Attached files
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
ESSENSE WATER, INC.
(Exact name of registrant as specified in its charter)
Nevada 2080 27-0265042
------ ---- ----------
(State or Other (Primary Standard (IRS Employer
Jurisdiction of Industrial Identification
Incorporation or Classification Number)
Organization) Number)
4327 S Pittsburg
Spokane, Washington 99203
(509)995-2433/(509)448-4956 FAX
(Address, including zip code, and telephone number, including area code,
of registrant's principal executive offices)
Mr. Jeffrey Nichols, Esq
811 6th Avenue
Lewiston, Idaho 83501
(415)314-9088/(800)219-4345 FAX
(Name, address, including zip code, and telephone number, including area
code, of agent for service)
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Approximate date of proposed sale to the public: As soon as practicable and
from time to time after the effective date of this Registration Statement.
If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. ?
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following
box and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. ?
If this Form is a post-effective registration statement filed pursuant to
Rule 462(c) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: ?
If this Form is a post-effective registration statement filed pursuant to
Rule 462(d) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering: ?
Indicate by check mark whether the registrant is a large accelerated filer,
an accelerated filer, a non-accelerated filer, or a smaller reporting
company. See the definitions of "large accelerated filer," "accelerated
filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.
(check one):
Large accelerated filer [ ] Accelerated Filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
CALCULATION OF REGISTRATION FEE
Title of Each Proposed Proposed
Class of Maximum Maximum Amount of
Securities to Amount to be Offering Price Aggregate Registration
be Registered Registered Per Unit Offering Price Fee
------------- ---------- ------------ ------------- ---------
Common Stock par
Value $.0001
per share 8,000,000 $0.025 $200,000 $22.92
Common Stock par
Value $.0001
per share 1,260,000 $0.025 $ 31,500 $ 3.61
TOTAL 9,260,000 $0.025 $231,500 $26.53
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(1) In the event of a stock split, stock dividend or similar transaction
involving our common stock, the number of shares registered shall
automatically be increased to cover the additional shares of common stock
issuable pursuant to Rule 416 under the Securities Act of 1933, as amended.
(2) The registration fee for securities to be offered by the Registrant is
based on an estimate of the proposed maximum aggregate offering price of the
securities, and such estimate is solely for the purpose of calculating the
registration fee pursuant to Rule 457(o).
(3) This registration statement also covers the resale by the selling
stockholders of the Registrant of up to 1,260,000 shares of common stock,
$0.0001 par value per share (the "Common Stock").
(4) The offering price has been estimated solely for the purpose of computing
the amount of the registration fee in accordance with Rule 457(o). Our common
stock is not traded on any national exchange and in accordance with Rule 457,
the offering price for the selling shareholders has been determined by the
price of the shares concurrently being offered for sale by the Company. The
price of $0.025 is a fixed price at which the selling stockholders may sell
their shares until our common stock is quoted on the OTC Bulletin Board, at
which time the shares may be sold at prevailing market prices or privately
negotiated prices.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS
REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933, OR UNTIL THE REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING
PURSUANT TO SECTION 8(A), MAY DETERMINE.
PROSPECTUS
THE INFORMATION IN THIS PRELIMINARY PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THESE SECURITIES MAY NOT BE SOLD UNTIL THE REGISTRATION STATEMENT
FILED WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION ("SEC") IS EFFECTIVE.
THIS PRELIMINARY PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT
IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY JURISDICTION WHERE
THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION DATED APRIL ___, 2012
PRELIMINARY PROSPECTUS ESSENSE WATER, INC.
8,000,000 SHARES OF COMMON STOCK 1,260,000 SHARES OF COMMON STOCK
OFFERRED BY ESSENSE WATER, INC. OFFERRED BY SELLING STOCKHOLDERS
This Prospectus relates to both (i) a public offering of our common stock, in
which we are offering a maximum of 8,000,000 shares of common stock, and (ii)
the resale by certain selling stockholders of Essense Water, Inc. of up to
1,260,000 shares of common stock held by selling stockholders of Essense
Water, Inc.
We are offering for sale 8,000,000 shares of common stock at a fixed price of
$0.025 per share. There is no minimum number of shares that must be sold by
us for the Offering to proceed. We will retain the proceeds from the sale of
any of shares being offered by the Company. The Offering is being conducted
on a self-underwritten, best efforts basis, which means management, will be
selling the shares. This Prospectus will permit our President, Kevin Nichols,
to sell the shares directly to the public, with no commission or other
remuneration payable to him for any shares that he may sell. Mr. Nichols will
sell the shares being offered by the Company and intends to offer them to
family members, friends, and business acquaintances. In this Offering of the
securities on our behalf, he will rely on the safe harbor from broker-dealer
registration set out in Rule 3a4-1 under the Securities and Exchange Act of
1934. The shares will be offered at a fixed price of $0.025 per share for a
period of 12 months from the effective date of this Prospectus.
In the resale by certain selling stockholders, the selling stockholders will
be offering their shares of our common stock at a fixed price of $0.025 per
share until such time as our shares are quoted on the OTC Bulletin Board (if
ever so quoted), and thereafter at prevailing market prices or privately
negotiated prices. Each of the selling stockholders may be deemed to be an
"underwriter" as such term is defined in the Securities Act of 1933, as
amended (the "Securities Act").
All funds that we raise from our offering of 8,000,000 shares will be
immediately available for our use and will not be returned to investors. We
do not have any arrangements to place the funds received from our offering of
shares of common stock in an escrow, trust, or similar account. Accordingly,
if we file for bankruptcy protection or a petition for involuntary bankruptcy
is filed by creditors against us, your funds will become part of the
bankruptcy estate and administered according to the bankruptcy laws. If a
creditor sues us and obtains a judgment against us, the creditor could
garnish the bank account and take possession of the subscriptions. As such,
it is possible that a creditor could attach your subscription which could
preclude or delay the return of money to you. If that happens, you will lose
your investment and your funds will be used to pay creditors.
INVESTING IN OUR COMMON STOCK INVOLVES A HIGH DEGREE OF RISK. BEFORE BUYING
ANY SHARES, YOU SHOULD CAREFULLY READ THE DISCUSSION OF MATERIAL RISKS OF
INVESTING IN OUR COMMON STOCK IN "RISK FACTORS" BEGINNING ON PAGE 9 OF THIS
PROSPECTUS. NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF ANYONE'S INVESTMENT IN
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THE DATE OF THIS PROSPECTUS IS ________________, 2012
TABLE OF CONTENTS
Page
Prospectus Summary 3
Risk Factors 6
Risk Factors Relating to Our Business 6
Risk Factors Relating to Our Common Stock 12
Use of Proceeds 15
Determination of Offering Price 17
Selling Stockholders 17
Dilution 19
Plan of Distribution 20
Description of Securities 26
Interests of Named Experts and Counsel 27
Experts 27
Description of Business 27
Description of Property 33
Legal Proceedings 33
Market for Common Equity and Related Stockholder Matters 33
Management's Discussion and Analysis of Financial
Condition and Results of Operations 33
Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure 36
Directors, Executive Officers, Promoters and Control Persons 37
Executive Compensation 40
Security Ownership of Certain Beneficial Owners and Management 41
Certain Relationships and Related Party Transactions 42
Where You Can Find More Information 42
Disclosure of Commission Position on Indemnification
for Securities Act Liabilities 43
Index to Financial Statements F-1
Financial Statements F-2 thru F-16
Other Expenses of Issuance and Distribution II-1
Indemnification of Directors and Officers II-1
Recent Sales of Unregistered Securities II-1
Exhibits II-2
Undertakings II-2
Signatures II-4
This Prospectus must be read carefully. It describes and sets forth our
business, financial condition, and results of operations. We have prepared
this Prospectus so that you will have the information necessary to make an
informed investment decision.
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this Prospectus. You
should not rely on any unauthorized information. This Prospectus is not an
offer to sell or buy any shares in any state or other jurisdiction in which
it is unlawful. The information in this Prospectus is current as of the date
on the cover. You should rely only on the information contained in this
Prospectus.
-2-
PROSPECTUS SUMMARY
AS USED IN THIS PROSPECTUS, UNLESS THE CONTEXT OTHERWISE REQUIRES, "WE,"
"US," "OUR," THE "COMPANY," AND "ESSENSE" REFERS TO ESSENSE WATER, INC. THE
FOLLOWING SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE INFORMATION
THAT MAY BE IMPORTANT TO YOU. YOU SHOULD READ THE ENTIRE PROSPECTUS BEFORE
MAKING AN INVESTMENT DECISION TO PURCHASE OUR COMMON STOCK.
ESSENSE WATER, INC.
We are a development-stage company that intends to develop, market, and
distribute a consumer water-based beverage. This beverage will most likely
include ingredients that may provide additional benefit to the user beyond
those derived from just water. The Company's beverages will be targeted to
the growing category of functional beverage consumers who may be looking to
get more from their bottled beverage than just plain water.
Essense Water, Inc. was incorporated in Nevada on January 29, 2009. We intend
to use the net proceeds from this offering to further develop our business
operations (See "Description of Business" and "Use of Proceeds"). Being a
development stage company, we have yet to produce any operating revenue and
have limited operating history. Our principal executive offices are located
at 4327 S Pittsburg St., Spokane, WA 99203.Our phone number is (509)994-2433.
From inception until the date of this filing, we have had limited operating
activities. Our financial statements from inception (January 29, 2009)
through February 29, 2012, report no revenues and a net loss of $29,284. Our
independent registered public accountant has issued an audit opinion for the
Company, which includes a statement expressing substantial doubt as to our
ability to continue as a "going concern."
We had previously offered our shares for sale by way of a similar Form S-1
Offering (which became effective June 9, 2010) and concurrently became a
reporting issuer under the Securities Exchange Act of 1934, as amended. We
believe that our doing so provides us with greater access to capital, that we
will become better known, and be better able to obtain financing in the
future.
In its previous S-1 Offering, the Company was unsuccessful in raising its
"minimum" amount of funding as set forth within the Prospectus and, as a
result, decided to cancel the offering. The minimum amount of funding in that
offering was set at $20,000, while the maximum offering amount was $200,000.
The Company expects that its revenues will come from the sale of its water-
based beverage(s) and we anticipate that our operations will begin to
generate revenue approximately 6 to 12 months following the date of this
Prospectus. There is no guarantee that we will ever generate revenues and we
have been surviving solely by cash advances that have been provided as needed
by our Founder, Kevin Nichols. There is and has been no agreement in place
for him to continue providing this funding.
-3-
We are a development stage company with only limited operations to date. Any
investment in the shares offered herein involves a high degree of risk. You
should only purchase shares if you can afford a loss of your entire
investment. Our independent registered public accountants have issued an
audit opinion which includes a statement expressing substantial doubt as to
our ability to continue as a "going concern." Since there is no minimum
amount of shares that must be sold by the Company, it is possible that we may
receive no proceeds or only very minimal proceeds from the offering and
potential investors may end up holding shares in a Company that:
- has not received enough proceeds from the Offering to begin operations;
and
- has no market for its shares.
There has been no market for our securities and a public market may never
develop. Our common stock is not traded on any exchange or quoted on the
over-the-counter market. After the effective date of this registration
statement relating to this Prospectus, the Company hopes to have a market
maker file an application with the Financial Industry Regulatory Authority
("FINRA") for our common stock to be eligible for trading on the Over-the-
Counter Bulletin Board.
The Company has no plan, agreement, arrangement, or understanding to engage
in a merger or acquisition with an unidentified company or companies, or
other entity or person.
THE OFFERING
The Issuer: Essene Water, Inc.
Securities Being 8,000,000 shares of common stock being offered by
Offerred: the Company and 1,260,000 shares of common stock being
offered by Selling Stockholders
Price per Share $0.025
Common stock
Outstanding before
the Offering 12,000,000 shares
Common stock
Outstanding after
the Offering 20,000,000 shares
Duration of the
Offering 12 months
Net Proceeds: If 25% of the shares are sold $ 50,000
If 50% of the shares are sold $100,000
If 75% of the shares are sold $150,000
If 100% of the shares are sold $200,000
Securities Issued There are 12,000,000 shares of our common stock issued
and Outstanding and outstanding as of the date of this Prospectus.
-4-
Use of Proceeds We intend to use the net proceeds from the sale of our
8,000,000 (after deducting estimated offering expenses
payable by us) for professional fees, general business
development including trademark, packaging design, and
bottling, marketing and promotion, and administration
expenses. See "Use of Proceeds" on page 15 for more
information.
We will not receive any proceeds from the sale of shares
of common stock by the selling stockholders who are
simultaneously offering 1,260,000 shares of common stock
under this Prospectus.
Registration Costs: We estimate our total offering registration costs to be
Approximately $4,000.
Risk Factors: See "Risk Factors" and the other information in this
Prospectus for a discussion of the factors you should
consider before deciding to invest in shares of our
common stock.
SUMMARY FINANCIAL INFORMATION
The tables and information below are derived from our audited financial
statements for the period from January 29, 2009 (Inception) to our most
recent fiscal year end of August 31, 2011, and our unaudited financial
statements through the most recent six months ended February 29, 2012. As of
February 29, 2012, our current cash balance was $1,932
FINANCIAL SUMMARY
August 31,
2011
Cash and Deposits $ 157
Total Assets $ 157
Total Liabilities $ 23,002
Total Stockholders' Equity (Deficit) $ (22,845)
Inception
to February
29, 2012
Statement of Operations
Total Expenses $ 29,352
Net Loss for the Period $ 29,352
February 29
2012
Financial Summary (Unaudited)
Cash and Deposits $ 1,932
Total Assets $ 1,932
Total Liabilities $ 29,284
Total Stockholders' Equity (Deficit) $ (27,352)
-5-
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
The information contained in this Prospectus, including in the documents
incorporated by reference into this Prospectus, includes some statements that
are not purely historical and that are considered "forward-looking
statements." Such forward-looking statements include, but are not limited to,
statements regarding our Company and management's expectations, hopes,
beliefs, intentions, or strategies regarding the future, including our
financial condition, results of operations, and the expected impact of the
offering on the parties' individual and combined financial performance. In
addition, any statements that refer to projections, forecasts, or other
characterizations of future events or circumstances, including any underlying
assumptions, are forward-looking statements. The words "anticipates,"
"believes," "continue," "could," "estimates," "expects," "intends," "may,"
"might," "plans," "possible," "potential," "predicts," "projects," "seeks,"
"should," "will," "would" and similar expressions, or the negatives of such
terms, may identify forward-looking statements, but the absence of these
words does not mean that a statement is not forward-looking.
The forward-looking statements contained in this Prospectus are based on
current expectations and beliefs concerning future developments and the
potential effects on the parties and the transaction. There can be no
assurance that future developments actually affecting us will be those
anticipated. These forward-looking statements involve a number of risks,
uncertainties (some of which are beyond the parties' control), or other
assumptions that may cause actual results or performance to be materially
different from those expressed or implied by these forward-looking
statements.
RISK FACTORS
Investing in our common stock is speculative and involves a high degree of
risk. Before investing in our common stock you should carefully consider the
following risks, together with the financial and other information contained
in this Prospectus.
RISKS RELATING TO OUR BUSINESS
WE CURRENTLY LACK A FULLY DEVELOPED/BOTTLED DRINK PRODUCT.
While the Company has spent considerable time in the formulation and test
tasting of potential drink formulas, we have not yet formally adopted a
"final" prescribed formula for the drink product upon which we intend to
actually bottle, market, and sell. There can be no assurance whatsoever that
we will ever successfully develop and formulate a successful product upon
which our business plan is based.
