Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] Quarterly Report Pursuant to Section 13 or 15(d) Securities
Exchange Act of 1934 for Quarterly Period Ended June 30, 2011
-OR-
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities And Exchange Act of 1934 for the transaction period from
_________ to________
Commission File Number 000-27279
Energiz Renewable, Inc.
(Exact name of registrant as specified in its charter)
FLORIDA 65-0106255
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
135 First Street
Keyport, New Jersey 07735
(Address of principal executive offices) (Zip Code)
(732) 319-9235
(Registrant's telephone number, including area code)
Indicate by check mark whether the issuer (1) filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.
Yes [x] No [ ]
Indicate by check mark whether the registrant has submitted
electronically and posted on its corporate Web site, if any, every
Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (section 232.405 of this chapter) during the
preceding 12 months (or for such shorter period that the registrant was
required to submit and post such files). Yes [ ] No [ ]
Indicate by check mark whether the registrant is a large accelerated
filer, an accelerated filer, a non-accelerate filer, or a small
reporting company as defined by Rule 12b-2 of the Exchange Act):
Large accelerated filer [ ] Non-accelerated filer [ ]
Accelerated filer [ ] Smaller reporting company [x]
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
Yes [ ] No [x]
The number of outstanding shares of the registrant's common stock,
August 22, 2011: Common Stock - 30,232,300
2
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
FORM 10-Q
For the quarterly period ended June 30, 2011
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 20
Item 3. Quantitative and Qualitative Disclosure About
Market Risk 21
Item 4. Controls and Procedures 21
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 1A. Risk Factors 24
Item 2. Unregistered Sales of Equity Securities and Use
of Proceeds 24
Item 3. Defaults upon Senior Securities 24
Item 4. (Removed and Reserved) 24
Item 5. Other Information 24
Item 6. Exhibits 24
SIGNATURES
3
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
CONSOLIDATED BALANCE SHEETS
June 30, December 31,
2011 2010
---------- ----------
(Unaudited)
ASSETS
CURRENT ASSETS
Cash $ 397 $ 3,300
---------- ----------
Total Current Assets 397 3,300
Total Assets $ 397 $ 3,300
========== ==========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accounts Payable 604,678 489,197
Accrued Expenses 1,061,591 625,210
Advances from shareholders 96,000 95,000
Notes Payable - Demand 393,000 323,000
---------- ----------
Total Current Liabilities 2,155,269 1,532,407
Total Liabilities 2,155,269 1,532,407
STOCKHOLDERS' DEFICIT
Common stock, $.0001 par value,
100,000,000 shares authorized,
30,232,300 shares issued and
outstanding at June 30, 2011
and December 31, 2010 3,022 3,022
Additional paid-in capital 2,939,848 2,895,582
Deficit accumulated during
development stage (5,097,742) (4,427,711)
---------- ----------
Total Stockholders' Deficit (2,154,872) (1,529,107)
Total Liabilities and Stockholders'
Deficit $ 397 $ 3,300
========== ==========
See accompanying notes to consolidated financial statements
4
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the For the For the Period
Three Months Ended Six Months Ended January 15, 1988
June 30, June 30, (Inception) to
------------------ ---------------- June 30,
2011 2010 2011 2010 2011
--------- --------- --------- --------- -----------
Revenues - - - - $ 20,000
COSTS AND EXPENSES
Compensation and
benefits 214,870 406,345 452,855 469,345 3,889,988
Professional fees 77,282 146,382 150,840 146,757 616,653
Travel and Enter-
tainment - 57,509 36,914 71,109 383,931
Other operating
expenses 477 4,194 1,630 4,194 179,876
--------- --------- --------- --------- -----------
Total costs and
expenses 292,629 614,430 642,239 691,405 5,070,448
OPERATING LOSS (292,629) (614,430) (642,239) (691,405) (5,050,448)
INTEREST EXPENSE 16,996 - 27,792 - 47,294
--------- --------- --------- --------- -----------
LOSS BEFORE
INCOME TAXES (309,625) (614,430) (670,031) (691,405) (5,097,742)
PROVISION FOR
INCOME TAXES - - - - -
--------- --------- --------- --------- -----------
NET LOSS $(309,625) $(614,430) $(670,031) $(691,405) $(5,097,742)
========= ========= ========= ========= ===========
NET LOSS PER COMMON
SHARE (Basic and
Diluted) $ (0.01) $ (0.04) $ (0.02) $ (.05)
========= ========= ========= =========
Weighted average
shares outstanding 30,232,300 13,937,300 30,232,300 13,104,800
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
5
ENERGIZ RENEWABLE, INC.
