
Total
Current Assets
|
52,141 | --- | 52,141 | |||||||||
Fixed
Assets
|
88,585 | 12,776,000 | 12,864,585 | |||||||||
Other
Assets
|
8,889 | 1,612,000 | 1,620,889 | |||||||||
Goodwill
|
--- | 12,564,000 | 12,564,000 | |||||||||
Total
Assets
|
149,615 | 26,592,000 | 27,101,615 | |||||||||
Accounts
payable and accrued liabilities
|
1,913,191 | --- | 1,913,191 | |||||||||
Long-Term
Debt
|
1,495,399 | 2,981,000 | 4,476,399 | |||||||||
Total
Liabilities
|
3,408,590 | 2,981,000 | 6,389,590 | |||||||||
Common
Stock
|
60,893 | --- | 60,893 | |||||||||
Preferred
Stock
|
--- | 23,971,000 | 23,971,000 | |||||||||
Additional
Paid In Capital
|
20,698,728 | --- | 20,698,728 | |||||||||
Accumulated
Deficit
|
(24,018,596 | ) | --- | (24,018,596 | ) | |||||||
Total
Shareholders’ Equity
|
(3,258,975 | ) | 23,971,000 | 20,712,025 | ||||||||
Total
Liabilities and Shareholders’ Equity
|
149,615 | 26,952,000 | 27,101,615 |
43
The
Goodwill associated with the Evergreen assets acquired relate to the Fuel
Contract acquired which was valued at $7,000,000 in the acquisition and the
excess of the Purchase Price of PriceEnergy ($5,740,000) over the Net book Value
of the Assets acquired ($175,638).
The
following table sets forth (i) the actual results of operations for Exousia for
the twelve months ended December 31, 2009 and (ii) the results of operations of
Evergreen on a pro forma basis reflecting the company’s income statement for the
year ended December 31, 2009 as if the acquisition had been in effect for the
entire year of 2009.
Exousia
|
Evergreen
|
Consolidated
|
||||||||||
Actual
|
Pro
forma
|
Pro
forma
|
||||||||||
Revenues
|
$ | 360,827 | $ | 14,054,000 | $ | 14,414,827 | ||||||
Cost
of Sales
|
$ | 212,206 | $ | 11,806,000 | $ | 12,018,206 | ||||||
Gross
Profit
|
$ | 148,621 | $ | 2,248,000 | $ | 2,396,621 | ||||||
Operating
Expenses
|
$ | 8,327,781 | $ | 1,241,000 | $ | 9,568,781 | ||||||
Operating
Income (Loss)
|
$ | (8,179,160 | ) | $ | 1,007,000 | $ | (7,172,160 | ) |
44
ITEM
9 - CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
DISCLOSURE
None
ITEM
9A - CONTROLS AND PROCEDURES
Evaluation
of Disclosure Controls and Procedures
An
evaluation, under the supervision and with the participation of the Company’s
management, was carried out including our principal executive officer and
principal financial officer, of the effectiveness of our disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and
15d-15(e)). Based upon that evaluation, the principal executive
officer and principal financial officer concluded that, as of the end of the
period covered in this report, the disclosure controls and procedures were not
effective to ensure that information required to be disclosed in reports filed
under the Securities Exchange Act of 1934 is recorded, processed, summarized and
reported within the required time periods and is accumulated and communicated to
our management, including our principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding required
disclosure.
Management,
including the principal executive officer and principal financial officer, does
not expect that its disclosure controls and procedures or its internal controls
will prevent all error or fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance
that the objectives of the control system are met. Further, the
design of a control system must reflect the fact that there are resource
constraints and the benefits of controls must be considered relative to their
costs. Due to the inherent limitations in all control systems, no
evaluation of controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. To address the material
weaknesses, management performed additional analysis and other
post-closing procedures in an effort to ensure its consolidated financial
statements included in this annual report have been prepared in accordance with
generally accepted accounting principles. Accordingly, management believes that
the financial statements included in this report fairly present in all material
respects our financial condition, results of operations and cash flows for the
periods presented.
Management’s
Report on Internal Control Over Financial Reporting
Management
is responsible for establishing and maintaining adequate internal control over
financial reporting as defined in Rule 13a-15(f) under the Securities Exchange
Act, as amended. Management assessed the effectiveness of its
internal control over financial reporting as of December 31, 2009. In making
this assessment, our management used the criteria set forth by the Committee of
Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal
Control-Integrated Framework. A material weakness is a deficiency, or
a combination of deficiencies, in internal control over financial reporting,
such that there is a reasonable possibility that a material misstatement of the
company's annual or interim financial statements will not be prevented or
detected on a timely basis.