-6-
OUR LIMITED OPERATING HISTORY MAY NOT SERVE AS AN ADEQUATE BASIS TO JUDGE OUR
FUTURE PROSPECTS AND RESULTS OF OPERATIONS.
We are a development stage company with a limited operating history upon
which an evaluation of management's performance and our future prospects can
be made. Our business plan involves operations in a highly competitive
industry with few barriers to entry and our working capital, including the
funds available to market our product once it has been developed, is and will
be limited. There are no assurances whatsoever that we will ever successfully
implement our business plan, generate any significant revenues, achieve
profitability, or positive cash flow from operating activities.
In addition, the Company is subject to the ongoing reporting requirements of
the Securities Exchange Act of 1934 with respect to quarterly, annual, and
other reports to be filed with the SEC. These reporting obligations require
us to spend significant amounts on audit and other professional fees. Because
of our limited capital resources we may be unable to meet our working capital
requirements which would have a material adverse effect on our business,
financial condition, and results of operations.
We are subject to all the risks inherent in a "start-up" enterprise. Our
prospects must be considered in light of the numerous risks, expenses,
delays, problems, and difficulties frequently encountered in the
establishment of any new business.
WE HAVE INCURRED LOSSES IN PRIOR PERIODS AND MAY INCUR LOSSES IN THE FUTURE.
We have incurred a net loss of $29,352 for the period from inception through
February 29, 2012. We cannot assure anyone that the Company can achieve or
sustain profitability on a quarterly or annual basis in the future. Our
operations are subject to the risks and competition inherent in the
establishment of a business enterprise. There can be no assurance that future
operations will be profitable. We may not achieve our business objectives and
the failure to achieve such goals would have an adverse impact on us and your
investment.
OUR SOLE OFFICER AND DIRECTOR HAS NO DIRECT EXPERIENCE IN THE BEVERAGE
INDUSTRY AND HAS NEVER LED A COMPANY FROM INCEPTION THROUGH OPERATIONS.
Mr. Nichols has no experience within the beverage industry and has never led
a company, such as Essense or any other, from its inception through a
successful level of operations. With no direct training or experience in
these areas, management may not be fully aware of the specific requirements
related to working within this industry
We will be relying heavily on his general business experience to establish an
effective business strategy for our future operations.
-7-
As a result, management's decisions and choices may not take into account
standard business or managerial approaches that typical beverage or other
such development-stage companies commonly use. Consequently, our operations,
earnings, and ultimate financial success could suffer irreparable harm due to
management's lack of industry experience in this industry and the overseeing
the successful start-up and completion of a company's business plan such as
Essense.
OUR INDEPENDENT AUDITORS' REPORT STATES THAT THERE IS A SUBSTANTIAL DOUBT
THAT WE WILL BE ABLE TO CONTINUE AS A GOING CONCERN.
We have incurred losses as a result of our development stage expenses and our
lack of any revenue to date. Accordingly, and as a result, we have received a
report from our independent auditors that includes an explanatory paragraph
describing their substantial doubt about our ability to continue as a going
concern. This may negatively impact our ability to obtain additional funding
or funding on terms attractive to us and may negatively impact the market
price of our stock.
THE BEVERAGE INDUSTRY IS HIGHLY COMPETITIVE. THERE IS NO ASSURANCE THAT WE
WILL BE SUCCESSFUL IN GROWING OUR BUSINESS AND ACHIEVING OUR OBJECTIVES.
The beverage industry is highly competitive. We will be competing with
numerous companies, most of which have substantially greater experience,
financial, and operational resources and staffs. Accordingly, there will be a
high degree of direct competition with our product(s). We cannot predict if
we will succeed in generating sufficient revenue and profits to grow our
business and achieve our objectives.
OUR BUSINESS MAY BE ADVERSELY AFFECTED BY ANY DOWNTURN IN THE U.S. ECONOMY
AND OTHER MARKET FACTORS OUTSIDE OF OUR CONTROL.
Our business plan and success will be dependent on discretionary consumer
spending. A significant downturn in the national economy, heightened
inflation, and prolonged economic weakness in the spending of discretionary
funds, could adversely affect our business, financial condition, and results
of operations. Any reductions in consumer spending may adversely affect our
business. In such an environment, our business, financial condition, and
results of operations could be materially and adversely affected.
WE MAY NOT SUCCEED IN ESTABLISHING OUR PRODUCT AND BRAND NAME, WHICH COULD
PREVENT US FROM ACQUIRING CUSTOMERS AND INCREASING OUR REVENUES.
A significant element of our business strategy is to build market share by
developing our product and promote it as a better alternative to plain
bottled water and establish our brand name or trademark. Although we have
filed for a trademark of the name "Essense Water" we have not yet received
final approval for it, nor does the Company have any other intellectual
property. If we cannot develop and establish our brand identity through a
trademark, we may fail to build a critical mass of customers required to
substantially increase our revenues. Promoting and positioning our brand in
the marketplace will depend largely on the success of our product development
-8-
and related sales and marketing efforts, coupled with our ability to provide
a consistent, high-quality product. To promote our brand, we expect that we
will incur substantial expenses related to advertising and other marketing
efforts. If our brand promotion activities fail, our ability to attract new
customers and maintain our customer relationships will be adversely affected,
and, as a result, our financial condition and results of operations will
suffer. If we fail to develop and register a trademark it may hurt our
efforts to build brand identity.
CHANGE IN CONSUMER PREFERENCES MAY LIMIT DEMAND FOR OUR PRODUCT.
Our success will depend, in part, upon our ability to develop and introduce a
different and innovative beverage that appeals to consumers. We must also be
competitive in the areas of quality and health. There is no assurance that
consumers will ever purchase our product. Additionally, our product will be
considered a premium product, and to maintain market share during
recessionary periods, we may have to reduce profit margins which would
adversely affect our results of operations. Product lifecycles for our
beverage brand and/or product and/or packages may be limited to a few years
before consumer preferences change. The beverage industry is subject to
changing consumer preferences and shifts in consumer preferences may
adversely affect us if we misjudge such preferences. We may be unable to
achieve volume growth through product and packaging initiatives. We also may
be unable to penetrate new markets.
WE WILL RELY ON THIRD-PARTY BOTTLERS TO MANUFACTURE OUR PRODUCTS. IF WE ARE
UNABLE TO ESTABLISH AND MAINTAIN GOOD RELATIONSHIPS WITH OUR BOTTLERS, AND/OR
THEIR ABILITY TO MANUFACTURE OUR PRODUCTS BECOMES CONSTRAINED OR UNAVAILABLE
TO US, OUR BUSINESS COULD SUFFER.
We do not intend to directly manufacture our product ourselves, but instead
we will be looking to outsource such manufacturing to third-party bottlers
and other such contract packers. Although we expect such production
arrangements to be generally of short duration, or terminable upon request,
in the event of a disruption or delay, we may be unable to procure
alternative packing facilities at commercially reasonable rates and/or within
a reasonably short time period.
INCREASES IN COST OR SHORTAGES OF RAW MATERIALS COULD HARM OUR BUSINESS.
The principal raw materials that will be used by us are most likely to be
those used in our bottle/containers, flavoring(s), and sweetener(s), the
costs and availability of which are and will be subject to fluctuations
caused by supply and demand forces influenced by, among other factors, cost
of energy, availability of such materials and ingredients, weather, changing
consumer tastes for certain of our ingredients and seasonal availability of
the various items. We are uncertain whether the prices of any of the above or
any other raw materials or ingredients will rise in the future and whether we
will be able to pass any of such increases on to our customers.
-9-
IF WE ARE UNABLE TO AVOID SIGNIFICANT EXPOSURE TO PRODUCT LIABILITY CLAIMS,
OUR BUSINESS COULD BE HARMED.
We may potentially be exposed to product liability and other such claims in
the event that our products, or the use of our products, are alleged to have
resulted in adverse effects. While we will endeavor to take all reasonable
precautions, we may not avoid significant product liability exposure. We do
not currently maintain product liability insurance, and there is no guarantee
that we will have coverage in the future sufficient to alleviate this risk.
If we are sued for any harmful effects that may have been caused by our
products, or any products we have used therein, we could suffer a significant
financial loss.
WE LACK CONTRACTS WITH POTENTIAL VENDORS AND DISTRIBUTORS. THERE CAN BE NO
ASSURANCE THAT WE WILL SUCCESSFULLY ESTABLISH OR MAINTAIN ANY CONTRACTS TO
BUY OR SELL OUR PRODUCTS IN THE FUTURE.
The beverage industry is predominantly an industry with several dominant
companies with existing brands. As such, there is and will be significant
competition for the limited space available on store shelves from which to
sell our products. Additionally, we do not have contracts in place with any
vendors to buy and/or sell our products. Also, due to our small size and
limited potential volume in the near term, our larger and existing
competitors may be able to obtain price advantages due to larger volume of
sales in the same products.
WE HAVE GENERATED NO OPERATING REVENUES FROM OUR BUSINESS AND WE MAY NEED TO
RAISE ADDITIONAL FUNDS IN THE NEAR FUTURE. IF WE ARE UNABLE TO DO SO, WE
MIGHT BE FORCED TO DISCONTINUE OUR OPERATIONS.
Our cash requirements may vary materially from those now planned depending on
numerous factors, including the results of our product development, including
its bottling and packaging, sales activities, and various market conditions.
The net proceeds from this offering, together with our projected revenue and
cash flow from future operations, if any, may not be sufficient to fund our
working capital and other capital requirements in the future. If this is
indeed the case, we will require additional capital to conduct our business
activities. Based on current and expected operations, we anticipate that we
will require approximately $200,000 to fully fund our operations over the
next 12 to 24 months and allow us to implement our full business plan. There
can be no assurance that additional funds will be available on terms
attractive to us or at all. If adequate funds are not available, we may be
required to curtail our planned expansion and/or otherwise materially reduce
operations. Even if such funds are available, there can be no assurance that
our business will be successfully developed or received. If we are to sell
additional shares, such sale may result in dilution to existing shareholders.
Furthermore, there is no assurance that we will not incur debt in the future,
that we will have sufficient funds to repay our future indebtedness, or that
we will not default on any future debts, and thus jeopardize our business
viability. Finally, we may not be able to borrow or raise additional capital
in the future to meet our needs or to otherwise provide the capital necessary
to conduct business and meet our business objectives, which might result in
the loss of some or all of your investment in our common stock.
-10-
WE WILL BE DEPENDENT UPON OUR TRADEMARKS AND PROPRIETARY RIGHTS, AND ANY
FAILURE TO PROTECT OUR INTELLECTUAL PROPERTY RIGHTS OR ANY CLAIMS THAT WE ARE
INFRINGING UPON THE RIGHTS OF OTHERS MAY ADVERSELY AFFECT OUR COMPETITIVE
POSITION.
Our success will depend, in large part, on our ability to develop and protect
our brand and products and to defend our intellectual property rights
thereto. We cannot be sure that trademarks will be issued with respect to any
future trademark applications or that our competitors will not challenge,
invalidate, or circumvent any future trademarks issued to, or licensed by,
us.
THE BOTTLED WATER INDUSTRY IS REGULATED AT BOTH THE STATE AND FEDERAL LEVEL.
If we are unable to comply with applicable regulations and standards in any
jurisdiction, we might not be able to sell our products in that jurisdiction,
and our business could be seriously harmed.
The United States Food and Drug Administration ("FDA") regulates bottled
waters as a food. Our bottled water product must meet FDA requirements of
safety for human consumption, labeling, processing, and distribution under
sanitary conditions and production in accordance with the FDA "good
manufacturing practices." In addition, all drinking water products must meet
Environmental Protection Agency standards established under the Safe Drinking
Water Act for mineral and chemical concentration and drinking water quality
and treatment which are enforced by the FDA. We also must meet state
regulations in a variety of areas. These regulations set standards for
approved water sources and the information that must be provided and the
basis on which any therapeutic claims for water may be made. Failure to
comply with such laws and regulations could result in fines against us, a
temporary shutdown of production, recalls of product, loss of certification
to market the product or, even in the absence of governmental action, loss of
revenue as a result of adverse market reaction to negative publicity. Any
such event could have a material adverse effect on our business. We cannot
assure you that we have been or will at all times be in compliance with all
regulatory requirements or that we will not incur material costs or
liabilities in connection with regulatory requirements.
Our products will also be subject to Federal Food, Drug and Cosmetic Act,
various environmental statutes, and various other federal, state and local
statutes and regulations applicable to the production, transportation, sale,
safety, advertising, labeling, and ingredients of such products.
WE ARE DEPENDENT ON KEY PERSONNEL TO OPERATE AND GROW OUR BUSINESS.
Our success will be largely dependent upon the efforts of our sole officer
and director, Kevin Nichols. We do not currently have an employment agreement
with Mr. Nichols. The loss of the services of this individual could have a
material adverse effect on our business and prospects. There can be no
assurance that we will be able to retain the services of such individual in
the future. In addition, our future success is dependent on our ability to
attract, train, retain, and motivate high-quality personnel.
-11-
OUR SOLE OFFICER AND DIRECTOR HAS BEEN INVOLVED WITH OTHER SEC REPORTING
COMPANIES.
Kevin Nichols was the founder of eight SEC reporting companies during early
2000 through late 2002. Each was a "blank check" company, which is defined by
the SEC as "a development stage company that has no specific business plan or
purpose or has indicated its business plan is to engage in a merger or
acquisition with an unidentified company or companies, other entity, or
person." The original intent with each of these was to seek a business merger
with or an acquisition of another company, but only two of the eight were
ever successful in moving beyond blank check status.
The six remaining blank check companies were dissolved in 2002. With respect
to the other two companies, Mr. Nichols resigned at the time of the mergers
and has had no involvement with either of them since that time. He retains no
management, has no controlling shareholder, or other position in either of
these two companies.
Each of these eight companies was, for certain periods of time, delinquent in
their timely filing of various required reports with the SEC. Seven of the
companies subsequently filed their Form 15-12G to suspend their reporting
requirements, but one of the "merged" companies has never filed such Form 15-
12G and has thus been delinquent since 2002 in their SEC filings. For more
specific information with respect to these companies, please see Page 33
under the heading Directors, Executive Officers, Promoters, and Control
Persons.
Although Mr. Nichols is no longer involved with any of these companies, there
is risk that such past business efforts, their lack of success, and the fact
that each became delinquent in their ongoing reporting requirements with the
SEC may limit or hinder the Company's ability to raise capital pursuant to
this offering.
RISKS RELATING TO OUR COMMON STOCK AND THIS OFFERING
THIS OFFERING HAS NO MINIMUM OFFERING AMOUNT AND WE MAY RAISE LESS THAN THE
$200,000 MAXIMUM OFFERING AMOUNT. OUR RAISING LESS THAN THE FULL AMOUNT MAY
LIMIT OUR ABILITY TO FULLY IMPLEMENT OUR BUSINESS PLAN.
We will be selling the Shares on a "best efforts" basis. Funds received by us
from this offering will be reduced to the extent that less than all the
shares offered hereby are sold. All funds received from this offering will be
immediately made available to and for use by the Company.
Sale of less than the maximum number of Shares may require the Company to
seek out additional sources of capital, such as through a private equity
placement(s), debt, or some combination of both. We presently have no such
other possibilities in mind or available to us.
Receipt of less than maximum proceeds may limit and have an adverse effect on
our ability to implement our business plan.
-12-
NO PUBLIC TRADING MARKET CURRENTLY EXISTS FOR OUR SHARES OF COMMON STOCK,
WHICH MAKES IT DIFFICULT FOR ANY STOCKHOLDER TO SELL THEIR SHARES.