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
For the Period
Six Months Ended January 15, 1988
June 30, (Inception) to
------------------- June 30,
2011 2010 2011
--------- --------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss $(670,031) $(691,405) $(5,097,742)
Adjustments to reconcile net loss to
net cash used in operating
activities -
Stock based compensation 39,522 115,830 1,662,706
Imputed interest 4,744 - 8,391
Changes in operating assets and
liabilities -
Accounts payable 115,481 84,899 669,077
Accrued expenses 436,381 243,000 2,154,791
Advances from shareholders - - 24,635
--------- --------- -----------
Net cash used in operating
activities (73,903) (247,676) (578,142)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from Notes Payable - Demand 70,000 250,000 393,000
Proceeds from advances from management 1,000 - 96,000
Net proceeds from issuance of common
stock - - 89,539
--------- --------- -----------
Net cash provided by financing
Activities 71,000 250,000 578,539
--------- --------- -----------
Net increase (decrease) in cash (2,903) 2,324 397
CASH AT BEGINNING OF PERIOD 3,300 - -
--------- --------- -----------
CASH AT END OF PERIOD $ 397 $ 2,324 $ 397
========= ========= ===========
SUPPLEMENTAL NON CASH ACTIVITIES:
Cash paid for interest $ - $ - $ -
Cash paid for taxes $ - $ - $ -
Forgiveness of amounts due related
parties $ - $ - $ 1,117,163
Payment of accounts payable by
management $ - $ - $ 64,399
See accompanying notes to consolidated financial statements.
6
ENERGIZ RENEWABLE, INC.
Formerly C&G DEC Capital, Inc.
(A Development Stage Company)
Consolidated Statement of Stockholders' Deficit (Unaudited)
Common Stock Additional Deficit
----------------- Paid-in Accumulated During
Shares Amount Capital Development Stage Total
------ ------ ---------- ------------------ -----
January 15, 1988 (Inception) - $ - $ - $ - $ -
Sale of stock, April 1988 90,000 9 32,930 - 32,939
Net loss for year ended
December 31, 1988 - - - (2,550) (2,550)
---------- ------- ----------- ----------- -----------
Balance, December 31, 1988 90,000 9 32,930 (2,550) 30,389
Contributed capital - - 2,600 - 2,600
Net loss for year ended
December 31, 1989 - - - (19,243) (19,243)
---------- ------- ----------- ----------- -----------
Balance, December 31, 1989 90,000 9 35,530 (21,793) 13,746
Sale of stock, November 26,
1990 16,300 2 53,798 - 53,800
Net loss for year ended
December 31, 1990 - - - - -
---------- ------- ----------- ----------- -----------
Balance, December 31, 1990 106,300 11 89,328 (21,793) 67,546
Net loss for year ended
December 31, 1991 - - - (67,546) (67,546)
---------- ------- ----------- ----------- -----------
Balance, December 31, 1991 106,300 11 89,328 (89,339) -
Stock adjustment 400,000 40 (40) - -
Net loss for the years ended
December 31, 1992 to 1999 - - - - -
---------- ------- ----------- ----------- -----------
Balance, December 31, 1999 506,300 51 89,288 (89,339) -
Stock issued for services,
July 2000 2,000,000 200 - - 200
Net loss for year ended
December 31, 2000 - - - (200) (200)
---------- ------- ----------- ----------- -----------
Balance, December 31, 2000 2,506,300 251 89,288 (89,539) -
7
Net loss for the years ended
December 31, 2001 to 2006 - - - - -
---------- ------- ----------- ----------- -----------
Balance, December 31, 2006 2,506,300 251 89,288 (89,539) -
Shares issued to management
and directors at par, March
22, 2007 6,716,000 672 - - 672
Shares issued to management
and directors at par, April
11, 2007 1,500,000 150 - - 150
Shares issued to director at
par, June 14, 2007 50,000 5 - - 5
Shares issued to management
and directors at par,
December 20, 2007 1,500,000 150 16,350 - 16,500
Net loss for the year ended
December 31, 2007 - - - (347,102) (347,102)
---------- ------- ----------- ----------- -----------
Balance, December 31, 2007 12,272,300 1,228 105,638 (436,641) (329,775)
Net loss for the year ended
December 31, 2008 - - - (380,063) (380,063)
---------- ------- ----------- ----------- -----------
Balance, December 31, 2008 12,272,300 1,228 105,638 (816,704) (709,838)
Net loss for the year ended
December 31, 2009 - - - (397,988) (397,988)
---------- ------- ----------- ----------- -----------
Balance, December 31, 2009 12,272,300 1,228 105,638 (1,214,692) (1,107,826)
Shares issued for services 17,960,000 1,794 651,060 - 652,854
Options and warrrant issued
for services - - 953,675 - 953,675
Forgiveness of debt by
management - - 1,117,163 - 1,117,163
Payment of accounts payable
by management - - 64,399 - 64,399
Imputed interest on
shareholder loans - - 3,647 - 3,647
Net loss for the year
ended December 31, 2010 - - - (3,213,019) (3,213,019)
---------- ------- ----------- ----------- -----------
Balance, December 31, 2010 30,232,300 3,022 2,895,582 (4,427,711) (1,529,107)
8
Stock based compensation - - 39,522 - 39,522
Imputed interest on
shareholder loans - - 4,744 - 4,744
Net loss for the six months
ended June 30, 2011 - - - (670,031) (670,031)
---------- ------- ----------- ----------- -----------
Balance, June 30, 2011 30,232,300 $ 3,022 $ 2,939,848 $(5,097,742) $(2,154,872)
========== ======= =========== =========== ===========
See accompanying notes to consolidated financial statements.