45
The
following material weaknesses were identified:
1.
|
As
of December 31, 2009, effective controls over the control environment were
not maintained. Specifically, a formally adopted a written code
of business conduct and ethics that governs to the Company’s employees,
officers and directors was not in place. Additionally,
management has not developed and effectively communicated to its employees
its accounting policies and procedures. This has resulted in
inconsistent practices. Further, the Board of Directors does
not currently have any independent members and no director qualifies as an
audit committee financial expert as defined in Item 407(d)(5)(ii) of
Regulation S-B. Since these entity level programs have a
pervasive effect across the organization, management has determined that
these circumstances constitute a material weakness.
|
|
2.
|
As
of December 31, 2009, effective controls over financial statement
disclosure were not maintained. Specifically, controls were not
designed and in place to ensure that all disclosures required were
originally addressed in our financial statements. Accordingly,
management has determined that this control deficiency constitutes a
material weakness.
|
3.
|
As
of December 31, 2009, effective controls over equity transactions were not
maintained. Specifically, controls were not designed and in
place to ensure that equity transactions were properly reflected.
Accordingly, management has determined that this control deficiency
constitutes a material weakness.
|
Because
of these material weaknesses, management has concluded that the Company did not
maintain effective internal control over financial reporting as of December 31,
2009, based on the criteria established in "Internal Control-Integrated
Framework" issued by the COSO.
Changes
in Internal Control Over Financial Reporting.
No change
in the Company’s internal control over financial reporting occurred during the
quarter ended December 31, 2009, that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
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
Securities and Exchange Commission that permit the Company to provide only
management’s report in this annual report.
No change
in the Company’s internal control over financial reporting occurred during the
quarter ended December 31, 2009, that materially affected, or is reasonably
likely to materially affect, the Company’s internal control over financial
reporting.
ITEM
9B - OTHER INFORMATION
None
46
PART
III
ITEM
10 - DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(A) OF THE EXCHANGE ACT
The following table sets forth certain information regarding the members of our board of directors and its executive officers:
Name
|
Age
|
Position
|
J.
Wayne Rodrigue, Jr.
|
55
|
Chief
Executive Officer/President/ Board Chairman
|
Robert
Lane Brindley
|
44
|
Director
|
Michael
Beane
|
52
|
Director
|
Robert
Roddie
|
54
|
Senior
Vice President/Chief Financial Officer/Chief Operating
Officer
|
During
2009 Mr. George Stapleton and Mr. Terry Stevens resigned their positions as
Directors of the Company.
Our
directors will hold offices until the next annual meeting of our shareholders or
until their successors are duly elected and qualified. Our executive
officers serve at the pleasure of the Board of Directors.
Set forth
below is a summary description of the principal occupation and business
experience of each of our directors and executive officers.
ITEM
11 - EXECUTIVE COMPENSATION
Directors
have not been provided cash compensation for their service as
directors. The directors of Exousia Advanced Materials, who resigned
effective December 31, 2006, were not compensated for serving on the Board
during 2005 or 2006.
Directors
will be reimbursed for expenses incurred to and from meetings. Also, Directors
will receive 100,000 shares of stock as compensation.
The
Company currently have employment agreements with its officers including its
CEO, Wayne Rodrigue and its Senior VP, CFO/COO, Robert Roddie. The terms of
these agreements have been approved by our board of directors.
Name
and Position
|
Year
|
Salary
|
Bonus
|
Stock
Awards
|
All
Other
|
J.
Wayne Rodrigue, CEO
|
2005
|
-
|
$1,000
|
||
2006
|
$60,095
|
$15,519
|
|||
2007
|
$115,000
|
$144,570
|
|||
2008
2009
|
$188,538
$80,769
|
$25,000
$185,000
|
|||
Robert
Roddie,
Sr.
VP/CFO/COO
|
2008
2009
|
$99,210
$87,000
|
$185,000
|
||
-
|
47
ITEM
12 - SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The
following table sets forth the beneficial ownership of the shares of our common
stock as of the close of business on December 31, 2009 for each person known by
us to own beneficially five percent or more of our common stock and of each of
our directors and our officers and directors as a group. For purposes
of this table, beneficial ownership has been determined in accordance with the
provisions of Rule 13(d)-3 of the Securities Exchange Act of 1934, under which a
person is considered to be a beneficial owner of a security if such person has
or shares the power to vote or to direct the voting of the security or the power
to dispose or to direct the disposition of the security, or if that person has
the right to acquire beneficial ownership of that security within 60 days
through the exercise of any option, warrant or conversion of a
security. As of December 31, 2009, we have 60,893,972 shares issued
and outstanding.