Our shares of common stock are not currently publicly traded. We intend in
the near term to apply for listing of our common stock on the Over-the-
Counter Bulletin Board ("OTC Bulletin Board"). Although we will be applying
to list our common stock on the OTC Bulletin Board, there can be no assurance
that our application will be granted, or that an active public market will
develop or be sustainable for our common stock. Additionally, there can be no
assurance that any broker will be interested in trading our stock.
Therefore, it may be difficult to sell your shares of common stock if you
desire or need to sell them. You may have no more liquidity in your shares of
common stock even if we are successful in the future in our being listed on
the OTC Bulletin Board.
OUR COMMON STOCK IS SUBJECT TO PENNY STOCK RULES, WHICH MAY MAKE IT MORE
DIFFICULT FOR OUR STOCKHOLDERS TO SELL THEIR COMMON STOCK.
Broker-dealer practices in connection with transactions in "penny stocks" are
regulated by certain penny stock rules adopted by the Securities and Exchange
Commission. Penny stocks generally are equity securities with a price of less
than $5.00 per share. The penny stock rules require a broker-dealer, prior to
a purchase or sale of a penny stock not otherwise exempt from the rules, to
deliver to the customer a standardized risk disclosure document that provides
information about penny stocks and the risks in the penny stock market. The
broker-dealer also must provide the customer with current bid and offer
quotations for the penny stock, the compensation of the broker-dealer and its
salesperson in the transaction, and monthly account statements showing the
market value of each penny stock held in the customer's account. In addition,
the penny stock rules generally require that prior to a transaction in a
penny stock the broker-dealer make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchaser's written agreement to the transaction. These disclosure
requirements may have the effect of reducing the level of trading activity in
the secondary market for a stock that becomes subject to the penny stock
rules.
OUR SOLE OFFICER AND DIRECTOR MAINTAINS A CONTROLLING INTEREST IN OUR
COMPANY. HE MAY BE ABLE TO CONTROL OR INFLUENCE CERTAIN CORPORATE ACTIONS
WITHOUT APPROVAL BY OTHER STOCKHOLDERS.
As of February 29, 2012, our President and Chairman, Kevin Nichols
beneficially owns 98% of our outstanding common stock, and after selling all
of the shares provided within this offering, he will maintain control of 59%
of the outstanding shares. As a result, he may be able to control or
substantially influence the outcome of matters requiring approval by the
stockholders of the Company, including the election of directors and approval
of significant corporate transactions.
-13-
WE HAVE NEVER PAID DIVIDENDS AND HAVE NO PLANS TO DO SO IN THE FUTURE.
Holders of shares of our common stock are entitled to receive such dividends
as may be declared by our Board of Directors. To date, we have paid no cash
dividends on our shares of common stock and we do not expect to pay cash
dividends on our common stock in the foreseeable future. We intend to retain
future earnings, if any, to provide funds for operations of our business.
Therefore, any return investors in our common stock may have will be in the
form of appreciation, if any, in the market value of their shares of common
stock. See "Dividend Policy."
THE COMPANY MAY NOT RAISE SUFFICIENT FUNDS FROM THIS OFFERING TO FULLY OR
SUCCESSFULLY IMPLEMENT ITS BUSINESS PLAN.
If we are unable to raise the maximum funds from this offering, there is
considerable risk that we will not be able to implement our business plan to
the degree set forth herein.
THE COMPANY'S MANAGEMENT COULD ISSUE ADDITIONAL SHARES, SINCE THE COMPANY HAS
75,000,000 AUTHORIZED SHARES, DILLUTING THE CURRENT SHARE HOLDERS' EQUITY.
The Company has 75,000,000 authorized shares, of which only 12,000,000 are
currently issued and outstanding and only 20,000,000 will be issued and
outstanding after this offering terminates. The Company's management could,
without the consent of the existing shareholders, issue substantially more
shares, causing a large dilution in the equity position of the Company's
current shareholders. Additionally, large share issuances would generally
have a negative impact on the Company's share price. It is possible that, due
to additional share issuance, you could lose a substantial amount, or all, of
your investment.
AS WE DO NOT HAVE AN ESCROW OR TRUST ACCOUNT FOR INVESTORS' SUBSCRIPTIONS, IF
WE FILE FOR OR ARE FORCED INTO BANKRUPTCY PROTECTION, INVESTORS WILL LOSE
THEIR ENTIRE INVESTMENT.
Invested funds for this offering will not be placed in a separate escrow or
trust account. Accordingly, if we file for bankruptcy protection, or a
petition for involuntary bankruptcy is filed by creditors against us, your
funds will become part of the bankruptcy estate and administered according to
the bankruptcy laws. As such, you will lose your investment and your funds
will be used to pay creditors.
WE ARE SUBJECT TO CORPORATE GOVERNANCE AND INTERNAL CONTROL REPORTING
REQUIREMENTS, AND OUR COSTS RELATED TO COMPLIANCE WITH, OR OUR FAILURE TO
COMPLY WITH EXISTING AND FUTURE REQUIREMENTS, COULD ADVERSELY AFFECT OUR
BUSINESS.
We are subject to corporate governance and internal control reporting
requirements, and our costs related to compliance with, or our failure to
comply with existing and future requirements, could adversely affect our
business. We may face new corporate governance requirements under the
Sarbanes-Oxley Act of 2002, as well as new rules and regulations subsequently
-14-
adopted by the SEC and the Public Company Accounting Oversight Board. These
laws, rules and regulations continue to evolve and may become increasingly
stringent in the future. The financial cost of compliance with these laws,
rules, and regulations is expected to be substantial. We cannot assure you
that we will be able to fully comply with these laws, rules, and regulations
that address corporate governance, internal control reporting, and similar
matters. Failure to comply with these laws, rules, and regulations could
materially adversely affect our reputation, financial condition, and the
value of our securities.
INVESTING IN THE COMPANY IS A HIGHLY SPECULATIVE INVESTMENT AND COULD RESULT
IN THE ENTIRE LOSS OF YOUR INVESTMENT
A purchase of the offered shares is highly speculative and involves
significant risks. The offered shares should not be purchased by any person
who cannot afford the loss of their entire investment. The business
objectives of the Company are also speculative, and it is possible that we
could be unable to satisfy them. The Company's shareholders may be unable to
realize a substantial return on their purchase of the offered shares, or any
return whatsoever, and may lose their entire investment. For this reason,
each prospective purchaser of the offered shares should read this Prospectus
and all of its exhibits carefully and consult with their attorney, business,
and/or investment advisor.
USE OF PROCEEDS
Our offering of 8,000,000 shares of common stock is being made on a self-
underwritten basis: no minimum number of shares must be sold in order for the
offering to proceed. The offering price is $0.025 per share. The following
table sets forth the uses of proceeds assuming the sale of 25%, 50%, 75% and
100%, respectively, of the securities offered for sale by the Company.
We are not receiving any proceeds from the sale of the 1,260,000 shares of
common stock being resold by selling shareholders of the Company.
If 25% of If 50% of If 75% If 100% of
Shares Shares Shares Shares
Sold Sold Sold Sold
---- ---- ---- ----
GROSS PROCEEDS $ 50,000 $100,000 $150,000 $200,000
Less: Repay Founder for Cash
Advances (1) 20,000 20,000 20,000 20,000
------ ------ ------ ------
NET PROCEEDS 30,000 80,000 130,000 180,000
Less: Offering Expenses
Preparation, Filing, Copies 500 500 500 500
Accounting and Legal 2,000 2,000 2,000 2,000
Transfer Agent 1,500 1,500 1,500 1,500
------ ------ ------ ------
TOTAL 4,000 4,000 4,000 4,000
-15-
Less: Administrative Costs
Office Supplies and Services 1,000 4,000 6,000 8,000
Accounting and Legal 10,000 10,000 10,000 10,000
------ ------ ------ ------
TOTAL 11,000 14,000 16,000 18,000
Less: Product Development
Drink Testing/Formulation 3,000 6,000 10,000 12,000
Name/Label/Packaging Design 5,000 10,000 15,000 18,000
Trademark 1,000 2,000 3,000 3,000
------ ------ ------ ------
TOTAL 9,000 18,000 28,000 33,000
Less: Marketing and Advertising
Product Promotion 3,000 8,000 12,000 15,000
Targeted Advertising 1,500 4,000 6,000 8,000
Web Design/E-commerce 1,500 8,000 12,000 15,000
------ ------ ------ ------
TOTAL 6,000 20,000 30,000 38,000
Working Capital 0 24,000 52,000 87,000
------ ------ ------ ------
TOTALS $ 50,000 $100,000 $150,000 $200,000
(1) The Company will reimburse its Founder from the proceeds of this offering
for a portion of the amount he has previously advanced/loaned to the Company.
As of February 29, 2012, he has advanced to the Company (and is owed by the
Company) a total of $26,659.
The preceding figures set forth above represent only estimated costs. All
proceeds will be deposited into our corporate bank account and any funds that
we raise from our offering of 8,000,000 shares will be immediately available
for our use and will not be returned to investors. We do not have any
arrangements to place the funds received from our offering of shares into an
escrow, trust, or similar account. Accordingly, if we file for bankruptcy
protection or a petition for involuntary bankruptcy is filed by creditors
against us, your funds will become part of the bankruptcy estate and
administered according to the bankruptcy laws. If a creditor sues us and
obtains a judgment against us, the creditor could garnish the bank account
and take possession of the subscriptions. If that happens, you will lose your
investment and your funds will be used to pay creditors.
Kevin Nichols, our sole officer/director, has been and is willing to provide
funds needed to cover our limited operations until such time as this offering
has been completed, including an amount sufficient to cover the existing
shortfall between cash on hand and the accrued liabilities (payables) of
approximately $2,625 showing on our February 29, 2012 financial statements.
Mr. Nichols has agreed that any funds advanced by him will be non-interest
bearing and payable upon demand. A portion of the Company's liability to Mr.
Nichols for these funds advanced by him will be repaid from the proceeds of
this Offering in an amount up to $20,000. See also Note (1) above.
-16-
DETERMINATION OF OFFERING PRICE
The price of the 8,000,000 shares being offered has been determined
arbitrarily by the Company. The price does not bear any relationship to our
assets, book value, earnings, or other established criteria for valuing a
privately held company. In determining the number of shares to be offered and
the offering price, we took into consideration our cash on hand and the
amount of money we would need to implement our business plan. Accordingly,
the offering price should not be considered an indication of the actual value
of the securities. We will not receive any of the proceeds from the sale of
the 1,260,000 common shares being offered for sale by the selling
stockholders, the shares of which may be offered and sold from time to time
by the selling stockholders. The selling stockholders will sell their shares
at $0.025 per share until the Company's shares are quoted on the OTCBB, if at
all, and thereafter at prevailing market prices or privately negotiated
prices. This price too was arbitrarily determined by the Company.
SELLING STOCKHOLDERS
The common shares being offered for resale by the thirty-three (33) selling
stockholders consist of 1,260,000 of our common stock, $0.0001 par value per
share. The following table sets forth the shares beneficially owned, as of
February 29, 2012, by the selling stockholders prior to the Offering by
existing stockholders contemplated by this Prospectus, the number of shares
each selling stockholder is offering by this Prospectus, and the number of
shares that each would own beneficially if all such offered shares are sold.
Beneficial ownership is determined in accordance with Securities and Exchange
Commission rules. Under these rules, a person is deemed to be a beneficial
owner of a security if that person has or shares voting power, which includes
the power to vote or direct the voting of the security, or investment power,
which includes the power to vote or direct the voting of the security. The
person is also deemed to be a beneficial owner of any security of which that
person has a right to acquire beneficial ownership within 60 days. Under the
Securities and Exchange Commission rules, more than one person may be deemed
to be a beneficial owner of the same securities, and a person may be deemed
to be a beneficial owner of securities as to which he or she may not have any
pecuniary beneficial interest. Except as noted below, each person has sole
voting and investment power.
The percentages below are calculated based on 12,000,000 shares of our common
stock issued and outstanding as of February 29, 2012. We do not have any
outstanding options or warrants convertible into shares of our common stock.
Total Shares
To Be Percentage
Offerred of the
Shares for the Shares Shares
Owned Security Owned Owned
Before the Holder's After the After the
Name Offering Account Offering Offering
Kevin Nichols (1) 11,740,000 1,000,000 10,740,000 54%
John Brandt 5,000 5,000 0 0%
-17-
John W. Brandt 5,000 5,000 0 0%
Nancy Brandt 5,000 5,000 0 0%
Donald Brigham 5,000 5,000 0 0%
Brad Cuddy 5,000 5,000 0 0%
Steve Cuddy 5,000 5,000 0 0%
Amy Drechsel 10,000 10,000 0 0%
Ben Drechsel 10,000 10,000 0 0%
Gary Drechsel 10,000 10,000 0 0%
Matthew Drechsel 10,000 10,000 0 0%
Brandon Graves 10,000 10,000 0 0%
Donna Graves 5,000 5,000 0 0%
Marcia Graves 5,000 5,000 0 0%
Michael Graves 5,000 5,000 0 0%
Shoni Graves 10,000 10,000 0 0%
Bruce Imel 5,000 5,000 0 0%
Wanda Keefer 5,000 5,000 0 0%
Carlos Martinez 5,000 5,000 0 0%
Melanie Martinez 5,000 5,000 0 0%
Diane Mitchell 15,000 15,000 0 0%
William Mitchell 15,000 15,000 0 0%
Julie Natale 10,000 10,000 0 0%
Karen Nichols (2) 15,000 15,000 0 0%
Rachel Nichols (3) 15,000 15,000 0 0%
Zachery Nichols (3) 15,000 15,000 0 0%
Frank Pfefferkorn 5,000 5,000 0 0%
Patsy Pfefferkorn 5,000 5,000 0 0%
Rolly Philips 10,000 10,000 0 0%
Jacquie Richel 5,000 5,000 0 0%
Esther Spataro 5,000 5,000 0 0%
Mark Sweeney 5,000 5,000 0 0%
Bryan Trenary 5,000 5,000 0 0%
----- ----- - --
TOTAL 12,000,000 1,260,000 10,740,000 54%
========== ========= ========== ===
(1) Kevin Nichols acquired his 12,000,000 common shares at the inception
of the Company for total cash consideration of $2,000.
(2) Karen Nichols is the sister of Kevin Nichols.
(3) Rachel and Zachery Nichols are the daughter and son, respectively, of
Kevin Nichols.
Note: All of the above-listed shareholders are the friends and family of our
founder who each were offered and accepted a "gift" of their shares of common
stock in the Company from those owned by Kevin Nichols.
None of the selling stockholders has a relationship with us to note (other
than those specifically referenced in (2) and (3) above) other than as a
shareholder, has ever been one of our officers or directors, or is a broker-
dealer registered under the Securities Exchange Act, as amended, or an
affiliate of such a broker-dealer.
-18-
We may require the selling stockholders to suspend the sales of the
securities offered by this Prospectus upon the occurrence of any event that
makes any statement in this Prospectus, or the related registration
statement, untrue in any material respect, or that requires the changing of
the statements in these documents in order to make statements in those
documents not misleading. We will file a post-effective amendment to the
registration statement to reflect any such material changes to this
Prospectus.
DILUTION
The price of the current offering is fixed at $0.025 per share. This price is
significantly greater than the price paid by the Company's sole officer and
director for his common shares of equity He paid only $0.00017 per share,
which is $0.02499 per share less than the share price being set forth in this
Offering.
Dilution represents the difference between the offering price and the net
tangible book value per share immediately after completion of this Offering.