9
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE A - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary in order to make the consolidated financial
statements not misleading have been included. Results for the three and
six months ended June 30, 2011 are not necessarily indicative of the
results that may be expected for the not necessarily indicative of the
results that may be expected for the year ending December 31, 2011. For
further information, refer to the financial statements and footnotes
thereto included in the Energiz Renewable, Inc. (the "Company") annual
report on Form 10-K for the year ended December 31, 2010.
NOTE B- NATURE OF BUSINESS:
Energiz Renewable, Inc. (formerly C&G DEC Capital, Inc.), the
"Company", is a Florida corporation which became public when it's
Registration Statement under the Securities Act of 1933 filed with the
Securities and Exchange Commission became effective on July 20, 1990
and closed on December 31, 1990.
The Company was engaged in the publication of a local newspaper. In
1991, the Company ceased doing business and has not engaged in any
enterprises since that time. The Company has remained as a
nonfunctioning non-trading public shell corporation until March 17,
2010 when the change in control occurred (See Note D.) In 2010, the
Company developed a business plan to become an international vertically
integrated energy company. The execution of this business plan is
highly dependant upon the Company raising adequate working capital.
In 2010, the Company formed a subsidiary, ERI Israel, Ltd, which is
wholly owned by the Company. ERI Israel, Ltd had no activity in 2010 or
2011.
NOTE C - GOING CONCERN:
As indicated in the accompanying consolidated financial statements, the
Company incurred net losses of $5,097,742 for the period January 15,
1988 (Inception) to June 30, 2011 and is considered a company in the
development stage. The Company has developed a business plan to become
an international vertically integrated energy company and is attempting
to raise additional capital for investment and working capital
purposes. There is no assurance that the Company will be able to raise
10
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE C - GOING CONCERN (Continued)
adequate additional capital in the equity markets. These matters raise
substantial doubt about the Company's ability to continue as a going
concern. However, the accompanying consolidated financial statements
have been prepared on a going concern basis, which contemplates the
realization of assets and satisfaction of liabilities in the normal
course of business. These consolidated financial statements do not
include any adjustments relating to the recovery of the recorded assets
or the classification of the liabilities that might be necessary should
the Company be unable to continue as a going concern.
NOTE D- CHANGE IN CONTROL
On March 17, 2010, shareholders of the Company that owned 11,658,300
shares out of a total of 12,272,300 issued and outstanding common
shares of the Company entered into an agreement to sell to various new
shareholders an aggregate of 10,492,470 of their common shares of the
Company for an aggregate price of $300,000 with closing to take place
on or before July 18, 2010. Under said agreement, David Brown, the
Company's Chairman of the Board would own 8,789,400 of said shares and
therefore a change of control of the Company would take place at that
time.
On May 10, 2010 a Stock Purchase Agreement Addendum was executed to the
above Stock Purchase Agreement to clarify that Edward T. Whelan and
Richard H. Tanenbaum shall forgive any debt owed by the Company as of
December 31, 2009, so that the Buyer has no further liability to either
for any obligations incurred by the Company arising prior to January 1,
2010. The only obligations remaining was for accounting and legal
services and for services rendered by Edward T. Whelan and/or Richard
H. Tanenbaum to the Company after December 31, 2009.
On August 4, 2010, the Board of Directors of the Company approved the
closing of the stock purchase agreement. As a result, $300,000 in gross
proceeds were received from David Brown and distributed, net of
$100,000 which was utilized to settle debt of the Company, to the
shareholders of the Company in exchange for 10,492,470 shares of common
stock. Of the $100,000 in debt settled by the Company, $35,601 was with
the former Management and principal shareholders.
In connection with the closing of the stock purchase agreement, the
former Management and principal shareholders agreed to forgive a total
of $1,117,163 in accrued expenses and advances and to pay $64,399 in
accounts payable of the Company.
11
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE E - STOCKHOLDERS' DEFICIT
The Company completed a public offering on November 26, 1990.
On July 9, 2000, the Company issued 2,000,000 shares of its common
stock for services rendered by various individuals at par. The shares
were valued at par as the Company had no operations and had nominal
value.
On March 22, 2007, the Company approved and issued 6,716,000 shares of
stock to officers and directors or their assigns at par value of
$0.0001.
On April 11, 2007, the Company approved and issued 1,500,000 shares of
stock to officers and directors or their assigns at par value of
$0.0001. Additionally, the Company approved and issued 50,000 shares to
a director at par value of $0.0001.
On December 20, 2007, the Company approved the issuance of 1,500,000
shares of stock for par value to officers and directors since they had
not been paid for services performed. The shares were valued at par
value of $0.0001 or $150.
On April 21, 2010 the Board of Directors approved an amendment to the
Articles of Incorporation of the Company to increase its authorized
$0.0001 par value common shares from 40,000,000 to 100,000,000. On
April 26, 2010 the Articles of Amendment to Articles of Incorporation
of Energiz Renewable, Inc. was filed with the Florida Secretary of
State.