None
Name
& Address of Security Holder
|
Title
or Position, if any
|
Number
of shares beneficially owned
|
Percentage
of class
|
J.
Wayne Rodrigue(1)
8503
North Fitzgerald Way
Missouri
City, TX 77459
|
Chairman
and CEO
|
14,731,895
|
24.19%
|
Robert
Lane Brindley
11833
Park Forest Court
Glenn
Allen, VA 23059
|
Director
|
1,228,830
|
2.02%
|
Robert
Roddie
407
Planters Row
Lafayette,
LA 70508
Michael
Beane
6
Eagle Point lane
Castle
Rock CO 80,108
|
CFO,
COO, Sr. V-Pres.
|
1,110,000
|
1.82%
|
Michael
Beane
6
Eagle Point lane
Castle
Rock CO 80,108
|
Director | 50,000 | |
All
Directors and Officers as a Group
|
17,120,175
|
28.11%
|
48
ITEM
13 - CERTAIN RELATIONSHIPS AND TRANSACTIONS
The
following are brief descriptions of transactions during the period covered by
this report between us and any of our directors, executive officers or
shareholders known to us to own beneficially more than 5% of our shares, or any
member of the immediate family of any of those persons, or other entities in
which such person beneficially own more than 5%.
ITEM
14 - PRINCIPAL ACCOUNTANT FEES AND SERVICES
M&K
CPAs, PLLC serves as our independent public auditors. The following fees
were incurred by M&K CPAs, PLLC for services rendered during the years ended
December 31, 2009 and 2008:
Audit
Fees: $93,350 and $111,417 for 2009 and 2008, respectively, for services
rendered for the audit of our financial statements and review of the financial
statements included in our Forms 10-K and 10-Q.
ITEM
15 – EXHIBITS
Exhibit
No.
|
Description
of Exhibit
|
3.1
|
Articles
of Incorporation of the Company (filed as Exhibit 3.1 to the Company’s
SB-2 Registration Statement declared effective August 6, 2002 is
incorporated here by reference)
|
3.2
|
By-laws
of the Company (filed as Exhibit 3.2 to the Company’s SB-2 Registration
Statement declared effective August 6, 2002 is incorporated here by
reference)
|
31.1
|
Certification
Pursuant to 302 of the Sarbanes-Oxley Act of 2002
|
31.2
|
Certification
Pursuant to 302 of the Sarbanes-Oxley Act of 2002
|
32.1
|
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
|
32.2 |
Certification
Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of
the Sarbanes-Oxley Act of
2002
|
A current
disclosure on Form 8-K was filed on January 13, 2010 setting forth in detail the
disclosures required related to the reverse merger between Evergreen Global
Investments Ltd. and Exousia’s subsidiary, Exousia Merger Subsidiary I, Inc.,
whereby Evergreen Global Investments Ltd. became a wholly owned subsidiary of
Exousia.
Exhibit
No.
|
Description
of Exhibit
|
1.1
|
Agreement
and Plan of Merger dated as of December 31, 2009 among Evergreen Global
Investments Ltd. and Exousia Merger Subsidiary I, Inc.
|
3.1
|
Certificate
of Designation and Preferences of Series A Convertible Preferred Stock of
Exousia Advanced Materials, Inc.
|
8.1
|
Press
release issued by Exousia on January 13, 2010.
|
49
SIGNATURES
In
accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
Exousia
Advanced Materials, Inc.
(Registrant)
|
By
//s// J. Wayne Rodrigue,
CEO
|
Date:
April 16, 2010
|
In
accordance with the Securities Act, this report has been signed below by the
following persons on behalf of the registrant and in the capacities and on the
dates indicated.
By
//s// Robert Roddie, Senior
VP/CFO/COO
|
Date:
April 16, 2010
|
By
//s// J. Wayne Rodrigue,
Chairman
|
Date:
April 16, 2010
|
By
//s// Robert Lane Brindley,
Director
|
Date:
April 16, 2010
|
By
//s// Michael Beane,
Director
|
Date:
April 16, 2010
|
50