Net tangible book value is the amount that results from subtracting total
liabilities and intangible assets from total assets. Dilution arises mainly as
a result of our arbitrary determination of the offering price of the shares
being offered. Dilution of the value of the shares you purchase is also a
result of the lower book value of the shares held by our existing
stockholders.
As of February 29, 2012, the net tangible book value of our shares of common
stock was $(27,352) or approximately $(0.0023) per share based upon the
12,000,000 shares outstanding.
If the maximum shares in this Offering are sold, we will receive net proceeds
of $181,000 (after repaying a portion of the founder's advances of $15,000
and offering expenses of $4,000) and our net tangible book value will be
$168,648. The 20,000,000 shares then outstanding will have a book value of
$0.01 per share. The net tangible book value of the shares held by our
existing shareholders will be increased by $0.01 per share without any
additional investment on their part. As a result, you will incur an immediate
dilution of $0.015 per share.
After completion of this Offering, purchasers of the shares being offered by
the Company will collectively own approximately 40% of the total number of
shares then outstanding shares for which these purchasers will have made cash
investments in the aggregate of $200,000, or $0.025 per share. Our existing
shareholders will own approximately 60% of the total number of shares then
outstanding, for which they will have made a contribution of $2,000 in cash,
or approximately $.0002 per share.
-19-
Existing Stockholders if all the Shares are Sold
Price per share $ 0.0001
Net tangible book value per share before Offering (0.0023)
Potential gain to existing shareholders $ 200,000
Net tangible book value per share after offering $ .01
Increase to present stockholders in net tangible
book value per share after offering $ .01
Capital contributions $ 0
Number of shares outstanding before the offering 12,000,000
Number of shares after offering held by
existing stockholders 12,000,000
Percentage of ownership after offering 54%
Purchasers of Shares in this Offering if all Shares Sold
Price per share $ 0.025
Dilution per share $ 0.015
Capital contributions $ 200,000
Percentage of capital contributions 100%
Number of shares after offering held by
public investors 8,000,000
Percentage of ownership after Offering 40%
Purchasers of Shares in this Offering if 50% of Shares Sold
Price per share $ 0.025
Dilution per share $ 0.019
Capital contributions $ 100,000
Percentage of capital contributions 100%
Number of shares after offering held by
public investors 4,000,000
Percentage of ownership after Offering 25%
Purchasers of Shares in this Offering if 25% of Shares Sold
Price per share $ 0.025
Dilution per share $ 0.022
Capital contributions $ 50,000
Percentage of capital contributions 100%
Number of shares after offering held by
public investors 2,000,000
Percentage of ownership after Offering 14%
PLAN OF DISTRIBUTION
Plan of Distribution for the Company's Offering of 8,000,000 Common Shares
Essense Water, Inc. has 12,000,000 common shares of common stock issued and
outstanding as of the date of this Prospectus. The Company is registering an
additional 8,000,000 shares of its common stock for sale at the price of
$0.025 per share. There is no arrangement to address the possible effect of
this Offering on the price of the stock.
-20-
In connection with the Company's selling efforts in this Offering our
President, Kevin Nichols, will not register as a broker-dealer pursuant to
Section 15 of the Exchange Act, but rather will rely upon the "safe harbor"
provisions of SEC Rule 3a4-1, promulgated under the Securities Exchange Act
of 1934, as amended (the "Exchange Act"). Generally speaking, Rule 3a4-1
provides an exemption from the broker-dealer registration requirements of the
Exchange Act for persons associated with an issuer that participate in an
offering of the issuer's securities. Mr. Nichols is not subject to any
statutory disqualification, as that term is defined in Section 3(a)(39) of
the Exchange Act. Mr. Nichols will not be compensated in connection with his
participation in the offering by the payment of commissions or other
remuneration based either directly or indirectly on transactions in our
securities. Mr. Nichols is not, nor has he been within the past 12 months, a
broker or dealer, and he is not, nor has he been within the past 12 months,
an associated person of a broker or dealer. At the end of the Offering, Mr.
Nichols will continue to primarily perform substantial duties for the Company
or on its behalf otherwise than in connection with transactions in
securities. Mr. Nichols will not participate in selling an offering of
securities for any issuer more than once every 12 months other than in
reliance on Exchange Act Rule 3a4-1(a)(4)(i) or (iii).
Essense Water, Inc. will receive all proceeds from the sale of the 8,000,000
shares being offered by way of this Prospectus. The price per share is fixed
at $0.025 for the duration of this Offering. Although our common stock is not
listed on a public exchange or quoted over-the-counter, we intend to seek to
have our shares of common stock quoted on the OTC Bulletin Board. In order to
be quoted on the OTC Bulletin Board, a market maker must file an application
on our behalf in order to make a market for our common stock. There can be no
assurance that a market maker will agree to file the necessary documents with
FINRA, nor can there be any assurance that such an application for quotation
will be approved.
The Company's shares may be sold to purchasers from time to time directly by
and subject to the discretion of the Company. Further, the Company will not
offer its shares for sale through underwriters, dealers, agents, or anyone
who may receive compensation in the form of underwriting discounts,
concessions, or commissions from the Company and/or the purchasers of the
shares for whom they may act as agents. The shares of common stock sold by
the Company may be occasionally sold in one or more transactions; all shares
sold under this Prospectus will be sold at a fixed price of $0.025 per share.
In order to comply with the applicable securities laws of certain states, the
securities will be offered or sold in those only if they have been registered
or qualified for sale; an exemption from such registration or if
qualification requirement is available and with which Essense Water, Inc. has
complied. In addition and without limiting the foregoing, the Company will be
subject to applicable provisions, rules, and regulations under the Exchange
Act with regard to security transactions during the period of time when this
Registration Statement is effective.
Essense Water, Inc. will pay all expenses incidental to the registration of
the shares (including registration pursuant to the securities laws of certain
states).
-21-
Plan of Distribution for the Offering of 1,260,000 Shares by the Selling
Stockholders
As of the date of this Prospectus, there is no market for our securities.
After the date of this Prospectus, we expect to have an application filed
with the Financial Industry Regulatory Authority for our common stock to be
eligible for trading on the OTC Bulletin Board. Until our common stock
becomes eligible for trading on the OTC Bulletin Board, the selling
stockholders will be offering our shares of common stock at a fixed price of
$0.025 per common share. After our common stock becomes eligible for trading
on the OTC Bulletin Board, the selling stockholders may, from time to time,
sell all or a portion of the shares of common stock on OTC Bulletin Board, in
privately negotiated transactions, or otherwise. After our common stock
becomes eligible for trading on the OTC Bulletin Board, such sales may be at
fixed prices prevailing at the time of sale, at prices related to the market
prices or at negotiated prices.
After our common stock becomes eligible for trading on the OTC Bulletin
Board, the shares of common stock being offered for resale by this Prospectus
may be sold by the selling stockholders by one or more of the following
methods, without limitation:
- ordinary brokerage transactions and transactions in which the broker
solicits purchasers;
- privately negotiated transactions;
- market sales (both long and short to the extent permitted under the
federal securities laws);
- at the market to or through market makers or into an existing market for
the shares;
- through transactions in options, swaps or other derivatives (whether
exchange listed or otherwise); and
- a combination of any of the aforementioned methods of sale.
In the event of the transfer by any of the selling stockholders of its shares
of common stock to any pledgee, done, or other transferee, we will amend this
Prospectus and the registration statement of which this Prospectus forms a
part by the filing of a post-effective amendment in order to have the
pledgee, donee, or other transferee in place of the selling stockholder who
has transferred his, her, or its shares.
In effecting sales, brokers and dealers engaged by the selling stockholders,
if any, may arrange for other brokers or dealers to participate. Brokers or
dealers may receive commissions or discounts from a selling stockholder or,
if any of the broker-dealers act as an agent for the purchaser of such
shares, from a purchaser in amounts to be negotiated which are not expected
to exceed those customary in the types of transactions involved. Before our
common stock becomes eligible for trading on the OTC Bulletin Board, broker-
dealers may agree with a selling stockholder to sell a specified number of
the shares of common stock at a price per share of $0.025. After our common
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stock becomes eligible for trading on the OTC Bulletin Board, broker-dealers
may agree with a selling stockholder to sell a specified number of the shares
of common stock at a stipulated price per share. Such an agreement may also
require the broker-dealer to purchase as principal any unsold shares of
common stock at the price required to fulfill the broker-dealer commitment to
the selling stockholder if such broker-dealer is unable to sell the shares on
behalf of the selling stockholder. Broker-dealers who acquire shares of
common stock as principal may thereafter resell the shares of common stock
from time to time in transactions which may involve block transactions and
sales to and through other broker-dealers, including transactions of the
nature described above. After our common stock becomes eligible for trading
on the OTC Bulletin Board, such sales by a broker-dealer could be at prices
and on terms then prevailing at the time of sale, at prices related to the
then-current market price or in negotiated transactions. In connection with
such re-sales, the broker-dealer may pay to or receive from the purchasers of
the shares commissions as described above. The selling stockholders and any
broker-dealers or agents that participate with the selling stockholders in
the sale of the shares of common stock may be deemed to be "underwriters"
within the meaning of the Securities Act in connection with these sales. In
that event, any commissions received by the broker-dealers or agents and any
profit on the resale of the shares of common stock purchased by them may be
deemed to be underwriting commissions or discounts under the Securities Act.
From time to time, any of the selling stockholders may pledge shares of
common stock pursuant to the margin provisions of customer agreements with
brokers. Upon a default by a selling stockholder, their broker may offer and
sell the pledged shares of common stock from time to time. After our common
stock becomes eligible for trading on the OTC Bulletin Board, upon a sale of
the shares of common stock, the selling stockholders intend to comply with
the prospectus delivery requirements under the Securities Act by delivering a
prospectus to each purchaser in the transaction. We intend to file any
amendments or other necessary documents in compliance with the Securities Act
that may be required in the event any of the selling stockholders defaults
under any customer agreement with brokers.
To the extent required under the Securities Act, a "post effective" amendment
to this registration statement will be filed disclosing the name of any
broker-dealers, the number of shares of common stock involved, the price at
which the shares of common stock is to be sold, the commissions paid or
discounts or concessions allowed to such broker-dealers, where applicable,
that such broker-dealers did not conduct any investigation to verify the
information set out or incorporated by reference in this prospectus and other
facts material to the transaction.
We and the selling stockholders will be subject to applicable provisions of
the Exchange Act and the rules and regulations under it, including, without
limitation, Rule 10b-5 and, insofar as a selling stockholder is a
distribution participant and we, under certain circumstances, may be a
distribution participant, under Regulation M. All of the foregoing may affect
the marketability of the shares of common stock.
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All expenses of the registration statement including, but not limited to,
legal, accounting, printing, and mailing fees are and will be borne by us.
Any commissions, discounts or other fees payable to brokers or dealers in
connection with any sale of the shares of common stock will be borne by the
selling stockholders, the purchasers participating in such transaction, or
both.
Any shares of common stock covered by this Prospectus which qualify for sale
pursuant to Rule 144 under the Securities Act, as amended, may be sold under
Rule 144 rather than pursuant to this Prospectus.
Penny Stock Rules
The Securities Exchange Commission has also adopted rules that regulate
broker-dealer practices in connection with transactions in "penny stocks" as
such term is defined by Rule 15g-9. Penny stocks are generally equity
securities with a price of less than $5.00 (other than securities registered
on certain national securities exchanges or quoted on the NASDAQ system
provided that current price and volume information with respect to
transactions in such securities is provided by the exchange or system).
The shares offered by this Prospectus constitute penny stock under the
Securities and Exchange Act. The shares will remain penny stock for the
foreseeable future. The classification of penny stock makes it more difficult
for a broker-dealer to sell the stock into a secondary market, which makes it
more difficult for a purchaser to liquidate his or her investment. Any
broker-dealer engaged by the purchaser for the purpose of selling his or her
shares in our Company will be subject to the penny stock rules.
The penny stock rules require a broker-dealer, prior to a transaction in a
penny stock not otherwise exempt from those rules, deliver a standardized
risk disclosure document prepared by the Commission, which: (i) contains a
description of the nature and level of risk in the market for penny stocks in
both public offerings and secondary trading; (ii) contains a description of
the broker's or dealer's duties to the customer and of the rights and
remedies available to the customer with respect to a violation to such duties
or other requirements of Securities' laws; (iii) contains a brief, clear,
narrative description of a dealer market, including bid and ask prices for
penny stocks and significance of the spread between the bid and ask price;
(iv) contains a toll-free telephone number for inquiries on disciplinary
actions; (v) defines significant terms in the disclosure document or in the
conduct of trading in penny stocks; and (vi) contains such other information
and is in such form as the Commission shall require by rule or regulation.
The broker-dealer also must provide to the customer, prior to effecting any
transaction in a penny stock, (i) bid and offer quotations for the penny
stock; (ii) the compensation of the broker-dealer and its salesperson in the
transaction; (iii) the number of shares to which such bid and ask prices
apply, or other comparable information relating to the depth and liquidity of
the market for such stock; and (iv) monthly account statements showing the
market value of each penny stock held in the customer's account.
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In addition, the penny stock rules require that prior to a transaction in a
penny stock not otherwise exempt from those rules; the broker-dealer must
make a special written determination that the penny stock is a suitable
investment for the purchaser and receive the purchaser's written
acknowledgment of the receipt of a risk disclosure statement, a written
agreement to transactions involving penny stocks, and a signed and dated copy
of a written suitability statement. These disclosure requirements will have
the effect of reducing the trading activity in the secondary market for our
stock because it will be subject to these penny stock rules. Therefore,
stockholders may have difficulty selling those securities.
REGULATION M
During such time as we may be engaged in a distribution of any of the shares
we are registering by this registration statement, we are required to comply
with Regulation M. In general, Regulation M precludes any selling security
holder, any affiliated purchasers, and any broker-dealer or other person who
participates in a distribution from bidding for or purchasing, or attempting
to induce any person to bid for or purchase, any security which is the
subject of the distribution until the entire distribution is complete.
Regulation M defines a "distribution" as an offering of securities that is
distinguished from ordinary trading activities by the magnitude of the
offering and the presence of special selling efforts and selling methods.
Regulation M also defines a "distribution participant" as an underwriter,
prospective underwriter, broker, dealer, or other person who has agreed to
participate or who is participating in a distribution.
Regulation M under the Exchange Act prohibits, with certain exceptions,
participants in a distribution from bidding for or purchasing, for an account
in which the participant has a beneficial interest, any of the securities
that are the subject of the distribution. Regulation M also governs bids and
purchases made in order to stabilize the price of a security in connection
with a distribution of the security. We have informed the selling
shareholders that the anti-manipulation provisions of Regulation M may apply
to the sales of their shares offered by this prospectus, and we have also
advised the selling shareholders of the requirements for delivery of this
Prospectus in connection with any sales of the common stock offered by this
Prospectus.
Offering Period and Expiration Date
The Offering of the shares being sold by the Company will start on the date
of this Prospectus and continue for a period of up to 12 months.
Procedures for Subscribing
If you decide to subscribe for any shares being sold by the Company in this
Offering, you must
1. execute and deliver a subscription agreement; and
2. deliver a check or certified funds to us for acceptance or rejection.
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The subscription agreement requires you to disclose your name, address,
social security number, telephone number, number of shares you are
purchasing, and the price you are paying for your shares.
All checks for subscriptions must be made payable to Essense Water, Inc.
Right to Reject Subscriptions
The Company has the right to accept or reject any and all subscriptions in
whole or in part, for any reason or for no reason. All monies from rejected
subscriptions will be returned immediately by the Company to the subscriber,
without interest or deductions.