On May 24, 2010, the Company authorized the issuance of 4,050,000
shares of common stock. 3,000,000 of these shares were issued to
Environmental Energy Enterprises LTD for the services of David Brown as
Chairman of the Company, for bringing business opportunities to the
Company, for the execution of an employment agreement, which was
subsequently approved by the Board of Directors and for the transfer of
the license owned by Energy Enterprises, LTD with Energiz International
to the Company. 1,000,000 shares were issued to Pierre Villeneuve,
400,000 shares of which were for the execution of an employment
agreement, which was subsequently approved by the Board of Directors
and 600,000 of which were for the transfer of the license owned by
Pierre Villeneuve with Energiz International to the Company. The
remaining 50,000 shares were issued to William Walling for compensation
for serving on the Board of Directors of the Company. The 4,050,000
shares were recorded at their fair value of $0.0286 per share, or
$115,830. The fair value was determined based upon the $300,000 cash
consideration received under the Change of Control.
12
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE E- STOCKHOLDERS' DEFICIT (CONTINUED)
The Company did not allocate any value to the license agreements
transferred because (a) the license agreements have a limited term
period of three months (b) are renewable for additional three month
intervals and (c) should the Company not obtain any funding to finance
the projects, the licensors may not renew the licenses.
On August 4, 2010, the Board of Directors approved the issuance of
12,940,000 shares of common stock under various employment and
consulting agreements. These shares were recorded at their fair value
of $0.0286 per share, or $370,084. $217,342 of this amount has been
recognized during the year ended December 31, 2010 and the remaining
$152,742 is being recognized over the remaining lives of the respective
consulting agreements. For the three months ended March 31, 2011, the
Company recognized an additional $18,805 relating to these agreements.
During the year ended December 31, 2010, the Company issued 500,000
shares of common stock under three joint venture agreements. These
shares were recorded at their fair value of $0.0286 per share, or
$14,300.
On October 12, 2010, the Board of Directors approved the issuance of
270,000 shares of common stock under three consulting agreements,
effective September 30, 2010. These shares were recorded at their fair
value of $0.0286 per share, or $7,722. Of this amount, $5,382 has been
recognized during the year ended December 31, 2010 and the remaining
$2,340 is being recognized over the remaining lives of the respective
consulting agreements. For the three months ended March 31, 2011, the
Company recognized an additional $846 relating to these agreements.
The fair value of the above transactions was determined based upon the
$300,000 cash consideration received under the Change in Control (See
Note D.)
On November 21, 2010, the Company approved the issuance of 200,000
shares of common stock to its' former Chief Financial Officer for
services. These shares were recorded at their fair value of $1.50 per
share, or $300,000 and recognized in the year ended December 31, 2010.
NOTE F- NOTES PAYABLE- DEMAND
On April 12, 2010, the Company received $100,000 from an investor under
a Promissory Note dated April 8, 2010. The Note was payable on demand
or before October 8, 2010. The Note bears interest at 8% per annum. If
the Note was not paid prior to December 31, 2010, the interest rate
would rise to 12% per annum. On December 22, 2010, the investor agreed
to extend this Promissory Note for the period through June 15, 2011. On
13
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
June 16, 2011, the investor agreed to extend this Promissory Note for
the period through September 15, 2011. The interest rate on this Note
over the extension periods is 12%.
On various dates in 2010, the Company received a total of $175,000 from
the spouse of the Chairman of the Company under a Promissory Note. This
Promissory Note was formalized in writing on July 14, 2010. The Note
was payable on demand or before December 20, 2010. The Note bears
interest at 10% per annum. If the Note was not paid prior to December
31, 2010, the interest rate would rise to 12% per annum. On April 8,
2011, the spouse of the Chairman agreed to extend this Promissory Note
for the period December 20, 2010 through December 20, 2011. The
interest rate on this Note over the extension period is 12%.
On November 24, 2010, the Company received $48,000 from an investor
under a Promissory Note dated November 24, 2010. The Note is payable on
demand or before November 24, 2011. The Note bears interest at 8% per
annum. If the Note is not paid prior to December 1, 2011, the interest
rate will rise to 10% per annum.
On January 27, 2011, the Company received $50,000 from an investor
under a Promissory Note dated January 27, 2011. The Note is payable on
demand or before January 27, 2012. The Note bears interest at 8% per
annum. If the Note is not paid prior to January 27, 2012, the interest
rate will rise to 10% per annum.
On March 26, 2011, the Company received $20,000 from the spouse of the
Chairman of the Company under a Promissory Note dated March 26, 2011.
The Note is payable on demand or before December 20, 2011. The Note
bears interest at 10% per annum. If the Note is not paid prior to
December 31, 2011, the interest rate will rise to 12% per annum.
Interest expense of $38,903 has been accrued on these notes through
June 30, 2011.
NOTE G- RELATED PARTY TRANSACTIONS
The Company has borrowed a total of $96,000 from a Company controlled
by its' Chief Executive Officer. These loans are non interest bearing
and have no repayment terms. The Company has imputed interest at 10%
amounting to $8,391 through June 30, 2011.
Combined, the Chairman and the CEO of the Company own over 52% of the
outstanding common stock of the Company at June 30, 2011 As such, the
Chairman and the CEO have the effective power to control the vote on
substantially all significant matters without the approval of other
shareholders.
14
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE H- EMPLOYMENT AND CONSULTING AGREEMENTS
On March 25, 2010, the Company engaged the Law Offices of SEC
Attorneys, LLC. The Company agreed to pay an annual fee of $66,000,
payable at $5,550 per month. This agreement ended on on June 1, 2011.
On May 2, 2010, the Board of Directors approved an employment agreement
with Pierre Villeneuve. The agreement was approved retroactive to
February 2, 2010, for a base salary of $120,000 for a three year term.
The agreement renews automatically for two additional three year terms.
The agreement allows for up to $5,000 as an automobile allowance. The
agreement can be terminated without cause by either party, however the
employee will receive 3 years compensation as severance if the
agreements are terminated by the Company. Under the agreement, the
employee received 400,000 shares for the execution of the employment
agreement and 600,000 of which were for the transfer of the license
owned by Pierre Villeneuve with Energiz International to the Company.
On August 4, 2010, the Board of Directors approved a consulting
agreement with Richard Tanenbaum, the former President of the Company,
for legal services. The agreement was approved retroactively to January
1, 2010. The agreement covers the following services: (1) drafting of
Stock Purchase Agreement and facilitating sale of the Company, (2) the
preparation of a Private Placement Memorandum in conjunction with
others: (3) drafting of contracts, joint venture agreements, etc., with
Apollon Solar, Energiz SA and Vincent Industries; (4) drafting of such
other documents as may be required in the efforts of the Company to
finance and operate a company which is intended to be a major
participant in the solar energy industry, a partner in new technologies
in the domain, a manufacturing company and other projects in various
countries throughout the world, including, but not limited to Israel,
United States, France, Italy and others; (5) service on the Advisory
Committee of ERI and (6) such other matters on an as requested basis.
Compensation for the first item above was 600,000 shares of common
stock immediately upon closing of the Stock Purchase Agreement. The
attorneys' fees for the performance of items two through four above
shall be a fixed rate retainer of $12,000 per month, payable on the
first of each month, for up to 60 hours per month of time/services
rendered by Richard H. Tanenbaum. This option is exercisable only upon
execution hereof and shall be deemed effective as of January 1, 2010
and may not be canceled absent lack of performance by Richard H.
Tanenbaum for a period of 12 months. As of January 1, 2011 it shall
automatically be extended for another 12 month period, absent
termination by either party on or before December 31, 2010. If less
than 60 hours of service are required in any given month there shall be
no credit therefore. If more than 60 hours of service are required in
any given month such shall be billed at 90% of the attorneys' normal
hourly rates. In addition, for performing item five above, Richard H.
15
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE H- EMPLOYMENT AND CONSULTING AGREEMENTS (Continued)
Tanenbaum shall be paid such stock or provided stock options in ERI on
a basis similar to that provided to David Brown, Pierre Villeneuve,
Edward T. Whelan and other key employees.
On August 4, 2010, the Board of Directors approved Employment
Agreements with David Brown, Chairman of the Board and Secretary, and
Edward Whelan, President and Board Member. Each of these agreements was
approved retroactive to January 1, 2010, and are for a base salary of
$180,000 each for a three year term. Each agreement renews
automatically for two additional three year terms. Each base salary
shall be increased, but not decreased, by the percentage increase in
the Company's stock price during the preceding year, with a maximum
increase of 50%. Each individual shall receive 1,500,000 options,
500,000 to be issued on December 31, 2010 and exercisable at $0.50,
500,000 to be issued on December 31, 2011 and exercisable at $1.50 and
500,000 to be issued on December 31, 2010 and exercisable at $0.50,
500,000 each to be issued on December 31, 2012 and exercisable at
$2.50. Each individual is allowed up to $5,000 for an automobile
allowance. These agreements can be terminated without cause by either
party, however each individual shall receive 3 years compensation as
severance if the agreements are terminated by the Company.
Additionally, Edward Whelan was issued 8,000,000 shares of common stock
under his employment agreement.
On August 4, 2010, the Board of Directors also approved the issuance of
600,000 shares each to Richard Tanenbaum and Edward Whelan for
consulting services performed in facilitating the Stock Purchase
Agreement.
On August 4, 2010, the Board of Directors also approved the issuance of
a total of 3,240,000 shares of common stock to various employees and
consultants for services. No formal employment or consulting agreements
exist with these individuals.
On October 12, 2010, the Board of Directors approved the issuance of
270,000 shares of common stock under three consulting agreements which
were effective during the three months ended September 30, 2010.
The first agreement was with R.F. Lafferty & Co., Inc. ("Lafferty")
which was effective July 7, 2010. As compensation, the Company agreed
to pay to Lafferty, or its designees, 150,000 restricted common shares
of the Company, a warrant to purchase 150,000 shares of the Company's
stock at an exercise price of $3. This warrant has cashless exercise
rights and expires at the latest date of any securities issued under
the consulting agreement, but in no event expiring in less than three
years from date of issuance. Additionally, Lafferty will be paid
stipulated proceeds from any financing that is executed.