Subscriptions for securities will be accepted or rejected within 72 hours
after they are received.
DESCRIPTION OF SECURITIES
We have issued and outstanding 12,000,000 shares of our common stock as of
February 29, 2012.
Common Stock
The Company is authorized to issue up to 75,000,000 shares of common stock,
par value $0.0001 per share.
Holders of the common stock are entitled to one vote for each share in the
election of directors and in all other matters to be voted on by the
stockholders. There is no cumulative voting in the election of directors.
Holders of common stock are entitled to receive such dividends as may be
declared from time to time by the Board of Directors out of funds legally
available therefore and, in the event of liquidation, dissolution, or winding
up of the Company, to share ratably in all assets remaining after payment of
liabilities. Holders of the Company's common stock have no pre-emptive or
conversion rights. The holders of common stock are not subject to further
calls or assessments. There are no redemption or sinking fund provisions
applicable to the common stock. The rights of the holders of the common stock
are subject to any rights that may be fixed for holders of preferred stock,
when and if any preferred stock is subsequently approved and issued. The
common stock currently outstanding is, and the common stock offered by the
Company hereby will, when issued, be validly issued, fully paid and non-
assessable.
Preferred Stock
The Company has not authorized any preferred stock
Board of Directors
The Board of Directors of the Company consists of one member, Kevin Nichols.
The term of office of any director expires at each annual meeting of
stockholders or until his successor is elected.
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Transfer Agent
The Company has yet to appoint a Transfer Agent, but will do so when, and as
may be required in the furtherance of the business plan.
INTERESTS OF NAMED EXPERTS AND COUNSEL
No expert or counsel named in this Prospectus as having prepared or certified
any part of this Prospectus or having given an opinion upon the validity of
the securities being registered or upon other legal matters in connection
with the registration or offering of the common stock was employed on a
contingency basis, or had, or is to receive, in connection with the offering,
a substantial interest exceeding $50,000, directly or indirectly, in the
Company or any of its parents or subsidiaries. Nor was any such person
connected with Essense Water, Inc. or any of its parents or subsidiaries as a
promoter, managing or principal underwriter, voting trustee, director,
officer, or employee.
EXPERTS
The financial statements for the period from inception (January 29, 2009) to
the fiscal year end of August 31, 2011 included in this Prospectus have been
audited by Seale & Beers, CPAs, an independent registered public accounting
firm, which report expresses an unqualified opinion and includes an
explanatory paragraph relating to the Company's ability to continue as a
"going concern" and are included in reliance upon such report and upon the
authority of such firm as experts in accounting and auditing.
The legality of the securities offered hereby has been passed upon for the
Company by Mr. Jeffrey Nichols, 811 6th Avenue, Lewiston, ID. As of the date
of this prospectus, Jeffrey Nichols holds no Company securities.
DESCRIPTION OF BUSINESS
Background
Essense Water, Inc. was incorporated in the State of Nevada on January 29,
2009. Our office is presently located at 4327 S Pittsburg St., Spokane, WA
99203. Our website, which has not yet been developed, will be
www.essensewater.com. The information that will be contained on our website
does not form a part of this registration statement of which this Prospectus
is a part.
We are a development stage company seeking to develop, market, and distribute
a beverage product that will be positioned as a "better for you than just
plain water" type of drink. It will be targeted to a growing category of "new
age/functional" beverage consumers. "New Age/Functional Beverages" is a
category that includes natural soda, fruit juices and fruit drinks, ready-to-
drink teas, sports drinks, and water.
The Company has preliminarily developed and formulated a beverage product,
the basis of which it expects to move forward with in the continued
development of its business plan. We have done the research, development, and
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taste testing ourselves. Once we have finalized and determine the proper
formulation(s), we will then seek a third-party to do the actual preparation
and bottling of the product based on these internally-derived formula(s).
The proceeds from this Offering are being sought to provide the funding
necessary to further advance our business strategy beyond what we have
accomplished to date. Once the Company has decided on the final formulation
of its product(s), designed its labeling, and selected the form of container
to use, it will seek to have it bottled through a third-party since the costs
for a production/bottling facility is cost prohibitive at this early point.
We intend to market and sell our products ourselves through a network of
natural, gourmet, and independent distributors, as well as through our own
web-site, which we have yet to develop. Our intent is focus on the smaller,
local market area before any expansion will be targeted.
As our business began on January 29, 2009, and the fact that there have been
no actual operations, we have not provided any historical comparative
analysis.
OUR ACTIVITIES TO DATE
Through our founder, Kevin Nichols, we have done extensive research into our
business model of seeking to develop, market, and distribute a beverage
product that will be positioned as a "better for you than just plain water"
type of drink. We have analyzed and studied the many competitors, researched
the multitudes of flavorings, sweeteners, colorings, nutrients, vitamins,
electrolytes, etc. (and their perceived vs. real benefits), sources for the
base water product to be used, packaging and containers, bottling methods and
bottle products, developed basic formulations for our beverage, performed
extensive taste testing, and met with various retailers and wholesalers about
product positioning, sales, and marketing.
To date, Essense Water, Inc. has achieved the following milestones:
- Developed at least three basic formulations of its product(s);
- Applied and filed for the trademark name of "Essense Water;"
- Become an SEC "reporting company;"
- Obtained the domain names "essensewater.com" and "essensewater.net;" and
- Assessed market potential for our product and determined that it be best
kept "local" and expanded from there.
Industry Overview
Our beverage in targeted to fall within the New Age/Functional Beverage
category, which we believe to be growing rapidly. The consumer has fast
become aware of the health risks of too much sugar and the many studies
evidencing the athletic performance benefits of proper hydration. In
addition, a variety of new beverages/serving sizes and selections with the
choice of various added ingredients are, we believe, contributing to robust
sales growth in this beverage category. Iindustry analysts forecast the New
Age/Functional Beverage market to grow to $800 million in 2009, up from $168
million in 2004.
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Our Product
The Company intends to develop its product using pure water as the basic
ingredient. In making it better for you than just plain water, the Company
expects to add other things to it, such as vitamins, electrolytes, and
possibly fiber to provide what may be real or perceived benefits to the
consumer. The Company has no intention to make any claims as to any health,
medical, or therapeutic benefits that may be derived from our product. The
product will most likely be flavored and colored, both through the use of
natural ingredients rather than artificial means. It will also be sweetened
naturally by way of the use of "stevia" extract as the sweetening agent. This
sweetener is very low calorie. The product will most likely not be carbonated
or contain any added "energy" enhancers or stimulants such as caffeine.
After much trial and error and attempts at many flavors, sweeteners, and
combinations thereof, the Company has developed and formulated three of its
basic potential fruit-flavored drink products that it intends to proceed with
towards more final-stage product development. At this stage, they consist of
spring water which contains natural fruit flavors, natural stevia sweetener,
potassium and sodium (as electrolytes), and no coloring. As the Company
proceeds, we will look into test various other drink "enhancements" such as
vitamins, minerals, and possibly fiber in making our product(s) "better for
you" than plain water.
We anticipate the ongoing development and formulation of our product will
continue to be done "in-house" rather than using a third-party to do so. The
selection and mixing of the many possible ingredients will be done by
management and subsequent taste-tests, if any, will continue by utilizing
various family members and close friends (who will not be paid for their
services) and compared to existing products for blind taste tests. Such
developments will most likely take place in Mr. Nichols home kitchen. While
certainly not a true development or testing facility in nature, sterile clean
vessels will be used to avoid contaminations or any tainting of the test
products and relatively precise means for specific formulation will be
utilized, such as various weight and volume measuring devices.
After our formulation(s) have been finalized, the Company will then meet with
potential bottlers and possibly other professionals, as may be required, to
determine the safety and efficacy of the proposed ingredients and that the
end product and related formula(s) will be able to be satisfactorily produced
on a larger scale.
Expected to be offered in single serving size, somewhere from 12 to 20
ounces, our product(s) will likely be made available as singles, four or six-
packs, and 24-container cases. The packaging, whether to use plastic, glass,
or other means, has not yet been decided.
The Manufacture of Our Products
Once our final formula(s) have been developed, the Company intends to
contract with third-party(s) to commercially produce and bottle the beverage.
These third party bottlers will assemble our products and charge us a fee,
generally by the case, for the products they produce. The Company has no
contracts with any third party bottlers at this time.
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We intend to follow a "fill as needed" manufacturing model to the best of our
ability, thus reducing the need for large inventories and storage of product.
Substantially all of the raw materials that will be used in the preparation,
bottling, and packaging of our products will be purchased by us based on the
final formula(s) of our product. As a general policy, we will pick
ingredients in the development of our product that will have multiple
suppliers and are common ingredients. This will provide a level of protection
against a major supply constriction or calamity.
To the extent that any significant increase in business may require the
Company to supplement or substitute third-party bottlers, we believe that
there are many readily available alternatives, thus alleviating the threat
significant delay or interruption in fulfilling future orders and delivery of
our product. In addition, we do not believe that any likely future growth
will result in any significant difficulty or delay in obtaining raw
materials, ingredients, or finished product.
Our Primary Markets
The Company will be targeting a niche in the soft drink industry known as New
Age/Functional beverages. The soft drink industry generally characterizes New
Age Beverages as being made more naturally, with upscale packaging, and often
creating and utilizing new and unique flavors and flavor combinations as well
as added ingredients.
This beverage market segment is highly fragmented and includes such
competitors as SoBe, Snapple, Arizona, Gatorade, Powerade, and Vitamin Water,
among others. These brands have the advantage of being seen widely in the
national market and being commonly well known for years through well-funded
advertising and marketing campaigns. Our product will have no mass media
advertising and, if any, a very small presence in the local market when
compared with many of our competitors. See "Business - Competition" below.
We are located in Spokane, Washington. We will most likely sell the majority
of our products locally, in natural food stores, local sports and athletic
stores, smaller local supermarkets, and possibly foodservice locations.
The primary marketing source of our products will most likely be the smaller,
locally-owned natural food, grocery, and gourmet stores in the Spokane and
surrounding areas. We also will target local sports and athletic stores. We
believe that our product may achieve a position in their niche in the fast-
growing natural food industry.
The Company has approached larger regional supermarkets, prominent local
grocers, and wholesalers who distribute to grocery stores, but this market
will be considerably harder to break into. The demand for limited shelf space
is quite high, thus bringing our limited product to these stores may prove
difficult. It is unlikely that we will pursue these markets in the near term.
We will also attempt to market our beverage product to local bars and
restaurants and consider placing our beverage product in local stadiums,
sports venues, concert halls, theatres, and other cultural centers as part of
our marketing plan.
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The Company has no plans to market the product internationally.
Distribution, Sales and Marketing
The Company itself will directly promote, market, and sell our products to
the above-mentioned primary markets. We may also seek local distributors that
have a broader reach directly into more locations. We also intend to offer
our product directly to consumers via the Internet through our website, which
is yet to be established, but is an intended use for proceeds from this
offering.
Marketing to Consumers
We expect to utilize several marketing strategies to market directly to
consumers, such advertising in targeted local and regional consumer magazines
and weekly papers, in-store discounts on the products, in-store product
demonstrations, possible street corner sampling, coupon advertising, consumer
trade shows, and possible local event sponsoring. Our website will also be a
large part of our consumer-direct marketing program.
Competition
The beverage industry is extremely competitive. The principal areas of
competition include pricing, packaging, development of new products and
flavors, and marketing campaigns. The Company's product will be competing
directly with a wide range of drinks produced by a relatively large number of
manufacturers. Most of these brands have enjoyed broad, well-established
national recognition for years, through well-funded ad and other marketing
campaigns. In addition, the companies manufacturing these products generally
have far greater financial, marketing, and distribution resources than the
Company will.
Important factors that will affect our ability to compete successfully
include taste and flavor of products, trade and consumer promotions, the
development of a new, unique cutting edge product, attractive and different
packaging, branded product advertising, and pricing. Each of these factors
will be taken into consideration as we proceed with our business plan.
The Company will also be competing to secure distributors who will agree to
market our product over those of our competitors, provide stable and reliable
distribution, and secure adequate shelf space in retail outlets. The
extremely competitive pressures within the New Age/Functional beverage
categories could even cause our products to never even be introduced beyond
what the Company can market locally themselves.
We believe we will be able to develop and introduce an innovative beverage
recipe and packaging whose use of premium natural ingredients will provide us
with a competitive advantage and be keys to our success.
Our beverage product will compete generally with all liquid refreshments,
including bottled water and, in particular, with numerous other New
Age/Functional beverages, including: SoBe, Snapple, Arizona, Vitamin Water,
Gatorade, and Powerade.
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Proprietary Rights
We will consider our finished product and concentrate formula(s) to be trade
secrets and brand names, logos, or other such item(s) to be trademarks and,
as such, material to our business.
The Company has submitted for trademark registration the name "Essense
Water," but we have not yet received final approval as we have to show the
name in use on our actual product available for sale before the process can
be finalized. This protection was considered necessary and was done by the
founder in a cost effective manner. This registration for trademarks in the
United States will last indefinitely as long as the Company continues to use
and police the trademarks and renew filings with the applicable governmental
offices. We plan to use non-disclosure agreements with any bottlers and
distributors to protect our proprietary rights.
Governmental Regulation
The production, distribution, and sale in the United States of our Company's
product will be subject to the Federal Food, Drug, and Cosmetic Act, the
Federal Trade Commission Act, the Lanham Act, state consumer protection laws,
federal, state, and local workplace health and safety laws, various federal,
state and local environmental protection laws and various other federal,
state, and local statutes and regulations applicable to the production,
transportation, sale, safety, advertising, labeling, and ingredients of such
products.
Although the Company has yet to select the form of container for its product,
we will most likely offer and use some type of non-refillable, recyclable
container. Legal requirements apply in many jurisdictions in the United
States requiring that deposits or certain eco-taxes or fees be charged for
the sale, marketing, and use of certain non-refillable beverage containers.
The precise requirements imposed by these measures vary. Other types of
beverage container-related deposit, recycling, eco-tax and/or product
stewardship statutes and regulations also apply in various jurisdictions in
the United States. We anticipate additional, similar legal requirements may
be proposed or enacted in the future at many other local, state and federal
levels.
Any third-party bottling facility that we may choose to utilize in the future
and any other such operations will be subject to various environmental
protection statutes and regulations, including those relating to the use of
water resources and the discharge of wastewater. It will be our policy to
comply with any and all such legal requirements. Compliance with these
provisions has not had, and we do not expect such compliance to have, any
material adverse effect on our capital expenditures, net income or
competitive position.
Environmental Matters
A cost of environmental compliance will likely be in the form of recycling
fees, which is a standard cost of doing business in the soft drink industry.
In certain states where we may sell our products, we may be required to
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collect redemption values from customers and remit those redemption values to
the state, based upon the number of bottles/containers of certain products
sold in that state. In certain other states, we may also required to collect
deposits from our customers and then remit such deposits to the respective
state agencies based upon the number of cans and bottles of certain products
sold in such states.
Employees
As of this Offering, we have no employees other than our sole officer and
director. The Company does not anticipate hiring any employees in the next
twelve months, unless significant revenues are generated. We believe our
future success depends in large part upon the continued service of our
current sole officer and director, Kevin Nichols. All of the initial product
development of the product(s) will be performed by Mr. Nichols, while
assistance with the taste testing and other such product development will be
provided by family members and friends free of cost to the Company.
DESCRIPTION OF PROPERTY
The Company presently utilizes the office of our sole officer and director,
Kevin Nichols, who makes this space available to the company free of charge.