16
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE H- EMPLOYMENT AND CONSULTING AGREEMENTS
The second agreement was with Thomas Hanlon, and was effective
September 1, 2010 and has a term of one year. As compensation, the
Company agreed to pay to Thomas Hanlon 100,000 common shares of the
Company. Additionally, Thomas Hanlon will be paid stipulated proceeds
from any financing that is executed.
The third agreement was with Ma'alot Green Ltd. P.C. ("Green") for
assistance in the purchase and development of industrial plant for the
manufacture and/or assembly of systems and/or equipment and/or
installations in the field of renewable energy in Yeruham, Israel.
Under the agreement, the Company paid Green 60,000 Israeli Shekels.
At June 30, 2011, the Company owed its' former Chief Financial Officer
$35,000.
NOTE I- JOINT VENTURE AGREEMENTS
On May 3, 2010, the Company entered into a Joint Venture Agreement with
Corville Development GMBH for the development of up to 5 sites in
Italy. The Company will have the option to develop each of these sites.
The development of these sites is contingent on receiving government
grants and private financing. The Company has agreed to issue 250,000
shares of common stock within 30 days of closing the agreement, 100,000
shares of stock within 30 days of any plants connecting 10 megawatts
("MW") to the electrical grid, and 100,000 shares of stock within 30
days of any plants connecting 20 MW to the electrical grid.
In June 2010, the Company entered into a Joint Venture Agreement with
Energiz America for the development of up to 5 sites in Canada. The
Company will have the option to develop each of these sites. The
development of these sites is contingent on receiving government grants
and private financing. The Company has agreed to issue 100,000 shares
of common stock within 30 days of closing the agreement and 100,000
shares of stock within 30 days of any plants connecting 10 MW to the
electrical grid.
On July 2, 2010, the Company entered into a Joint Venture Agreement
with WREG SLR for the development of up to 5 sites in Romania. The
Company will have the option to develop each of these sites. The
development of these sites is contingent on receiving government grants
and private financing. The Company has agreed to issue 150,000 shares
of common stock within 30 days of closing the agreement and 150,000
shares of stock within 30 days of any plants connecting 10 MW to the
electrical grid.
To date, the Company has not developed any sights relating to the above
joint ventures.
17
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE J- COMMITMENTS AND CONTINGENCIES
In relation to employment and consulting agreements noted above, the
following are the future commitments:
Year Amount
2011 $ 240,000
2012 480,000
2013 480,000
2014 480,000
2015 480,000
Thereafter 1,440,000
----------
$3,600,000
NOTE K- WARRANTS
In connection with the Lafferty consulting agreement, the Company
issued a warrant to purchase 150,000 shares of the Company's common
stock at $3.00 per share. The following summarizes the activity for the
six months ended June 30, 2011:
Weighted
Average Weighted
Exercise Average
Outstanding Exercisable Price Life
----------- ----------- -------- --------
Outstanding December 31, 2010 150,000 150,000 $ 3.00 2.52 years
Issued - -
Exercised - -
Cancelled/ Forfeited - -
--------- --------- ------ ----------
Outstanding, June 30, 2011 150,000 150,000 $ 3.00 2.02 years
========= ========= ====== ==========
The Company determined the fair value of the warrants to be $3,675, or
$0.0245 per warrant, at the date of grant using the Black-Scholes
option pricing model. The following assumptions were used to calculate
the fair value of the warrants:
Dividend yield 0%
Volatility 377%
Risk-free interest rate 2.20%
Expected life 1.5 years
Grant date stock price $0.0245
18
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE L- STOCK OPTIONS
On April 11, 2011, the Board of Directors approved the issuance of
500,000 options each to its' Chairman and Chief Executive Officer,
effective December 31, 2010. These options were issued in accordance
with the employment contracts with these individuals. The options vest
immediately, are exercisable at $0.50 and expire on December 31, 2013.
The following summarizes the activity for the six months ended June 30,
2011:
Weighted
Average Weighted
Exercise Average
Outstanding Exercisable Price Life
----------- ----------- -------- --------
Outstanding December 31, 2010 1,000,000 1,000,000 $ 0.50 3 years
Issued - -
Exercised - -
Cancelled/ Forfeited - -
--------- --------- ------ ----------
Outstanding, June 30, 2011 1,000,000 1,000,000 $ 0.50 2.51 years
========= ========= ====== ==========
The aggregate intrinsic value of the exerbcisable options was $700,000
at December 31, 2010. The Company determined the fair value of the
warrants to be $950,000, or $0.95 per option, at the date of grant
using the Black-Scholes option pricing model. The following assumptions
were used to calculate the fair value of the options:
Dividend yield 0%
Volatility 111%
Risk-free interest rate 1.50%
Expected life 3 years
Grant date stock price $ 1.20
NOTE M - INCOME TAXES
The Company follows FASB ASC 740, Income Taxes and recognizes a
deferred tax liability or asset for temporary differences between the
tax basis of an asset or liability and the related amount reported on
the financial statements. The principal types of differences, which are
measured at the current tax rates, are net operating loss carry
forwards. At June 30, 2011 and December 31, 2010, these differences
resulted in a deferred tax asset of approximately $857,000 and
$700,000, respectively. FASB ASC 740 requires the establishment of a
19
ENERGIZ RENEWABLE, INC. AND SUBSIDIARY
(Formerly C&G DEC Capital, Inc.)