His office is located in Spokane, Washington. The office provides use of
computer, phone, printer, and a fax machine and its general character is
adequate to provide sufficient space and resources for the Company's business
development.
As for the initial testing and development of its product(s), the Company
will utilize the kitchen within Mr. Nichols' home. Mr. Nichols presently has
and will make available to the Company his own measuring instruments and
utensils for precise weights, volumes, and mixing of the liquids and
ingredients used in formulating the initial product(s).
Mr. Nichols also has an adequate amount of excess storage capacity within his
home, in excess of 100 square feet, which will be made available as might be
needed.
There are no written agreements documenting the above arrangements.
LEGAL PROCEEDINGS
To the Company's knowledge, no legal proceedings, government actions,
administrative actions, investigations or claims are currently pending
against us or involve us that, in the opinion of our management, could
reasonably be expected to have a material adverse effect on our business and
financial condition.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
This section of the prospectus includes a number of forward-looking
statements that reflect our current views with respect to future events and
financial performance. Forward-looking statements are often identified by
words like: believe, expect, estimate, anticipate, intend, project and
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similar expressions, or words which, by their nature, refer to future events.
You should not place undue certainty on these forward-looking statements,
which apply only as of the date of this prospectus. These forward-looking
statements are subject to certain risks and uncertainties that could cause
actual results to differ materially from historical results or our
predictions.
We are a development stage company and have not yet fully developed our
beverage product, have not commenced operations, and have not yet generated
or realized any revenues from our business operations.
Our auditors have issued a "going concern" opinion, which means that they
have reason(s) to believe there is substantial doubt that we can continue as
an on-going business for the next 12 months. This opinion is based largely on
the Company's suffering initial losses, not having any operations, and having
a working capital deficiency. In addition, we have not generated any revenues
and no revenues are anticipated until we complete the development and
formulation of our beverage product, have our product produced, establish a
sales network, and actually begin sale of the product.
The Company believes that it will be able to achieve operating cash flows
from the sale of its product but, until such time, we must rely on our
ability to raise cash from sources other than operations, namely this
offering and advances by Kevin Nichols. At the present time, our only source
for funding has been by way of loans by our founder, Kevin Nichols.
We have only one officer and director. He alone is responsible for our
managerial and organizational structure which will include preparation of
disclosure and accounting controls under the Sarbanes Oxley Act of 2002. When
these controls are implemented, he will be responsible for the administration
of the controls. Should he not have sufficient experience, he may be
incapable of creating and implementing the controls which may cause us to be
subject to sanctions and fines by the Securities and Exchange Commission
which ultimately could cause you to lose your investment.
Plan of Operation
If we are successful in raising the maximum amount in this offering, we
believe we can satisfy our cash requirements during the next 12 to 24 months
and be fully able to move forth with operations to the extent as set forth
and described herein. Further, we would not anticipate the need to raise
additional capital over the next 12 months.
Raising any amount less than the full amount from this offering may limit, to
varying degree, the Company's ability to fully implement its business plan.
If this was to happen, all categories of expenses will be reduced
accordingly, some more than others, and possibly even some cut completely
(please see Use of Proceeds section on Page 15 of this Prospectus).
Receipt of less than full funding from this offering may also require the
Company to seek additional capital in the form of a private equity
placement(s), debt, or some combination thereof. Doing so would place an
additional burden of Mr. Nichols' time and thus take him away from his focus
on product development and moving the Company closer to operating status.
-34-
We intend to accomplish the foregoing and will measure our accomplishment
through the following milestones:
1. Complete this public offering. The Offering will conclude the sooner of:
a) when all 8,000,000 shares of common stock have been sold, or b) one year
after the effective date of this registration statement. While the Company
expects to continue finalizing the testing and formulation of its product as
it received proceeds from this Offering, it will not begin more full scale
operations, much beyond final product formulation, until this Offering is
closed. Rather, the Company intends to concentrate much of its efforts on
raising as much potential capital as possible during this period.
2. Finalization the formulation of its drink product(s) will be of foremost
importance in this stage of the Company's business cycle. As stated earlier,
the drink(s) will be formulated with added ingredients with the idea of
making it better for you then plain water. The Company will continue to
endeavor to develop one "basic" formula rather than several formulas, and
then offer that formula in a few basic flavors, of which we have has
developed three to date.
3. Once the drink formula(s) has been developed and decided upon, the Company
will begin working simultaneously on several other key areas in the
furtherance of its business plan. In no particular order, these areas of
development include the following:
- Develop contacts with third-party bottlers, selecting one for bottling
of the Company's product,
- develop a name for the Company's product,
- design labeling for the product,
- research and select the form of packaging (i.e. bottle type),
- research and decide upon the pricing model for the product;
- design and develop the Company's web-site utilizing a third-party web
designer
- meet with local area retailers and wholesalers regarding sale and
distribution of the product, and
- plan other marketing and promotional means for getting knowledge and
brand recognition of the product.
4. Detailed breakdowns of the costs of these areas of our business
development were provided earlier within this Prospectus in the "Use of
Proceeds" section on Page 15. If the Company is not able to generate
sufficient revenues and cash flow levels after the above milestones in its
development to continue operations, it will be forced to suspend or possibly
cease operations. If it were to cease operations, the Company has no plans to
do anything else and would most likely shut down and cease to exist.
Liquidity and Capital Resources
To meet the Company's need for funding to further implement its business
plan, it is seeking to raise capital from this Offering. In doing so, we can
make no assurances or guarantee that we will be successful in selling any or
all of the shares. The funds raised by this Offering will be applied to the
items set forth in the Use of Proceeds section of this Prospectus. The
-35-
Company will attempt to raise the amount of funds necessary to proceed with
all of the phases of its plan of operation. The sources of funding we may
consider to fund this work include a public offering, a private placement of
our securities, or loans from our sole officer/director.
Kevin Nichols, our sole officer/director, and holder of a majority of our
common stock, has agreed to continue to advance funds as needed until the
Offering is completed or has failed. While he has agreed to advance the
funds, the agreement to do so is verbal and is unenforceable as a matter of
law.
To date, the Company has only performed extensive market research into the
industry and has begun only preliminary formulation of its beverage product.
We have not carried out any work on any other phase of our development plan
and have incurred only minimal development costs to date.
The Company received its initial funding of $2,000 through the sale of common
stock to our sole officer/director who purchased 12,000,000 shares of common
stock with such funds on May 29, 2009. From inception until the date of this
filing, the Company has had no operating activities. The Company's audited
financial statements from inception (January 29, 2009) through August 31,
2011 (our most recent fiscal year end) report no revenues and reflect a net
loss to date of $(24,845) related solely to our many start-up related costs.
As of February 29, 2012, our total assets were $1,932 and our total
liabilities were $29,284. As of the same date, we had cash of $1,932. Kevin
Nichols, our sole officer/director, has been and is willing to provide us the
money needed to continue with our limited operations until this Offering has
been completed, including an amount sufficient to cover the existing
shortfall between cash on hand and the accrued liabilities of the Company.
Operations will include, but are not limited to, filing reports with the
Securities and Exchange Commission as well as the certain of the business
activities contemplated by our business plan such as product formulation and
testing. A portion of the proceeds from this Offering (up to $15,000) will be
used to repay part of the liability to Mr. Nichols of money advanced by him,
which as of February 29, 2012 was $26,659.
CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
AND FINANCIAL DISCLOSURE
During the period from January 29, 2009 (inception) to February 29, 2012,
there were no disagreements between the Company and our independent public
accounting firm, Seale & Beers CPAs, as to any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or
procedure, which disagreements, if not resolved to the satisfaction of our
auditors, would have caused to make reference in their reports on the
financial statements for such year(s) to the subject matter of the
disagreement.
-36-
DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS, AND CONTROL PERSONS
Officers and Directors
The name, address, age, and positions of our present sole officer and
director is set forth below:
Name Age Positions
Kevin Nichols 53 President, Treasurer, and sole Director
Our sole director will serve until his successor is elected and qualified, or
until the earlier of his death, resignation, or removal from office. Our sole
officer was elected by the board of directors for a one year term, and will
serve until his successor is duly elected and qualified, or until the earlier
of his death, resignation, or removal from office. The Board of Directors has
no nominating, auditing, or compensation committees.
Background of Our Sole Officer and Director.
Business and Educational experience of Mr. Kevin Nichols.
Kevin Nichols is the Company's President, Secretary, Treasurer, and Director.
BBA Boise State University, Boise, ID
Major: Accounting and Finance
Over the past twelve years, Mr. Nichols has been self-employed as an
independent business consultant through his wholly-owned company, Selway
Group, LLC and through Altres Group, LLC, which is owned jointly, on a 50/50
basis by him and his brother, Jeff Nichols. Both of these companies
specialize in providing assistance with the many start-up and other
requirements of new and existing businesses, including company formations and
structuring, elements of tax and accounting, and analyzing existing
businesses for inefficiencies, ways to increase profits, and seek new growth
opportunities.
Prior to his self-employment, Mr. Nichols held positions primarily in areas
of accounting and finance with such companies as Arthur Andersen & Co, SAFECO
Properties, Wells Fargo Realty Advisors, Seafirst Bank, Bank of America, and
Kiemle & Hagood Co., a Spokane-area commercial real estate development and
management company.
With respect specifically to the Company, Mr. Nichols has had no direct
experience in the beverage industry, nor has he overseen the complete
implementation, from start-up through successful operations, of a company
similar to Essense.
-37-
Management's Past Experience and Involvement with Other SEC Reporting
Companies
Our sole officer and director, Kevin Nichols, founded and was the sole
officer and director and owned 100% of the outstanding shares of stock in a
total of eight SEC reporting companies several years ago. He no longer has
any involvement with them and is no longer associated with them in any way,
such as with respect to management, any controlling shareholder, or other
position.
Each company was initially a "blank check" company, which is defined by the
SEC as "a development stage company that has no specific business plan or
purpose or has indicated its business plan is to engage in a merger or
acquisition with an unidentified company or companies, other entity, or
person." The original intent with each of these was to seek a business merger
with or an acquisition of another company.
Only two of these eight companies ever advanced beyond this initial "blank
check" stage of development. A description of each of these two is as
follows.
Originally founded as Vintendo Corporation, the Company filed its initial
report under this name with the SEC on January 25, 2000. The Company
subsequently merged with 121 International, at which time Mr. Nichols
resigned, and ultimately changed its name to and became known as Altadigit
International Corp. Altadigit's business plan called for it to be a multi-
level marketing company selling consumer products. Mr. Nichols has had no
contact with anyone associated with this Company since early 2005, and, as a
result of this lack of communication, would speculate that this company is no
longer in business. This Company filed a report on Form 15-12G with the SEC
on April 4, 2005, which is the certification of termination of registration
of a class of security under Section 12(g) or notice of suspension of duty to
file reports pursuant to Section 13 and 15(d) of the Act Section 12(g). From
approximately late 2002 through the filing date of its Form 15-12G, the
Company was and is to be considered "delinquent" in its requisite filings
with the SEC.
Originally founded as Oiram Inc. and initially filed under this name with the
SEC on January 25, 2000, this Company subsequently merged with Encore
Environmental Services, at which time Mr. Nichols resigned, and ultimately
changed its name to and became known as Urban Resource Technologies, Inc. Its
business plan called for it to engage in the conversion of a wide variety of
waste products into new, usable products and into valuable electrical and
thermal energy. Mr. Nichols has had no contact with anyone associated with
this Company since mid to late 2002, and, as a result, would speculate that
this company is no longer in business. This Company has never filed a Form
15-12G with the SEC to suspend its duty to file reports and has remained in
"delinquent" status since approximately mid-2002.
The remaining six companies never progressed beyond their blank check status.
Each has since been dissolved as corporate entities. Each of them has since
filed a Form 15-12G, and has thus suspended any ongoing duty to file its
-38-
reports with SEC. However, prior to actually filing their Form 15-12G's, each
company was considered delinquent with SEC in their required filings. The
names and SEC filing details/dates of these six companies are as follows:
Approx.
Date Date of Filing
of First Delinquent Date of
SEC Filing Status Form 15-12G
---------- ------ -----------
Wiley Rock Inc. 1/7/2000 August 2002 4/4/2005
Polycera Corp. 1/7/2000 November 2002 12/7/2009
Elsinore Capital I, Ltd. 12/28/2001 November 2002 12/7/2009
Elsinore Capital II, Ltd. 12/28/2001 November 2002 12/7/2009
Elsinore Capital III, Ltd. 12/28/2001 November 2002 12/7/2009
Elsinore Capital IV, Ltd. 12/28/2001 November 2002 12/7/2009
You can read all of the past filings and see more information on each of
these companies on the SEC's website, which can be found at www.sec.gov by
searching under "Search for Company Filings" heading.
Audit Committee Financial Expert
The Company does not have an audit committee financial expert since it
believes that the cost of retaining a financial expert at this time of the
Company's development is quite prohibitive. Further, as we have no operations
at the present time, it is believed that the services of a financial expert
are not warranted.
Conflicts of Interest
Mr. Nichols plans to devote approximately 15 to 20 hours per week to the
Company. The only conflict that exists is his devotion of time to his
business consulting work. None of Mr. Nichols' business consulting interests
are competitors of or would conflict with the Essense business plan.
-39-
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth the compensation paid by us from inception
(January 29, 2009 through February29, 2012, to our sole Officer and Director.
The information includes the dollar value of base salaries, bonus awards, and
number of stock options granted, and certain other compensation, if any.
Long Term Compensation
Awards Payouts
Annual Compensation Restricted Securities
Name and Other Stock Underlying LTIP Other
Position Year Salary Bonus Compen. Awards Options Payouts
Compen.
--------------------------------------------------------------------------
Kevin
Nichols 2009 $0 $0 $0 0 0 0 $0
President, 2010 $0 $0 $0 0 0 0 $0
Secretary, 2011 $0 $0 $0 0 0 0 $0
Treasurer
And
Director
Our sole director has not received monetary compensation since our inception
to the date of this Prospectus. We currently do not pay any compensation to
any directors for serving on our Board of Directors.
The compensation discussed herein addresses all compensation awarded to,
earned by, or paid to our named sole Officer and Director.
EMPLOYMENT AGREEMENTS, TERMINATION OF EMPLOYMENT, CHANGE-IN-CONTROL
ARRANGEMENTS
There is currently no employment or other contract or arrangement with any of
our officers. There are no compensation plans or arrangements, including
payments to be made by us, with respect to officers that would result from
their resignation, retirement, or other termination from us. There are no
arrangements for our officers that would result from a change-in-control.
None of our officers have received monetary compensation since our inception
to the date of this Prospectus.
STOCK OPTION GRANTS
We do not currently have a stock option plan nor any long-term incentive
plans that provide compensation intended to serve as an incentive for
performance. No individual grants of stock options or other equity incentive
awards have been made to our officers or directors since our inception;
accordingly, none were outstanding as of the date of this Prospectus.
There are no annuity, pension or retirement benefits proposed to be paid to
the officer or director or employees in the event of retirement at normal
retirement date pursuant to any presently existing plan provided or
contributed to by the company or any of its subsidiaries, if any.
-40-
DIRECTOR COMPENSATION
We have not compensated our director for his service on our Board of
Directors since our inception. There are no arrangements pursuant to which
directors will be compensated in the future for any services provided as a
director.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
We review all relationships and transactions in which the Company and our
directors and executive officers or their immediate family members are
participants to determine whether such persons have a direct or indirect
material interest. Transactions that we have determined to be directly or
indirectly material to us or a related person are disclosed below. We believe
each transaction is on terms no more favorable to us than the terms generally
available to an unaffiliated third-party under the same circumstances.