(A Development Stage Company)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2011
(UNAUDITED)
NOTE M - INCOME TAXES (CONTINUED)
valuation allowance to reflect the likelihood of realization of
deferred tax assets. Since realization is not assured, the Company has
recorded a valuation allowance for the entire deferred tax asset, and
the accompanying financial statements do not reflect any net asset for
deferred taxes at June 30, 2011 or December 31, 2010.
The Company's net operating loss carry forwards amounted to
approximately $3,337,000 and $2,712,000 at June 30, 2011 and December
31, 2010, respectively and will expire between 2015 and 2026.
NOTE N- SUBSEQUENT EVENTS
On August 3, 2011, the Company borrowed an additional $500 from a
Company controlled by its' Chief Executive Officer. This loan is non
interest bearing and has no repayment terms.
20
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
Trends and Uncertainties. Demand for the Company's services and
products are dependent on, among other things, general economic
conditions which are cyclical in nature. The Company's business
operations may be adversely affected by the Company's competitors and
prolonged recessionary periods.
There are no known trends, events or uncertainties that have or are
reasonably likely to have a material impact on the Company's short term
or long term liquidity. Sources of liquidity both internal and
external will come from the sale of the Company's services and products
as well as the private sale of the Company's stock. There are no
trends, events or uncertainties that have had or are reasonably
expected to have a material impact on the net sales or revenues or
income from continuing operations. There are no significant elements
of income or loss that do not arise from the Company's continuing
operations. There are no known causes for any material changes from
period to period in one or more line items of the Company's financial
statements.
Liquidity and Capital Resources. As of June 30, 2011, the Company's
cash on hand was $397.
For the six months ended June 30, 2011 and 2010, the Company did not
pursue any investing activities.
For the six months ended June 30, 2011, the Company received proceeds
from Notes Payable - Demand of $70,000 and proceeds from advances from
management of $1,000. As a result, the Company had net cash provided
by financing activities of $71,000 for the six months ended June 30,
2011
For the six months ended June 30, 2010, the Company received proceeds
from Notes Payable - Demand of $250,000 resulting net chase from
financing activities of $250,000.
Results of Operations. Since March 17, 2010, we have resumed
operations as a business. We are a US publicly traded company on the
Over The Counter Pink Sheets trading under the symbol ERIP.PK. We
intend to become an international vertically integrated renewable
energy company. We are implementing our business model by initially
establishing ourselves as a vertically integrated solar energy company,
from production of solar panels through project acquisition,
development, financing, installation and management, up to being an
independent power producer.
21
For the Three Months Ended June 30, 2011 compared to June 30, 2010
------------------------------------------------------------------
For the three months ended June 30, 2011 and 2010, we did not receive
any revenue.
Operating expenses decreased from $614,430 for the three months ending
June 30, 2010 to $292,629 for the same period in 2011. This was mainly
due to decrease in compensation and benefits from $406,345 for the
three months ending June 30, 2010 to $214,870 for the same period in
2011, a decrease in professional fees from $146,382 for the three
months ending June 30, 2010 to $77,282 for the same period in 2011, a
decrease in travel and entertainment expenses from $57,509 for the
three months ending June 30, 2011 to $0 for the same period in 2011.
The net loss decreased from $614,430 for the three months ending June
30, 2010 to $309,625 for the same period in 2011.
For the Six Months Ended June 30, 2011 compared to June 30, 2010
------------------------------------------------------------------
For the six months ended June 30, 2011 and 2010, we did not receive any
revenue.
Operating expenses decreased from $691,405 for the six months ending
June 30, 2010 to $642,239 for the same period in 2011. This was mainly
due to a decrease in compensation and benefits from $469,345 for the
six months ending June 30, 2010 to $452,855 for the same period in
2011, a slight increase in professional fees from $146,757 for the six
months ending June 30, 2010 to $150,840 for the same period in 2011, a
decrease in travel and entertainment expenses from $71,109 for the six
months ending June 30, 2010 to 36,914 for the same period in 2011.
The net loss decreased from $619,405 for the six months ending June 30,
2010 to $670,031 for the same period in 2011.
Going Concern
The accompanying consolidated financial statements have been prepared
on a going concern basis, which contemplates the realization of assets
and the satisfaction of the liabilities in the normal course of
business. The Company has incurred losses of approximately $(670,031)
and $(691,405) during the six months ended June 30, 2011 and the six
months ended June 30, 2010, respectively. These conditions raise
substantial doubt about its ability to continue as a going concern.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Not applicable for smaller reporting companies.
Item 4. Controls and Procedures
Our management is responsible for establishing and maintaining adequate
internal control over financial reporting. Internal control over
financial reporting is defined in Rules 13a-15(f) and 15(d)-15(f) under
the Exchange Act as a process designed by, or under the supervision of
22
a company's principal executive and principal financial officer and
effected by a company's board of directors, management and other
personnel to provide reasonable assurance regarding the reliability of
financial reporting and the preparation of financial statements for
external purposes in accordance with generally accepted accounting
principles.