Our executive, administrative, and operating offices are located at Mr.
Nichols' office in Spokane, Washington. This space is provided for the
Company's operations at no charge. There is no written agreement evidencing
this arrangement.
Kevin Nichols has agreed to advance additional funds to the Company, as may
be needed during this Offering to cover expenses. Any funds advanced by him
will be non-interest bearing and payable upon demand.
Kevin Nichols acquired a total of 12,000,000 shares of the Company's common
stock for a total purchase price of $2,000.
In December 2010, Kevin Nichols offered as "gifts" of Company common shares
from his personal holdings to various family members and friends. These were
extended to and accepted by a total of thirty-two (32) individuals and
comprised a total of 260,000 shares, leaving Mr. Nichols with total holdings
of 11,740,000 shares of the Company's common stock.
Those individuals of note as being "certain relationships" receiving these
gifts of shares, and their relationship to Mr. Nichols, were: Karen Nichols
(sister), Rachel Nichols (daughter), and Zachery Nichols (son) Each of these
individuals received 15,000 shares.
The Company's Counsel, Mr. Jeffrey Nichols, is Kevin Nichols' brother.
The following table sets forth information with respect to the beneficial
ownership of our common stock as of February 29, 2012 by:
- each person known by us to beneficially own more than 5.0% of our common
stock;
- our sole director;
- our named executive officer; and
- our sole director and executive officers as a group.
-41-
The percentages of common stock beneficially owned are reported on the basis
of regulations of the Securities and Exchange Commission governing the
determination of beneficial ownership of securities. Under the rules of the
Securities and Exchange Commission, a person is deemed to be a beneficial
owner of a security if that person has or shares voting power, which includes
the power to vote or to direct the voting of the security, or investment
power, which includes the power to dispose of or to direct the disposition of
the security. Except as indicated in the footnotes to this table, each
beneficial owner named in the table below has sole voting and sole investment
power with respect to all shares beneficially owned.
Number of
Name and Address Shares Owned Percent of
Title of Class of Beneficial Owner Beneficially (2) Class Owned
-------------- ------------------- --------------- -----------
Common Stock Kevin Nichols, President 11,740,000 97.83%
Secretary, and Director
All executive officers 11,740,000 97.83%
and directors as a
group (one person)
-----------
(1) The stockholder listed above possesses sole voting and investment power
with respect to the shares shown, subject to applicable community property
laws, and the mailing address for the beneficial owner is 4327 S Pittsburg,
Spokane, WA 99203.
(2) Based on 12,000,000 shares of common stock outstanding as of the date of
this Prospectus.
WHERE YOU CAN FIND MORE INFORMATION
We have filed with the Securities and Exchange Commission a registration
statement on Form S-1 under the Securities Act with respect to the securities
we are offering by this Prospectus. This Prospectus does not contain all of
the information included in the registration statement. For further
information about us and our securities, you should refer to the registration
statement and the exhibits and schedules filed with the registration
statement. Whenever we make reference in this Prospectus to any of our
contracts, agreements, or other documents, the references are materially
complete but may not include a description of all aspects of such contracts,
agreements, or other documents, and you should refer to the exhibits attached
to the registration statement for copies of the actual contract, agreement,
or other document.
We are subject to the information requirements of the Exchange Act and will
file annual, quarterly, current event reports, proxy statements, and other
information with the SEC. You can read our SEC filings, including the
registration statement, over the Internet at the SEC's website at
http://www.sec.gov/. You may also read and copy any document we file with the
SEC at its public reference facility at 100 F Street, N.E., Washington, D.C.
20549.
-42-
You may also obtain copies of the documents at prescribed rates by writing to
the Public Reference Section of the SEC at 100 F Street, N.E., Washington,
D.C. 20549. Please call the SEC at 1-800-SEC-0330 for further information on
the operation of the public reference facilities.
DISCLOSURE OF COMMISSION POSITION ON
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our Articles of Incorporation and Bylaws provide that we shall indemnify our
officers or directors against expenses incurred in connection with the
defense of any action in which they are made parties by reason of being our
officers or directors, except in relation to matters as which such director
or officer shall be adjudged in such action to be liable for negligence or
misconduct in the performance of his duty. One of our officers or directors
could take the position that this duty on our behalf to indemnify the
director or officer may include the duty to indemnify the officer or director
for the violation of securities laws.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to our directors, officers and controlling persons pursuant
to our Certificate of Formation, Bylaws, Nevada laws or otherwise, we have
been advised that in the opinion of the Securities and Exchange Commission,
such indemnification is against public policy as expressed in the Securities
Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by us of
expenses incurred or paid by one of our directors, officers, or control
persons, and the successful defense of any action, suit or proceeding) is
asserted by such director, officer or control person in connection with the
securities being registered, we will, unless in the opinion of our counsel
the matter has been settled by a controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed
by the final adjudication of such issue.
-43-
ESSENSE WATER, INC.
FINANCIAL STATEMENTS AND ACCOMPANYING FOOTNOTES
TABLE OF CONTENTS
1. REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM F-2
Financial Statements for the Six Months Ended February 29, 2012and 2011
(unaudited) and Years Ended August 31, 2011 and 2010 (Audited)
2. BALANCE SHEETS F-3
3. STATEMENTS OF OPERATIONS F-4
4. STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) F-5
5. STATEMENTS OF CASH FLOWS F-6
6 NOTES TO FINANCIAL STATEMENTS F-7
Unaudited Interim Condensed Financial Statements for the Six Months Ended
February 29, 2012and 2011 (unaudited)
2. BALANCE SHEETS F-11
3. STATEMENTS OF OPERATIONS F-12
4. STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT) F-13
5. STATEMENTS OF CASH FLOWS F-14
6 NOTES TO FINANCIAL STATEMENTS F-15
F-1
SEALE AND BEERS, CPAs - PCAOB & CPAB REGISTERED AUDITORS (www.sealebeers.com)
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders of
Essense Water, Inc.
(A Development Stage Company)
We have audited the accompanying balance sheets of Essense Water Inc. (A
Development Stage Company) as of August 31, 2011 and 2010, and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended August 31, 2011 and 2010 and since inception on January 29,
2009 through August 31, 2011. Essense Water, Inc.'s management is
responsibility for these financial statements. Our responsibility is to
express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with standards of the Public Company
Accounting Oversight Board (United States). Those standards require that we
plan and perform the audits 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 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 Essense Water Inc. (A
Development Stage Company) as of August 31, 2011 and 2010, and the related
statements of operations, stockholders' equity (deficit) and cash flows for
the years ended August 31, 2011 and 2010 and since inception on January 29,
2009 through August 31, 2011, in conformity with accounting principles
generally accepted in the United States of America.
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in Note 3 to the
financial statements, the Company has no revenues, has negative working
capital at August 31, 2011 and 2010, has incurred recurring losses and
recurring negative cash flows from operating activities, and has an
accumulated deficit which raises substantial doubt about its ability to
continue as a going concern. Management's plans concerning these matters are
also described in Note 3. The financial statements do not include any
adjustments that might result from the outcome of this uncertainty.
/s/ Seale and Beers, CPAs
- -----------------------
Seale and Beers, CPAs
Las Vegas, Nevada
October 28, 2011
F-2
ESSENSE WATER, INC.
(A DEVELOPMENT STAGE COMPANY)
BALANCE SHEETS
As of As of
August 31 August 31
ASSETS 2011 2010
CURRENT ASSETS
Cash $ 157 $ 696
--- ---
TOTAL CURRENT ASSETS 157 696
--- ---
TOTAL ASSETS $ 157 $ 696
=== ===
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Accounts Payable and Accrued Liabilities $ 4,375 $ 1,750
Payable to Affiliates 18,627 9,973
------ -----
TOTAL CURRENT LIABILITIES 23,002 11,723
------ ------
TOTAL LIABILITIES 23,002 11,723
------ ------
STOCKHOLDERS' EQUITY
Common stock, ($0.0001 par value
75,000,000 shares authorized
12,000,000 shares outstanding
as of August 31, 2011 and 2010 1,200 1,200
Additional paid-in capital 800 800
Deficit accumulated during development stage (24,845) (13,027)
------ ------
TOTAL STOCKHOLDERS EQUITY (22,845) (11,027
TOTAL LIABILITIES AND STOCKHOLDERS EQUITY $ 157 $ 696
=== ===
The accompanying notes are an integral part of these audited financial
statements.
F-3
ESSENSE WATER, INC.
(A DEVELOPMENT STAGE COMPANY)
STATEMENTS OF OPERATIONS
January 29,
2009
(inception)
Year Ended Year Ended through
August 31, August 31, August 31,
2011 2010 2011
Income:
Operating Revenues $ 0 $ 0 $ 0
---------- ---------- ----------
TOTAL REVENUES 0 0 0
Expenses:
General and Administrative 10,818 9,117 23,845
General & Administrative -
Related Party 1,000 0 1,000
---------- ---------- ----------
Total Expenses 11,818 9,117 24,845
Provision for Income Taxes -- -- --
---------- ---------- ----------
NET INCOME (LOSS) $ (11,818) $ (9,117) $ (24,845)
========== ========== ==========
BASIC EARNINGS (LOSS)
PER SHARE $ (0.00) $ (0.00)
========== ==========
WEIGHTED AVERAGE NUMBER OF
COMMON SHARES OUTSTANDING 12,000,000 12,000,000
========== ==========
The accompanying notes are an integral part of these audited financial
statements.
F-4
ESSENSE WATER, INC.
(A Development Stage Company)
Statement of Stockholders' Equity
From January 29, 2009 (Inception) through August 31, 2011
-----------------------------------------------------------------------------
Deficit
Accumulated
Common Additional During
Common Stock Paid-in Development
Stock Amount Capital Stage Total
----- ------ ------- ---------- ------
BALANCE,
JANUARY 29, 2009 -- $ -- $ -- $ -- $ --
Stock issued for cash
on May 29, 2009
$0.00017 per share 12,000,000 1,200 800 2,000
Net loss,
August 31, 2009 (3,911) (3,911)
---------- ------- ------- ---------- -------
BALANCE,
AUGUST 31, 2009 12,000,000 $ 1,200 $ 800 $ (3,911) $ (1,911)
========== ======= ======= ========= ========
Net loss,
August 31, 2010 (9,117) (9,117)
---------- ------- ------- ---------- -------
BALANCE,
AUGUST 31, 2010 12,000,000 $ 1,200 $ 800 $ (13,027) $(11,027)
========== ======= ======= ========= ========
Net loss,
August 31, 2011 (11,818) (11,818)
---------- ------- ------- ---------- -------
BALANCE,
AUGUST 31, 2011 12,000,000 $ 1,200 $ 800 $ (24,845) $(22,845)
========== ======= ======= ========= ========
The accompanying notes are an integral part of these audited financial
statements.
F-5
ESSENSE WATER, INC.
(A Development Stage Company)
Statements of Cash Flows
-----------------------------------------------------------------------------
January 29,
2009
(inception)
Year ended Year Ended through
August 31, August 31, August 31,
2011 2010 2011
---------- ---------- -----------
OPERATING ACTIVITIES
Net income (loss) $ (11,818) $ (9,117) $ (24,845)
Adjustments to reconcile net
loss to net cash provided
by (used in) operating
activities:
Changes in operating liabilities:
Increase (decrease) in
Accrued Payables 2,625 (1,750) 4,375
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES (9,193) (10,867) (20,470)
FINANCING ACTIVITIES
Issuance of Common Stock -- -- 2,000
Advances/Loans from Affiliates 8,654 9,613 18,627
-------- -------- --------
NET CASH PROVIDED BY (USED IN)
FINANCING ACTIVITIES 8,654 9,613 20,627
-------- -------- --------
NET INCREASE (DECREASE) IN CASH (539) (1,254) 157
CASH AT BEGINNING OF PERIOD 696 1,952 --
-------- -------- --------
CASH AT END OF PERIOD $ 157 $ 696 $ 157
======== ======== ========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during period for:
Interest $ -- $ -- $ --
======== ======== ========
Income Taxes $ -- $ -- $ --
======== ======== ========
The accompanying notes are an integral part of these Financial Statements.
F-6
ESSENSE WATER, INC.
(A Development Stage Company)
Notes to Financial Statements
August 31, 2011
-----------------------------------------------------------------------------
NOTE 1. ORGANIZATION AND DESCRIPTION OF BUSINESS
Essense Water, Inc. (the "Company"), was incorporated on January 29, 2009,
under the laws of the State of Nevada. The Company is a development-stage
company, established to develop, produce, and market a water-based consumer
beverage. It has elected a fiscal year end of August 31.
The Company's authorized share capital consists of 75,000,000 shares of
common stock, $0.0001 par value per share. At August 31, 2011 and 2010, the
Company has 12,000,000 shares of its common stock issued and outstanding.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
A. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of
accounting. The Company has elected an August 31, yearend.
B. BASIC EARNINGS PER SHARE
ASC No. 260, "Earnings Per Share", specifies the computation, presentation
and disclosure requirements for earnings (loss) per share for entities with
publicly held common stock. The Company has adopted the provisions of ASC No.
260.
Basic net loss per share amounts is computed by dividing the net loss by the
weighted average number of common shares outstanding. Diluted earnings per
share are the same as basic earnings per share due to the lack of dilutive
items in the Company.
C. CASH EQUIVALENTS
The Company considers all highly liquid investments purchased with an
original maturity of three months or less to be cash equivalents.
D. USE OF ESTIMATES AND ASSUMPTIONS
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates. In accordance with ASC No.
250 all adjustments are normal and recurring.
F-7
E. INCOME TAXES
Income taxes are provided in accordance with ASC No. 740, Accounting for
Income Taxes. A deferred tax asset or liability is recorded for all temporary
differences between financial and tax reporting and net operating loss
carryforwards. Deferred tax expense (benefit) results from the net change
during the year of deferred tax assets and liabilities.
Deferred tax assets are reduced by a valuation allowance when, in the opinion
of management, it is more likely than not that some portion of all of the
deferred tax assets will be realized. Deferred tax assets and liabilities are
adjusted for the effects of changes in tax laws and rates on the date of
enactment.
F. REVENUE
The Company records revenue on the accrual basis when all goods and services
have been performed and delivered, the amounts are readily determinable, and
collection is reasonably assured. The Company has not generated any revenue
since its inception.
G. ADVERTISING
The Company will expense its advertising when incurred. There have been no
advertising costs since inception.
H. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
The Company's management has evaluated all recent accounting pronouncements
since the date of the last audit through the issuance date of these financial
statements. In the Company's opinion, none of the recent accounting
pronouncements will have a material effect on the financial statements.
NOTE 3. GOING CONCERN
The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As discussed in the notes to the
financial statements, the Company has no established source of revenue. This
raises substantial doubt about the Company's ability to continue as a going
concern. Without realization of additional capital, it would be unlikely for
the Company to continue as a going concern. The financial statements do not
include any adjustments that might result from this uncertainty.
The Company's activities to date have been supported by equity financing by
its founder. It has sustained losses in all reporting periods, with an
inception to date loss of $24,845 as of August 31, 2011. Management is
presently providing the required working capital to the Company to facilitate
and pursue its business plan.
NOTE 4. WARRANTS AND OPTIONS
There are no warrants or options outstanding to acquire any additional shares
of common stock.
F-8
NOTE 5. RELATED PARTY TRANSACTIONS
The Company's sole Officer and Director has advanced/loaned the Company funds
and has paid certain third-party expenses on behalf of the Company. As of
August 31, 2011 and 2010, the amounts owing the sole officer and director
were $18,627 and $9,973, respectively. These amounts are payable on demand
and are non-interest bearing.
The Company's sole officer and director receives and is owed no salary.
The Company neither owns nor leases any real or personal property.
The sole officer and director of the Company is involved in other business
activities and may, in the future, become involved in other business
opportunities as they become available. Thus he may face a conflict in
selecting between the Company and his other business interests. The Company
has not formulated a policy for the resolution of such conflicts.
During the year ended August 31, 2011, the Company paid a total of $1,000 to
its legal counsel, Mr. Jeffrey Nichols, who is the brother of Kevin Nichols.
NOTE 6. INCOME TAXES
As of August 31,
2010 2010
------ ------
Deferred tax assets:
Net operating tax carryforwards $ 24,845 $ 13,027
Other 0 0
------ ------
Gross deferred tax assets 24,845 13,027
Valuation allowance (24,845) (13,027)
------ ------
Net deferred tax assets $ 0 $ 0
====== ======
Realization of deferred tax assets is dependent upon sufficient future
taxable income during the period that deductible temporary differences and
carryforwards are expected to be available to reduce taxable income. As the
achievement of required future taxable income is uncertain, the Company
recorded a valuation allowance.
NOTE 7. NET OPERATING LOSSES
As of August 31, 2011, the Company has a net operating loss carryforward of
approximately $24,845. Net operating loss carryforward expires 20 years from
the date the loss was incurred.
F-9
NOTE 8. STOCK TRANSACTIONS
On May 29, 2009 the Company issued a total of 12,000,000 shares of common
stock to its sole officer/director for cash at $0.00017 per share for total
proceeds of $2,000.
The stockholders' equity section of the Company contains the following
classes of capital stock as of August 31, 2011:
Common stock, $0.0001 par value: 75,000,000 shares authorized;
12,000,000 shares issued and outstanding.
NOTE 9. SUBSEQUENT EVENTS
The Company has evaluated subsequent events through the date that the
financial statements were issued, and determined there are no other
subsequent events to be reported.
F-10
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Balance Sheets
As of February 29, 2012
ASSETS
February 29, August 31,
2012 2011
Current Assets
Cash $ 1,932 $ 157
--- ---
Total Current Assets 1,932 157
===== ===
LIABILITIES
Current Liabilities
Accrued Liabilities 2,625 4,375
Payable to Affiliates 26,659 18,627
------ -----
Total Current Liabilities 29,284 23,002
------ ------
STOCKHOLDERS' EQUITY(DEFICIT)
Common Stock:
Paid-In Capital, Par Value $0.0001 per Share,
75,000,000 Shares Authorized,
12,000,000 Shares Outstanding 1,200 1,200
Additional Paid In Capital 800 800
Deficit Accumulated During Development Stage (29,352) (24,845)
------ ------
Total Shareholders' Equity (27,352) (22,845)
------ ------
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY(DEFICIT) $ 1,932 $ 157
===== ===
The accompanying notes are an integral part of these financial statements.
F-11
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statements of Operations
Inception
Three Three Six Six (January
Months Months Months Months 29,2009)
Ended Ended Ended Ended Through
February February February February February
29,2012 28,2011 29,2012 28,2011 29,2012
------- ------- ------- ------- -------
Income:
Operating Revenues $ 0 $ 0 $ 0 $ 0 $ 0
- - - - -
Total Income 0 0 0 0 0
- - - - -
Expenses:
General & Administrative 2,375 2,050 4,507 5,551 29,352
----- ----- ----- ----- ------
Total Expenses 2,375 2,050 4,507 5,551 29,352
----- ----- ----- ----- ------
Provision for Income Taxes 0 0 0 0 0
- - - - -
Net Income (Loss) $(2,375) $(2,050) $(4,507) $(5,551) $(29,352)
===== ===== ===== ===== ======
Net Loss per Common Share -
Basic and Diluted $ (0.00) $ (0.00) $ (0.00) $ (0.00)
==== ==== ==== ====
Weighted Average Number of
Shares Outstanding -
Basic and Diluted 12,000,000 12,000,000 12,000,000 12,000,000
========== ========== ========== ==========
The accompanying notes are an integral part of these financial statements.
F-12
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statements of Cash Flows
January 29, 2009
Six Months Six Months (Inception)
Ended Ended Through
February February February
29,2012 28,2011 29,2012
------- ------- -------
Cash Flows from Operating Activities:
Net Loss $ (4,507) $ (5,551) $(29,352)
Net Change in Accrued Liabilities (1,618) 177 2,625
--- --- -----
Net Cash Provided By
(Used In) Operating Activities (6,125) (5,374) (26,727)
----- ----- ------
Cash Flows from Financing Activities:
Advances from Affiliate 7,900 5,500 26,659
Repayment to Affiliates 0 0 0
Proceeds from Sale of Common Stock 0 0 2,000
- - -----
Net Cash Flows Provided by
Financing Activities 7,900 5,500 28,659
----- ----- ------
Net Increase (Decrease) in Cash 1,775 126 1,932
--- ----- ---
Cash - Beginning of Period 157 695 0
Cash - End of Period $ 1,932 $ 821 $ 1,932
===== === =====
Supplemental Disclosure of Cash Flow Information:
Cash Paid For:
Interest $ - $ - $ -
Income Taxes $ - $ - $ -
The accompanying notes are an integral part of these financial statements.
F-13
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Statement of Shareholders' Equity
For the Period From Inception (January 29, 2009) Through February 29, 2012
Deficit
Accumulated
---- Paid-In Capital ---- During
Development
Shares Amount Excess of Par Stage Total
----------------------------------------------------------------------------
BALANCE, 1/29/2009 0 $ 0 $ 0 $ 0 $ 0
----------------------------------------------------------------------------
Sale of Common Shares
To Founder for Cash
on May 29, 2009 12,000,000 1,200 800 0 2,000
Deficit - thru
August 31, 2009 (3,911) (3,911)
----------------------------------------------------------------------------
BALANCE, 8/31/2009 12,000,000 $ 1,200 $ 800 $(3,911) $(1,911)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2010 (9,117) (9,117)
----------------------------------------------------------------------------
BALANCE, 8/31/2010 12,000,000 $ 1,200 $ 800 $(13,027)$(11,027)
----------------------------------------------------------------------------
Deficit - thru
August 31, 2011 (11,818) (11,818)
----------------------------------------------------------------------------
BALANCE, 8/31/2011 12,000,000 $ 1,200 $ 800 $(24,845)$(22,845)
----------------------------------------------------------------------------
Deficit - Six Months
Ended
February 29, 2012 (4,507) (4,507)
----------------------------------------------------------------------------
BALANCE, 2/29/2012 12,000,000 $ 1,200 $ 800 $(29,352)$(27,352)
----------------------------------------------------------------------------
The accompanying notes are an integral part of these financial statements.
F-14
Essense Water, Inc.
(A Development-Stage Company)
Unaudited Interim Condensed Notes to the Financial Statements
-----------------------------------------------------------------------------
NOTE 1 - CONDENSED FINANCIAL STATEMENTS
The accompanying financial statements have been prepared by Essense Water,
Inc. (the "Company") without audit. In the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations, and cash flows
at February 29, 2012, and for all periods presented herein, have been made.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with accounting principles generally
accepted in the United States of America have been condensed or omitted. It
is suggested that these condensed financial statements be read in conjunction
with the financial statements and notes thereto included in the Company's
August 31, 2011 audited financial statements. The results of operations for
the period ended February 29, 2012 are not necessarily indicative of the
operating results for the full year.
NOTE 2 - GOING CONCERN
The Company's financial statements are prepared using generally accepted
accounting principles in the United States of America applicable to a going
concern which contemplates the realization of assets and liquidation of
liabilities in the normal course of business. The Company has not yet
established an ongoing source of revenues sufficient to cover its operating
costs and allow it to continue as a going concern. The ability of the Company
to continue as a going concern is dependent on the Company obtaining adequate
capital to fund operating losses until it becomes profitable. If the Company
is unable to obtain adequate capital, it could be forced to cease operations.
In order to continue as a going concern, the Company will need, among other
things, additional capital resources. Management's plan is to obtain such
resources for the Company by obtaining capital from management and other
investors sufficient to meet its minimal operating expenses and seeking
equity and/or debt financing. However management cannot provide any
assurances that the Company will be successful in accomplishing any of its
plans.
The ability of the Company to continue as a going concern is dependent upon
its ability to successfully accomplish the plans described in the preceding
paragraph and eventually secure other sources of financing and attain
profitable operations. The accompanying financial statements do not include
any adjustments that might be necessary if the Company is unable to continue
as a going concern.
F-15
NOTE 3. RELATED PARTY TRANSACTIONS
The Company's sole Officer and Director has advanced/loaned the Company funds
and has paid certain third-party expenses on behalf of the Company. As of
February 29, 2012 and February 28, 2011, the amounts owing the sole officer
and director were $26,659 and $18,627, respectively. These amounts are
payable on demand and are non-interest bearing.
The Company's sole officer and director receives and is owed no salary.
NOTE 4 - SUBSEQUENT EVENTS
Company has evaluated subsequent events through the date that the financial
statements were issued. There were no significant subsequent events that need
to be disclosed.
F-16
[Back Page of Prospectus]
ESSENSE WATER, INC.
8,000,000 SHARES OF COMMON STOCK
1,260,000 SHARES OF
COMMON STOCK
TO BE SOLD BY SELLING STOCKHOLDERS
PROSPECTUS
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE
HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH
INFORMATION THAT IS DIFFERENT. THIS PROSPECTUS IS NOT AN OFFER TO SELL COMMON
STOCK AND IS NOT SOLICITING AN OFFER TO BUY COMMON STOCK IN ANY STATE WHERE
THE OFFER OR SALE IS NOT PERMITTED.
We have not authorized any dealer, salesperson or other person to give you
written information other than this Prospectus or to make representations as
to matters not stated in this Prospectus. You must not rely on unauthorized
information. This Prospectus is not an offer to sell these securities or a
solicitation of your offer to buy the securities in any jurisdiction where
that would not be permitted or legal. Neither the delivery of this Prospectus
nor any sales made hereunder after the date of this Prospectus shall create
an implication that the information contained herein nor the affairs of the
Issuer have not changed since the date hereof.
Until ___________, 2012 (90 days after the date of this Prospectus), all
dealers that effect transactions in these shares of common stock may be
required to deliver a prospectus. This is in addition to the dealer's
obligation to deliver a prospectus when acting as an underwriter and with
respect to their unsold allotments or subscriptions.
The Date of This Prospectus Is: _______________, 2012
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The estimated costs of this offering are as follows:
Amount(1)
$
Item
SEC Registration Fee $ 27
Transfer Agent Fees 1,500
Legal Fees 1,000
Accounting Fees 1,000
Printing Costs 473
-----
TOTAL $ 4,000
(1) All amounts are estimates, other than the SEC registration fee.
INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Articles of Incorporation and Bylaws provide that it shall
indemnify its officers or directors against expenses incurred in connection
with the defense of any action in which they are made parties by reason of
being our officers or directors, except in relation to matters as which such
director or officer shall be adjudged in such action to be liable for
negligence or misconduct in the performance of his duty. It is possible that
one of our officers or directors could take the position that this duty on
the Company's behalf to indemnify the director or officer may include the
duty to indemnify the officer or director for the violation of securities
laws.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended (the "Securities Act"), may be permitted to the Company's
directors, officers, and controlling persons pursuant to our Certificate of
Formation, Bylaws, Nevada laws or otherwise, we have been advised that in the
opinion of the Securities and Exchange Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by us of expenses incurred or paid by one
of our directors, officers, or control persons, and the successful defense of
any action, suit or proceeding) is asserted by such director, officer or
control person in connection with the securities being registered, we will,
unless in the opinion of our counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final
adjudication of such issue.
II-1
RECENT SALES OF UNREGISTERED SECURITIES
On May 29, 2009, the Company sold 12,000,000 restricted shares of common
stock to Kevin Nichols for $2,000 cash under an exemption contained in
Section 4(2) of the Securities Act of 1933. At the time of the issuance, the
Mr. Nichols, the founder, had fair access to and was in possession of all
available material information about the Company, as the sole officer and
director of the Company. This issuance was offered only to the founder and
involved no general solicitation. The shares bear a restrictive transfer
legend in accordance with Rule 144 under the Securities Act. The founder is
sophisticated in investing. On the basis of these facts, we claim that the
issuance of stock to our founding shareholder qualifies for the exemption
from registration contained in Section 4(2) of the Securities Act of 1933.
EXHIBITS
Exhibit Description
3.1 Articles of Incorporation
3.2 By-Laws of the Registrant
5.1 Opinion and Consent of Jeffrey Nichols, Esq.
23.1 Consent of Seale and Beers, CPA's
UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(a)(1) To file, during any period in which offers or sales of securities are
being made, a post-effective amendment to this registration statement to:
(i) Include any prospectus required by Section 10(a)(3) of the Securities Act
of 1933;
(ii) To reflect in the Prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any
deviation from the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the Commission pursuant
to Rule 424(b) (Sec.230.424(b) of this chapter) if, in the aggregate, the
changes in volume and price represent no more than 20% change in the maximum
aggregate offering price set forth in the "Calculation of Registration Fee"
table in the effective registration statement.
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
(2) That, for the purpose of determining any liability under the Securities
Act of 1933, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
(3) To remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
Offering.
(4) That, for the purpose of determining liability under the Securities Act
of 1933 to any purchaser:
(i) If the registrant is subject to Rule 430C, each prospectus filed pursuant
to Rule 424(b) as part of a registration statement relating to an offering,
other than registration statements relying on Rule 430B or other than
prospectuses filed in reliance on Rule 430A, shall be deemed to be part of
and included in the registration statement as of the date it is first used
after effectiveness. Provided, however, that no statement made in a
registration statement or prospectus that is part of the registration
statement or made in a document incorporated or deemed incorporated by
reference into the registration statement or prospectus that is part of the
registration statement will, as to a purchaser with a time of contract of
sale prior to such first use, supersede or modify any statement that was made
in the registration statement or prospectus that was part of the registration
statement or made in any such document immediately prior to such date of
first use.
(5) That, for the purpose of determining liability of the registrant under
the Securities Act of 1933 to any purchaser in the initial distribution of
the securities:
The undersigned registrant undertakes that in a primary offering of
securities of the undersigned registrant pursuant to this registration
statement, regardless of the underwriting method used to sell the securities
to the purchaser, if the securities are offered or sold to such purchaser by
means of any of the following communications, the undersigned registrant will
be a seller to the purchaser and will be considered to offer or sell such
securities to such purchaser:
(i) Any preliminary prospectus or prospectus of the undersigned registrant
relating to the offering required to be filed pursuant to Rule 424
(ss.230.424 of this chapter);
(ii) Any free writing prospectus relating to the offering prepared by or on
behalf of the undersigned registrant or used or referred to by the
undersigned registrant;
(iii) The portion of any other free writing prospectus relating to the
offering containing material information about the undersigned registrant or
its securities provided by or on behalf of the undersigned registrant; and
(iv) Any other communication that is an offer in the offering made by the
undersigned registrant to the purchaser.
II-3
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements of filing on Form S-1 and authorized this registration statement
to be signed on its behalf by the undersigned, in Spokane, Washington on
April 24, 2012 .
ESSENSE WATER, INC.
By: /s/ Kevin Nichols
-----------------
Kevin Nichols
President, Secretary, Treasurer,
and Director
(Principal Executive Officer
Principal Financial Officer and
Principal Accounting Officer)
II-4