We conducted an evaluation, with the participation of our Chief
Executive Officer and Chief Financial Officer, of the effectiveness of
the design and operation of our disclosure controls and procedures, as
defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange
Act of 1934, as amended, or the Exchange Act, as of March 31, 2011, to
ensure that information required to be disclosed by us in the reports
filed or submitted by us under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
Securities Exchange Commission's rules and forms, including to ensure
that information required to be disclosed by us in the reports filed or
submitted by us under the Exchange Act is accumulated and communicated
to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as
appropriate to allow timely decisions regarding required disclosure.
Based on that evaluation, our Chief Executive Officer and Chief
Financial Officer have concluded that as of June 30, 2011, our
disclosure controls and procedures were not effective at the reasonable
assurance level due to the material weaknesses described below.
A material weakness is a control deficiency (within the meaning of the
Public Company Accounting Oversight Board (PCAOB) Auditing Standard No.
2) or combination of control deficiencies, such that there is a
reasonable possibility that a material misstatement of the annual or
interim financial statements will not be prevented or detected.
Management has identified the following three material weaknesses that
have caused management to conclude that, as of March 31, 2011, our
disclosure controls and procedures were not effective at the reasonable
assurance level:
1. We do not have formalized documentation related to our internal
control policies and procedures; however, there are informal policies
and procedures that cover the recording and reporting of financial
transactions. Written documentation of key internal controls over
financial reporting is a requirement of Section 404 of the Sarbanes-
Oxley Act and was applicable to us for the year ending December 31,
2010. Management evaluated the impact of our failure to have written
documentation of our internal controls and procedures on our assessment
of our disclosure controls and procedures and has concluded that the
control deficiency that resulted represented a material weakness.
2. We do not have sufficient segregation of duties within accounting
functions, which is a basic internal control. Due to our size and
nature, segregation of all conflicting duties may not always be
possible and may not be economically feasible. However, to the extent
possible, the initiation of transactions, the custody of assets and the
recording of transactions should be performed by separate individuals.
Management evaluated the impact of our failure to have segregation of
23
duties on our assessment of our disclosure controls and procedures and
has concluded that the control deficiency that resulted represented a
material weakness.
3. We do not have sufficient personnel working on our accounting
functions to ensure we can timely file our quarterly and annual
reports, as indicated by the filing of this annual report after the
original due date (but within the extension period). Management
evaluated the impact of our lack of internal accounting personnel to
ensure we can timely file our required quarterly and annual reports and
has concluded that the control deficiency that resulted represented a
material weakness.
Changes in Internal Control over Financial Reporting
There were no changes in our internal control over financial reporting,
as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act,
during our most recently completed fiscal quarter from prior periods
that have materially affected, or are reasonably likely to materially
affect, our internal control over financial reporting.
24
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Edward T. Whelan, our chief executive officer, chief financial officer
and director received a Wells notice on June 14, 2010 informing him
that the staff of the Securities and Exchange Commission intended to
recommend that the SEC file a complaint in Federal District Court
against him and Grace Holding, Inc., an entity controlled by Mr. Whelan
that is a shareholder of the Company. The complaint would allege that
they both violated Section 10(b) of the Securities Exchange Act of 1934
and Rule 10b-5 for misappropriation of funds and the manipulation of a
stock unrelated to the Company. Without admitting or denying the
allegations, Mr. Whelan agreed to a final judgment relating to this
matter providing for a three year penny stock bar and a fine of $37,000
that has not yet been paid.
Item 1A. Risk Factors
Not applicable for smaller reporting companies
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. (Removed and Reserved)
Item 5. Other Information
None
Item 6. Exhibits
Exhibit 31* - Certifications pursuant to Section 302 of the Sarbanes-
Oxley Act of 2002
Exhibit 32* - Certifications pursuant to Section 906 of the Sarbanes-
Oxley Act of 2002
Exhibit 101.INS** XBRL Instance Document
Exhibit 101.SCH** XBRL Taxonomy Extension Schema Document
Exhibit 101.CAL** XBRL Taxonomy Extension Calculation Linkbase
Document
Exhibit 101.DEF** XBRL Taxonomy Extension Definition Linkbase
Document
Exhibit 101.LAB** XBRL Taxonomy Extension Label Linkbase Document
Exhibit 101.PRE** XBRL Taxonomy Extension Presentation Linkbase
Document
* Filed herewith
**XBRL (Extensible Business Reporting Language) information is
furnished and not filed or a part of a registration statement or
prospectus for purposes of Sections 11 or 12 of the Securities Act of
1933, as amended, is deemed not filed for purposes of Section 18 of the
Securities Exchange Act of 1934, as amended, and otherwise is not
subject to liability under these sections.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this Report to be signed on its behalf
by the undersigned thereunto duly authorized.
Dated: August 22, 2011
Energiz Renewable, Inc.
By: /s/Edward T. Whelan
---------------------------
Edward T. Whelan
Chief Executive Officer
Principal Financial Officer
